Tuesday, October 7, 2008

Gap Now Open 2 Days.

Have a look at the chart of the XLF (above). Thank goodness for the ban on short selling. Can you imagine what would have happened had the government orchestrated manipulation not been in place. What a relief that the government is there to protect us from the evils that lurk in the dark.

Uh oh, Houston, we have a problem. The banks are breaking down, yet once again as evidence by the banking index (KBE Banking Index chart above). Expect the usual chorus of bottom callers, even though their ranks have been thinned.

As the title of this post indicates, the gap on the Spiders is now open 2 days with 3 being the magic number for me. Please notice today's action on all 3 of the major indices not only took out yesterdays lows but closed below them as well. That being said, absolutely nothing is sacrosanct when the manipulators in chief, (the Fed and Treasury) always at the ready and capable of heaving another short term taxpayer sponsored life preserver which triggers a massive 500 pt short covering rally so be on guard, even though they inevitably wind up they way they all do. Useless waste of our money.

I thought it prudent to tighten my stop levels today given what is transpiring in the markets. Actually, let me correct that last statement. I thought it prudent to tighten my stop levels given the level of manipulation by the authorities in the markets.

I also want to address many of the pundits out there claiming that all of our ills we presently see our credit related. These are probably the same crew of gurus who believed the global de-coupling thesis which we all know the answer to now. We are in a recession with only the blindest of the blind still in denial. Just as the credit crisis was denied by those till they just couldn't do continue their stance without their sanity being called into question, the recession will be denied in similar fashion.

I have to laugh at the financial TV's obsession as to when and where the bottom will be. First of all relax, we are a long long way from a bottom, at least a bottom that holds for longer than a week. What are so many afraid of missing out on that fosters this obsession with a bottom? I can assure you, yet again, that this the market will not bottom until the bottom callers stop calling bottoms and completely and utterly discredited.

I have been receiving questions via email from some readers which I will publish, respecting requests for anonymity, along with my thoughts in my next post.

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

Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ 61.75 stops at $76.91/$71.89
Long 2 units of Ultrashort Dow ticker DXD @ $57.85 stop at $67.89/$62.69
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $112.71
Short 2 units of Apple ticker AAPL @ $178.05 stop at $107.21/$115.31
Short 2 units Salesforce.com ticker CRM @ $56.05 stop at $42.12/$46.19

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