Saturday, November 08, 2008

The curious case of Goldman Sachs...

As you all know by now, I have been short GS for a while, and am up quite a bit on that short obviously since its sitting right over 52 week lows. While the other brokers continue to get hammered, GS has held up remarkably well. It's been my experience over the years that often the best shorts in a bear market are the last stocks you would expect to fall. While they may hold up stronger for a while, when they roll over, they roll over in a BIG BIG way, and you have the added edge of a more dramatic down move. On this blog I've called and been right about a number of these stocks; POT, FSLR, LEH, FNM, FRE, GS, GOOG, etc.etc.etc. There are a few stocks here that still have a lot of downside left to them. Friday I called puts on TM. I got an email from a subscriber who asked why I would want to short TM, that if GM goes under (govt won't let it, wrongly) TM would pick up their market share. First off, that's not necessarily correct, and secondly, TM just announced sickly horrendous #s. The only way you can own TM here is if you think that they have made a Faustian deal with the devil! The stock is a $68.50 stock in the auto industry! Sales are cracked and will get worse more than likely. This is the type of swing short I'm looking for now, stuff that makes sense but the market hasn't caught up with it YET. I have a few on my radar that I'm giving to clients, but some of them I've mentioned before and continue to pound the table on them, like TM and GOOG and GS. GS is an enigma. They are in no man's land, and the only reason I hear for owning it is that they are "smart guys" and that they will figure it out. Really? Then why are they in this mess to begin with, if they are so smart and so good about figuring things out! With MS, MER, BSC, LEH, LM all slamming lower, GS should be $20s in a couple/three months. I see no compelling reason for us to rally here, other than some wishful thinkers. The financial sector looks ready to move down harder and lower, potentially this week. Several banks I LOVE LOVE LOVE short, some not so much. It's a good group to couple up if you have a sense as far as who will weather it out easier. This coming week I have to lean lower, but not heavy. At least not initially. Too many guesses and not enough clarity. Do we go back and retest recent lows, or do we bounce first? That's the ultimate question, and one we'll see soon enough on! I'm flying to Germany for a conference in a few days so may not be available here til I get back. Remember to rule! Waxie

5 comments:

Erik28 said...

Waxie,

Keep up the great posts!!!!!!!!!!


I've read your books, and to say i've been trading for 11 months and my port is up 280% off swing trading options, that would be fact

- to say it would of been similar results w/o trendfund....would NOT!


I know were a little ways out, but let us know please what your looking at this yr for Window Dressing rally, followed by JAN Effect Crash

GOOG looked like the perfect example in 2007, from the price action mid dec, then the jan crash


AFAM (imo) looks like it might be setting up something VERY similar for THIS yr. (hell there are not that many stocks that are OUTperforming the market significantly)

any/all... Window Dressing/JAN Effect plays that you potentially see setting up are greatly appreciated when we get there!

Gabriel said...

It's getting scarry... Please make a few bad recommandations.It will just show us that you are human. I have a lousy broker, I get the alerts 10-20 min late on an iphone, I have a small portfolio and I MADE MORE THAN TEN THOUSAND last week alone. God bless you and have a safe trip
Gabe
PS Don't move to Germany for a Heidi Klum like. They are ok, but very possessive. It will change all your calls. Just enjoy them...

Sunil said...

Totally agree that financial sector along with others is poised to go lower. With unemployment rate projected to reach over 9%, lot more pain seems ahead. Short term however, looks like a different story. RUT seems to be forming inverse head and shoulder along with oher indexes. Just like in the past bear market rallies we have had so far, indexes might be headed to 10 week moving average at which point I would love to short this market. I was really amazed to see market rally 248 points on Friday despite all the negative news of GM and unemployment report whch tells me market wants to go higher shorter term. IMO.

Sunil said...

Inverse head and shoulder forming in RUT. 10 week moving average seems like short term target in the current bear market rally.

Nick said...

The Queen, merideth has put a $20.00 price on WFC. Nick