The Day of the Paradox

 | Aug 10, 2012 | 2:05 PM EDT
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Some days are totally nuts. This is one of them. We've got people chasing China stimulus, buying stocks like Freeport (FCX) and Vale (VALE). But we have people saying that China's so weak and the euro's weakening that they are buying Clorox (CLX), General Mills (GIS) and Kimberly-Clarke (KMB).

Suez Max daily oil tanker rates are the lowest I have ever seen them, $6,000 to $1,000. Everyone loses at those prices. But lumber is up the limit.

Natural gas is being crushed again, but it had just broken out to a new high.

All of those paradoxes are insane. Someone's going to be really wrong come Monday.

But amazingly, these alternate bets keep the averages from collapsing as nobody wants to be short anything. Think about it, the iPath DJ-UBS Copper TR Sub Index ETN (JJC) is signaling you have to short Freeport. Do you want to short that coiled spring? Oil can't rally, but if China cuts rates you want to be long all the oil and oil stocks in the world.

We are literally making bets against the spot markets all over the place -- except those who are being defensive and buying the consumer packaged goods stocks -- betting that the economy's taken another turn for the worse.

I am more inclined to go cyclical. The defensives seem to have stalled out. The numbers look cut enough to allow for some upside on any news. Europe's on vacation, so it seems a bit status quo. But the worse news out of China, the better.

Another way to look at it: we should be down huge. We aren't. The buyers are relentless,.the sellers sporadic. All in all, a positive down day.

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