Sunday, October 16, 2011

Market Ruminations

I don't say this very often but I don't have a clue as to what is going on. Rumors are that the US has assured the Europeans that the US would help with the bail out of the European banks and countries. When that rumor started around the market turned on a dime and has going up ever since. Be that as it may we are also entering that period of time that occurs every year when the market goes up for no logical reason. I'm going to place a bet that the market will go up from here to year end. This is strictly a gamble. There is no reason for the market to be going up right now other than the Fed is priming the pump again. They are printing money like crazy and trying to bid up the price of the long bonds to drive down the yields. The guys at the Fed can't seem to grasp the fact that it isn't interest rates that are preventing loans from being made it's just there is no demand for loans. What businessman in their right mind would invest in plant and equipment when there is no demand for their products? Ok, here goes. Tomorrow I am going to place a bet the Dow is going up between now and the end of the year. I will do this using the ETF fund DDM. I'll follow that up with a little looser trailing stop than I have used in the past because of market volatility of late. Here are my other thoughts. 
BONDS: In spite of the Fed's efforts to bid up the price of longer term bonds I think the price of bonds will drift down as the stock market drifts up. 
The Dow: I think the Dow will drift up till year end. 
Gold: I think Gold has more downside before it forms a bottom but for now I am looking for a trading range. 
I'll keep you posted as to how my bet is going.

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