Our Trades are Lined Up Like Ducks in a Shooting Gallery – Wall Street Underground

By Nick Guarino | April 10, 2010

I am 100% satisfied with our trade recos. Our specific market, carefully chosen ETFs let us hold our positions, at no extra cost, till the markets go our way. We are averaging in very well.

I’m also 100% satisfied with the markets we are trading. We are perfectly positioned, in my opinion, to potentially make a killing in each one — if it turns out we have guessed right once again.

One thing did surprise me a little. From the start of these trades, I have given all of you detailed explanations of what we faced. Of what to expect.

I told you we were going to layer in, that it would take time. I told you endless times this is speculating. Never trade with money you can’t afford to lose.

So I was a little surprised to hear the cries of pain from some subscribers. Both at how much the markets have rallied against us, and the time the trades have taken. It’s critical at times like these to keep your perspective.

Folks, you have lived through the biggest bubble in history. The biggest stock market rally-back now up over 70%. You’ve lived through the biggest b.s. spin job ever contrived. Rat-shit Nazi spin doctors like Goebbels would be proud of the propaganda campaign that has taken in the masses.

From the first, I told you the Dow could go over 11,000. I told you $1200 gold was well within my expectations. So were $100 oil, and a 4% yield on the 10-year bond. If you followed my recommendations you are perfectly positioned to take advantage of these events.

Plus we are getting two damn nice bonuses. The PIGIES are wiping out in Europe. (Portugal, Ireland, Greece, Italy, England and Spain.) And China’s liquidity bubble is bursting again. This gives us several more trades that could do extremely well.

I believe our patience is about to be rewarded. The liquidity given to Goldman Sachs, AIG, GMAC, GE, Citi, BA, and Wells Fargo (to name a few) has dried up. They are close to blowing their wads. And that means it’s my belief another round of bubbles will burst soon. These act of desperate bubble rallies are the only thing that has kept them afloat.

To show you how dirty it’s been: till now major U.S. banks and financial institutions could borrow money from the Fed at 0.25%… and then loan it back to government at 2.25%.

They were making an incredible profit of two percentage points (200 basis points). For doing nothing. That is free money.

But they didn’t bank those profits. They didn’t use them to remove the bad derivatives debts from their balance sheets. Even though they said they would do that.

They took that money and went right back into the derivatives casino. As I told you, they doubled down. These “new” toxic derivatives are biting them in the butt. Same in Europe and China.

The world’s major governments got involved in a mindless, bubble- blowing stimulus campaign. That is why oil — after soaring to $150 a barrel and then wiping out to $40 — is back where we got our last layer of positions. In the mid-$80s.

Every day, I hope they get $95 to $100 oil. We could add another layer of positions. That could make our potential profits even greater, when the market crashes as I expect.

The gold rally has been disappointing. I hoped we could get higher positions on the latest breakout. But the market seems to have stalled. Still, a drop from here to around $250 an ounce (where I believe gold is heading) could make us an incredibly nice chunk of change.

Long bonds have done well. Interest rates got within a smidgeon of 4% on the ten year. Our zero-coupons and long bond ETF’s are close to another average point. I will let you know if we reach it.

As a man who has spent a lifetime profiting from the destruction of bubbles, I can tell you I’ve never been more satisfied with a group of trades. Each one is within the range we expected. Each one looks to me like it’s about to go our way. But as you well know, I could be wrong. That is why you place your bet, spin the wheel, and hope lady luck is with us.

For those of you who are antsy…who want more action…who would like the markets to roll over tomorrow…all I can do is remind you: that is just not how trading works.

I wish it were different. But it’s not. Reality is, bubbles grow bigger and bigger. They burst when they have suckered in the maximum amount of available money. That process can be a royal pain in the ass, as you wait them out.

I think we are very close to that point now. Let me get specific. I believe the Dow is a few hundred points from its top. Oil within 25 bucks. Gold within 200 bucks. And long-term interest rates within one percentage point of their top.

I believe we will see the biggest plunge in these markets EVER, when the fat lady finally sings. I could be wrong!


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