I mentioned yesterday in a perfect world I'd like to see S&P 860 or so to begin getting more aggressive on the short side - we are now closing in on S&P 850. This market has a lot of resistance overhead at 860 to 880. Great things are emerging in our economy: countless more job losses, consumer confidence at historic lows, housing prices dropping nearly 20% year over year putting hundreds of thousands more under water by the month. All good things (to the stock market) because "it can't get worse" - the words the sirens have been singing for 15 months. And soon the sirens will talk about "stocks are not reacting to bad news" and we'll repeat the song and dance we do every 4-8 weeks.
Much of the "worst of" stocks have still not rebounded to a point I'd prefer to short but some of the financials have begun to get interesting again. We have an excellent set up in Goldman Sachs (GS) [I will post the chart later this afternoon] The stock is up a few % to $77.40s, and we have a nice resistance at $79ish (50 day moving average). I'm buying a 3.0% stake here & I'll place a stop loss at $81 or so if the Kool Aid overwhelms me. (this would be about a 4% loss)
The stock hit $60 a week ago so I don't know what my perfect exit target is but if I can get a 10% move ($70 or so) I'll probably take quite a bit off the table. The only concern here is peer Morgan Stanley (MS) has been *the* stock in the sector that traders are using ... so we'll see if the cheer spreads.But it's the perfect low risk short set up for a technical scalp. p.s. Apple (AAPL) has an identical chart setup to GS. Exact mirrors the past few weeks in fact.
I'm hoping for more rally in names I want to have as "permanent shorts" so I can get more attractive entry points.Short Goldman Sachs in fund and personal account
5 comments:
Go get 'em, Mark! I am totally in agreement that the probability is things will get worse at Goldman BEFORE they get better.
Careful with talk like that. That's how you attract black helicopters and next thing I know, I lose 1 reader.
In addition, to our wonderful economy, you forgot to mention that every news story now is a "breaking story" that will lead to a 45 minute spike in the market; CNBC is great at doing this - some meaningless, to be revised later data point is suppose to reverse 14 months of lousy price reaction. Geithner picks his nose with his left hand - market spikes!
I'm just surprised we did not have a 1000 point rally on the confirmation
I mean cmon now, a guy who has been there all along being moved from VP of Bailouts to President of Bailouts... thats gotta be worth at least 500 points.
Fox Business has also done that dumb Breaking news.
I still remember watching futures one morning last fall and Steve Leisman came on with "breaking news" and it was something that meant nothing, but when the BANNER (Red) came on before he spoke futures spiked 1%. Then when he finished his 2nd sentence it was gone.
Yes, it's not a casino.
DRI has a similar chart to EAT, and is considered to be highly over-leveraged, and according to dining polls, *just a bad place to eat*. And JPM is expected to have inherited a considerable sun of bad paper and is up more than it probably should be.
As to CNBC... They truly are the "National Enquirer" of market shows... An endless stream of 'breaking news' on the latest Madoff movements... "He's leaving his apartment and getting in limo!", a constant barrage of BS about the TARP program, Geithner's appointment, etc....
jegan
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