Wednesday, May 21, 2008

Turn out the lights, the party is starting to look OVA!

Market tanked hard after the Feds came out and said, duh, economy is definately NOT getting better and in fact is getting WORSE, real estate is going lower and inflation is troubling.

I mean, are these surprise comments? No! But, as always, optimism will drive a bear market rally to the top of the heep, only to leave a lot of people holding the proverbial bag who bought into the notion that the "bottom is is".

Let me be emphatic about one thing, there is no such thing as a "bottom"! Financials are so vastly overpriced still its insane. The brokers in particular look at least 50% overpriced and yeah, that includes Goldman Sachs which has at least 25 - 30 BILLION in bad debt on their books from what I've seen and I still say sees $125 or lower this year. Go against that call at your own risk! I stick to it.

The short list we did is starting to pay off, I would look at some of the recent momo moves for potential shorts if we continue selling off. I like SOLF a lot SHORT now, and we called the puts today and are up on them a wee bit already. Look for a lot of this type of stock to retrace quickly if the market gets an extended downward move.

Remember, the reason why "Sell in May and go away" is in the vernacular is because it's a TREND that has worked many times over the years.

Also remember that nothing goes in a straight line, so while I think we are looking increasingly bearish, I would look to unload longs on the rallies from here and also look to set up some shorts on any bump on short covering. If I'm right, and obviously that's not a given, then we should trend DOWN and then get a nice bump next earnings period. Market has seemed to follow that trend the last few quarters and it seems to want to do that now.

Oil at $130s, jeez louise, it don't stop! I would think now we have a legit shot of seeing my $150 target this year. Sucks, thats one call I wish I was wrong about, trust me. Costs me $100+ to fill up my SUV, this week I am selling it and leasing a hybrid. While I'm not a huge believer that hybrids are the answer, since I want to dump my truck anyway, might as well do a bit better, right?

In the meantime, let's see what shakes out here. We are probably gonna be sloppy and choppy. DOn't expect just a total dumping, but again, I think we look pretty putrid here. BUT, also remember that even though the Fed said things are crappy *again - duh!* they also DID say that the 2nd half of the year should see a pickup.

Do I believe that? Not a shot, but hope does, indeed, spring eternal!




Jon said...

Good luck selling your SUV. Nobody wants anything that costs $100 plus to fill-up. Maybe best 30% below bluebook maybe you can get?

Waxie said...

Whatever it is, it is. I'm getting rid of it either way. It's a market, its worth what its worth, nothing more, nothing less!


Jon said...

You're right. Spoken like a true Master Trader. Thanks for this cool blog & your thoughts on the market & other things.