Thursday, May 22, 2008

A bull Market in Mirrors

The chart of GE (above) paints a picture of nervousness. As you can see the $31 is incredibly important. I am sure the masters of the universe are burning up the phone lines discussing the maginot line here and its defense given GE's universal dominance in institutional portfolios. Like my notes indicate, if $31 doesn't hold, there will be the dickens to pay!

I came across the following Wilbur Ross article out of the FT and feel compelled to comment on it. I want to say up front that Wilbur Ross is one of the speculating titans of our generation and I am a huge fan. It simply doesn't get much better than him to put it bluntly. That being said, you remember Mr. Ross bought H&R Block's mortgage unit Option One for $1.1 billion as well as buying American Home Mortgage Investment. He was on CNBC regularly touting his shrewd purchases. Others took it as their cue to pile on a pump the merits of his positions. Well, it looks like his foray into this arena is not turning out as planned and as is custom now in our bailout economy, he is looking for a bail out. No moral hazard now is there Mssrs. Bernanke and Paulson ?

Yup, credit crisis is behind us for sure! I am bearish on equities and I must tell you that someone of Mr. Ross ability crying for a bailout sends chills up my spine, and makes me think I am nowhere near bearish enough. I would think he would just dump his position on someone else and move on. But maybe, just maybe he can't.

Here's a thought for Mr. Ross, hire some slick investment bankers, preferably ones with heavy duty Fed relations hmmmmm JP Morgan !!) and repackage this toxic paper with some lipstick and perfume and pawn them on the Fed and the taxpayer. Heck everyone else is doing it, why not you. Better get yours before the window shuts and nobody gets paid.

Nobody likes to take a loss, it hurts your ego, your pride, your wallet. It's awful, but the truly great ones do it, they take their lumps, and quick and above all don't whine and blame everyone and the cleaning lady. There is a severe shortage of mirrors for people to look into, for that is exactly where the blame rests. Right, square in front of you. It truly could be a bull market in mirrors, but don't expect the Fed to encourage it, and as we all know, you don't fight the Fed !!

Good speculating to you all !

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $16.64
Long 3 units Ultrashort Dow DXD@ $50.12 stops 2/1 at DIA $132.68/130.26
Long 2 units Ultrashort Financials ticker SKF @ $103.90 stop at XLF $26.72
Long 1 unit Currencyshares Swiss Franc ticker FXF @ $96.25 stop at $93.82
Long 2 units Frontier Oil ticker FTO @ $28.25 stop at $25.26
Short 1 units Daimler AG ticker DAI @ $86.20 stop at $82.48
Short 1 unit Brinker Int'al ticker EAT @ $21.25 stop at $24.14
Short 3 units Retail Holders ticker RTH @ $96.72 stop at $98.56
Short 2 units Goldman Sachs ticker GS @ $191.53 stops at $197.68/$193.58
Short 2 units Darden ticker DRI @ $36.35 stops at $40.27/$38.34
Short 3 units Lehman ticker LEH @ $43.70 stops 2/1 at $47.46/$45.48
Short 2 units Deutsche Bank ticker DB @ $117.03 stop at $120.18

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