PANIC FROM LONDON

PANIC

The second quarter reporting season started with a blast in London, and market is going to over-react. It appears that crude is under pressure, which is somewhat counter-intuitive. Usually, crude price tends to move upward in the event of political instability (along with gold). On the other hand, it does make some sense because (1) demand for fuel could fall due to security concerns; and (2) investors’ first instinct will be protecting any gains, which have only come from energy sector.

Therefore, I would like to sell some energy stocks (PZK comes into mind) at the opening and cover it when selling becomes intensified. I may also raise some cash from my large financial holdings. On the other side of the equation, I would look for tech names to nibble, particularly small names which will undoubtedly suffer the most from this panic selling.

This is rather amazing. There are so many contrarians out there that the consensus this morning probably is buying at panic, instead of selling. So a real contrarian would have to sell in order to against consensus. Moreover, market did not panic sufficiently to present buying opportunities. It was essentially a wash! Resilient.