Green Monday

Green Monday was a novel written by Michael Thomas and published in June 1980. I remember reading it as a young trader at the CBOE in Chicago. While I don't think it was ever a NY Times bestseller, Green Monday was still entertaining and even thought provoking. This fictional story was mostly about oil and manipulation in the financial markets. OPEC was at the height of its power at that time (1980), financial markets were reeling under the strain of sharply higher energy prices, near record interest rates, out of control inflation, and restrictive monetary policies. The global economies were mostly in recession and there was almost no light at the end of the tunnel. As I recall, Green Monday is about a few key oil sheiks conspiring to actually LOWER oil prices to ward off the potential threat of military action against the OPEC countries by western energy consuming nations. The plot thickens when these same sheiks attempt to personally profit from this action by accumulating massive amounts of U.S. equities ahead of the actual announcement that crude oil prices will be dramatically lowered. They quietly accumulate huge stock positions in almost every liquid exchange listed company and then make billions when on Green Monday the announcement of lower oil prices is made.When the actual announcement is made, energy-related share prices went down at first in the book, but then joined in a record bull run with most other companies.

While the novel Green Monday doesn't sound like much of a page-turner, I think the story line may actually be relevant to the current economic environment, where sharply lower oil prices are creating havoc (and opportunity) in the financial markets. 

Almost every headline was ugly today in the financial media. European banks are collapsing, demand for credit default swaps is soaring, gold and silver are safe havens again, the once almighty and invincible U.S. Dollar is under significant pressure in foreign exchange dealings, and global stock prices are in full retreat.

So why are buy signals suddenly being triggered by my computer trading software in major U.S. stock market averages? Maybe we shouldn't ask why! Maybe we should just BUY!!

However, if we do ask "why", then maybe the answer is that sharply lower energy prices will soon lead to a dramatic and unprecedented wealth transfer from energy producing nations to energy consuming nations. And maybe, just maybe, real economic growth and prosperity will finally be generated on a global basis!

Bottom line: I think it's time to buy U.S. stocks again! The next big swing in equity prices is probably to the upside. The end of the great correction of the last few months is probably close at hand. I even think that today's intra-day price lows could represent a tradable bottom, and they might even represent THE BOTTOM!

S&P 500 Index Weekly Chart with Computer-generated Buy & Sell Signals