Mainely Stocks

[ari5000]

talking to myself about Yen:

http://stockcharts.com/h-sc/ui?s=FXY&p=D&yr=0&mn=9&dy=0&id=p48665212384

Not sure if anyone is reading here anymore but these posts help me as much as anyone else.

First: Read "The Quants" --by Scott Patterson -- It'll explain a lot about why the market moves the way it does.

Basically, you've got a bunch of big hedge funds that buy momo stocks -- and they tend to act like a pack of elephants.

One of the most important elements of a strong risk appetite is the Japanese yen. The bubble and bust was fueled by the 'carry trade' -- hedge funds can juice their profits by borrowing yen due to ultra-low rates, and go buy... whatever and get a better return. Then yen hit bottom during the flash crash but take a look: There's the yen back over the 200 day MA -- not since late March have we seen that.

It was clear to me last week the elephants are back. The market was moving -- lead by ultra-momo names... AAPL to all-time highs, but NFLX, CREE, DECK, SNDK, BIDU, CRM -- super growthy/expensive big cap names were dominating.

Now it appears we have a major gap up in store on Monday fueled by China currency intervention. Yessir, if you wait for the news pundits to say its a bull market, it's probably over. But several technical analysts I follow clearly changed to modestly bullish last week.

I have been dabbling long but have been far too gunshy to take advantage of the recent move. I did buy back a large position in CCME... but it's a small cap China name and it has not gone up. (But at least I'm long.)

I'm also holding some BRCD but that too has not done anything.

What is important to understand is, there are big funds on Wall Street and they are HUNGRY, no, STARVING for alpha, or performance. They need to find some place to put their money to work. If these guys smell momo - the market is going to rip and it's going to be 'unreal'. Most people will not believe it for a second. And they probably shouldn't. But that doesn't mean it's going to stop.

Most indexes are pinned up against their 50 day MAs but these may get broken at the open and that's going to send a big greenlight signals to everyone sitting on cash -- and the shorts are going to be in panic mode at the open. So you've got an extremely bearish sentiment competing with what will be a triple green light open.

I got a feeling tomorrow is going to be a banner day for some... and quite painful for others that were leaning the wrong way.

Thing is, tomorrow's rally may just be the start of a big upmove, not the end as many will still assume.

Good luck and happy father's day to the dad's.