Tuesday, September 16, 2008

Well holy crap ...

Well guys, its been almost 2 weeks now since my last post. What a mess to come back to.

Well not much more to say, after the gap of gap openings we found a bottom in the morning hours and went for a rally. Mid day we had a perfect head and shoulder form which should have been a great entry point for anyone attempting to go short. Then we did what I would not have expected, make a new low and ending the day in 60 points down.

News Update
Well before posting todays action I wanted to reiterate where we are and maybe rant a little. Normally I only include technicals and not fundamental data but its hard to ignore at this point. Well my first rant, FNM and FRE were taken over - looking at it now what a bunch of bull crap - Paulson whose term ends this year wanted to secure his long term career and decided it was a good idea to screw over FNM shareholders and take control over a company that needed support in terms of credit but not control. And instead they decide to not give ANY support for banks trying to make right out of LEH. I know we all need to live with some victims down the road but it frustrates me when you see that a different approach could have smoothed out what we are going through.

Next on the list AIG - well, we CANNOT allow AIG to fail at least not in the state its in at this point. The exposure outside of the finance credit market is too large to let it go belly up. Here is where I expect either a sell off for specific sectors/divisions or some other mechanism to ensure liquidity.

Who is on my next on my "shit what we gonna do now" watch list? - WAMU, I dare to say that by the end of this week we will know what will happen with WAMU.

What else - can anyone say 0.5% rate cut. What really works for us at the moment is the strong dollar and the fact that inflation is not as bad as we think, since all other currencies experience the same problems - if not worse.

EDIT: Well thanks for more bad news, GS reported this morning and guess what - it was not good. One could argue this is priced into the market but it does not help when reports are worse then expected. This reiterates even more that the markets need help today.

Well, I expect a trend changer to occur today in terms of news announcement. We will continue our down run that started yesterday as more trouble is ahead of us. Get your money ready for a nice recovery once the bottom is found - a piece of advise - don't be a hero and be the first to guess the bottom today - wait for confirmation and then enter the market. From a technical side we are oversold on 60min and 15 min charts - an indicator I normally use to go long. Also VIX being above 30 is another great indicator. It is currently higher then at our July 15th low and will probably be at the peak today for the year.

Time and Price
Well slight format change. I am giving a bit more detail now on highs and lows as its easier for a trader to determine price action around those points to know where we headed throughout the day.

6th high 1236
5th high 1229
4th high 1221
3rd high 1217
2nd high 1211
1st high 1200
1292 open/close
1st low 1187
2nd low 1174-1176
3rd low 1168-1170

There is potential for more lows but lets wait and see. Wait for the bounce and make some nice money on the up run once trend is confirmed. We do not have much more room to go on the downside today and after such a move a recovery is expected.

Watch List
There are quite a few bargains out there at the momemt. WMT has been holding on very nicely to its gains, its trading on the upper end so watch for it to come down before entry - defintly something I may go long with.

Tech wise - open a position consisting of AAPL, RIMM and DELL (yes dell). All 3 of them should give you nice gains - for better protection and more downside protection I would consider MSFT and INTC, HPQ as well. Depending on your trade cost the more you can pool together the better.

Mid Term
Well, our primary bear trend is continuing, more so now then ever. I would expect a continuation of our trend into october where we should see our first 10xx on the S&P and possibly mark the lows for the year. We shall see.

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