Dangerous Times - Obama Tries to Fuel Market

What an interesting way to close the market on Friday. I think it was pretty clear that there was someone waiting with a button to make sure that the market closed above 8000, as that is a pretty strong technical point for momentum. I literally watched it jump from 7992 to 8000 in the absolute last second of the market. At any rate, it was still big for the market to be as down as it was with: 1. Having GDP numbers be better than expected, 2. Having two strong days of selling after beginning the week in the green, 3. Having a Friday end as a red day is a rare things these days. So, I think we definitely have some downward momentum, but not quite enough yet in my opinion.

It is very clear that deflation is here, as we can see with the huge drop in real estate prices, oil, and precious metals. Eventually, I believe this deflation is going to lead to a deflationary down spiral and eventually capitulate. I do think we're very close, but we're not quite there. I heard a good analogy yesterday describing the state of the S&P. Under 820, the market has a cold, under 800 the market has caught pneumonia, and under 780, we're on our death bed. The technicals show us very close, but not there yet. As a result, we are vulnerable to these quick, short-term rallies that can be very, very violent. So, as I said a couple days ago, I have adjusted my investment strategy to make quicker trades and shoot for lower returns. I'm not ready to go all short, but I am very close.

So I did sell off most of my FAZ on Friday and a bit of my SRS shares that I had purchased a couple of days ago to pocket the return. I sill have plenty of short to reward me for another down day Friday, but I have a lot more conservative plays as well. I'm playing this market a bit more conservative than usual as I feel with the possibility of these violent rallies, I don't want to be caught with as many shares that I have usually been holding. Weekends always tend to have surprises as the government likes to let new hopes brew with investors over the weekend. This is why I have big positions in DGP, GDX, TBT, and UUP(see the market trend report below for UUP +90, Get your own symbol analyzed for free, all you need is a name and email, Click Here). Yes of course I have my FXP, SRS and EEV, which I continually have, I've just lowered my positions a bit until we see some more technicals triggered. Don't you worry, they're coming.

uup chartuup analysisAs for now, I don't want to roll any dice with Mondays as who knows what news come out this weekend. Obama has already attempted a "premature hope rally", by announcing his "promises" to increase liquidity in the banks and get the flow of money started. Sure, anything else Obama? Why don't you just create mana bread for all American families. He's obviously hoping to dupe the not so wise investors again, and oddly it may work for one or two days, but unless he has the secret to life, there is not much anyone can do to unfreeze the markets currently.

At any rate I plan on waiting around to see how the market reacts on Monday and make my move. It's a toss up at this point. I would expect to maybe see some green rallies next week, and maybe even become quite violent if announcements come forth. So, I'll play it by ear. These rallies make the market even more vulnerable for failure.

I thought I would end on a funny story that happened in China the past week. In Hong Kong, it is tradition for their equivalent of a "CFO" of the country to perform a stick shaking ceremony, in which generates a fortune for the country for the next year. In shaking a bundle of sticks, one stick falls out of the bundle and corresponds with a sequence of numbers, that in turn generates a fortune. Well, this past week, the fortune which was given was horrible. It talked of depression, economic turmoil, and much suffering. The people of China take this ritual so seriously, it caused quite an uprising and even some rioting, as people feared the fate of their country. The Governor eventually had to make a press statement to say that the ceremony was only traditional and did not actually reflect the future of the country. I found this story amusing, since so many people think China is good place for investment. Ahhh, the naive.

So we'll see how it goes. Some people had mention Zecco.com trading their rates. The new minimum balance of 25,000 for free trades is true, however, you can also get free trades if you make more than 25 trades a month, which I assume most of you, like me, are doing. Still one of the best deals I've seen out there. So there's some information for you. Also, just a reminder, only 2 more days for the Lending Club promotion, win $100, see here. Have a good weekend everyone, Happy Trading and we'll see you tomorrow.

23 comments:

  1. FF2 Says:

    FF,

    How do you think the credit market? When you looking at the credit spreads and TBT, the credit market has been improving since December. If so, this should be good news for the business and stock market. We might not be able to see even 7500 again, at leat, I feel like this trip will not make it there yet. (I was waiting for 7000 last time but it did not make it)

    I think I have been paying attention to the same things and have same goals as you did, so I am naming myself after you as FF2. Thanks!

  2. Anonymous Says:

    what do you think of financials today? they are attempting a rally, but it hasn't convinced yet...

  3. Anonymous Says:

    what do you think of financials today? they are attempting a rally, but it hasn't convinced yet...

  4. Finance Fanatic Says:

    I think some pushback Obama has been getting on his stimulus has brought some doubt in on it's validity. We'll see if we can close under 8000 today.

  5. John Says:

    now this comment is to the POS anon who post bad words to me. EAT MY SHORTS you fool and see you at dow 6,000. Dont think PPT does not short markets like bears too. I was waiting to attack this POS with clear facts like today. Know this I hate cnbc and I use elliot wave theory. If don"t know what it is look it up google.com you SMART SUPER BULL. Iam not in anyway hateing on any bulls, bears, investors. All iam doing is protecting my good name.

    Now lets talk some stocks , bonds, gold, silver, oil.
    I see oil first test $30 level before we get a rally see back to $147 or higher by JUN-AUG 2009 time line

    I see silver target at $50oz by JAN2010 and GOLD $2,700 by JAN2010

    Dow30 should by 2010 4,000-3,000
    S&P500 by 2010 400-300


    THIS is what the POS post of me days ago.

    Anonymous said...
    John you must be retarded if you think FAZ will hit 200 again. If it even touches 80, which would be a 60% rally for FAZ, PPT would of kicked in long ago, moreover every short will be covering and taking profit. Saw what happened last time it fell 40%? Next day it rallied 30% and that happened during the abysmal earnings from BoA and C.

    Only the announcement of nationalization through Obama's mouth would such a plunge happen. Keep holding FAZ if it ever hits 80s, I'll be long gone with my profits and riding the wave on FAS.

    January 30, 2009 3:02 PM

    under the post yesterdays profits erased - all eyes on GDP

  6. Jackson Says:

    John, Did you lose all your capital during the crash and now your praying for a bigger crash to make up? We all know a maximum of few more down and up days may exist but the outlook is rosy. Wall street is 6 months ahead of recovery. We have seem bottoms for most of the good stocks by now. Don't make another mistake and try to use proper language as FF may ban you from posting more comments.

  7. John Says:

    jackson stop lieing like a Bull.
    you must be sick i got into sep 10 skf dxd sds i made tons of money you fool. I feel sorry for you jackson you a super BULL must own bac c jpm and other banks base on X-mas ho ho ho the x-mas fools rally is over and wake up hell in the banks. OR is jackson mad that he got fire from C BAC JPM WM LEH BSC or someother. what a sad story for you. I wish you the best of luck getting or finding a new job base on OBAMA NATION. dont piss if bears right always. nov-dec was small bull rally to help some funds to dump from the PPT. or is it you held a ton of bank stocks in your account jackson. If this is the case I wish luck on your bank stocks. AND see you at DOW6,000 jackson. I just wonder what you going to say when dow hit 6,000 its time to short. when I will be going long with BGU TNA (FAS) only if this etf does not go to $0.00
    this right plan not going long now its TOO early only if bear loss 2,000 more to the downside. that risk you own right now. guess what i did not get ban by FF cause did not hurt anyone and I was only protect my name. ok jackson and you HAVE NICE DAY TRADEING.

  8. Jeff Says:

    umm John can you take your uneducated rambling elsewhere? The reason I come to this site and not the google message boards is to avoid people like yourself.

  9. John Says:

    sorry jeff I will no longer talk to lost people.

    I have the most repect to you jeff and other members , guests here.

    ask me any question you wish?

  10. Jackson Says:

    Thanks Jeff,

    FF, please consider banning John if he continues using improper language, and please clarify that to the users. FYI Jeff, look up stocks like RIMM, ABB and many of the REITS and tell me if you think they will hit their bottoms gain. If you do think, you may consider shorting RIMM. I am definitely a bull and long since I am able to wait and ready with lots of cash to pick good stocks when DOW is down. Good luck to you and make sure to hold on to your FAZ for a target of $3000 and never sell it below that.

  11. Greg Says:

    No more rambling from John. I am getting sick of him. FF, please ban him.

  12. John Says:

    wait hold I did not start this rambling was it anon and jackson
    please look at post see for your self. if truely is wrong what i said why iam not ban cause i say the cold hard facts sorry you cant understand.

    Anonymous said...
    John you must be retarded if you think FAZ will hit 200 again. If it even touches 80, which would be a 60% rally for FAZ, PPT would of kicked in long ago, moreover every short will be covering and taking profit. Saw what happened last time it fell 40%? Next day it rallied 30% and that happened during the abysmal earnings from BoA and C.

    Only the announcement of nationalization through Obama's mouth would such a plunge happen. Keep holding FAZ if it ever hits 80s, I'll be long gone with my profits and riding the wave on FAS.

    January 30, 2009 3:02 PM


    Jackson said...
    John, Did you lose all your capital during the crash and now your praying for a bigger crash to make up? We all know a maximum of few more down and up days may exist but the outlook is rosy. Wall street is 6 months ahead of recovery. We have seem bottoms for most of the good stocks by now. Don't make another mistake and try to use proper language as FF may ban you from posting more comments.

    February 2, 2009 12:18 PM


    you guys look at time and date then say IF was me. and lie

  13. tom Says:

    yes john you are right they did start this rambling.Iam on your side.

  14. bob Says:

    right on john this guys are jokers

  15. mike Says:

    john dont mind the bulls you and i know they buy all down to $0 LOL.
    iam also on your side

  16. Finance Fanatic Says:

    As for commenting, please maintain the mutual respect. Sure, we can have our disagreements, but we can respectfully disagree. Excessive "pump and dump" talk will be ignored. Let's keep this site a forum of investment strategies and thoughts without the bashing. Bulls and Bears are welcome. Thanks.

  17. John Says:

    I totaly agree with you Finance Fanatic.I will in the future take a pass on people that talk nothing but Hot Air. Thanks for having my side tom, bob, mike. and I dont know why you would talk so bad of me jackson and anon. I will be the better man tell you sorry even if I was right and you were wrong. to put a end to this bashing.

  18. Wendy Says:

    John, posting too many messages acts like spam.

    By the way, nice job on commenting on behalf of tom, bob and mike. It is so clear from the English and the timing that all of them are you. I am sure you are gonna post back and swear that they are other people. Please stop that and start respecting others.

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