Monday, June 23, 2008

Monday Intraday Update

The markets are mixed, with oil and solar up, while financials are sold off. The "pain" trade of long oil and short financials is still working, and we don't see any reason why that should change. Until we get a break down in oil, below $130/barrel, the "pain" trade will continue to work until we see "demand destruction".
Do you believe demand destruction is ahead? The consequences of traveling less by car and plane would result in people using the internet a lot more, yes? Why should Sally drive a 60 mile round trip to the mall outside of Chicago or LA, when she can use her PC to buy and receive delivery of just about anything, all without wasting a single gallon of $4.00+ gas? Please consider buying Google (GOOG) when the Nasdaq closes that 2,300 gap.

The FOMC will issue their policy statement and smattering of psychology at 2:15pm ET this Wednesday. Our readers should position themselves more for July 16th, as the details of the Fed meeting/minutes are released. POTC feels they will be more hawkish than the more neutral spin offered this coming Wednesday: interest rates are heading up, and the stock market will not rally until oil breaks $130/barrel. Lastly, remember this is an election year and the economy is very sensitive with high food and energy, so the FOMC's statement could be more political on Wednesday and then reveal greater truths on July 16th at 2:00pm ET.

We remain bearish. Please follow the 11 Commandments and 7 Pillars, the Psychology of the Call team wishes all our new and return readers a good Monday.


Anonymous said...

I like your thinking. Google is a great company no matter where oil goes!

Anonymous said...

Do you mind explaining the Nasdaq 2,300 gap you keep talking about? I keep seeing it come up but am not exactly sure I am on the same page as you all. Thanks

Anonymous said...

Please look at the "gap" just days after April 11th:

When a stock or an index gaps up (opens much higher than the prior close), it's not at all uncommon for the gap to 'fill' or 'close', meaning that the stock or index will return to the level prior to the gap. The same is true for the opposite action (a gap down). Hope that clarifies it.