Thursday

TheInflationist Weekend Summary: 100709

Post a Comment July 9, 2009 – 2:31 am |   | Permalink |  Print This Post |

We will be travelling this weekend so will post our weekend summary in advance. There was no weekend summary last week because no trades were taken for the previous week.

Our portfolio now is worth $94228, up 135% since inception (6.5 months). Cash in bank is down to $56000 ($57229 last weekend summary) after our purchase of 5000 shares of Cooper Energy, and after taking profits in day trading on the Dow and Dax. Markets continue falling as Dow made a new low. S&P500 support at 875 was broken intraday but closed above it. This is classic manipulation in our view - take out the stop losses at key support (or resistance), followed by an intraday reversal closing above that level. Hence the fall from 875 to 870 (intraday low) was swift. We prefer not to participate in this expected head and shoulder fall. Our short exposure is maintained via NIFTY, which is at key support at 4050. Our portfolio is relatively light on short NIFTY (only $5/point unhedged short, the other is played with a long Hang Seng hedge). We have closed half our shorts in NIFTY in our personal portfolio yesterday at 4060. For the purpose of our public portfolio, we will leave it open with a target of 3800.

The precipitous fall in the S&P yesterday to 870 followed by an impressive reversal may indicate a short term bottom. We do not see markets turning until late next week - we will pencil in Friday 17th July as the trough of this decline. We will close a few unhedged short Dax and our Dax/FTSE plays closer to that date. Our portfolio is due for some pruning. We intend to double up our Natural Gas exposure when NYMEX Gas price hits sub $3.00. We have been looking for listed gas producers which have taken a big hit for exposure but have found none which is trading close to cash and debt free. Most gas producers have valued their reserves and projected revenue based on a Natural Gas price of $5.60 mBTU. Based on yesterday’s gas price of $3.35, that is at a 40% discount to their long term (”conservative”) projections. Our only concern is the level of interest in Natural Gas - we much prefer the crowd bailing out on gas. It may take some time to turn around, but we are happy to sit on this and let it simmer.

Gold and Silver have taken a big hit in the last few weeks. We are more cautious on gold and silver again because every investor and his dog are bullish on them. No doubt it will eventually head up, but we are looking for a better entry.

Crude Oil is down to $60-61 - we look to take a long position sub $50. The Crude Gas ratio is still around 18. Those who are game may short crude and long gas.

We will be putting Jakarta on our watchlist as President Yudyohono won 61% of votes in yesterdays elections. Analysts are expecting markets to rally on the news. Let’s hope for a >10% NIFTY-style rally so that we can short it !

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www.theinflationist.com