Thursday, October 23, 2008

Thursday Morning

It seems that I have been doing a lot of watching of the tape as opposed to blogging and trading lately with yesterday being another example of that. I like to do this as I need to stay in tune with the patient just as an intensive care physician stays with his/her patient round the clock to stay in synch with the patient's status. I think this wise.

That said did you notice not only the gap down yesterday on the tracking stocks of both the Dow(ticker DIA) and S&P(ticker SPY) which happened on larger volume than the 3 day prior run up. It is little things like this that can and often are a tell as to what is happening. Unfortunately this can get lost in the shuffle.

I am of the belief something larger is afoot here and it is not good. I think the stock boyz are finally getting a clue and almost like the last one to find out bad news and holding the bag they are not happy about it. We were way oversold and should have popped much higher from the recent lows. Instead we did not. Some claim that crashes occur from extremely oversold levels. Just something to think about amidst all the hype of pom pom TV that this is indiscriminate selling, which by the way you would be well served to ignore. I would give them (CNBC) a pass if on the way up it was indiscriminate buying but we all know they don't operate that way.

My personal opinion is the stutter stepping down of this market decline is actually doing more harm than good as it is keeping people from doing what they should and that is get defensive, get smaller, sell down positions. Instead, you sell today, get a 300 pt rally the next day and feel stupid. The only thing is we go down 500 the next two days. The point being is it is 3 steps down, 1 or 2 steps up, etc. You get the picture.

That said, the equity market seems to be waking up to the fact, of a recession larger and more painful than even some of the more pessimistic among us had feared is here. That unemployment is headed for double digits, even by the government's lowball doctored stats. That pension funds are severely underfunded. That the cancer is spreading and the Fed''s balance sheet does have a limit, sorry Steve Leisman it is not infinite, it is finite to the point foreigners step up to buy our paper.

All this is now being priced in on a furious, almost a catch-up pace. I realise this infuriates the polyannic ignoramus's like Dennis Kneale et al but the pendulum has now swung and is in motion and to guess where it stops on the downside is as futile as when it swung to the upside, Larry Kudlow and Dennis Kneale's protestations notwithstanding.

Housekeeping notes;

Yesterday I was stopped out of my long TBT position at $59.30 for a loss of just over 3/4 of a pt on 1 unit as it gapped down at the opening.

I was stopped out of my long CBI position at $11.75 for a very small gain on 1 unit.

I am moving my stop on FXY upwards to $97.68

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 @ $90.60 stop $84.34
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at 97.68
Short 1 unit ticker CRM @ $56.05 stop at $42.12

1 comment:

senrex said...

Strange price movements as well. I bought UYM for 17.55 at about 3:10 PM with the Dow up 35 points. Then it sold off. Long story short: after moving with the market all day, at the end of the day, with the Dow up 170+, the UYM closes at 17.80.

Something's fishy.