Tuesday, November 8, 2011

I Told You So!

So boring it becomes! To keep saying, “ I told you so”.

Monday, 7th Nov. I wrote; “Despite all the problems in Europe, I think Europe will hold up for some more time and possibly by mid-November, we shall see bids for risk assets. This is because, I see the trade becoming too one sided. Last week MS came out with a report for its clients which virtually says that Europe is finished. While I do not disagree with that diagnosis, I doubt their timing and agenda.  Everyone is looking to short Euro and play safe while the primary dealer banks need to do window dressing for the coming year end. Just like I do opposite of what GS says, I want to take all reports from TBTF banks with liberal dose of salt. I think bunga bunga Berlusconi would be forced to resign soon and a new Government will be formed in Italy. Then the ECB will buy Italian bonds to reduce the rates and bring in some short lived cheer.

Sure enough, we had a exit-Berlu rally. I expect a major top by December. And for those who have not gone out of equity yet, that would be a good opportunity to exit.

I am long gold in a measured way. Spreading my bets over few days. In short term gold has reached the upside of the channel and we may see some weakness in price. Longer term my upside price target of gold is around $2150 before another correction.

Things are as dysfunctional in Europe as ever. America is just muddling through. Cash is going to be king.
By the way, selling may not be over yet and we are likely to see some selling pressure in the coming days.

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