Wednesday

Rally On Aussie Aussie Aussie!

6 Comments March 3, 2010 – 1:30 pm |   | Permalink |  Print This Post |

We are cheering the following to rally higher so that we can short it:

1. AUD/NZD - target 1.33 - 1.35. Appears to be in its final move up - problem is it is impossible to quantify the move. Brings back not so fond memories of us shorting (and holding on with the threat of a margin call) EUR/AUD from 1.65 to ~2.12 ! (we had like 10 positions at its peak). The EUR/AUD is currently at 1.5 ! (from memory we got out at 1.98 - we have stopped looking at it!). Even though we are bullish on commodities in the long run, we are expecting a pull back in commodity prices - and for it to stay depressed for a while to shake off the masses expecting a rally. If and when commodities pull back, the AUD should also follow suit. AUD/NZD is our way of indirectly shorting commodities. New Zealand is also rich in agriculture (it has more sheep than people the last time we were there), and has better weather. From memory Marc Faber has invested in farmland in NZ.

2.  India’s NIFTY - hit 5083 today. Our shorts at 5020 appears very silly now. It is OK, we are still bearish (relative to China) on India. We are hoping for isolated strength in India. Will update our trades on this when the time comes !

3. Copper. The higher it goes, the better. We didnt make money on our public portfolio, stopped out at entry. But we are keeping an eye on it. The problem is the contracts expire and we hate having to roll over (risk of contango, or in the case of shorting it backwardation)

4. AUD/GBP. Whilst we are very bearish on the sterling, nothing goes up (in reference to AUD) in one straight line. The Aussie Sterling has gone from 0.37 to 0.6 - thats a 60% depreciation in less than one year! Sooner rather than later it will pull back. Our targets are 0.63-0.65. Unlikely but if it doesn’t happen no big loss.

On the contrary, we are hoping for Circadian to go lower (even though we still hold all 7000 shares in it). Licking our lips for an entry sub 50. Closed at 53c today, very low volume ($7000 worth traded). Our bottom heavy approach in averaging down (deemed risky and a NO NO in the textbooks of gambling) should work fine.

OK guys, I will see you in the battlefield! It’s a zero sum game so no friendly fire please. Aim at the bad guys (you-know-who!). See you in London for a cheap holiday after ?