Hello 2012

It looks like the markets are going to have a nice start to 2012.  Oil, gold and silver are all up on what I assume is the news out of Iran. 

As expected yesterday, when the US went out full bore with a Japan-lite approach of McCollum-like strategy of leaving Iran no option but to keep escalating until finally the US has enough public support grounds for a response, in under 24 hours Iran has launched a second missile, this time not a medium-range SAM to a long-range shore-to-sea missile. Needless to say, the US 5th Navy is watching these quite welcome developments with great interest. From Reuters: "Iran said on Monday it had successfully test fired a long-range missile during its naval exercise in the Gulf, flexing its military muscle to show it could hit Israel and U.S. bases in the region if attacked. The announcement came amid rising tension over Iran's disputed nuclear programme which Western powers believe is working on developing atomic bombs. Tehran denies the accusation and last week said it would stop the flow of oil through the Strait of Hormuz if the West carried out threats to impose sanctions on its oil exports." At this point it is glaringly obvious to all but the most confused that the US is consistently pushing Iran to escalate further and further, until such time as the US ships stationed in Bahrain say enough and decide it is time to sink some boats.

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Saut thinks that this rally is close to being over.  He is still bullish for 2012 however.

Since the day after Thanksgiving I have stuck with the strategy that the Santa Claus rally had begun. On November 25th the SPX was changing hands around 1158. We are now 100 points higher. Consequently, I would not chase the dragon right here since I anticipate that an upside blow off is due. 

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Our technical analyst came out with his usual list of trading insights for the new year.

I hope you enjoy reading my “Trading Insights for 2012” as much as I did compiling them.
 Technical analysis is a windsock, not a crystal ball. It is a skill that improves with experience and study. Always be a student,
there is always someone smarter than you!
 “Thou Shall Not Trade Against the Trend.”
 Let volatility work in your favor, not against you.
 Watch what our “Politicos” do, not say.
 Similar to the Tampa Bay Buccaneers in 2011 (four wins and 11 losses as of this writing, versus 10 wins and six losses in 2010),
markets tend to regress to the mean over time.
 Emotions can be the enemy of the trader and investor, as fear and greed play an important part of one’s decision making
process.
 Portfolios heavy with underperforming stocks rarely outperform the stock market!
 Even the best looking chart can fall apart for no apparent reason. Thus, never fall in love with a position but instead remain
vigilant in managing risk and expectations. Use volume as a confirming guidepost.
 When trading, if a stock doesn’t perform as expected within a short time period, either close it out or tighten your stop-loss
point.
 As long as a stock is acting right and the market is “in-gear,” don’t be in a hurry to take a profit on the whole positions, scale out
instead.
 Never let a profitable trade turn into a loss and never let an initial trading position turn into a long-term one because it is at a
loss.
 It’s not the ones that you sell that go higher that matters, it’s the ones you don’t sell which go lower, that do.
 Don’t think you can consistently buy at the bottom nor sell at the top. This can rarely be consistently done.
 Don’t buy a stock simply because it has had a big decline from its high and is now a “better value;” wait for the market to
recognize “value” first.
 Don’t average trading losses, meaning don’t put “good money” after “bad.”
 Your odds of success improve when you buy stocks when the technical pattern confirms the fundamental opinion.
 There are periods where traders, due to either economic or emotional reasons, don’t need to trade. When the market is acting
poorly, don’t press trades on the long side.
 We can't control the stock market. The very best we can do is to try to understand what the stock market is trying to tell us.
 Understanding mass psychology is just as important as understanding fundamentals and economics.
 When trading, remain objective. Don’t have a preconceived idea or prejudice. Said another way, “the great names in our
business … the Paul Tudor Joneses; the Stevie Cohens; the Andy Halls; the George Soros’…all have this same trait: the ability to
shift on a dime when the shifting time comes.”
 When trading, if a stock doesn’t perform as expected within a short time period, either close it out or tighten your stop-loss
point.
 Any dead fish can go with the flow. Yet it takes a strong fish to swim against the flow. In other words, what seems “hard” at the
time is usually, over time, right.
 Earnings estimates often follow stock prices.

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Here is an interesting stat from Stansberry Research.

At least 17 states predict budget gaps for 2012 (which will be made up through higher taxes and further spending cuts and layoffs)… State tax collection remains $21 billion below 2008 levels. The combined budget gaps are estimated to be $40 billion for the year.

And to end on an absurd note, only 29 states are spending less from their general funds than they were before the crisis. We'll see how this is reflected in municipal bonds this year…

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Here is another wonderful example of stupid laws being carried out by stupid people.  Welcome to New York!

Marine Faces 15 Years in Prison for Unknowingly Violating Gun Law


Ryan Jerome was enjoying his first trip to New York City on business when the former Marine Corps gunner walked up to a security officer at the Empire State Building and asked where he should check his gun.
That was when Jerome’s nightmare began. The security officer called police and Jerome spent the next two days in jail.
The 28-year-old with no criminal history now faces a mandatory minimum sentence of three and a half years in prison. If convicted, his sentence could be as high as fifteen years.
Jerome has a valid concealed carry permit in Indiana and visited New York believing that it was legal to bring his firearm. He was traveling with $15,000 worth of jewelry that he planned to sell.
The online gun-law information Jerome read was inaccurate, however, and his late September arrest initiated what may become a protracted criminal saga. He hasn’t yet been indicted by a grand jury, but there may be little legal wiggle-room if he is.
“If he does get indicted, and they want to give him something less, then the legal minimum would be two years,” noted Mark Bederow, Jerome’s attorney. “They couldn’t even offer less if they wanted to.” 
Jerome isn’t the first out-of-state visitor to volunteer that they had a gun, only to be put through the wringer. In December, Tennessee nurse Meredith Graves noticed a “no guns” sign at the World Trade Center site and asked where she could leave her weapon, only to face similar charges.