Wednesday, July 2, 2008

Sobering Up ?

Do you think maybe that the short bus riding equity market participants are finally sobering up to the concerns the infinitely much smarter credit market players have been voicing for some time? I am in no way rejoicing at what is transpiring in the markets, simply because if you are one of the many who are still deluding yourselves about us not being in recession, credit crisis being contained blah, blah blah, quite frankly, you ain’t seen nothin’ yet.

Unlike the pom pom television network known as CNBC, but referred to by many in the blogosphere as CNBS, my job is not to be a bull or bear but to be right ! CNBC may claim that they are unbiased but we all know who butters their bread. Just watch who the advertisements are from, all market product providers. Dare I say they have a vested interest in keeping Joe Sixpack in the game, that is the reason for the incessant bullish bias. Bear markets do tend to destroy the lumpinvestorate’s stock market interest and the cheerleaders know this hence the rah rah rah in the face of overwhelmingly negative facts.

Regarding the CNBC stock market contest, I would counsel viewers and participants of this colossal waste of time to stop doing exactly that. ....wasting time on it! I would instead suggest those inclined re-direct their concentration and effects on stop loss management of their REAL WORLD portfolios, which, given the preponderance of the retail investor to be long only, I can only assume is starting to incur some serious losses.

Do not pay attention to the blather about volume being light, the suggestion there is that light volume = don't worry there is no conviction. A wise trader whose name I cannot recall once opined that volume is the hook. As the wise man Art Cashin would say volume equals validity. Besides, volume is much more important on the upside as it takes a lot of buying to put a market up and a mere lack of buying to put a market down ! Remember this when Bob Pisani tells you volume is on the light side.


Regarding stocks for the long term, yes in the long run stocks go up, much smarter market watchers will remind you of this constantly but in the long run we are all dead as well. The question you must ask yourself as the $45 stock you bought which now sits at $32 is this, “Can I tolerate it going to $16 before it goes to $75, and worse yet, what if it takes 7-8 year to do so.

I would suggest you ask yourself these type of questions immediately if you have not already done so as this bear is only getting started given the fact that we have just exited a monumental once in a generation credit bubble.

I want to take this opportunity to wish all of my readers an enjoyable 4th of July holiday. I will be taking a few extra days off but will be watching markets closely and will post if I come across anything of interest.

Good speculating to you all and always remember that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 3 units Ultrashort Dow DXD@ $50.12 stops $62.22/60.49/58.62
Long 2 units Ultrashort Financials SKF @ $103.90 stops $146.47/139.46
Long 3 units Currencyshares Swiss Franc ticker FXF @ $97.35 stop at $93.82
Long 3 units Ultrashort ReEstate ticker SRS @ $88.95 stops $99.23/97.47/92.72
Long 1 unit US Gasoline Fund ticker UGA @ $60.35 stop at $62.54
Long 1 unit Ultrashort QQQ ticker QID @ $37.05 stop at $41.91
Long 1 unit Ultrashort S&P ticker SDS @ $57.20 stop $61.57
Long 2 units Hecla Mining ticker HL @ $8.50 stop at $7.16
Long 2 units Kinross Gold ticker KGC @ $18.93 stop at $17.56
Short 1 units Daimler AG ticker DAI @ $86.20 stop at $70.12
Short 2 units Brinker Int'al ticker EAT @ $20.07 stop at $20.68
Short 2 units Darden ticker DRI @ $36.35 stop at $35.36
Short 2 units Lehman ticker LEH @ $43.70 stop at $28.32
Short 2 units Deutsche Bank ticker DB @ $117.03 stops at $105.26/99.32
Short 1 unit of Visa ticker V @ $86.25 stop at $85.36
Short 1 unit HSBC ticker HBC @ $83.23 stop at $83.52
Short 2 units of Netflix ticker NFLX @ $30.35 stop at $29.43
Short 1 unit of IBM ticker IBM @ $122.80 stop at $127.27

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