Tuesday, March 25, 2008

Some Random Thoughts

So the Case/Shiller Housing numbers came in today. No so good were they. Lets not even talk about the consumer confidence numbers. I will repeat it again, until all these pundits and experts throw in the towel and stop calling a bottom we cannot have one. Bottoms are formed when participants give up, say uncle, and just walk away. Until then, it is only wishful thinking and believe me, there is plenty of that on Wall St.

Are you paying attention to the volume in this market. The volume on these rally days is sorely lacking and in my opinion, pathetic. Why is no one talking about it. These rallies are panic driven which is the calling card of short covering. These are people who buy back stock at any price. Ask yourself if this buying is the buying of traders who think the bottom is in or is it the buying people who are short and are running for cover from sniper fire (apologies to Hilary Clinton) at any price? I believe it is the latter.

I am recalling this from memory but I heard Art Cashin, the head of floor trading at UBS, this morning call the shorts in this market: the most jittery group he has ever seen in his years on the floor. As an exercise in enlightenment punch up a basket of the financials XLF, C, BAC, AIG, WM, COF, WFC, MER. Look at the most recent action and now compare it to the action of late January. It doesn't matter which you look at they all look the same; sharp, fast, and short lived. Like I said, short covering.

I see earnings are being revised downwards for Q1 which is not going to make the "but the markets cheap on a valuation basis" robots very happy. This is factual news yet what I see is Bob Doll and Larry Fink of Blackrock's call of a bottom, being replayed over and over on pom pom TV. Do you now see why I call it pom pom TV. Now I am not asking that they be the negative news network but reporting of the facts good or bad would be refreshing.

Now we are getting the news the Clear Channel deal is not going through. I am in no way involved in this as a trade but I do have some thoughts. Thoughts like, were the bankers involved in this fiasco capable of having any. Have they not had enough? Are they that stubborn or just that stupid. Just what an over leveraged, financially hemorrhaging beast needs more of, just what got it that way in the first place! MBA's gotta love em'!

Don't you remember all those leveraged buy outs (LBO's) day in and day out? Don't you recall merger Monday on pom pom TV? What do you think happened to all the bonds used to finance those deals? Here's a hint, look on the balance sheets of all the participating banks and if you don't find it on their balance sheets, hire a forensic accountant so he can sleuth around the off balance sheet entities for it. I GUARANTEE it's there. It's there all right, rotting like a dead fish only without the smell. This lack of smell is why the big investment/commercial banks are so good at hiding the stuff. How else can we explain how the majority of highly paid sell side analysts on the street missed it.

Chrysler bonds created via the Cerberus deal were floated at 14-16% if memory serves, with no takers, so now they sit on the books of banks like JP Morgan. Gee, I wonder if they're marked to market? Wait, don't answer that.

Housekeeping notes, I was stopped out of half of my 2 unit long position on FXP at $96.55. Not nearly the profit it was a week or so ago but nothing to sneeze at. Still long 1 unit.

Good speculating to you all.

Open Positions:

Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Ultrashort China25 ticker FXP @ $84.55 stop at $84.85
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $92.85 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units Citigroup ticker C @ $23.45 stop at $25.40
Short 2 units AGCO ticker AG @ $61.00 stop $62.75

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