I spent much of the weekend catching up on things in the market. Today is my first day back at work and to be honest I am a little bewildered by all that seems to have happened while I was day.
Before getting into any of that I really should share my overriding impression of the state of the Union.
The country is in dire need of a change. Having suffered the worst Presidency in living memory (possibly ever) the country is in desperate need of strong leadership. We all know about the various problems the Americans face from the credit crisis to the housing crisis and from inflation to Iraq, but I was quite surprised at the determination of people there to move the country forward.
During the protracted Obama/Clinton Primary both candidates made a strong play as representing change. While Hilary Clinton was always going to be far too much of an establishment figure to carry this off, everything about Obama screams that this man is genuinely something different. I went away, highly suspicious of the kind of charismatic politics that Obama personifies and was even more suspect of the substance behind his message. I came home, however, with this opinion completely reversed.
– One little aside I heard while over there, was that over 50% of Obama’s campaign contributions came from individual Americans donating $200 or less. When a grass roots campaign is talked about, this will go down in history as one of the most powerful ever. –
Anyway while in America I covered about 2,000 miles across California, Oregon and Washington and spoke to a lot of people. I also saw quite a lot of CNN (although this is absolutely the last time I will ever admit that!). While I admit that any perception I might have from this trip is highly subjective and quite limited, the over-riding impression I got is that Obama is going to win by a landslide. I wouldn’t be at all surprised to see a massive turnout in November, which will give Obama the kind of mandate that America (and the World) really needs.
I don’t want to build up an unrealistically optimistic set of hopes in any politician, as Real Politik will always prevail, but I think an Obama victory is going to do short term wonders for stock markets…….
US/UK Index Prices
……. On that note, we are now at critical levels for many stocks, but more importantly the Dow, the S&P500 and the FTSE100. I will just list them now.
The Dow’s March 2003 Primary Value Zone is 11162:1178. As of writing we have just seen this market bounce off this level in intraday trading. As always I really cannot stress how important this level is. I am going long, but missed my entry point. I am going to wait for the end of today before trading and am also going to trade fairly light to start with. I am going to write more about why tomorrow, but for the time being it is still a little early in the summer for my liking and I am also worried about outlook downgrades during earnings season.
The S&P 500’s March 2003 Primary Value Zone is 1291:1297. It is now roughly 40 points below this level, which is worrying, but could in some ways be a better trading long than the Dow. Again more of this in the next few days….
The FTSE100’s March 2003 Primary Value Zone is 5324:5335. Last week it closed above this level. I am less keen about going long on the FTSE, but to be honest past experience has told me the importance of the strength of this Value Zone, so I will probably put my concerns to one side and go in light again.
Watching today’s US action I think tomorrow is going to be a good opportunity to write more about these levels, but make note of the prices, they are beauties!!!
This morning I went long Lonmin at 2901 on a March contract.
Lonmin’s May 2005 Secondary Value Zone is 2779:2791. When I bought the futures contract the daily price was at about 2830. I know I haven’t bought at an optimal level, but there are several reasons I really like the prospects of this stock.
Lonmin is primarily a Platinum miner. The price of Platinum has remained doggedly high and there was an announcement at the start of the year about a likely global shortage.
Looking at the charts Lonmin has been highly range bound in the last 12 months. It is now at the bottom of this range, in its value zone, 1 month before its next set of announcements. As timing goes this is an excellent combination.
I am looking for the daily price to top at least 3500 again, but it could go higher if earnings are strong in August. Lonmin announces on August 7th. Positive Prospects for Japan
Again this is a topic I am going to write more about in the coming weeks and is likely to become a bit of a theme of mine, but I am really encouraged by the prospects of Japan. I know I am not exactly ahead of the curve in this view and this has been at the forefront of quite a lot of commentary for a while now, but I finally came across some ideas that made perfect sense to me.
These aren’t my ideas, but are definitely worth repeating.
The first is that Japan’s banking system has been relatively unscathed in the credit crisis, thanks to their traditional management style and their unwillingness to participate in a lot of the speculative and predatory lending practices of most of their international competition.
The second argument is that inflation for Japan will be less bad (and possibly even positive) than for the rest of the World. Much of Japan’s economic torpor has been attributed to the deflationary cycle its economy found itself in. A burst of controlled inflation, could well break this pattern.
I have to go now, but will add more detail to all of the themes above in the next few weeks