Tomorrow Uncle Ben Bernanke takes off his glasses and unveils his cape at 2:15 PM so we'll see if we hear anything new but it is not a time to press shorts. I can find almost no one who believes in this move (up) (ok Doug Kass does, and so will Jim Cramer until we turn negative for more then 3 hours) so as a contrarian at heart I want to believe in it for no other reason that so few do. There is no good economic reason for this move but we were oversold (at a historic level) and it has been too easy to wake up every morning and throw on 5 shorts and laugh to the bank. Now the next phase will be much more interesting because you have under invested longs who are hating to see this move without them involved (performance anxiety should be kicking in about this time after saying last week was nothing but a temporary bounce); along with shorts feeling first pangs of fear for the first time. We'll take it day by day, but in the very near term I see S&P 780 and then the 50 day moving average has traveled down to 790ish. Once more as I said this weekend - the remarkable thing is, if we get north of S&P 800, the charts are shaping up to be uber bullish. Scary thought - but as always I am willing to drink Kool Aid and sing songs of lephrechauns if it makes us some gold coins.
I am mostly playing this with ETFs since the action is so whippy every day (2-4% moves) - I've lifted some Google (GOOG) short exposure as a precautionary tactic as this was one of our "insurance" policies to the downside. I do have a limit order to short ITT Education (ESI) - just a bit higher than here, because even as I drink GREEN Kool Aid I like to short hyped sectors.
Short Google in fund; no personal position
6 comments:
Not trying to be political, but my reading of Doug Kass's THE bottom call is that as far as I know he's more liberal guy and truly believes that the actions of the Obama Administration, Treasury, and Fed are actually going to work sooner rather than later. As far as a tradeable bottom, his points about sentiment and the hedgies being way short going into last week make a lot of sense. Thoughts?
First, he said he was as long as he had ever been the week before the bottom "this week" call. And that was about 8% higher (could be more) than where we did reverse. The Kuldow show bottom was called on a Monday - saying "within 1-3" days, and it happened the next Monday but again, he was "as long as I've ever been" the week previous to Kudlow. Which judging from the stocks meant he could of lost 10-15% from the time he was the most long he had ever been to 2 Mondays later. That said the Kudlow show call will be the one celebrated.
He has said this is the low of the year and potentially a generational low. I disagree with both of those. I do think (duh) its a nice tradeable bottom - as we said when the rubber band had been pulled back 37-38% from the 200 day moving average that was akin to history (only other time was Nov 08) - but being early 2 days in the bear can cost you 5-8%. I know because I went quite long the Wed (2 days after he said a bottom would come in 1-3 days) and got scorched for my only big loss day of the Jan-Feb-Mar period. (-3.5%)
Anyhow that's for ego - now we need to figure out where from here. I do believe all bottoms are retested so Kass' bottom for the year will have the test then. But between now and the retest we'll see how much room we can run. Again if its similar to Nov 08, most of the gains were in the first week, we went sideways for a month, and then one last run in firt week of Jan 09 before petering out.
That would be akin to us being flat most of April and petering out early May.
If history rhymes.
Re: "I can find almost no one who believes in this move (up) (ok Doug Kass does, and so will Jim Cramer" .. Good call!. I just posted on StockTwits about 1/2 hour ago. Not only is Cramer all jazzed and rattling on about technicals, but noted that Doug Kass's call came through.
UG,
as a market predictor Cramer is like a thermometer. He will tell you what is but not what is coming.
2 weeks ago he was on edge of despair. Now on verge of giddy. Now writing War and Peace pieces about how we got this housing thing licked. I didnt see a lot of new news on fundamental front past two weeks... aha! its the market! Its up - we're all good now.
Until its down - and then we're doomed again.
It is bemusing once you catch on, if not tiring.
See how (in)accurate Jim Cramer's Mad Money recommendations for Google stock were... Cramer's stock calls shown visually on the chart over a two-year period -
http://www.stocktagger.com/2007/07/jim-cramer-google-inc-goog-track-record.html
See how (in)accurate Jim Cramer's Mad Money recommendations for Google stock were... Cramer's stock calls shown visually on the chart over a two-year period -
http://www.stocktagger.com/2007/07/jim-cramer-google-inc-goog-track-record.html
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