Tuesday, February 22, 2011

Bulls Stub a Hoof

Home a bit late tonight so just a few thoughts.

Now I am Worried
This has me worried tonight. From Reuters:
IMF: World Economy Can Survive Oil Price Surge for Now
The IMF has about the same predictive ability of the US Federal Reserve. It is reasonable to panic now, HA!

How Much Would You Pay for Democracy?
I hesitate to write this section because I am not going to get into policy debates or philosophical arguments about this here. Still, I was thinking this today so here goes.

It has been US (amongst plenty of others) policy to support dictators or oppressive regimes in the oil rich nations. The reasons for this are many, but number one is to keep oil prices lower than they otherwise might be. While it is both scary and refreshing to see revolts by the small people in these nations (they do not see much of the oil pie at all) you have to ask yourself question:
How much will I pay for democracy?
If governments become formed that really hand out the oil revenue among the people, they are going to want more of it. This could raise oil prices which will affect the cost of every single thing you buy one way or the other. New leaders may walk from OPEC and their oil price controls. I have no idea what will happen. Is there a point, say gas at $6 a gallon, that you might think democracy may be too expensive? Food for thought.

Market Meltdown or just a Blip?
I am going to admit it up front, I was loving watching the more bearish bloggers and writers get excited today. In what seems like a move up without end, a strong volume sell off was just what a doom and gloomer was looking for. It was refreshing to see a little fear and thinking going on out there for once.

Still, fact is the move down results in just getting the indices to the 20 Day Moving Average! Trader Mark had this chart up:

And offered this:
Finally an exciting day.... this is only the second episode (Egypt being the other) where the S&P 500 has retraced to the 20 day moving average since Thanksgiving. Let's see what the dip buyers do.

So is this the bulls stubbing a hoof, or the start of a larger move down? I will need to see the weeks action to make a better guess. What is true is that many individual names were damaged today, some very badly. If the broad indices start running back up quickly the stocks leading the way may not be the same hot names that ran since last summer.

For a great big picture look at what's going on, head on over to Ultra Trading's post today. Sample:
If this market is going to turn, don't think the dip buyers will give up without a fight. A majority of traders and investors have made money for two years by literally doing nothing but holding stocks. It was an easy way to make money and they won't give up without a fight. They will pour money into any weakness as they have been conditioned. They will focus on the Bernanke put which in reality expires soon unless QE3 is hinted at in the next few weeks.
No head over and read the whole thing.

Have a good night.


Stagflationary Mark said...

"IMF: World Economy Can Survive Oil Price Surge for Now"

Small world! I mentioned that one on my blog as well.

It took me forever to create my post. I have no idea which of us actually managed to heckle them first, lol. :)

getyourselfconnected said...

Indeed, that headline was a winner. Great minds do think alike!

Jennifer Hillier said...

I just wanted to let you know that I do read your blog! I don't feel smart enough to offer insightful comments, but I am reading! :)

getyourselfconnected said...

No worries JH. Trust me, anything you want to add in will be worthwhile.

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