well made a little trade before close on UYG. the only way to make money in this enviroment is to be a sniper. wait and watch for your spots to take what they give you.
You don’t TRADE this market, unless you do it for a living…
The path of least resistance here is DOWN…
THINK…
We are seeing this economy come apart at the seams…Without EXCEPTION, the economists have BLOWN EVERY SINGLE FORECAST they’ve made for the last 2 years.
This is a GLOBAL event…
The ONLY stat that will matter very shortly is JOB LOSSES!!!
The economy CAN NOT side step job losses. It boogles my mind that we have a event that is STILL unfolding on a GLOBAL scale, and we have NIT WITS talking about a peak unemployment number of 7%-8%.
That is complete BS. The job losses will be HISTORIC, just like the HOUSING BUST was historic, like the price of OIL was HISTORIC, like the freeze up of the credit markets was HISTORIC, and ON and ON…Yet the economists expect RUN OF THE MILL job losses during this recession???
Real money will be made by those who realize that the lows we are now trading at ARE NOT a BUYING OPPORTUNITY…They are your last chance to GET OUT!!! Being SHORT here will be a VERY PROFITABLE position. This should be set up as a LONG TERM trade…buying way out of the money, long time, puts in some select ETF’s will be CASH COWS over the next year as the REALITY of this MESS is driven home. This will be EXACTLY the same scenerio that people WATCHED as housing prices fell FURTHER than even the most pesimistic person believed they would.
We have just entered the most painful and important part of this cycle. The part we the Recession turns to depression…The difference???
A recession is when your NEIGHBOR losses HIS job…A DEPRESSION is when YOU lose YOURS!!!
Most of us here will be postioned to pick up Real Estate at prices that we would have NEVER thought possible. The most important thing to remember during this event is the POWER OF CASH!!! In a deflationary event, contrary to popular believe, CASH actually INCREASES in value. I’m not talking about CURRENCIES, I’m talking about YOU having a bank account with CASH in it . When the owner of that 40 acres you’ve been talking with finally can’t take it any longer and calls you to DUMP the price, that CASH will be the most POWERFUL negotiating tool in the world!!!
The FOUNDATIONS of Future EMPIRES are being built RIGHT NOW!!!
You can dig in and HUNKER DOWN, or you can grab that shovel and start BUILDING!!!
The truth is that unemployment is MUCH higher than 8-9% right now. However, the government has changed the way the report all the numbers over the years and therefore the numbers are all bogus. This morning’s CPI report indicated prices are decreasing, but except for fuel and autos, I’m still seeing (with my own two eyes) prices increasing. The miniblinds that I put in my rentals just went from $3.96 to $4.76. A 10 piece chicken McNuggets (just the nuggets) a few months ago was $2.00. Then they jumped to $2.60. Last week, they jumped again to $2.80! In my opinion, we still have strong inflation (ex-fuel and autos, as the government would say). Widespread deflation of prices hasn’t even begun yet, but I certainly agree that it could.
Mike
I just read something this morning that made a lot of common sense.
The reason prices will/are falling is DEMAND!!! It’s so simple, it’s actually hard to invision…The market place never lies…Prices are/will continue to fall because the CONSUMER is GONE, DONE, FINISHED!!
Manufacturers CAN NOT pass price increases along because there is NO DEMAND for their products.
The interesting twist on this is exactly what you mentioned Mike…
McDonalds was one of the FEW companies that actually passed along prices increases because there are so many TRADE DOWN consumers. These are people who would RARELY eat at McDonalds, but are now going there BECAUSE of those $2.80 McNugget dinners.
I have also read that the HOUSING BUST could be contributing to this trend. As people lose their homes they actually EAT OUT more often as a type of mental vacation from their new reality.
There is a GREAT book that you should buy TODAY!!!
Its…“Conquering The Crash” by Robert Prechter (He’s the Elliot wave Guru that see’s the Dow hitting 1000 before this is over)
Mike, You could have wrote this book…EVERYTHING you’ve been talking about is in there along with some INCREDIBLY insightful observation based on over 100 years of market history.
FDJake,
Thanks for the book recommendation. I will order it today! I’m currently reading the book “The End of Prosperity” by Arthur B. Laffer, Stephen Moore, and Peter J. Tanous. It’s a very good book about the history of taxes in the United States and their effect on the economy.
Mike
I think Shorting is the only way to make money in here anymore. i dont see this thing improving anytime soon.
if they let the autos fail i bet i will be able to get HUGE discounts on homes in michigan (not detroit) grand rapids. i have already been looking at them because they are very cheap.
if the autos go BK the banks would begin fire sales to unload the ton of foreclosures.
Alan Greenspan is really making a name for himself. I cant believe people pay for that 4 eyed frog to talk to them.
I’ll lay out the Auto companies FAIL SAFE Plan…
You watch…this is EXACTLY how this will be played IF the Big 3 DO NOT get those LOANS before January…
The Big 3 are “playing nice” right now…They are trying to explain how bad things could get if they DO NOT get these bridge loans. If the CEO’s can’t get Congress to understand the IMPACT of a failure of the Big 3 in TESTIMONY…THEY WILL SHOW THEM…FIRST HAND…UP CLOSE and in REAL LIFE!!!
If the lame duck session of Congress screws this up and DOES NOT give the car makers bridge loans IMMEDIATELY the Automakers will announce absolutely MASSIVE LAYOFFS…and I mean MASSIVE…this will hit ALL suppliers IMMEDIATELY!!! They will, in turn, announce THEIR MASSIVE Lay offs.
The stock market will get DESTROYED as banks, pensions, mutual funds, and many others, holding MASSIVE amounts of stock and debt in the Big 3 and THEIR SUPPLIERS will sell.
This event will be on the news EVERY MINUTE OF THE DAY…Think about it…this is what our MEDIA LIVES FOR…I can already see the cameras set up outside the plants, inside the homes of laid off employess WEEKS before Christmas, parents CRYING, kids CRYING…This will be a GIFT for the major media outlets. Congress will turn on a DIME as soon as January 20th rolls around because THEY (the Dems) will now play the role of SAVIORS!!! This is POLITICAL GOLD for the Democrats. I think the Republicans are being played like a piano.
EITHER WAY…They GET whatever MONEY they need!!!
trading this market is not healthy.
I totally agree with you on this.Realistically trading is never healthy in any market condition…The stress is immense…This is why I constantly tell people to stay out of this market…This is a pro’s ONLY market and I can tell you some professional traders I know have lost %30-%40 on multi million dollar (personal) accounts so far this year…That kind of % loss devastates any account,big or small…That kind of % loss changes lives forever…That type of loss will take decades to rebuild considering the current economic issues we are going through…
I took a stop yesterday on my etf basket…no big deal…%1.2 on the %10 of capital I used…Could be worse…I will re-enter soon if we get a good bleed…
Just curious here Rookie…
Why fight the tide on this???
Maybe I’m completely wrong on this…but everything I see points to a HUGE UNDER ESTIMATING of this economic event. All we seem to hear is what a great “bargain” stocks are…that alone makes me look at the other side.
Wouldn’t it be easier to just be short here…take a longer term time frame and just wait… for what, in all likely hood, is coming???
I’M JUST PICKING YOUR BRAIN HERE…not trying to argue a point.
i just dont know about the bounce off the lows anymore, well atleast for today. I could see the market falling threw it very soon.
I cant believe im saying that with options expiration in 2 days. I’m in all cash and might bite on something probably not though.
well 15 minutes left looks like we’re breaking lows on the close of the dow. not the intraday lows of 7700 or was it 7900 idont remember. i think those get broken this week aswell.
welcome back panic selling with the short this market will crash fast and hard now.
I’M JUST PICKING YOUR BRAIN HERE…not trying to argue a point.
Good question and the last thing I take it as is sarcastic…Seriously…
I guess its simply hard for me to swallow…Watching Goldman trade at $55 a share and numerous others simply melting is tempting to me…I am a contrarian trader by nature…When the markets were in Bull mode I was very cautious and was happy with mediocre returns…I don"t mean to sound arrogant but I’m in the “stay rich” business not the “get rich” business…So for the simple fact that I evaded being decimated by this market it does tempt me pair into these unreal prices…But at the same time I keep very tight stops and make sure that if I’m not right I take quick stops…At the same time I don’t trade in my rearview mirror…I’m very well aware that just about everyone is getting out of this market either because of margin calls or just fear…These are the times when accumulation should start…But like I said I don’t trade in the rearview mirror…Yeah it would be easy to say short this and that but when this market hits a bottom the rebound will be a rip your face off rally and I’m a bottom fiend…Mind you I’m not red on the year,up about %10.3 or so on my ENTIRE account so by no means am I hurting…Overall I’ve always felt that Buffet was right on one thing,his motto…Be fearful when others are greedy and greedy when others are fearful…Tough part is this time is much different…I’ve never been married to any stock,fund etc for very long…If I could get a %7 yield (with no volatility) or a CD I would never trade my account again…But we all know thats a pipe dream for the next few years…My main point is I guess I just feel this is overdone but we all know it’s not at the moment…Do I know where it will end,no…Do I feel it will end soon,who the heck knows…I do know one thing,that Obama needs to announce a serious bailout package and if he announced he would delay those tax increases this market would bounce %25 fast…But I doubt he will do either one of those things…And not to sound political but I truly believe that a portion of these losses is because of his election win…hen he started to dominate the polls the markets started the black swan dive (no pun intended,its a technical charting term)…Other than that I simply have no where to park my money other than to actively look for scalps…I’m not getting short here…I’m not buying closed end funds because they are illiquid…I’m not buying Bond funds because of holding periods and I feel the defaults will continue but mostly because of the holding periods…My money market accounts pays me %2.93 which is pure dogsh*t…I won’t buy some %4 CD and lock up my money for a year…I won’t send my money offshore for obvious reason…I wont buy corporate notes…I wont buy callable CD’s…I have to chase returns and thats my position right now on this mess…And yes I’m very tempted to become a dollar cost average long term investor but I can’t swallow willing taking losses because of my nature as an active trader…I hope I wasn’t too long winded for you…
“Hope I wasn’t too long winded.”
No…those are some great insights!!!
Besides…Long winded is MY specialty.
I wonder what this market will look like if things just follow the same order that every event in this bust has…
We get the initial drop…A lot of genuinely smart people believe we’ve seen the worst of it…Then it just keeps dropping.
Housing did this…
Investment Banks did this…
Commodities did this…
The Stock Market did this…
Now it looks very likely that numerous Insurance Companies are about to get their heads handed to them in a MASSIVE Commercial Real Estate bust that could make the housing disaster seem small.
I had to laugh when the FED released their unemployment expectations today…7.5% PEAK :shocked
Reversion to the mean Dow average for almost 80 years would have that index at 5000…
But who knows…we are in UNCHARTED WATERS without a compass.
tomorrow should be a very interesting day. I agree when we rally it will be a huge swing. With all the shorts in this current market I would be thinking it happens now but watching everything get creamed it seems like alot of money is waiting. I think they’re waiting for the shorts to cause hedge funds to throw in the towel, along with margin calls and then when the buyers come in those shorts will cover and the tidel wave gets moving fast.
I thought we’d see buyers come this week and cause us to go higher but from watching the volume and charts i believe their is a HUGE amount of shorts in the market now. I hope we see the same thing tomorrow early, I would take a jump in then.
anyone look at a chart of DRYS ?? i was up huge on it when we rallied, i kept it overnight and got stopped out the next day after throwing up almost all my profits. I thought we were getting a short squeeze with options expiration coming and from the volume the last 10 days it had alot of shorts on it. what really happened was those shorts covered when we rallied, then they re-opened their positions the next day. today it had over 16 mil volume its all time high. it moved straight down with little bumps. this stock was $115 + when the bdi 11,000 when china was buying up all kinds of commodities and commodities were sky high. now its 5.30 ish. the whole dry bulking sector is being destroyed. this stock could be a huge short squeeze opportunity very soon. i will be watching it like a hawk. If it doesnt get a squeeze i hope it gets shorted to the ground. i’d love to buy and hold that stock @$3 or less for a few years. they have an oil drillship business that they will spin-off as a dividend in the next months that i want. I think the stock will probably just keep killed along with the other shippers.
I know it sounds odd but I dont feel that alot of hedge funds are net short this market now…This is pure unwinding of positions from every stage of investor…The right way to play this market is one of two ways…1) Go into an all cash position and come back in January after BO takes over and take a crack (Thats what Steven Cohen owner of SAC Trading did with his entire staff !!!)…2) Put a very small fraction weekly because this market isnt going to zero…6000 maybe but I doubt it…I think by 7000 some serious economic package will be in the works…But I could be wrong…I just dont feel its very professional to get bearish at 7997 on the Dow…The time to get bearish was 14000 Dow…7997 you start to hatch a plan to get into the market…There is $300 Billion in cash in money market funds and no one likes sh*tty rates…People will come back into this market when the smoke clears…Who knows when that will be…But you can bet the blood is pouring into the streets in a huge way…Barton Biggs was very bearish today on Bloomberg,and snappy to that Jeff Spicoli commentator they have on after 3pm…People are hitting the bid and looking for the door and people with boatloads of cash are salivating at the prices…And I’m one of them looking for a long play…One good day fully invested in this market can yield 40k-70k when things turn around…I’m keeping the powder dry because good times will be back after the markets flushes all these weak hands out…Then the mother of all short squeezes will start and that should gain traction into a nice follow through rally…But when that happens is anyones guess…
fdjake,
And yes I did laugh when I heard Lyle Gramley start making predictions…Also did you see Dr.Doom on this morning?..Nouriel pegged it nicely on this one…but a broken clock is right twice a day…Nouriel has been bearish for years…Had you been net short on his views you would be broke years ago…
By my count, this is the 4th time we’ve tested the low. I didn’t see any panic selling - this was an orderly decline on only moderate volume. Certainly no capitulation that I can see. On that basis, I think we go lower from here, probably to about 7,200 on the DOW. What’s more, the FED has basically admitted now that things will get worse through 2009. Job losses haven’t even started to appear and we still have credit card defaults; commercial real estate defaults; the auto bailout; airline bailout; etc to go.
I’m betting down!
Mike
It may not be hedge funds short be their is a lot of shorts out here. seems like everyone in the market is short at the moment.
here is something i think will be very helpful to investors.
If you’re looking for a clear indication of a market bottom, just look for the BDI to start moving noticeably higher as it often predicts and moves in tandem with the equity markets," said Rodger Moore, head-strategy at DBM Capital Management.
The BDI offers a real time indication at global raw material and infrastructure demand. Unlike stock and commodity markets, it is totally devoid of speculative players. The BDI leaves no room for speculation, is not subject to revisions, and it can’t be manipulated because it is not tradable.
Interesting article with some very interesting charts…I follow David Fry, and not just because he is an avid surfer…Incredible technician…
QQQQ puts on FIRE today…Up OVER 100%…No story …REAL MONEY.
Why fight this???
WE are headed into a DEPRESSION…NOT RECESSION…A DEPRESSION.
The text book definition of DEPRESSION is a 10% or greater drop in GDP…We WILL see that…
This market is STILL too high…This is an economic event not seen since the 1920’s. Money has been thrown at this market like NEVER BEFORE IN HISTORY…STILL NO EFFECT…That…is telling us something.
So learned gentlemen…I’m one of those who cashed out (6 figures) in mid September right after the first 900 point drop, and never cashed in (7 figures) when I sold my company 3 years ago. Both monies are currently in 2 different money market accounts. I am actually scared that this money could up and dissappear.
What would you suggest?
jmd_forest