Market Ruminations

First a quick update. As you know from previous posts I closed out my bet on DDM with a nice profit in anticipation of a downdraft in the market. I also placed another bet on gold with UGL. The market hasn't gone down yet and I got stopped out of my bet on UGL with a small loss. I think I'm going to have to go to a looser stop on Gold. I've been putting a 2% stop loss on my Gold bets and this is the second time I've been stopped out on a whipsaw. I think next time I'll expand that to 4% and see how it goes. In any event here is how I currently feel things are going to play out.

STOCKS: Short term I think the Dow and S&P are what is called overbought. The price is substantially over the moving average lines and typically they have 5 or 6% correction when they get this far above the line. After that I would expect a nice run up into summer. If we have the expected pull back I will place another bet on DDM. 

THE DOLLAR: The dollar is due for bounce here. I think the fear about the Euro in general and the PIIGS in specific is going to cause a move to " Safety " which means the US Greenback. Today I am going to place a small bet on UUP which is a bet the dollar will go up. I'll keep you posted on how that goes. 

GOLD: Gold will go down as the dollar goes up as they are an inverse of each other. If we have a decent pull back in Gold I'll replace my bet on it with a looser stop loss.

2012: I think the Obama administration and the Fed will manage to keep the wheels on until after the election. I think 2012 and 2014 are going to brutal. Whoever wins the election will wish they hadn't when all the imbalances in our economy come to a head but for the rest of this year I think they can keep the lid on it.