We'll see what 4 PM brings... but all systems go thus far. If 741 holds, we have a nice chance for S&P 780.
As mentioned earlier if Morgan Stanley (MS) breaches $24 I will be bringing in my short (insurance) ... that's really my only material short at this moment as I'm sipping Kool Aid in large quantities. Pom poms firmly in hand.Once more I am taking full credit for this rally, as my 2 Depression posts Tuesday AM were the cause of it ;) Marked the bottom. Boo Yah.
Long/Short Morgan Stanely in fund; short in personal account
13 comments:
Yikes, I remember what happened the last time I saw the Kool-Aid Man. Hopefully it won't be 2 for 2.
Please.
Kool Aid men have feeling too. ;)
It is all about MtM?
Anon
we were just monsterously oversold
We hit the same level of divergence versus the 200 day moving average (even worse by a percent or two) as November 2008, which was a record - 37% then, I think north of 38% this time.
The market is a rubber band, it eventually snaps back. Everyone and their mom was buying guns, and gold and talking about the End of Days. You have to go against the crowd at extremes like that as much as it hurts.
Now we will enter the next phase of "whew its over" "the government has saved us" "the economic data is improving" and "we'll be out of this in 6 months"
Its all a bit amusing once you catch on to the pattern.
Yeah, the oversold rally that many of us had been expecting showed up, but took a bit longer than most expected.
Its okay to bring the kool-aid out once in awhile!
TraderMark,
...got a feeling Lucy is going to pull the football back. When do you think the "GOTCHA" is gonna happen?
There is no harm in Kool Aid in moderation at the appropriate time. Just make sure you don't believe it while you drink it :)
MMMMmmmm Good!
Next Anon,
I take it day to day around here. A Lucy lurks around every corner. As always resistance becomes support and support becomes resistance. If 741 holds as support we can have some happy times with the football. If it breaks down then we turn back to the dark side.
Compare the mood today versus 1 week ago. 180 degrees. It can be 180 degrees different in a week or two. For now everyone thinks banks are minting money hand over first and problems on their balance sheet don't matter. Congress is pressuring accounting boards to change rules, etc. That whole Great Recession? That was last weeks news.
When markets want to go up, they will find an excuse and vice versa. I'd say the "easy money" has been made on this turn, but that doesn't mean there is no other money to be made. But its a rally within a bear market, and more of the money over time will be made on the short side. Personally I am hoping a lot of the worst of stocks make some nice moves up and get closer to resistance so I can start shorting at much higher levels. And then we'll repeat the next move down again in a few days/weeks/months. No need to predict things to such a degree - we'll let the market take us to where it wants to go and try to catch some of the waves along the way.
@nobody in particular -
The overwhelming impression I get on this rally is "We're painting the roses red"....
I'm not a pro. I'm wouldn't even call myself a trader. But I do pay attention. And the main camps visible to me seem to be people who are simply trading on a short-term upswing and make no illusions about it, and larger investors who are dipping their toes in the water and layering in their long (oddly enough, meaning "long term" and not just "going up" in this case) exposure but still expecting more downside to come. For whatever it's worth, that's what I can see from my particular trench.
I don't think this is kool-aid. This is the store-brand imitation kool-aid. We're buying it because it's cheap and sugary. And even though the kids won't like it as much, after the complaints they'll still drink it because it's sugar. So we're not even trying to lie to them about it or spin it as "a new flavor you haven't seen before".
Why were we due for a bounce? Well because everyone else thought we were and the charts say so. Why did everyone else think so? Because *they* were sure everyone else would think so.
@Mark
"Personally I am hoping a lot of the worst of stocks make some nice moves up"
I think you got your wish today. My personal list of the worst has outrun everything on my entire watchlist today, excluding levered ETFs. And even some of those got beat. When COF beats out UYG, I begin to suspect the punchbowl recipe was 1 packet kool-aid to 3 parts Ritalin and 5 parts Tequilla.
Eastern Europe and REITs are HOT HOT HOT - BUY NOW! (cough, ahem).
Yes I still have my short on COF and hoping it gets to 15-20. We'll see.
REITs are the best. :)
I feel like Rip Van Winkle.
Is anyone out there reading this stuff?
In the category of "You can't make this stuff up", this from the head of BofA's mortgage division:
“Volume is good, application quality is holding up and the acquisition of Countrywide is really paying off for us with the additional capacity,” Barbara Desoer, head of mortgage, home equity and insurance, said in a telephone interview yesterday. “Thank goodness we have it.”
Then a few paragraphs on...
"Desoer wouldn’t discuss the recent performance of home loans already on its books, saying “you know what’s happening with” home prices and unemployment “and the potential impact those can have on borrowers being under stress.”
The bank’s mortgage-servicing business has more than doubled its staff that deals with troubled borrowers to 5,000 in the past year. Still, the company hasn’t always provided the best service, in part because of the volume of calls for help, she said.
Are people actually surprised that the banks are able to generate positive operating results when their cost of capital so heavily subsidized due to government guarantees?
This is a BALANCE SHEET ISSUE! Use income statements for toilet paper until home prices start to rise.
Your tax dollars are hard at work subsidizing jumbo mortgage originations for BofA at enormous margins that will accrue to BofA bondholders and shareholders. Doesn't it make you feel warm and fuzzy?
There must be something stronger than sugar in that Kool-Aid.
Honestly, I think this rally will last longer than most of us believe. My PURE GUESS is we will kiss the S&P 200DMA before its over. I envision those who made money shorting on the way down will be dealing with endless frustration as the market simply wont break its uptrend. Why won't it break? Performance-chasing fund managers sitting on record levels of cash will be buying on the dips the whole way up. "Were closer to the end than the beginning"..."this is a once-in-a-generation opportunity to buy stocks cheap"..etc." All these greedy rationalizations will just push the petal even harder.
Finally, once the shorts have given up, and the fund managers are fully vested, we all wake up and realize the world REALLY IS coming to an end. That is when we take a very violent and nearly endless plunge back into the abyss...
Boy, I hope I'm wrong...
any takers?
Gestalt,
this is the American way. Tax the middle to subsidize the corporate. You are from another country so you don't understand Cramerica. The way you sell it is, we are all part of Wall Street... Main Street IS Wall Street and other such ideaology. Ideaology rules in this country.
Mike, anything is possible. In the 1930s there were a few 40-80% type of rallies. We have not really had any huge moves - a few 15-20% types... the 200 day moving average would be nearly a 40% move so it would be quite epic.
I think the news flow economically will be so bad it will be hard to ignore for such a period of time to get us all the way up to the 200 day moving average but anything is possible.
I am taking it one day at a time around here since there is no memory in this market from 1 day to the next.
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