Hi all,
I used to post under forward curve (and previously contango, which is a shape of a forward curve) but thought I would start the year with this name. I've traded most physical commodities for banks and trading companies in London but now I run Thebe Ventures and am trying to create jobs here in SA. So if anyone has any great business ideas that need backing then get in touch.
Anyway, back to topic. From time to time I'll try and post some thoughts on the markets and give some insight into commodities etc. Right now it looks like equities are getting ready to break out to the upside (see Dow daily chart below). This should get everyone yakking on about how bullish the year is going to be and that maybe QE will extend forever. At least in Europe we know they have to do QE unless the Germans are somehow able to block it.
But, I'm sure that the Fed will end QE mid year and the Dollar will then weaken, yes weaken. Right now FX traders are "buying the rumour" that QE will end and interest rates will rise (meaning they are buying and strengthening the USD i.e. markets are always forward looking). When QE actually does end then traders will "sell the fact" and the Dollar will weaken and thus commodities will rise and equities will fall.
For now however, expect equities to have a nice little run and commodity prices to remain subdued. Although I do expect crude oil to return to a marginal production cost of around US$60 to US$70 quite quickly, possibly by end Jan / mid Feb.
Enjoy and good luck. And remember that the bull walks up the stairs whilst the bear jumps out the window. Study Pythagorus, Gann and the Masonic liberal arts for more insights. So being long around 90% is probably the right position, just try to avoid being "caught and short" for that crucial 10%.
P.S. Thanks to Patrick for creating this space and running the competition. Great work sir.
