Tuesday, February 17, 2009

Back to the Mat

I probably won't turn around and go long tomorrow, but it's possible (for a trade).

The S&P 500 was slam-jammed another 4.5% today, the Dow is back to the November closing lows and the Financials are tied to concrete blocks again, balance sheets locked-tight and fit for sailing.

While there was no great panic or capitulation (on our shores at least), the investing public is sufficiently grim for the moment and I did exit several of my shorts late in the session (following a maximum plunge short earlier in the day).

I remain net-short (~1.5 to 1), but my head is somewhat safely back into its shell for the evening.

It was more Crutch and Dagger as far as market news. Russia went back into self-imposed-holiday mode and was shut for trading (propping up the Ruble requires a lot of rest, especially when oil is hitting lower-lows); we saw further going-out-of-business action in Eastern Europe; which encouraged serious selling into Western Europe; which set the tone for further drubbing here in the West. If you needed a sign of panic today, then you tuned into those who are on the hook with Hungary, Austria, Poland, etc. for hundreds of billions of Euros.

At least someone insured these bonds...oh wait.

In the West, we didn't exactly disappoint either - it was the story of Tiny Tim goes to Detroit and comes back with one crutch missing. A new uber-fraud surfaced (whereby income seeking widows, seniors and unified minors came to understand their Ultra-CD ETF's we're not really accumulating twice the normal interest after all (are you kidding me?) And this might be an $8B scam (according to the feds), but stay tuned because according to the Stanford Financial website, SIR! Allen Stanford was managing >$50B).

Detroit? yes, Detroit automakers need more money because their sales levels are coming in below the (very) recent targtets. In the case of GM, they are only asking for another 3 or $4B. That is good right? Because the market-cap today for that company is $1.33B (or less than half of the hopeful request) - and if we measure all the money they need to stand-up tall and move into the 21st century, their market-cap covers anywhere between 5 and 15% of the necessary funds they need for their bridge-in-Brooklyn loans.

Beautiful, Torture King.

If you are stuck long this market, then I apologize for being crass. I recognize there is real pain right now and you don't need my smart-ass ambulance chasing attitude to needle you further. Constructively, there really wasn't much in the action today which suggests we're near any sort of turn and I do suspect that all lows are going to be taken-out before the next reasonable rally will begin. But there is a rhythm to this beast and the rhythm calls for being watchful now for a counter-move higher.

I'm not saying we're about to bounce, but I don't want to keep flying full-blast short into possible congestion. If tomorrow is resolutely negative again (with continuing severe internals) then I'll re-accelerate further shorts, at least intraday. And if we do bounce, I would like to increase the short exposure again late in the session, depending.

In other words, don't do what I do.

Currently Short (according to size): VNO, BBT, SIVB, AXA
Currenty long (according to size): AVAV, ATHN

No comments: