Wednesday, December 3, 2008
The above chart is a daily view of the financial Spiders ticker XLF. Friday was a abbreviated trading session as the XLF reached the 50% retracement of the leg down from early November. I am using toady's strength to get short the financials as they are hopelessly mired in such a quagmire beyond comprehension.
The facts are indisputable. The losses which by the way, the banks refuse to take continue to mount. The bulls can deny this up and down all the day long but this is fact. It matters not where they hide them, off balance sheet or on, level 1, 2, 3, it matters not a whit. The gig is up. Even the short bus riding equity boyz are starting to get a clue that the losses are staggering and this is just in the CMBS and residential mortgage arena. The commercial mortgage anvil has yet to fall. Credit card receivables, auto paper et al, will rear their ugly head as the economy and more importantly job losses mount. Slowly this is sinking in to even the densest market participants.
The shills can cheer and cajole and prod all they want it cannot change the facts. The banks and bank holding companies are insolvent, but for a minute lets pretend they are not. How are they gonna make money Mr. Larry Kudlow, Mr. Vince Farrell ?
Lending ? You're kidding right?
People and entities who need money aren't being lent to if hell froze over and the people one would want to lend to don't need it and further are smart enough to not want it!
Leverage ? Again a joke right?
Gone for good as they pull in their horns to stay afloat. Think of it like the guy who sells the family silver to keep the heat on and food on the table.
Wealth Mgmt and Advisory services? Another joke huh?
You call what the likes of B of A, Wachovia, Merrill were doing wealth management. I will cut you some slack on this one because even after the Henry Blodgett, Mary Meeker Frank Quattrone, Jack Grubman fiasco clients stayed on. Go figure but better left to shrink rather than me. In the face of this, who needs advisory services to stay in cash or buy T-bills.
Proprietary Trading ?
Without a Hank Paulson to lobby for increased limits back to the glory days of 60/70/80:1 a la Fannie and AIG keep dreaming.
This all adds up to a logical choice to test the water getting short the financials once again.
Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".
Long 1 unit Ultrashort Financials ticker SKF @ $148.10 stop @ XLF $12.31
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56