Over Trading

July and August are typically the most challenging months of the year to "make money".

The hardest part of money management is deciding what is the psychology factor (bearish or bullish), the technical factor (what are the trend lines), the fundamental factor (cheap or expensive), the idiot factor (what are hedge funds doing or not doing), the trading factor (what are the short term traders doing) and finally the seasonal aspects to all the above.

The Olympics in August will combine for a very low volume maybe high volatility environment, in a seasonally dangerous time to be "calling" the market. Yet far too many traders will be attempting to do so......buyer and seller beware!

Nothing yet has changed for financials. The current short term debt continues to be rolled into yet more debt (problematic when longer term interest rates move higher). Derivatives continue to lose yet more money as each financial institution marks down more market to market losses. The Fed window will stay open now through 2009. And real interest rates remain negative......i.e. they should be much higher.

Taxes will go higher in 2009. Government spending will be much lower in 2009 (to help offset out of control deficits). Corporate profit margins have peaked (with higher all around costs). And the cost of money will go a lot higher in 2009. Like home mortgages. Housing however is more than half way through its correction...with "sales" well below replacement value.

Most importantly (and completely missed by everyone), depletion of the world's most important oil reserves are rising much faster than perceived demand destruction for oil. Mexico accounts for 13% of oil imports to the USA and Venezuela also 13%...these are the closest suppliers outside Canada....which is 25%.

So- Financials are OVER VALUED AND TRADED. Energy Under valued and misunderstood......and NEVER more important. Coal and Natural gas is our only focus right now.

China after the Olympics will turn back on every plant currently shut down for air quality issues and go flat out again starting in September.

Don't get caught up in the current volatility and trying to call bottoms or tops in anything.....trends remain lower....as the unwinding continues maybe for years....

Barkly seen here watched everything very closely.