Sunday, November 23, 2008

The Obama Bid

Whether they planned it this way or not, the Obama administration displayed remarkable market savvy on Friday.

First, in leaking they were working behind the scenes on a plan to stimulate the economy come January 20th (something we're seeing news on this weekend), and then the market-timing of the announcement of Tim Geithner as the new treasury secretary.

The Geithner news was floated following a terrific flush into lower-low territory for the market, but not until things had already begun to stabilize...and then, right into the last hour of trading.

How can we be sure the market was stabilizing? Well, think of it this way: The latest death-spiral Financial, this time the titanic Citigroup (Piggy), was crashing further into oblivion Friday with the dreaded weekend and the promise of equity euthanasia at hand (Kill Piggy). And yet the market indices were basically flat at worst, before the treasury secretary news sparked a late, 500 Dow-point surge higher.

If the market cannot manage further grim while a former-darling Financial is being pursed for the reaper - then I would say the market was ready to rally.

I definitely had a rocky week, but I was market-neutral or net-short 75% of the time, utilizing Ultrashorts SDS and/or TWM as hedges. On Friday I removed hedges no less than 4 occasions, each time the market began to re-reverse positive on the day. On the last occasion I dumped hedges at-the-market the moment the Geithner news was uttered. At this writing, I am exposed to many of the longs listed below.

The shorts have had it very easy lately, but bear-market rallies have a tendency to get medieval on the shorts, insuring it is not only the longs who are marauded (this is an equal opportunity unemployer). The market has had a substantive flush (understatement), the new administration is now at the helm and we're heading into the strongest seasonal period of the year. If we undercut lows again, I will adjust, eat crow and retreat with maximum cowardice. In the meantime I'll argue strongly that the retracement period for the market has begun; that the upside of this retracement will be the strongest for quite some time; and while there will be dips along the way, that trend will remain in tact until the inauguration January 20th.

Buy the future Obama rescue - sell the fact.

The following is my current Woolen Woot Suit of Longs which I am trading around and largely long at this writing. With the exception of the Golds, all of the groups are currently highly ranked in terms of relative strength. The Golds are only middle-ranked, but they are climbing in ranking and you'll see major volume in the breakout rally of that group on Friday...



Airlines:
ALGT (thin)
UAUA
RJET

Commercial Schools:
APOL
COCO
CPLA (thin)

Biotech/Biomedical Svcs:
AMGN
GXDX (thin)
MYGN
GENZ

Commercial Svcs/Healthcare:
HMSY (thin)

Commercial Security/Safety:
EMS (thin)
ASEI (thin)

Retail:
DLTR
WMT

Military-Systems/Aerospace:
AXYS
AVAV
ISYS

Metal Ores-Gold/Silver:
GDX (Miners ETF)
NEM
ABX
GOLD
RGLD

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