Thursday, March 5, 2009

Quick Note


I received an email from a reader, (thx R.T) asking the following,

"I noticed Bill Fleckenstein has recently closed his short fund, Marc Faber has said we are due for a big bounce and that Robert Prechter thinks the same. Do you think you are pushing the envelope too far staying short? "

Well, first off no one and I mean no one knows where the absolute top or bottom tick will be cept' the Big Fella upstairs. I have the utmost respect for the 3 mentioned pundits you have noted as they do much homework, are 'students' of the market and march to their own drummer, unlike the daily dose of hacks you see on CNBC.

I wholly recognize that all the oscillators and ancillary indicators that these men follow are all severely oversold and are screaming for the market to bounce. The problem is we are not, which tells me that when you cannot bounce from a severely oversold state you can crash. They seem to have goosed the rally yesterday with the rumors of a suspension of mark to market accounting.

Hear this once and for all, no matter what the landscape of laureates like Steve Forbes and Bill Isaac say,

you want to put a stake in the heart of what little semblance of propriety, honesty, and integrity our capital markets may have left, then suspend mark to market accounting !


I believe the short bus riding equity boyz are finally waking up to what is reality. I continue to believe that if you ask 20 of your friends, associates and relatives if they have sold out their positions (re: IRA, 401k accounts) no more than 4-5 have done so and until that number sits at 16-18 we will be nowhere near a bottom.

I have my stops in place to protect myself against the manipulations like that which we saw yesterday. These manipulations and chicanery are done, if not with the direct involvement of the Fed and Treasury and SEC, then with their tacit approval of simply looking the other way while it goes on.


I have also learned through experience that listening to others can sometimes cloud your judgement. I would rather, in this particular instance, hang on too long and give some back, rather than exiting early, based on these 3 wise men's opinions, only to see the market do what MY ANALYSIS thought it would do. Simple translation, I would rather lose on my own hook than win on theirs so to speak. The fact that they are shouting a warning means I continue to check and re-check my charts, my stops everything, I may have been on DEFCON 2 but now with their admonitions I am on DEFCON 1

Sorry for being so long winded but I hope this answers your question R.T.


I would like all the Fed defenders and apologists, of which their are legions, to read this article detailing how the Fed is continuing to refuse to release data surrounding the AIG bailout. I consider it exhibit #213 of evidence that the Fed and Treasury are part of the disease not the cure.


Housekeeping notes;

Yesterday afternoon I was stopped out of 1 unit of my EFU position at $136.25 for a gain of just over $46 pts leaving me with 1 unit.

This morning I was stopped out of my 1 unit long ICO position at $1.47 for a loss of about a nickel 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 Ultrashort MSCI EAFE ticker EFU @ $89.80 stop at $123.28
Long 2 units Ultrashort S&P500 ticker SDS @ $69.80 stop @ $93.42/100.22
Long 2 units Ultrashort Real Estate ticker SRS @ $53.80 stop @ $64.72/75.42
Short 1 unit Apple ticker AAPL @ $102.05 stop at $100.11
Short 1 unit Apollo Group ticker APOL @ $82.95 stop @ $82.95
Short 1 unit Microsoft ticker MSFT @ $19.20 stop @ $19.20

No comments: