Don't trade against the institutions. When they dumped all inventory that's a red flag. When they load up (last wed + yesterday) that's the green signal.
i suspect the kind of rally we had yesterday was shorts covering. Why? because with all the issues going on with subprimes, growth slowing etc. institutions would not be buying so agressively unless they were removing hedges (shorts). This was not a bottom but a pullback and a small one since Feb 2007. What happens when the carry trades are unwound again? And Japanese banks still have until March 31 to square their books, so watch out for volatility as they unwind... http://lauristonletter.blogspot.com/
I changed my mind everyone. After getting a decent night's sleep, I'm bearish again. Screw the UltraDow 30. I am deeply skeptical of this rally. Corporate earnings are eroding, and cap ex already has. How could a sane person invest long in such an environment where such things are provable. I just knew at least one of you would give a flyinf f%$K.
I do...I think we'll be turning a corner this week and next....1st Quarter is going to be the one that slows down everything I think. It will help when homebuilders and lending companies start lowering guidance and delivering earnings that fall short of expectations and are lower YoY.
This is why. I re-read this quote this morning and it brought me back to my senses - it's all black and white, without spin: Unless one thinks the consumer is going on yet another bender, the above is a very ominous sign. *I hated what FedEx had to say yesterday, too. Canary in coal mine.
I'm not ready to throw all of my money back into the market yet. The correction of February 27th was a precursor of how hard and fast this market is "willing" to drop just on the thought of the Chinese economy slowing. Just think how bad it will be when there is actually some TRUE bad news. Any rally will most likely be short-lived as we are coming into the historical flat period of the market. (may-august)
that and we get housing news tomorrow with existing sales (projection -2.5%) & Monday's new home sales (expected also pretty low) which should push worries as is, but would look even worse if they go beyond expectations. It makes things like yesterday just fun to be in for a short while and grab what you can...right now everything is relatively blah...
That's my boys. The "Bad News Bears" and yes I'm short today. But killed it long off that stretched low. Sold a lot of calls against longs yesterday right at the bond close. BOING, BOOOIIIINNNNGGGGGGGGGGGGGGG. Today was a gimme down day.