Sometimes I read the news on yahoo finance or wsj.com and just shake my head that the market can ever go up ;) It is a horror show out there in the real economy. Thankfully we can trade in the fake economy aka Wall Street. I have a monster good opinion piece from the New York Times that will post at 4 PM today - I encourage every reader to take the time to read at least my summary, if not the entire two pieces.
It's 3 PM, so I guess it's time to see if the 2008 "3 PM action" is put to death or if 2009 will be no different.
If I were shorting individual names - I'd be looking at some of the names we mentioned late last week [Jan 2: Potential Short Set Ups] as short candidates - some of these have not budged at all despite all this "hope". Also the "worst of breed" fluff like Las Vegas Sands (LVS) here as it buts against resistance in the $8.50s. iShares Dow Jones Real Estate (IYR) continues to call to me as a short - it is so perfectly set up that even the Ultrashort Real Estate (SRS) could work here.
"Short Me!" (stop loss $38.20)
A lot of retailers have also rallied much in the past 2 sessions and are hitting resistance. Since I cannot short individual names I'm stuck with the evil Ultrashorts. I have a 5% exposure which I'll probably take to 12-14% or so if S&P breaks 920 on the close, while we keep our boatload of cash on the sideline. If I could short individual names after this hectic of a rally, with so much resistance ahead I'd probably put on about 8-10 individual short positions.
Today is the type of day that makes my month - almost all our major long positions have sung higher so with only 3 of every 10 dollars in the market we are beating the market by 1.5%. That's "risk adjusted return" if there ever was such a thing. Many long names are in the +3-5%+ category- heck even pawn shops are hot today. If I could have 1 day a week like this I'd be a very content camper. RTG = Rising Tide Growth
I'd like to once again repeat - the more speculative the type of stocks that are being run up, the longer in the tooth this move is. What I am noticing is outside of a few names like SQNM almost all the "leaders" of the past 3-4 weeks are stalling out and starting to roll over - something I saw Friday as well. The merchandise leading us the past 2-3 days is not the type to bank on, for anything more than a quickie in and out trade. And there is no way you can root for energy prices (and the whole commodity complex) to go higher without realizing it will destroy whatever is left of the US consumer. We can't two weeks ago say the economy will recover in large part to the 'tax rebate' of lower gas prices and now today say the economy will recover, just look at oil prices - they signal a worldwide recovery. That's CNBC logic. Just can't have it both ways - even though stock market participants want to.
But... 3 PM arrives and with big money back from vacation we have to see if they are back to their last hour manipulations circa 2008.
Remember 2009 will be the year of sentiment - facts are going to be awful for many months to come. It's ping pong: hope vs reality. I expect a very wide range of trading (quite likely a 40% range from from top to bottom during the year) - and hence a traders market, not a buy and holder's. If you find yourself very bullish today instead of 4-5 weeks ago when prices were materially lower, this year will probably not treat you well. Not the type of market you want to be piling into stocks that have run so quickly...
As always, former resistance is new support so S&P 920 which was our ceiling for a long time is now our "support" - just be careful, it most likely will prove to be a trap door. Everything is technical driven in this market and the rats will all jump ship together once technical supports begin to break.
I'll start the countdown to the first CNBC anchor saying "Well I guess it was not all priced in..."
