Return

Today was my first day back in the office after my holiday.

It seemed terribly uneventful even though it was the biggest rally in 4 month (a 150 point move

It could well be the bottom as it broke out of the down trend channel and closed above 5000 too.

Chart below. Hmmm...

I found it uneventful in the fact that - yes it is a massive up day, but it is still difficult to believe and trust that this is the bottom. This is only ONE up day after all...

So - Yes a big day, but it seems like an un-tradable rally.

This week is also massive, PPI came out today and was 1% vs 1.6% (!!!!). Basically this should reflect in Wednesdays CPI, and this has a good chance of being a lot weaker because of the PPI today. Hence - we could be looking at the beginning of a interest rate cut cycle (as opposed to tightening). I think this contributed quite strongly to todays rally.

Also a whole bunch of U.S banks report earnings this week. Apparently they have changed an accounting rule whereby a debt only becomes bad after 4 months as opposed to the old 3 month rule. Hence, earnings although negative will be less negative because it will be excluding one month less of bad debts. These guys really are desperate to make this crisis look more mild than it really is... even if it makes it look better on paper. These problems are not going away in a hurry.

For example, while I was on holiday, check out Freddie Mac and Fannie Mae, the U.S's government sponsored banks.

They look like they are about to go broke. Fannie Mae's sub prime exposure if written down the typical 20% minimum as has been the standard is twice the equity value of the firm. Freddie Mac is no better. In other words, these guys are broke, and it is only a matter of time. The possibility of a government bail out is keeping it afloat I would imagine... it certainly would make me hesitant to short it despite the fact its broke. Who knows, the government may just want to print them more money and use it to write away all their bad debts. Economic genuis *cough*.

I did get long ONE thing today, despite how uneventful today was. Yes, it was good old Sundance Resources. It caught my eye at 26.5 today as it was churning some massive volume at those levels. No matter how many times it came back offered it was continuously taken - between 10am and 2pm. This is what caught my eye initially. I pretty much knew if it broke through 26.5 it was off to the races. To what extent however I was not sure. We had geometric angles at 0.285. This however also failed miserably. It closed on a new high of 0.315, which is where I got long. (I feel more comfortable getting long on the close, even if i pay up, it is usually a sign that the next day will be strong.)

It surprised me because the news in itself is absolute crap. 1.2billion tons of terrible quality iron ore thats a million years away of ever being mined justifies an increase of marketcap of $150million? How stupid. Its hard to overlook at chart like this though...

Small-ish size and a very tight stop.

U.S is indicating up but its still an hour early.

Anyway - thats me out. Let's see what tomorrow brings.