I didn't make that trade but it was there. I didn't tweet any trades Friday out of respect for the dead in the well documented Batman shooting. Prayers go to those families and friends of the victims. Didn't feel right to be belting out levels and trades knowing so many were shocked and dismayed and grieving.
The Week Ahead
The wall of worry just got a little bit steeper. Spain can't bail out it's self let alone Valencia. The approval of the Spanish bank bailout by the Germans, QE hopes from China as well as the U.S., the China rate cuts, and the Bank of England Funding set up is what caused the upside pressure on stocks. That and the better than expected earnings (if you can call it that) of a few big caps. The overall tone of the market was that it wanted to go higher but the world economy won't let it. Had Valencia not spoiled the fun we would have gone higher Friday. Spain's bond yield spike resurrected the bears. This brings us back to the Dow Jones transportation average which can't catch a break. Below is a daily chart of the $DJT
As for the Fed meeting I think there's a good chance they announce more QE. After Fed chairman Ben Bernanke testified to congress dampening hope for more QE it would be a good time to spring it on the market. I think they'll buy mortgage backed securities and leave it open ended not specifying an amount. There is sufficient disbelief in this happening right now and for good reason, but this is exactly why I think it will. Recent data points to contraction in a big way and inflation is well under the Fed's target. I can't imagine Bernanke waiting for an actual negative GDP print to act.
As a small trader one of my biggest advantages is speed. I can go long and then go short and then go long again with ease. This blog is geared towards small traders who share this same advantage. A larger trader couldn't change course the same way nor should he even try. Nas has an interesting line on a song on his new album that goes "A Caterpillar can't relate to what an eagle envisions." meaning if your not on that level you can't see the world the same way... This makes a lot of sense to me but I feel like I can at least try since my plan is to get on that level some day. So here's what I would be doing if I was big money.
Buying European stocks of the best companies they have to offer! My 5 favorites right now are as follows:
Ensco PLC $ESV
Adecoagro S.A. $AGRO
Siemens AG $SI
Arcelor Mittal $MT
I can't stress enough how important it is to do your own homework. Even some big money is having a problem doing it's own homework these days from what I hear. ALWAYS DO YOUR OWN HOMEWORK!
All in all I don't think the world will end anytime soon, and if it does the last thing I'll be worried about will be money. But I do think things will get worse before they get better in Europe and in that case the thing I'll be thinking about most is money. These 5 European ADR's have priced in super ugly scenario's and for the most part they're located in relatively safe countries with relatively safe economies (emphasis on RELATIVELY) and they look like most of their worst days are behind them. Also, I'd put a -3% stop on any stock right now Europe or otherwise..
Until next time happy hunting traders! And good luck!