Wednesday, June 13, 2012

Just Another Day.

If you have seen even a little bit of Jamie Dimon’s testimony before the Senate Banking Committee you should be able understand why we are destined to doom. These are the people who are supposed to safeguard America’s wealth. Instead these people were just about rolling before the almighty king and were severely apologetic about the inconvenience they have caused to the” Demon”. Most of the so called Joe Six-packs are so enthralled with Kim Kardahsian’s  sex tape and nude picture that they have no time to think about the real issues. But however much I may dislike JPM and other TBTF banks, come August, I am going to buy the shares of JPM. It is the best house in a bad neighbourhood.

So yesterday it was a sucker’s rally after all. Today it gave back half of the gains of yesterday. Tomorrow it might gain another few points and this up-down dance will continue for a while. If 1.2550 holds in Euro, we may see a bounce tomorrow. For the last 5 trading days we are moving in the following range.

Although I am not a great fan of IHS pattern, it does look like one forming and if we hold the lows of June 4, we may be due for good bounce.  With Greek election due this Sunday and FOMC on June 20, which I think will be kind of disappointing for most; I think we will hit a bottom by June 22nd. Till then I expect the market to move sideways in a range. Some are expecting a huge bounce on Monday, June 18th but I am doubtful and would not put a wager on it. With so much headline driven movement, why would you want to risk your capital either way? I keep repeating, we are not going to miss anything and it is better to give up few points in order to identify the true trend.

Gold appears to be holding the line for now and I am holding my GLD. But when the QE comes, Silver is expected to outshine Gold by many miles. I would not be surprised if Silver is able to cross $ 50 landmark this time. We have to be patient because the corrections are not over yet.  But we are getting there.

For the next seven trading days, I would keep repeating myself that be in cash and cushy. Identify stocks or sectors which you think have held up well during this downturn / correction and which logically will do well in the next up-move. Because with his re-election in November, Obama will do everything to ensure that stock markets are up before that. And if you have any favourite stock or sector in mind, please share it with us. I am not a stock picker and I generally go with sector specific ETFs but sometimes a well selected stock will give higher return. One sector I am looking with great interest is the Bio-tech sector. Let us know what your pick is.

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