Why You Should Go Short Tomorrow

Discussion in 'Trading' started by cszulc, Jan 24, 2008.

  1. cszulc


    Tomorrow should be an up day, due to the great earnings, presenting an excellent day to short.

    Look at next week:

    Mon: New Home Sales (market expects increase, I'm projecting 15k decrease)

    Tues: Durable Goods/Consumer Confidence (market expects decrease of 1.0-1.4, I'm projecting at least 2 points)

    Wed: ADP Employment/Advance GDP (market projects 1.5-2.0%, in my mind anything under 2% will get a down day), and FOMC Meeting results (market still hopes for 25 and even 50 bp cut, I'm projecting NO cut due to the recent 75bp cut!).

    Thurs: Personal Income, Core PCE, Initial Claims, Chicago Manufacturing

    Fri: Employment Report, ISM (my projection is down to 45.0), and Michigan Sentiment

    All or at least MOST of these economic reports are bound to be bad and present a pretty good short opportunity considering the past 2 good days we have had (plus tomorrow's good possibility).

    What do you think?
  2. cszulc


    Also, I think we might retest the lows of 2002, and with this aggressive cutting that has shown nothing reminds me of the 2000-2003 bear.

    People are saying rate cuts will help us so much, but really they'll just tack on more debt to the consumer which will soon explode into the multiple trillions and no way to pay for it.
  3. I agree with you mostly. I think after Wednesday next week it will start to fade. The FED meeting is the big question. Uncle Ben is unpredictable to some degree. I wouldn't be surprised to see him talk about inflation again and only give a .25 cut regardless of what the futures are showing. Maybe a little selloff tomorrow afternoon and into Monday with a quiet Tuesday?
  4. Exactly, either way this is all going to end badly. I had just 1 long term position throughout the last year that was my "investment" and it has been crushing me nonstop. This market is only good for trading and nothing else. It is too volatile for "investing" and hence I learned my lesson after taking a big fat loss on my 1 crappy long position.
  5. cszulc


    Exactly. He, in my mind, is too worried about inflation to provide additional aggressive cuts other than a 25bp, which like Dec 11th, will be faded by the market. We sold off on the last ISM number as well, because of the below-50 reading which we will see again.
  6. 75BP was to stop the Chimp giving his 'State of the Union" speech on the 28th against a '87 backdrop. Bernanke seems aware that he cannot cut much more but didn't want another thrashing from Wall St for being a bad poodle. He is probably cringing at the thought of another whipping to come if he does not cut and hoping his masters won't whip him if he cuts 25BP on 30th. Poor clueless academic sap probably thought he would be the one settiing policy when he took the job no one else was stupid enough to take.

    Alternatively if Wall St is short after using the rate cuts support to reverse then we may see no cut and an attempt to break the market.

    Seems to me it's more about Realpolitik than fundamentals. Banks vs Hedge funds.
  7. good analysis, the most critical event is still the rate cut, i really think a 50 bps is needed to prevent another selloff. We will see, looking to exit most positions tomorrow as well.
  8. xiaodre


    why go short before the fed? I don't think that's wise, considering what I saw from the last fed...

    I'm just gonna exit my trades and wait to trade until sometime after 3.15pm...
  9. Excellent point. Going short just because the market is up is not usually a good idea. What are you going to do if the market continues to rally into the Fed meeting in anticipation of more rate cuts? The Dow could be back to 13,000 before next Wednesday is over.

    Guys, just trade what happens. Don't develop strong opinions. Even the best analysis can be flawed. It's not about being right, anything can happen, just put yourself in a position to take advantage of opportunity when it is presented, don't predict......that's what trading is all about!! It's just that simple.

    Just log into your account tomorrow, ask yourself where the market is going, and look for your opportunity. That's all you gotta do.

  10. how did you arrive at this number? explain your exact reasoning.
    #10     Jan 24, 2008