That said, I was buying short exposure off the surprise cuts in August and it cost me for about 8 weeks... until the market came to face reality.
Now what? 8 weeks of no stimulus... and calls for more cuts within a few weeks. The market got everything it asked for (and more) - now what?
So another prediction came true, this one from last fall - Fed funds rate at 3% by spring 2008. Back than that was an outlier prediction. Now, it appears "slow to the game" but I did not expect 125 bps in 8 days. So about 3 meetings got squeezed into 8 days.
Now it looks like we go to replay of 2001 and head to 2-2.5% in the coming quarters.
S&P500 is now at 1375. Lots of resistance overhead. 1380, 1400, 1420
I'll expect a sell off to start from one of those levels after euphoria leaves the market....
I've added incrementally to a few of the Ultrashorts. And will layer in if we breach the 3 levels mentioned above.
Gold jumping
Inflation is going to be a beast... even more than it already was. In about 18 months I can see a massive uptick in rates to try to tame inflation. And people blaming Ben for causing inflation, and "bowing" to the markets. The same commentators who today will be cheering. Guy can't win.
But for now... "they" rejoice. Since all that matters is today. Main Street will suffer in the long run. NYC wins again. At least for a few hours/days/weeks whatever. Until reality returns. Cramer is screaming Alleluliah. So at least he is happy. All his buddies in Manhattan can enjoy they have manipulated Ben into a twisted mess.
3 comments:
I couldn't agree more with your analysis. When the emergency cut first happened I also wondered, if things are so bad that we need this cut, then why are people jumping into the market?
Perhaps the gov. looks to ignore inflation to avoid increasing the various payouts that are attached to it like SocSec COLA, TIPS, etc...
Mark
What would you do when Mos hit 83-84? Buy more or sell ? That FWLT sure look like a bear flag? same thing with MDR. Even all the coal stock aci, BTU, mee look like they set up for the inverse H&S. But will they break up or down after that? I wonder is it better to play the wash out stock? less pain.
Michael, my thoughts are the govt is broke so they cannot pay true COLA adjustments. I really feel for these poor people living on Social Security and getting these ridiculous 2% COLA; they are falling behind by major leaps each year. I think the Fed knows its all a joke myself but can't say anything like that publicly.
Hieunguy,
First I always assume the market could go up or down - nothing is written in stone. My belief is it goes down and retests the lows reached last week, at least. And most likely more as this is a bear market. But I could be wrong so I don't want to be so confidant as to assume anything. That said my portfolio is positioned that things are going down from here as much as it can be. As for MOS or any other position I'd be looking to add when the market retests lows i.e. Dow 11.5K. Or individual lows. Hence MOS at 83-84 is not a buy in this market. I'd be looking to buy around low 70s. I have lightened up MOS from 9% down below 6%, selling in the low $90s even though I feel true value is $120+. But that's the market right now. Same goes for coal or any other. If market tanks, I'd be looking at old lows before getting interested. It is toxic to hold anything long in this market not made of gold.
As for the washed out stocks, I think its a short covering mirage.
Post a Comment