The Wobble

Sept. 19 2008 Hans Lysglimt

There is so much fun to write about we don’t know where to start today.
Lets begin with the coordinated efforts by the central banks. Let the tax payers pay.
We expected something unexpected, and this is what we got. There will be more surprise efforts as this crisis deepens. We should make a list of the kind of things they might do. That is what makes playing this market so hard, you never know what they will come up with next.
So we are happy we sold and recommended you to sell some of your put options in the free fall on Monday. Even though it fell further on Tuesday. You have to continuously evaluate the odds.
Our put options are now mainly January 2010 and we feel confident that trouble will escalate before then.

Because this is a true turn of the tide. The graphs have peaked, the trend is now downwards. This is a reversal of the boom. This is not just a small little recession, this is the real deal. A major long recession or maybe even a depression.

So things will fall more, much more.

The boom initiated by the coordinated central banks efforts is almost amusing. Markets fall 5-9 percent in a day and then reverses up 5-9 percent in a day by a government fix. As if the central banks could really fix anything. They have created way way way to much money, and they have come to the end of the road. And then they try to fix it by creating even more money, the only trick they know.
This rally here will be very short lived. It is a pathetic suckers rally. If it lasts for a few days up to heights it might be time to take new short positions, short term ones.

The dollar has rallied tremendously. This is due to repatriation of USD from foreign markets. So the fall in China and Russia and the rise of the dollar is related. US investors sell in China and buy dollars to buy US treasuries. Treasuries rise and yields fall.
The dollar will eventually fall good and hard. Very hard. It might be possible to catch this, we are monitoring the situation.

Then there is gold. Gold has risen from USD 751 to 882 and then it peaked at 906 this week. A crazy ride. We made a video on YouTube yesterday when gold was at 882 and warned investors about jumping on to this bandwagon. It would not last we said, we recommend watching that video. Gold kept rising up to 920, but has now fallen back to 842. It will fall further. The spectacular 125+ dollar rise was purely panic driven.

Gold is a commodity and it will fall as everyone is scrambling for cash. Silver even more so.

Stay in cash. Await really really good buying opportunities before buying anything.
There will be true bargains, thus do not buy anything but a true bargain where you are confident you are doing a great deal. Not a good deal, a great deal.

We are down in sunny Gran Canaria for the week. We will make some videos.
We have requested and gotten good feedback on what we should cover.

Gran Canaria, Spain. Sept 19. 2008 Hans Lysglimt

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