Dollar Tanks: Market Rallies as Euro Pops
The market continued its decline yesterday,
although the momentum waned. Despite hitting new lows the indices bounced
nicely into the close and protected their March low. Volume was also high
yesterday, which indicates that some of the accumulation may be
institutional as opposed to speculators or small traders.
I decided to add three long positions yesterday. While I do not
think the market bottomed yet it should soon. Additionally, even if the
market hasn't bottomed I just do not see the indices falling more than
2.5% in the short term. In fact, other than oil, most of the major market
constituents look like they are less than 1% away from a bottom.
Of course, it is risky to time a bottom. Many have tried and a
small few succeed. But as long as we keep our stop losses tight, pain to
our back pocket should be minimal. Additionally, I think the market will
make a series of 5% moves, both up and down, over the next few months,
maybe until the end of the year. If that is the case, we have no choice
but to anticipate bottoms as opposed to reacting to trend shifts.
In lieu of my belief that the market is likely to experience short
term gyrations and the downside is minimal, we took new long positions
yesterday.
I think XXXX
is the most likely of the trades to play out, but the upside is also the
least. The other two, XXXX
and XXXX,
while more risky, offer bigger upside.
I took two new positions as well. In addition to the access you
have of TradeMaster's
portfolio, I will also inform you when I am making trades in my personal
account. But keep in mind that I am far more aggressive with my personal
money than I am with our portfolio. Yesterday I picked up shares of
XXXX
and HYGS. Both are just intended to be quick 10% pop trades, and I think
(unless they gap this morning) you should be able to get in near my entry
for either.
Today is options expiration day, which means that we can expect the
unexpected. My hunch is that most options guys hold puts and are
positioned quite bearish. (I know, bold statement right.) But they will
likely end those trades this morning and generate artificial buying
activity so they can take a half day and hit the course this afternoon. I
am speculating that they will play golf, but I do think you will see many
investors close their shorts this morning.
Also helping the indices will be a rebound in the euro. The euro
surged this morning after Sarkozy claimed to have a Greek resolution in
place. The euro trades at $1.41 price support, so the strong support and
bullish comments from French President Sarkozy could jack the euro today
(and into next week).
