Monday, March 16, 2009

The Rally Continues

What does one say about the rally other than this is how markets function. They never go down in a straight line nor do they rise. Amidst all the hoopla and excitement of this rally I would remind readers that we are only working off a severely oversold condition and no matter how excited the financial media gets about this rally it is a bear market rally.

Please pay attention to the volume on many stocks, like for example GE (chart above). Notice how the volume in this rally is waning. This is not what you should see if the bottom is for real. I realize many equity players have extremely short memories but it would be wise to remember that we have just exited the mother of all credit bubbles which many seem to think all can be made well in the world by the magic wand of the Fed, the Treasury and the Obama Administration.

If you truly believe that the sins of so long manifested via this monster credit bubble can be worked off and over in 12-16 months, well then, and I hate to say this, but you deserve the fate that befalls you.

It has been said that you cannot save people from themselves and as much as I hate to agree with this it seems to be true.

One thing I have noticed is the number of seasoned market watchers who seem to be excited about calling a bottom here. I am astonished at the number and am baffled as to what they are watching to make such a prognostication.

I truly wish it were a bottom and I hope I am wrong but everything I am looking at point to no such thing. It would be wise to remember that it was the seasoned market professionals of the late 20's, who managed to escape the carnage of the first leg down in the debacle that was 1929, who got caught in the bear market rally and still suffered the same fate as their ill prepared retail prey.

You must also remember that all those hedge fund valet boyz, endowment and mutual fund robots are petrified of missing a market bottom, more petrified than losing money. Which should go a long way to telling you how your money is truly being managed.

As for the banks and their purported profits this quarter, (apologies to Vikram Pandit) we have not even begun to witness the commercial real estate write downs and credit card losses as yet. These write downs notwithstanding, the banks are in wonderful shape, right Larry Kudlow? even if they are insolvent by all sane measurements.

Housekeeping notes;

Late Friday I was stopped out of my long UCO position at $7.75 for a loss of just over a 1/4 pt on 2 units.

This morning I was stopped out of my short GOOG position at $328.60 for a loss of just shy of 3.5pts on 1 unit short.

I was also stopped out of my long SKF position at $132.25 for a loss of just over 5pts on 1 unit long.

I was also stopped out of my long EFU position at $122.45 for a gain of 32.5 pts on 1 unit long.

I am lowering my stop on APOL to $72.54

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 Real Estate ticker SRS @ $62.75 stop @ $58.68
Short 1 unit Apple ticker AAPL @ $102.05 stop at $100.11
Short 1 unit Apollo Group ticker APOL @ $82.95 stop @ $72.54
Short 1 unit Microsoft ticker MSFT @ $19.20 stop @ $19.20

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