Monday, April 20, 2009

The Mysterious Case of Benjamin Bottoms...and Bank of America...

OK, so Bank of America reported seemingly kick ass earnings and went up right? I mean, they beat by a MASSIVE .48 cents, turned a supposed HUGE profit of BILLIONS, and blew out on every metric!

I mean, we are off to the races, right? WRONG!

This is why ultimately anyone investing here is a sucker. Obviously I think anyone investing at all is a sucker, but now in particular. This bank rally has been nothing but smoke and mirrors. I've argued this with a whole slew of people and investors and there are some that are convinced that because the govt has put a "floor" under the banks, that they are buys here. This is the same arguement that they've made since the first govt intervention last year. We all know how that turned out.

Ultimately this is going to end badly,and unfortunately very badly. You know a market is full of it when things like this happen. Part of why we sold off, besides the fact that BAC seemingly has LIED time and time again, and again today Ken Lewis said on the conference call that both Merrill and Country Wide were accretive to earnings! I mean, that is the funniest thing I've heard in a long time. That definately does not pass the laugh meter test! It's almost as funny as what we're going to hear about the nonsense stress bank tests. Please, don't insult people's intelligence, please.

The market also sold off due to a blogger claiming that results from the stress test were leaked and that 15 out of 19 of the largest banks are technically insolvent. Duh! But, its a rumor and it may or may not be true. However, regardless, if just a rumor can sell us, what does that say about the markets ability to sustain a real long lasting rally? Perhaps, but I don't buy it at all.

Tuesday we'll see if we get another turnaround Tuesday. This has happened a lot lately, when we selloff on MOnday we turn it around Tuesday.

Two stocks to keep a very keen eye on are; MS and AMZN, both have earnings this week and should get a push higher. I would love to get MS down to $22.50 area and then buy some calls for earnings (not holding over, just a very short trade). AMZN is a very hot stock and it was up nicely all day until end of day when the markets tumble took it with it. It still didn't go down much, so it showed good relative strength.

I'm just going to briefly mention my nemesis GS. There is more and more "stuff" coming out about GS, sooner or later it'll really crack the stock. It's not something to short this second, but I do think it'll set up as a nice short soon.

In my class last week I discussed MS and how its acting very poorly. It still is. This stock should be $35 or $40 based on the way GS traded. The fact that it can't hold $25 seems disturbing to me. While I think it gets one last ditch push into earnings, I think post earnings and any pop over time this thing is dead. We'll see, but it's important to note these kinds of things.

We should gap up decently Tuesday. That's been pretty strong trend, and its Tuesday to boot. Trin was over 2 at the close and that trend is awesome, we usually get bought early the next day. I think it should be a fade for at least a trade if no news is out. From that fade, assuming it happens, we may rebounce. I think we get a pretty choppy day, so please be careful and don't overtrade! Choppy days are not good days to step out and trade heavy. You are better off just waiting for another opportunity which should happen later this week if it doesn't happen Tuesday or Wednesday.

We'll see, if the banks gap up big on no news, I think you buy SKF or FAZ and should get a trade out of it, using the 10 am rule just in case it's wrong so you stop out and reverse if you like.

All in all, I'm not calling tops, nor bottoms, I'm just calling TRADES!



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