Will there be a "Bear Board" too ;-) ?!

t4k

Thanks, G034, and Bill. Will keep watching...

This AM KRY was showing an inverted bid/ask spread, where the bid was higher than the ask. Is this something that occurs often with a volatile stock such as KRY?

Thoughts?

Regarding the UBS downgrade of BAC and the 1-year targets of 1450 on the S&P. I do not think that these two analysis are reconciliable.

The economy is clearly slowing here due to the higher interest rates. One could argue that metals and energy have been the two main drivers for this bull market and that with their continued leadership the S&P could hit new highs.

As we are starting to see in the current pricing of both oil and metals both of these sectors are highly sensitive to economic growth and it may be a stretch to expect continued outperformance after 3-4+ years of high growth.

If we strip out those two sectors we are left with the leadership in the financials. The banks and lenders as well as the brokers are up considerably over the past several years. The main assumptions in the UBS report - slowing economy as well as deteriorating credit quality and smaller interest rate spreads indicate that the financials are also running up against the wall.

With energy, metals, and financials soon to be down for the count what will be providing the leadership for the S&P to rally to new highs over the coming 12 months? I was skeptical last fall when we discussed a retest of lows on the major indices during Q4 2005. We all know how that turned out with a significant rally despite all odds materializing. Hoping for the same in this Q4 is a dangerous proposition as Bill points out.

I would be taking the other side of UBS recommendations this fall mainly by going long Puts instead of short and by using the low volatility and options premiums for the major banks against themselves. It is possible to position yourself in major names such as BAC and WM with a 1.5+ years time horizon in the Puts without paying the typically high options premiums for such a maneuver with the carrying costs below 5% of the share prices. The added leverage which is typically obtained in the 2-10X equity range should outweight the cost.

It will take something special to make this fall rally happen from the long side. That said, I am waiting for the September fed meeting to be completed before taking my positions. I think the bull thesis for this winter will be more clearly viewable from that point and we will be able to analyze the questionable foundation of assumptions that this glass house is built on.

Best regards,

BG

Bill,

Here is my first posting to the "Bull" board:

"How did those guys get in my basement? - g034"
see below:

http://streettracksgoldshares.com/us/media/gb_media.php

Bull? Bear?

Neither.

IMHO, right now the market is an Ass.

Good points, BG! I think you have cut through the clutter!

Bears getting hammered.

re: bears getting hammered...

Ya, its beyond me why anyone would bet against the US market - when it's all rigged to go up - I've tried and made little.

Every day (knowing that the market is rigged to go up) I ask myself - "Is there any reason for the market to fall today?" - if I can't come up with any - I just day trade long.

There were none today - no econ news, GS sachs earns ok, oil falling - so we go up...

Commodity shorts still working surprisingly...

But if oil does not fall on a bearish inventory report tomorrow- will probably try a long trade on a oil stock for the heck of it.

Unless they drop it all the way to $60 tomorrow - if that happens - maybe the US index run will have used up all its bullets - and the "sell oil - buy stocks" trade has ended.

-tradesman

btw... I note how the S&P 100 has made a new 5 Year high but none of the other index's have...

tradesman

t4k, you wanted some bear...
Bill, you wanted some bull...

http://www.youtube.com/watch?v=BunSFHfL4d0

"I'm a gold investor, check it out.. Bammm! check it out"

BTW g034 - I can quite imagine that your basement is well on the way to looking like those photos :)

Looks like the summer rally may not be over.....

Thanks TB, I needed that.

Tradesman - thanks for your excellent insight, you've articulated what's been rumbling around my head for a couple weeks now. Can't short, don't dare get long; let's see what needs doing around the house!

t4k

I have a question about writing put options. I am interested in writing 10 puts on Cameco at the 30 strike for Mar 07. At about 1300.00 in premium, is that a good ply? There is major support at 28.28. If it were to be exercised to me, that would put me to a net position at 28.70. Assuming that support held, that would put me at risk for a loss of 420.00 if it broke through and I were to sell(in a perfect world). For you that do this type of trading, does this look like a good trade? I will probably wait until the premium is at least 1500.00 before I put on this trade. Greg