The G Manifesto

Separate Yourself from the Herd

Weekly Commentary
For August 17th– August 21st 2009
By: Matthew Bradbard

Click Here for Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression

Why is it dangerous when most of the marketplace is leaning one way? Well, because most people lose money when they invest, so if you do what most do you will arrive at the same outcome. When the majority thinks the stock market is moving into a new bull market it is probably time for a correction, when most believe the US dollar is doomed it will presumably see higher ground, when the general market sentiment is that fed funds will be near zero indefinitely then we may actually see rates move higher sooner rather than later. The point being is when too many people lean in one direction it is generally a bad outcome. Think of yachtsman all running towards one side of a boat…you get the idea.

To find out exactly how we are positioning our clients in commodity futures and options, Contact us today at 1-888-920-9997.

Financials
Stocks: Both the S&P and the Dow closed almost at the exact price where the week started, talk about a market that may be running on fumes. Sellers continue to emerge around 1010 to 1015 in the S&P and we will be sellers at those levels with them on behalf of clients. Continue to accumulate puts and hold for a break to 960 is how we see it. 958 serves as the 38.3% Fibonacci retracement, the 50 day moving average comes in at 940 in September. The Dow should find resistance at 9425 and support at 9175 and then 8975. In the words of Warren Buffet we suggest booking profits as “you never go broke by taking a profit.” It may actually help you sleep better as well with less stock market exposure.

Click Here for Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression

Bonds: The Fed concluded its 2 day meeting and kept rates unchanged at .125%, as expected. Their latest information “suggests that economic activity is leveling out.” They also confirmed that they are in the process of purchasing $300 billion of Treasury securities and expect to be done by October. September 30-yr bonds traded higher by 3’19 points last week closing back over the 40 day moving average. This level at 117’20 should now act as support. Resistance comes in at 119’16 followed by 120’10. September 10-yr notes were also higher last week, gaining 2’11.5 points. Support comes in at the 40 day moving average as well at 116’18 with resistance at 118’00 followed by 118’20. After last week’s gains in the Euro-dollar look to buy more puts this week. This will be a reoccurring theme as we will continue to advise selling rallies for the next several quarters. Our favored play is at the money or just out of the money puts in June and September 10’.

Click Here for Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression

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Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results. There are no guarantees of market outcome stated, everything stated above are our opinions.