Thursday, August 28, 2008

Gustav's Winds Cause Free Market System to Hiccup… Election Year Politicking

POTC believes today's sustained momentum is synthetic. We predicted a bullish GDP number and did say Mon-Thurs would be neutral to bullish, but the lack of volatility due to today's intervention rhetoric has us disgusted. A cheer for the free market system? Not today. The overhang with rising unemployment and the "foundational crack" at Freddie and Fannie will destabilize the equity markets sooner than most talking heads will lead you to believe. We bought S&P emini S&P puts today at 1,298, and will buy an equal number around 1,305 IF the S&P has another synthetic reflex rally tomorrow. POTC does not believe that news from the IEA should be driving financials higher. Perhaps Gustav will miss the major oil & gas properties, the SPR will not have to be tapped, and crude will climb due to geopolitical issues in Israel or Russia or Nigeria over the three day U.S. Labor Day holiday. We wish all our forward thinkers a good day.

1 comment:

Anonymous said...

Agree 100%, oil should not have been down on a Cat 3 or 4 Louisiana hurricane. A contrarian point I'd like to make is Najarian on Fast Money did mention unusual option activity in financials, esp Lehman, so maybe your "election year" positive is playing out ahead of the Republican convention?