Trading the market is almost always about timing. I get asked for long term predictions all the time, many of you here ask me and have asked these questions. I'm usually happy to tell you what I think longer term, but honestly it does help, but only because of the bias factor. Since I am clearly bearish, I am always thinking about places in which to enter or reenter shorts. I love the banks short. You have no idea how much I love them short. I've been saying for quite a while that most of them are bankrupt. Tonight I heard Jim Rogers, whom I know a tiny bit having been on a couple of shows with him, say the same thing. Having said that, I can't just arbitrarily short the banks this second since I feel that the market has a better shot to rally into Obama then die harder than it has. And yes, I'll be pissed if I miss a big drop due to the news I feel will come sometime in 2009, but thats the breaks. One of my favorite ways to play the coming destruction is through the SKF, but I don't want to tie up a ton of capital and then risk us getting a big pop that lifts all boats/stocks in spite of reality. SKF was $143s premarket and finished the day at $122! That's a big move to hold through. I'm not interested in investing to the short side, the same way I don't think buying stock is a good idea. I think its a stupid idea. Beyond stupid, frankly. So, I'd rather pick my spots, knowing that there is a good shot I will miss a move or two. The way I trade if I bought 5000 shares of SKF ad it died $50 points in a big rally I'd be remiss and I think that's too nerve wrecking and just not good trading or money management! You have to be willing to miss some moves to hopefully/probably catch the down moves that are more substantive. Today was textbook buy the gap down and it ROCKED! I wasn't around most of the day unfortunately, but the best thing about the market is that tomorrow there will be more money winning ideas.
The 1st winner of the World SEries of Trading is Howie Busch! Congrats to him and his family! Make sure you sign up NOW to predict where the DOW will finish short term. Market should stay strong until Obama for the most part. We're buying bad news now. Having said that, there's a lot that can go wrong from here that would impact pricing.
Let's see what shakes, but I would avoid the banks like a pleague.
See ya next week, I'm beat and going to bed!
Michael "Waxie" Parness