The markets certainly have been interesting recently. I am enjoying the volatility and hope it continues for a while longer. I would like to see the markets correct further, especially because I have some shorts that are working nicely. Obviously, I would like to see the shorts fall even further and then repurchase them. And I have cash sitting on the sidelines that I want to invest in more oil stocks. I am hoping that oil stocks continue to correct. With oil demand increasing and oil companies having difficulty increasing their production, I remain bullish on longer term oil fundamentals. So from my vantage point, a further correction would be a good thing.
Bill Fleckenstein of FleckensteinCapital.com (subscription website) gave a particularly eloquent analysis on his website yesterday. One of the obvious items he pointed out was that the days of the LBO put are likely over. Thus, some of the companies that have been struggling but have had their stocks buoyed up by the purported LBO put might now face reality.
Another site I recommend reading is Adam Warner's Daily Options Report. As the market volatility increases, the derivative markets become even more interesting. In his usual style, Adam provides excellent and insightful commentary on what is happening in the derivatives world as well as how to use derivatives to your best advantage. I consider his blog essential reading, regardless of actual market conditions.
I am not sure what to expect in today's markets. In some respects, I do not think today matters a great deal. If markets go up, pundits will claim that the buy-on-the-dip
crowd is following their usual practice. If they go down, just more anxiety. I am more curious about what happens on next Monday and Tuesday, after all everyone soaks on the new information over the weekend. And do we find some hedge funds or other major institutions in dire straits?
As I write this article, I note that the markets have just opened. Although I have more red than green on my screen, the broader S&P 500 is nearly at flat. Should be an interesting day, though I am not sure it matters a great deal.
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