HedgeFundLive.com — The firm did well yesterday booking approximately $68,000 bringing the month to nearly $131,000. Once again I find myself staring into a delusional market. We sold off hard in the afternoon the retraced about one third of it. Oil traded off marginal creating an overnight gap in the futures to 1318. Though I have been very bearish this last month, I am long select names and will look to take off my positions into early morning strength. I have already sold 30 S&P futures contracts. I am long in the money SPY puts as well. We have not typically seen follow through.
But we will, if not today then tomorrow. We will break 1300 during the day session and I think test as low 1290 on the S&P futures. This will be signaled by a confirmed break of the 1308 level. Nothing has improved on the geopolitical front. Our economic numbers continue to be a look back to prior Libyan and other Middle East events. The worst news overnight is that Saudi Arabia will be banning peaceful protests. Yes you read that correctly. This was my greatest fear that the contagion would reach the Saudis. It has apparently, evidenced by the proactive response of a nervous monarchy.
For a moment I will back away from pontificating on the Middle East and the markets ability to ignore the severe impact it could have on our economy. I will focus on inflation and the fact that QE2 is coming to an end. Do I need to recap how many of the pundit referred to thief rally of the last 3 months as the QE rally?
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