Indeed Shakespeare wrote: "A rose by any other name would smell as sweet." Well on Sunday we had a sweet victory on the announcement that Osama Bin Laden was killed in a raid executed by the Navy Seals. Upon the news the futures market went ballistic and I saw as high as +120 on the YM.
Prior to that news, silver futures plummeted 13% as CME boosted required margin. Gold followed suit but only slightly and the dollar strengthened as the oil dropped. All these were big news before the Osama Bin Laden's death announcement but it became exciting when silver dropped with barely a trace.
But we all know that Osama's death has nothing to do with reality in the world markets, so then we must ask ourselves what caused the earth to move? Sell in May; or perhaps something totally different?
Euphoria is a simple diversion from reality. The feeling is good and people wish to get lost in it because the alternative is not very palatable, what ever it may be. The reality that we are ever growing our debt, that we have increasing daily living expenses at the grocer and the pump, or that our dollars will not last as long as we have planned and even the thought that we are not able to enjoy the fruits of our labor as much because we cannot afford it, sends many of us to seek other ways to feel that all is not lost. So if we find solution and hope in the equities, commodities,and currency markets then that is where we'll go. Many who cannot see any way of increasing their worth via savings and have not much hope in real estate, are now flocking into the markets. All that cash that was for long talked about is now entering a market that is already frothing from over a two year rise... or shall we say high rise. The more wishing to occupy it, the more they will pay for the privileged of doing business.
It is the common sense of free markets: supply and demand. It would have its own checks and balances if it were not manipulated. But what if the supply in the "supply/demand" markets has been set askew and what if the demand is forced and unreal? What if like with Bin Laden we do not take this "threat" seriously either.
Drastic or otherwise, there will be a turning point perhaps most won't foresee. Much like the airplanes into the World Trade Center.
At first, we stared incredulous. Then we denied it could happen on purpose, then we cheered on the rescuers to save those who were trapped but in the end, no one foresaw the collapse and utter total destruction of such terrific monuments of man's achievement.
Will there be such a parallel in the markets? I hope not. I hope we all get out of this burning tower before we get ruined. But we can only do so with a dose of reality and not while we are in a euphoric state. We can only survive if we quit dreaming that the more debt we accumulate the easier the drop will be. If we don't, then we'll have to look and ask ourselves, who will be the firemen sent in for the rescue, how many will be sacrificed and what will the name be of the one we'll blame for it all?
Happy Trading, Living and Dancing
The Daily Pick - AGQ
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