Replies to post #7155 on General Stock Ideas

[bigworld]

Did Today's Stock Plunge Give The QEeen Light?
Submitted by Tyler Durden on 05/17/2012 17:22 -0400

From mid-November last year, S&P 500 futures fell from a high of 1259 to a low of 1136 in around 9 days - 123 points (or 9.7%). This was enough, it seemed, for the Central Banks of the world to get on the phone and press the big green 'print' button in a coordinated response to markets waking up to the dismal reality hidden under the covers. From May 1st highs at 1412 to today's 1300.5 lows is a 112point drop in around 13 days (or a drop of around 7.8%). While the most recent move is slower and smaller so far - today's action in stocks (and even more so in Gold) perhaps reflects the reality that QE3 is inevitable (gold) but not until stocks have fallen enough to warrant 'extraordinary actions' by the Fed. Do we have another 2-3% drop before the Fed picks up the phone?

And as we noted earlier, perhaps it is worth considering how the 'USD-fiat-based unit of account that the S&P 500 is priced in' is now dramatically different from the 'non-fiat-currency unit of 'risk' that credit is priced in'. Critically, credit markets remain a far more effective indication of the business cycle or credit demand/supply to put it another way, than the USD-devalued unreality of US equities...

[bigworld]

scstocks: Good morning. I was surprised to see our markets open essentially flat considering that it was a bloodbath over in Asia overnight. When I hit the hay @ 2 AM the major Asian indices were down 3%....I used today's pause to completely sell out of PSQ and HDGE for now. I bought some KOL and some XME. I'm pretty much sticking with my hunch that the Dollar is topping out and will sell off for a few weeks and that inflation hedges like GDXJ, KOL and XME will rebound strongly. The US Treasury market is extremely overbought. The US 10-YR Treasury hit the lowest closing level ever on Thursday. Treasury and AAA Corporate bond yields across the board haven't seen these levels since 1954 according to one analyst I follow. This flight to safety will be the right play, just not right now. That trade is too overcrowded and will have to reverse before resuming again. GDXJ hit a 3 yr low under $18.00 when I really tried to load up. With markets it is safe to play the reversion to the mean. When something is priced at a historical extreme it is safe to bet that it will reverse course eventually and revert to the mean. We'll see how it shakes out.