Comment by phil

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phil
June 20th, 2013 at 7:08 am

SCO/Jfaw – Be careful with market sell orders.  At the dead open, the MM can screw you.  The July $36s have a delta of .55 and closed at $1.15 so $1.70 is to be expected.  

TOS let's you put trailing stop sell orders and, if you have to automate, that's the way to go.  In the STP, we have the $35s at net about $2.15 after buying back the short calls (brilliantly) yesterday.  Those closed at $1.50 and have a delta of .74 so, hopefully, we'll cash out better than even and, as we are on a mission to cash out our open positions even and keep our realized profits, that's going to be fine with us!. 

Cycles/ZZ – I think, in the larger term, we are stabilizing from the big crash but, unfortunately, stable should be around 1,450 on the S&P, not 1,650.  This is like if you pull a ship underwater in the bathtub, down to the bottom but it's full of air (stimulus) and you let it go and it rises back up and, in fact, goes HIGHER than the surface of the water.  That's where we are now, because the ship went back to the top and even higher – people are extrapolating that the ship can now fly.  That's the difference between TA people and Fundamentalists in a nutshell. 

Frankly, I think that the end of QE, once the initial shock to the system wears off, will be just what we need to get the economy going as people with savings will begin to get a return on their money and banks, who are sitting on virtually all of the money the Fed has been printing, will finally be forced to actually LEND some of that money out to generate their own income.  Once that massive pile of freshly printed money finally begins to move through the economy, we can hopefully get into a more virtuous cycle.  

So that's how I reconcile the two and that's what keeps me long-term bullish.  

Thanks for Fisher Equation – very good for people to understand.  

Oil/Burr -Well, we did with our USO/SCO plays.  

Gold/Jfaw – I don't think we get there ($1,100).  The macro is that the drop in gold (for various reasons) caused the massive sell-off in GLD that I've been predicting for years and that flooded the market with physical gold.  Now GLD is about 50% depleted so I don't see it going to zero and, even if 25%, then they can only dump half as much gold going forward as they dumped in the first half of this year, which began at $1,700.  So $350 ($400 today) and another 50% would be $1,100 at worst.  $1,100 is also the point at which most miners lose money extracting gold and, if you've ever seen a gold mining operation, you know they'll shut down long before that happens.  So I think $1,200-$1,250 is worst case and, once GLD is forced back to buying – things can turn around very quickly as the physical market is very tight.  Those are all factors that have nothing to do with inflation or investor confidence or global conflict, which can also drive the price up very quickly.