Thursday, April 23, 2009

I'm gonna kick your arse...part 1

OK, so today we finally got what everyone knew, that the government forced the buyout of Merrill Lynch by Bank of America, or at least that's what Ken Lewis is now saying about Hank Paulson. Hank Paulson? Oh, he says that Ben Bernanke coerced him to do it. Ben Bernanke? He basically says it never happened.

Hmm, what's an American to do? Hehe, it's pretty hilarious if you let it be. These are the people who are trying to solve the crisis! It's not really funny, its actually tragi-comedy at it's finest. Shakespeare couldn't possibly come up with better material!

Oy veys meir mein gofen. (means oy vey my head hurts, fyi). Oy vey = oh, boy basically.

OK, now that I've given you your daily Yiddish lesson, let's get back to the comedy!

OK, so all this on the eve of the stress tests, which obviously are a total joke at this point, does anyone think they have ANY meaning? Please, they don't, so get with it if you have any notion they might.

Then the shareholders are pissed cause they are like "Ken Lewis has a feduciary duty to shareholders. Hello!!!! Hello!!!! You dummy shareholders! Your company is worthless, the ONLY reason BAC stock is worth .01 cent, let alone nearly $9 is that the government has gamed the system! It's a bit disingenuous for you to complain. And, if you then tell me "yeah, but if they didn't take on Merrill they'd be fine. Yeah, sure they would have, even if they didn't take on COuntrywide, which I'm fairly sure the government had a hand in that as well, BAC is and was INSOLVENT!

It's amazing, all these dummies want the stock to go up. At $9 this stock is trading at $9 too much.

These are the people running things now. Now you know why I go nutso here, my friends. And that's why ultimately, while I'm happy the market is red hot and I'm happy to go long at any moment, we are going to be much much lower years from now. Not higher. The government will have to let the patient die at some point, in fact they should have from the beginning and we'd be in much much better shape. I was discussing some of this with a friend in the business the other night and they were talking about Lehman and how it was a mistake for LEH to fail. I started to laugh, and he said "you don't think so?" NO, that's one of the biggest made up lies ever. I hear Booyah talk about it 100 times. It's the markets mantra - "look what happened when we let Lehman fail! We can't do that ever again!"

Hence, "too big to fail" was born! It's also Psych 101 in mass hysteria propaganda. Lehman failing didn't do anything more or less then anything else big has. Please, what a joke. What is scary to me is that so far I've heard at least a dozen times how the entire system has teetered on the verge of collapse because of all these things. What does it say about a system that can fail so easily? I mean, so one firm out of MILLIONS breaks down and it can bring the entire system down? That is so beyond nutso it's unreal.

Reason #2 why anyone investing for more than a trade is insane.

OK, now as far as the market, wow, I mean I have to say I lost Thursday. I was up in the am and we called SKF and SRS and IBM short and did very well, but I didn't think we would pop into the close and got caught off guard. It happens. Friday should be very good trading if you are patient, stress test info will be released and the market will respond accordingly. We are so far overbought its insane, but we can certainly get more overbought so we're in no man's land here. There are buyers on any dip, but buyer beware because any moves here for now are merely people who have missed the whole run and are going to be the one's who jump in the pool last when everyone else has jumped out because the 8 year old kid made a turd in the pool. The guy jumps in and thinks he is lucky because he has the pool to himself, until he realizes the absolute horror that he's not alone, he has a turd sharing the pool with him! Well, if that analogy doesn't freak you out, you get my drift. If you are jumping in AMEX at $23 tomorrow I'm not sure what you think your upside is longer term. Thing is, many of these stocks are trading at 50+ percent of their peaks when things were GOOD. Also keep in mind that they are making money because the money doesn't cost them anything, and mark to market was revised. AND, analyst #s came way down and overshot to the downside to boot. Bottom line is, while some of them could go higher, I don't see the move playing out that much longer - FOR NOW! We shall see, we shall see....

In the meantime, futures indicate a down start to tomorrow. I think the model would then be that we fade the gap (which has been ROCKING!) and that's that unless there is a really good setup in our opinion.

What usually happens here is that the laggards catch up and the overbought stuff starts to pull in. We still could get a bigger upside move, but I think you have to wait for a clean breakout above 8000 before swinging stuff. More likely is a pull in, so we'll see here soon enough!
Its as tough to pick a top as it is to pick a bottom. But, I would not want to be swinging much long here, unless its a small cap that has some catching up to do and I feel strongly it has tremendous upside and isn't going under.

I lean short Friday, but not stubbornly, and not anything that is going to kill me. Rather wait for clearly sailing.

We shall see, we shall see, it's bed time is all I know!




Mike said...

Hi Waxie:

Based on the opinion you made on your Tuesday's blog, I wonder if this up move to 870s on S&P 500 is the number you look for to start shorting the market again?

It really appears that people are buying the dip, and thinking that they got a good deal on the trade. The government and analysts are promoting people to buy by posting good news or comments as big as they can and as long as they can, and hide bad news to the corner.

Can you share your thoughts on the duration of this up move? How much longer would you think this up move is going to last? Won't this market ever correct itself sooner rather than later? Will it go to 900 before go below 800 on S&P 500?


In Debt We Trust said...

Some of the biggest turds out there are European banks like DB - 100% increase in 5 weeks?!!! Of course it stands to reason that they are a major AIG counterparty.

But still...the way these banksters complain. It seems like they forgot how to be grateful to the people who bailed them out from zero. They were bankrupt last October - but seemed to have forgotten the days of TED >4.0

Their sense of entitlement is ridiculous. It would be funny if it weren't so sad.

Ash said...

Looking forward to your next blog post Waxie. I want to know your thoughts on what impact Swine Flu will have on the markets. I made money today shorting the market. Do you think Swine Flu will be bigger than SARS?