CH gapped open higher and are now making new lows., SH were 30 higher earlier, now are 10 lower. WN tried to trade above 8.00, put in a high at 8.02, we are now trading at 7.80.
This type of action suggests underlying weakness which is puzzling.
With Crude higher and the Dow higher, combined with the fact that its the first of the year, we should be getting $ flow Into Commodities. Logically we should be higher.
The fact that its not playing out can mean one of two things. 1) We are still in thin Markets b/c the masters of the universe are still skiing in Gstaad and Aspen or 2) There is real underlying weakness which should be sold.
I personally favor #2. I would be looking to sell rallies and use rallies to buy cheap puts. In this environment, I’d even like some straddles in place, selling 2 calls to pay for the premium on the puts. This is aggressive, but I do not like the way the grains look, and I want to get paid if we have a sharp sell off in the next 7 days before the Jan 11th USDA report.
I’d even sell a March Dow here. I’d risk 50 to 60 points on a rally, looking to take 150 to 300 pts off the table if the market rolls over.
I think at first blush the market rallied on the “deal”. As people digest the facts and realize that they basically kicked the can again, I don’t see the bullish story. Middle class taxes go up w/ payroll going from 4.2 to 6.2% That’s $1K tax raise on those making 50K a year. I guess this is the new “rich” the Democrats are going to target. Their rhetoric says one thing, but the reality is the middle is getting nailed. The fact is, that’s where the $ is. 315 million folks. The top 1 or 2% simply cant foot the whole bill when the accountants run the numbers. No matter if they are accountants who like MSNBC or accoutants who favor Fox News. Math does not lie.
Raising spending 41 dollars for every 1 dollar in spending cut doesnt’ really solve the debt bomb. $620 billion in spending increases contrasts with $15 billion in spending cuts.
That’s balanced and fair? I think when the smoke clears, regardless of your political bent, be it conservative or progressive, we can all add and subtract.
CER