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My Gut Feeling for Today October 1, 2013

Well I woke up today as the garbage was being collected to learn that the world did not stop revolving on its axis because of a government shutdown in Washington. Index futures were rising and gold futures were getting drubbed. All was well in the world. The normal world, that is to say; the world outside of The Beltway (that is Interstate 495).

So as I mentioned on Bloomberg Radio with Pimm Fox yesterday, maybe Americans don’t want to hear about bailing out Wall Street anymore because all we seem to do is bail out Washington. This time around, Washington did not bail itself out. Here is a podcast of my full interview (it starts around the 16:30 on the podcast) and the entire show.

I decided to put some money to work ahead of the quarter and debt resolution. I posted a series of ideas on Scutify.com yesterday and took my own advice by stating a position in Chicago Bridge & Iron (CBI). I have a 2014 year end price target of $85 for the company’s stock.

I mentioned Gold before. It was off over $30 in the pre-market. I am on record and continue to believe that it will trade down toward $1,000. I remain short through the leveraged ETF, ProShares Ultra Gold (GLL).

Yesterday we had a mini-panic at the open which was quickly faded. I attribute the early selling to hedge funds hedging and individuals taking their trading queues from the news media who battered them over the head over the weekend on the great shutdown.  However, there was relative strength and even a brief parry into the green for the S&P Smallcap 600 (SML) and S&P Midcap 400 (MID) indexes. This indicated that the risk-on money is poised to invest.

As for today, the sun shall shine on the market as investors realize that a government shutdown is not a bull market killer. I expect, at the very least, a mirror image of yesterday’s losses with some added upside from beginning of month cash inflows to mutual funds and pension plans. Those risk-on indexes – S&P Smallcap 600. S&P Midcap 400 and Russell 2000 (RUT) should all outperform today.

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long CBI, GLL, MDY, IWM— although positions can change at any time.

                                                                                        

Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. You can subscribe at www.restaurantstox.com 

 

Interact all day with Scott all day with your Platinum subscription to Wall Street All-Stars.

 

You can email Scott at scottallstars@gmail.com

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