Thursday, August 21, 2008

The Spiders S&P 500 - SPY

The Spiders (chart above) look very interesting at this point. They have broken a short uptrend and have now jobbed about for a couple of days. While it could rally and kiss the broken up trend line form underneath it looks like a break of $126 would seal its fate and get me active on the short side via my preferred vehicle, the Ultrashort S&P 500 ticker SDS (chart below).

I keep hearing the bulls telling me the market is a discounting mechanism and that all the bad news is discounted. So based on this I have a couple of quesiton for the "I'm bullish because the market is discounting all the bad news", and the "given all the bad news the market should be down a heck of a lot more" crowds.

Please explain to me how Musharraf's resignation in Pakistan is stock market positive?

Please explain to me how Russia, now basically occupying Georgia, controlling the Baku-Supsa pipeline is bullish for stocks. Remember now, they own the suppy and now the distribution vehicle.

Please explain to me how bailing out Fannie and Freddie's and expanding their balance sheets further to buy even more toxic mortgage paper helps the current credit situation, prevent falling home prices, and prevent escalating defaults?

Please explain to me where the likes of Merrill, UBS, et al are going to get the cash to buy back the billions in auction rate securities they have agreed to buy back via the settlement with the NY attorney general ? (neither admitting nor denying wrongdoing, I might add for all you Merrill Lynch commission paying customers!)

I see Dick Bove of Ladenburg Thalmann came out with an endorsement of BUY on Lehman on the possibility of a hostile takeover. Yup, another quality commission generating idea from the brilliant research minds that reside on Wall St.

I keep hearing from the steady stream of gurus on pom pom TV, that Fannie, Freddie and Washington Mutual are perpetual call options. How funny. I guess Nortel, JDS Uniphase, Level 3 Communications et al. are perpetual call options as well. Do many of you remember CNBC's stock picking contest and the popular stocks of the contest. All single digit stocks on a regular basis. Sirius was consistently a #1 holding, a $3 stock which is now a $1.50 stock. But like the experts continue to chant, a perpetual call option.

But just buy stocks as dips are buying opportunities. And that recession you think you see is not a recession at all but rather, according to former Texas Senator and McCain advisor Phil Gramm, just a a mental recession. Just like the esteemed congressman William Jefferson from Louisiana who the FBI dilly dallies with over $90,000 in marked bills in his freezer there seems to be a slight disconnect from reality by the Washington zombies.

Good speculating to you all and never ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units of Powershare Agriculture ticker DBA @ $35.35 stop $34.79
Long 2 units of XTO Energy ticker XTO @ $45.40 stop at $44.48
Long 1 unit Currencyshare SwissFranc ticker FXF @ $92.70 stop at $90.68
Long 1 unit Ultra Oil & Gas Proshares ticker DIG @ $84.35 stop at $79.68
Long 1 unit U.S. Oil Fund ticker USO @ $96.95 stop at $91.38
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $128.56
Short 3 units FedEx ticker FDX @ $87.10 stop at $88.16
Short 2 units of Apple ticker AAPL @ $178.05 stop at $182.76
Short 1 unit Blackrock ticker BLK @ $218.50 stop at $218.126

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