Play the Limbo
Research for Online Investors

by John Dalt

03/02/09 

To write about the market today requires bravery. No predictions today. Who knows? Ok, I will call for a bounce tomorrow. Call it a ‘dead cat’ if you like, this market is so oversold that one has to wonder if we are about to run out of sellers. 

If you bought anything today, you are down now.  My computer alerts were going off so fast it sounded like the soundtrack from “Close Encounters of the Third Kind”. 

There were many 52-week lows made today. How many days are stocks, gold, silver, oil, gas and interest rates down at once? There were a couple of occasions today when the market tried to rally, but failed. There is a short squeeze approaching that will be truly amazing to watch. I get the impression that the short sellers are driving the market down, a repeat of the action on investment banks last year. When a reversal takes place, they will get scared and try to cover, it will look like somebody cried fire and the bodies will pile up in the only exit. I am not short anything right now, and while I am down on every position, this too shall pass. The short sellers are running to a momentum play that will burn them as surely as it burned the buyers of crude oil last June thinking ‘it is different this time’. Greed is a terrible thing to watch, but fun. 

I could not understand the oil market last week.  It went nuts on a less than expected build in inventory.  Storage is full; I do not know how you build much more inventory.  I recognize that the price can move quickly if a fear of higher prices invades the thinking of the market.  This could happen quickly because the refiners could feel pressure to bring on stocks to capitalize on the lower price.  They have storage available and could quickly create buying pressure.  Gasoline usage is up; the U.S. consumer is reverting to his old ways.  The charts below show the inventory and days’ supply are still at high levels. 

If you want to hear Jim Roger’s opinion of Tim Geithner watch him on YouTube here.  This is hilarious, unless you live in the U.S. and pay taxes.

I have had a couple of conversations with George Kengott at First National Gold Bullion.  If you are looking for precious metals check out their web site here.  There is a link on our home page in the bottom left corner for you future reference.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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