6/14 My Mood & The Market

Written on June 14, 2010

Good evening or top o’ the morning (depending on your time zone)-

I will leave the psychology to the fetching Mrs. Tompkins, but when I am speculating (trading or investing for sales people) in the markets, my p/l usually does something to my psyche. Most say it is greed and fear. I am more emotional than most, but over the last 25 years, my gut goes something like the following chart.

Though far easier to see than it used to be, it is still a great barometer in the market for me…whether trading stocks, bonds, currencies, metals, or commodities…it is always worth knowing where my “gut” is and what it is telling me…My buddy Steve who works brokering investments in California wrote to me recently,

“You realize you are self employed the moment you figure out your boss is an Ass.” The masses are asses and a good long trend produces more geniuses per capita than any amount of genetic engineering ever will. So, we watch market sentiment and option volatility to gauge where the herd is gathered. In great news for Qatar and the GCC but asinine to the rest of the civilized world, Norway, Canada, and the U.S. have all discussed legislation to restrict offshore drilling, which will reduce supply. I wanted to catch up on some of the meanderings of late, so here we go:

Bum steers: GS · June 120 puts at 0.38, now .27 · July 120’s at 2.26, now 2.48 · Oct 95’s at 2.76, now 2.92 BP at 38 stopped at 36, 33.98 now · $20 January Put trading near 1.50, closed at $2.40 Freddie Mac and Fannie Mae · will cost the US citizenry $128 bln (Agencies now 80% owned by US taxpayers*$160 bln minimum losses). · 85.4 mln US citizens paid taxes in 2009, that will be a surcharge of $1498 per tax payer, love those smart guys.

Prime Steers: GRMN at 32, now 34.30 · the July 27 puts at 0.60 now .32 CHL Stock is trading at 47, now 50 AAPL held stop at 235 watch its action up near the highs…if it takes the highs out, enjoy the ride, if it flirts hesitates wobbles or does not. Remember what they do with pigs ‘n hogs…and traders caught “Hoping”.

Broad Steers: S&P stopped at 1056… stop was triggered DJIA stopped at 9908… stop was triggered Stocks are opening the week firm. May they rise to the moon for you! All the best, Leon