Tuesday, March 24, 2009

Monster Rally Thoughts

Just like a man dying of thirst in the desert who upon seeing a mirage of a oasis will drink the sand so it is with the equity markets. So starved are these playerz for any tidbit of hope to run the market.

Facts are facts and the market had a wonderful day for the bulls. Suffice to say there are so many non confirmations out there from volume to volatility, just to name a few, that it would take a manager of other's money to buy this market.

I am not going to complain about the rally as this is what markets do. Everyone and I mean everyone seems to have caught this bottom !! To which I offer my utmost congratulations. Just be warned that if it were this easy to pick a bottom in the markets, as all the boobs and boobs on CNBC seem to be doing, we would all be living in Tahiti. As a side note, I absolutely love all the armchair technicians, yes when you have no clue what is going on you turn to technicals, opining how if such and such a level holds you can stick with the market. These same "newly minted technicians" would reference a wiji board if it served their ends.

Do not discount the tricks and manipulations that the Fed and Treasury can use with you as the guarantor. Make no mistake, in poker terms this is an all in bet by the Fed with YOUR money! If you believe that this newest toxic asset program will solve our ills then you are most eminently qualified to run a major insurer, bank, brokerage or better yet the IMF, The World Bank, The Fed or The Treasury.

A reader emailed me and candidly asked that given my criticisms of all the 'quick fixes' by the authorities what can be done to fix this. (thx M.L.)

The answer quite simply is DO NOTHING. Yes, I realize this sounds preposterous to the meddlers among us but it is precisely what must be done. The reason I say this is that if we do not let the failures among us fail we will all fail. I repeat if we do not stop this virus of profligacy and handouts to crony's we will have nothing left.

I cannot state this strongly enough. I do not care the industry or the sector. Until we get this through our thick skulls I am petrified the country that we have all grown up in will cease to function. You cannot risk a limb at the expense of the host. I pray that there are some adults out there who understand this concept for our financial survival depends on it.

The "everything is better" crowd is out in full force pushing the propaganda the worst is over. Expect CNBC to continue to drag out the regular shills. Bill Gross, Bob Doll, Vince Farrell, et al. All very bright men who never met a market that couldn't be bought with both fists. Surrounded by yes men kept in clover by the continued participation of the lumpinvestorate, and yes dear reader that is you!

Do you really expect the manager of the globe's largest portfolio of debt paper coming out of the mother of all deb/credit bubbles to not be in full support of any and all government intervention to support that market?

Do you really expect his lieutenants to call credit and debt anything other than the oxygen of the economy? Do not hold your breath waiting for El-Erian or McCulley of Pimco call credit/debt what it truly is, the lead noose of subservience around your neck, as this is their livelihood.

Do you really expect one of the largest mutual fund magnates to tell people anything other than sit tight and pay fees?

I have the ill feeling that those who are long and have been crushed in this market over the last 18 months will once again refuse to use this rally to reduce their equity exposure which is exactly what they should be doing. Unfortunately they (public) will commit the same mistakes over and over again. This is a gift to get out and lighten up no matter what the vested interest shills may claim.

Housekeeping notes;

Mercilessly yesterdays freight train that was the markets stopped me out of multiple positions;

I was stopped out of my long SRS position at $58.80 for a loss of about $5 3/4 pts on 1 unit.
I was stopped out of my long SDS position at $77.80 for a loss of about $2.5 pts on 1 unit.
I was stopped out of my short GS position at $108.15 for a loss of about $1.3/4 pts on 1 unit.

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 1 unit Ultashort 20yr Treasury ticker TBT @ $44.25 stop @ $42.17
Short 1 unit Microsoft ticker MSFT @ $19.20 stop @ $19.20

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