Obama Brings Hope To Investors - For Better or For Worse

obama bailoutCall it a hunch or call it an overdose of OSD (Obama Stimulus Decisions), but I actually made a SHORT TERM move into longs today. Many more speed bumps have arrived into this road to destruction of our economy than I first anticipated and in order to maximize my value, I'm looking to try and play both sides a bit more, for the time being. Currently, investors are very vulnerable to just announcements of hope and with the new President being busy and active, I definitely feel there will be many more announcements to come in his first months of office. Please don't misunderstand me, I still strongly believe that our economy is still very much spiraling downward, I just feel I can make some extra $$$ on the bumps. Call it the day trader in me. I don't plan on actually "day trading" per say, but my trade volume should definitely be going up. I'm still very bullish in my current short positions, I would just like to make some cash on the bumps up to load up on my shorts at lower levels, because in the end, I believe the market will come crashing...and fast.

Today I sold off my remaining SKF and put them into BAC and C. With Obama just being put in office, he is wanting quick action. I expect to see things turn much quicker that we did with the Bush administration. Sure, this can eventually lead to worse things for the economy and probably will, but the point is the market will probably rally from it in the short term. These are the reasons to justify my longs. I do still have a strong short position in SRS, FXP and EEV. I just feel these can hold up better during these rallies than SKF and FAZ.

Either way, my holding of these stocks will be very short lived. In fact, I would like to be completely liquidated from them before Thursday's close, at latest. I do not want to be stuck with financials going into GDP announcements. By doing this, I plan to throw my gains from the hopeful quick rally into more short positions, which will, I believe, ultimately yield strong gains.

So far my plan seems to be working out for me as it looks as though Obama is trying to get his stimulus plan (maybe $900 billion) to pass ASAP. Although, he is getting a lot of opposition from the GOP, signs are looking good for the ability to get something passed as early as maybe next week. Just whispers of this has sent financials up almost 10% in after hours. If this sticks into tomorrow, I will most definitely shave some profits off the top, as with all speculative announcements, the cheering is usually short-lived. Also, as you can see, momentum charts for Bank of America do not look pretty. -75, OUCH. Get your own symbol analyzed for free, all you need is a name and email, Click Here.

bac chartbac analysis
Yahoo also announced "better than expected" earnings, however yielding a loss for the quarter. But, as usually, investors think of this as a good sign as the stock is trading up 5% in after hours. I actually like yahoo, even before the earnings announcement. I believe over the next five years, a lot of focus is going to be shifted over to e-commerce, which should indeed boost value for Yahoo. Plus, I also think at Yahoo's recent low stock price, they are still very vulnerable for a hostile takeover. I think something should happen, definitely before the end of the year.

Keep an eye out for FOMC's meeting notes tomorrow. We shouldn't expect much as far as a rate cute (since we're pretty much already at 0%), but they are definitely still capable of moving a market in either direction depending on their economic outlook. If something substantial is announced, we can expect to see a strong run in which ever direction it heads. I personally feel we will have an up day of trading tomorrow as the hope of new stimulus could really ignite the buying the next couple of days, pending that something largely significant is not announced.

New home sales and GDP numbers are still to come at the end of the week. As I said earlier, I would like to be fully out of my longs before that GDP number is given. In fact, I believe Thursday we may trade down just expecting a bad number. Analysts have tried to soften the landing by projecting an enormous -5.4% result. Their hopes is that anything even slightly lower than this number can be manipulated to investors as a positive sign and erasing the memory that our GDP just did indeed fall almost 5%. Sadly, I am not as easily fooled. Anything below 3% and I am running for the hills. Why roll the dice with longs right now when I can just stay in cash and earn 2.45% APY* with HSBC Direct Online Savings, all FDIC insured. I will be able to sleep better at night, that's for sure. So I don't see me in BAC and C longer than a week.

Well, let's see how tomorrow goes for my new long positions. I am a bit more nervous going long in this market as I feel it is more of a gamble, but I do see some opportunity in it. Check out these free INO technical stock trading videos, very informative, click here. Happy Trading everyone and have a good night.

10 comments:

  1. Dave Says:

    FF,
    I really like this post because it demonstrates that it is necessary to be decisive and take action when potential opportunity presents itself (in this market). Don't fall in love with the ultra-shorts simply because it's logical. There's no place for that (logic) in this market. There is a very well defined long term trend (down,down,down) but I agree there may be short term opportunity on the upside.

    As you point out, it is "playing a hunch" (I just call it gambling), so it's not for everyone.

    By the way - did you see that the new bailout bill calls for over 50% of the money to be spent AFTER 2012?!?! All the way out to 2019. That's a pretty slow response to an economic 911 call. I smell a rat...

  2. Finance Fanatic Says:

    Dave,
    Indeed in this market, I'm sure everyone has altered their strategy a few times. I agree with the bailout bill calls. Thats why I feel in the long run, we're just digging a deeper whole. But I might as well take advantage of the emotional runs.

  3. Dave Says:

    I've got to retract my statement about the the timing of allocation in the economic stimulus bill. I heard that on a normally reliable talk radio show last night, but when I investigated today I can find nothing to back it up.

    The full house bill HR1 is online here. And it looks to me like they are pretty commited to spending our money quickly. Sorry for the bad info...

    And I want to know where FF bought his crystal ball!

  4. Anonymous Says:

    think this rally will continue into tomorrow?

  5. Finance Fanatic Says:

    I don't know, but I can't get too greedy, there are things about this rally that I will write about in a post later that I don't like and make me very skeptical. So I will most likely take a lot of my profits before the close today and put them into either FAZ or DGP. We'll see.

  6. John Says:

    Hi guys and girls iam glad all you bulls are happy with these last days. Just want to drop some notes for you. The days that we were rising higher were on very light VOL don"t think this fool rally will last a time long time.

    Next thing the spy , dia , iwm , qqqq are all forming a bearish head and shoulders patern on the charts. this top #1 top bearish pertern of all of them. careful buying uphere in market. and $vix and $cpc are very lows levels telling there way to many people and funds are on the bullish side.

    Today I add more to my bears etfs FXP FAZ SRS GLD and cash%20/ 70% bear etfs/10% gold. I remain saying the target for a nice bottom in the markets is Dow 6,000.

    Its never to late to unload the longs and get into bear etfs for the crash down to my target. I see nothing in the charts or anything the markets to change bear plan to a bull plan.

  7. John Says:

    where see the $vix and $cpc

    http://stockcharts.com/charts/gallery.html?%24cpc


    http://stockcharts.com/charts/gallery.html?%24vix

  8. QUALITY STOCKS UNDER 5 DOLLARS Says:

    Great post on some great stuff.

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  10. mark herry Says:

    We should appreciate Obama for this great job and investors should not be late if they want to have own Custom Essay-Writing Services and other businesses. They should be thankful to Obama for this hope but this is not first time that he did great job like this and this is his great quality.