QUOTE]Quote from ByLoSellHi: 2-28-2008 Get out. Get he hell out of the market and go short. Forget volatility and trading. Just get out. [/QUOTE] Today was the worst day yet in the credit market. I think that we at least restest the Jan lows. The divergence between what is going on everywhere but equities is unreconcilable. The amount of issunce that is coming down the pipe to cover all the auction fails and all the other instruments that were supposedly cash equivalents that are now illiquid is staggering. This is the repricing of risk that many of knew was coming only it will be a forced repricing like Thornburgh today. Look what FNM is trying to get away with (from its 10-Q) "The total number of loans we purchase from MBS trusts is dependent on a number of factors, including management decisions about appropriate loss mitigation efforts, the expected increase in loan delinquencies within our MBS trusts resulting from the current adverse conditions in the housing market and our need to preserve capital to meet our regulatory capital requirements. For example, we recently introduced a new HomeSaver Advancetm initiative, which is a loss mitigation tool that we began implementing in the first quarter of 2008. HomeSaver Advance provides qualified borrowers with an unsecured personal loan in an amount equal to all past due payments relating to their mortgage loan, allowing borrowers to cure their payment defaults under mortgage loans without requiring modification of their mortgage loans. By permitting qualified borrowers to cure their payment defaults without requiring that we purchase the loans from the MBS trusts in order to modify the loans, this loss mitigation tool may reduce the number of delinquent mortgage loans that we purchase from MBS trusts in the future and the fair value losses we record in connection with those purchases." Hard to believe! Maybe there is small gain to be made on further upside here in the short term but the downside risk is huge. People have been waiting for the credit markets to start to function again but they can't wait forever, they need the funds that have been tied up and the market is still deteriorating. It is just a matter of time before forced selling occurs and then things will get marked to market and the potential for some nasty writedowns will surface. Until there are real signs of improvement in the credit markets anything more than a small intraday long is probably not a great RR trade here with markets at resistance and butting up against a DTL in addition to all the fundamental crap. BuyLo I think you are about to get paid! I posted this link in another thread but I think it appropos to repost here: http://www.house.gov/apps/list/hear...ubini022608.pdf
No, I'll willingly eat crow. I have never made such a broad call as this one, but I'm also backing it up with intense put buying on select sectors. If I'm right, and the market takes a swan dive, I'll be hailed as a genius or lucky, or maybe with a few "anyone could have seen it coming." If I'm wrong, well, you know... I hope so, Mv. I'm entering some large positions, everyone on the short side.
1st TWM 2nd QID 3rd SDS, QID could take 1st place, but I see TWM outperforming the most out of those 3. GOOGLE, AAPL and RIMM have kept the NDX afloat for sometime now, QID should be trading around 55 range now...
If anyone actually thinks Jan 22nd marked a bottom in this market you should think twice because that was not the bottom, I believe were in for another major fall as well. I think Jan 22nd lows will be reached again sooner than later. There isn't any catalyst left for this market, rate cuts are about the only thing, but lowering rates to historical lows also has its problems as you can see by the dollar falling to new lows on a daily basis. Its going to get even more volatile over the next few months, anyone thinking its headed towards new highs is foolish.
Good luck, maybe think about putting on some OTM March bear call spreads in case the move takes a while or we drift up a little first or look for some stocks that will explode if we get a massive rally instead due to some massive government bailout and buy some cheap OTM calls, maybe some calls on Gold stocks as any bailout will send gold through the roof and gold stocks are lagging still just about to come out from under the burden of their forward sales at lower prices. I admire your conviction but you have been around long enough to know how this works so take out some insurance. If you are right it will have been a small price to have paid.
Not only that, and I have this on gospel, you can't even get construction loans from banks right now. I never remember this. Never. There were bad times where they'd loan you the money but put you through collateral hell, charge you heavy juice and use a fubar LTV ratio, but I never recall a time where they said point blank no. That's just one factor. Add the credible info on the statistical sampling of projected bank failures that the FDIC is openly gearing up for, and the complete drought of LBO money, along with a hundred other factors, all negative, including an inverse relationship with fed rate cuts and mortgage rates, home, credit card and auto loan defaults, and you're never going to get a clearer sell signal.
Fair point. Just pondering this over tonight, but given my level of conviction, I think cheap, deep out of the money calls are my preference. One other thing, and it's admittedly a digression, but somewhat related to the tenor of my point - lumber/building material stockyards are running so low on materials, that they have to special order common products. It's not because they are selling so much, but because they're selling so little that they aren't confident enough to carry inventory anymore. Obviously, that's housing related, but I have more than a feeling that the same thing is happening in other sectors of the supply chain (non-housing related).
Totally agree with thi, my friend already made 90k in 2008 shorting financials and USD, and ging long on euro,platinum, palladium, gold and nat gas..