Unfrigginbelievable!

So NOW the bloody fundamentals come into play and the US drops like a friggin rock...?! I'm rapidly losing my sense of humour here...

I haven't quite been stopped out of my Sasol long position but certainly not enjoying the lack of trend in the market at the moment... Maybe that's a problem I need to look at more closely... Volatility is screwing up positions but the underlying question should be: WHAT THE $@CK IS THE TREND?!

Basically the US dropped when they realised they didn't feel all that confident that the bank bailout plan was going to be able to stave off problems in the US banking market. This set panic across global markets initially as all the tentative confidence in the markets evaporated.

SA markets have a bit of a "shock-absorber" as the Rand weakened a bit and after the initial Blitzkrieg on our markets. Stocks seemed to have bounced off their low now that Europe is in our markets.

A bit of a dog show on the markets at the moment as we try and shrug off what has happened in the US...

But anyway I digress.

My thoughts this morning turned to pair trading i.e. taking long and short positions simultaneously as a way of dealing with the intra-day / intra-week volatility we're experiencing at the moment. It is not a strategy I've previously employed but I guess it holds some appeal for me with such big movements.

My initial thoughts were to look at Long Sasol / Short All Share or Long All Share / Short SAP for example. Bounced it off the guys on the Page 88 forum and apparently clients at Cortex have had some success with the Platinum counters in recent months - Long AMS / Short IMP.

Other recommendations were:
(MTN / Telkom)
(Anglo American / Billiton)
(Gold Fields / Harmony)

I guess the trick would be to find weightings for these positions and taken an active role managing them... Obviously there is also a higher level of investment required for these kind of transactions.

And THAT my friends will be my Plan Of Action for the next few days...

Gold shares fly

I'm sorry but somebody has to explain these markets to me and why a two-day record breaking rally on the Dow is all that exciting??

Locally SA markets took off like a bat outta hell with the Gold index adding some 17%.

The gold price rallied nicely on Friday and added a few more dollars today.

On the SA market the unhedged producers such as Harmony Gold (22%) and Gold Fields (21%) had a very pleasant day. The Newgold ETF also made some nice gains but nowhere near as spectacular....

In the bigger picture, the gold index isn't a particular heavyweight (but we did touch on it in a recent post), but I think South Africans just have this affinity with Gold...

But scrape beneath the surface and the safe haven metal is the one flying and getting everyone all worked up in the last 72 hours. The reality is that the market is on the move because the US government has agreed to bail out another financial services firm....

These are the headlines on Bloomberg to prove my point:

- Citigroup Gets $306 Billion Shield From Losses, Capital After Stock Dive
- Home Resales in U.S. Fall as Foreclosures Push Prices Down Most on Record
- BlackRock Fires Four Managers, Six Analysts in First Cuts in Its History
- Fed Must Speed Aid to Auto Credit Units, Schumer Says
- AIG Auto Unit to Drop Damaged Brand to Help Sale
- New York May Lose 225,000 Jobs, Comptroller Says
- Obama Vows Bold Moves to Avoid Millions of Lost Jobs

And this is grounds for a rebound??

Two solid days of gains is pretty hard to disagree with but I still maintain that you're buying into a sucker rally in the short term.....

With the day belonging to Harmony, I thought it only appropriate to post a picture of their Doornkop operations to brighten the blog up a bit....

Rand to be hit?

Does anyone else get the schnarkies that the Rand is about to take an almighty klap??

I've been watching the action in the US and locally and suddenly in the last few minutes Gold has rocketed some 50 odd dollars and the gold shares are on a mission.

Harmony, Gold Fields and AngloGold Ashanti are up in excess of 10% and gold doesn't look like its planning to stop.

In between this the Rand has slipped to R8.22 to the US dollar...

This is great for my Impala shares and for my dollar earnings but will play absolute havoc with the local South African economy (Inflation and debt issues will continue to rise).

I just get the horrible feeling we're about to see a huge selloff of emerging market currencies as people pull their money back into their home balance sheets.

I think I will just keep patting my IMP on the head for the moment... Time for these things to fly....