I may be crazy, but it keeps me from going insane.

Nice rally on Friday after a gap lower on fears of Congress taking its usual course. Looks like a gap higher that should take us to 1265. A weekly close above that level will put in the bottom, and get us moving up for the next six months or so. 1450 here we come.

I Love You Just the Way You Are

Pretty normal post expiration Monday retrace. After a 120 pt move on the SPX, we do need a little breather to take care of some overbought indicators. Really like the VIX not moving on this low volume downdraft. We should see a close above 1265 in the Dec futures to really knock the socks off of the shorts.

Good arguments made by Merrill's Rich Bernstein on why the banks are close to a bottom but not quite their yet. I think once we see the Treasury's plan on mortgage bonds, the financials will skyrocket. Playing the range right now in the XLF (19-23). A close above this will start a new bull run.

Getting down to the wire for the Mets. The Brett Favre acquisition is going as I thought for the Jets. Spend a lot of money on past talent, and you get a mediocre offense.

Yowza, Yowza, Yowza

So that's what you call volatility. For those of you playing the home game, hopefully you did not get whiplashed too much. Now with this short sale restriction in place, we will see the rally I have been looking for. A move of 10% to 15% from here on the quick is in the cards.

Get back in there and buy, Mortimer.

Back in Black

Well almost in the black. The market has done what I thought it would by staying in a tight range even with oil coming down. The economists at Merrill Lynch are still seeing slower growth throughout the world economy. My view is that these numbers are already priced in to most stocks so we are at bargain levels. Financial stocks have stabilized and are poised for an upmove here. Made some good short term trades on the airline and retail stocks as fuel prices have stabilized for the time being. Move to neutral on those sectors now. Pick up some good names in the commodity sector here as the 4th quarter approaches and yesterday's winners will be marked up.

For those of you not too familiar with my trading style, let me revisit some of my themes:
1. Buy stocks when they are in a cheap market.
2. Buy good names in good sectors on pullbacks.
3. Buy volatility in beaten down stocks that have based for a few weeks. Time is needed to wring out the sellers.
4. At all times, sell out of the money calls. Take in some premiums and trade around the positions. You can always buy them back if you want to. Remember, a cheap sale is better than an expensive buy.
5. And most importantly, the market will always move to the point of most pain before it reverts to the norm.

My Mets still 2 1/2 games ahead of the Phillies.

Surfin' USA

Looking for gasoline to hit that $3.25 level, do not know what crude price that translates into since the crack spread ( how many gallons of gasoline per barrel of oil) is pretty screwed up these days. But let's say I would not be surprised to see double digit crude come October. This should keep a bullish wind behind the market, as long as a major financial institution does not fail this summer.

This rally is "the end of the world is not tomorrow, so I need to own stocks." probably looking like 1250 to 1325 SPX as a good trading range for a couple of weeks.

Hey, the Mets are now tied for 1st, good luck to the boys of summer!

Where have you gone Joe Dimaggio?

So its been about 8 weeks since I posted anything. Let's recap what has happened in the markets:
1. Banks are struggling to stay solvent.
2. Home sales keep dropping.
3. Non-financial earnings holding steady.
4. Commodity prices soaring.

Gee, same news from last year, but what's different? Perception. Last year we saw this as a short term blip. Now, all the pundits are calling for a "New Deal" type of legislation to shore up the system. If you let the free market react, we will wipe out the non-performers, while letiing the stronger players survive. This happens every decade and will continue in the future.

Still bullish, see new highs by end of year.

Let the Good Times Roll

Oh by the way, seeing topping of commodities trade as the small fish is looking to move from stocks to grains. Also, lots of interest in energy as well, which will make the dip buyers carry the pain. A good trade here would be to be long some indexes and short a portion of energy against it.

By the way, doesn't Chris Paul remind you of Carlton from the Fresh Prince?