Survival of the Fittest, But Who's Fit To Survive - Bulls or Bears?

bull_bear_marketI believe this picture does a good job of summing up the activities of today's trading. Seller's torro'd bulls along until the last 20 minutes of trading, where bulls grabbed the bull by the horns and kept him down. Trading was like a roller coaster. Volatility like this is expected in an undefined state of the market that we're currently in, where technical forces are pushing the opposite way as investors. It will indeed be very interesting to see how this market continues to move, especially with rather large announcements coming up to end the week (new home sales and the big GDP).

Existing home sales came in under expectations, which I would hope would be no surprise to anyone reading this site. Much of the morning was spent with Bernanke being drilled with questions by congress. Bernanke did his best to try and maintain optimism and continue to reiterate that there are no plans to nationalize banks. This may be the big factor why many banks ended strong today, despite the down trading for the Dow.

WFC, JPM, and BAC all traded up today as it seemed some confidence was returned to investors in regards to the banking systems. Who knows how long that confidence will last? As far as I know, it could already be gone. Financials are a big gamble right now, which can yield some serious, quick, returns, but can also kill you if you don't watch out. The only move I made in my account today, was I actually bought into some BAC at $5.25 (I should have bought earlier, but oh well), hoping to maybe see a rally to close. We were definitely heading there, but bears put that to an end very quickly. It closed at $5.16 after reaching $5.50. I've got some pretty strict stop losses on it, so that if we start out too bad tomorrow morning, I will close out of that position. BAC Market Club report trend score is -75, so it is moving up (Get your own symbol analyzed for free, all you need is a name and email, Click Here).

Not much has changed from the stance I had yesterday. Indeed, we ended down, but the S&P has continued to stay above the November 20th lows after our dip two days ago, which is a stronger indicator than the Dow, being the bigger index. So I still feel the market is vulnerable of a rally. I have not strongly positioning my portfolio for a rally, because as we can see, there is sill a lot of skepticism in the market. So I will continue to make small, conservative moves until I start to see more definition in the models. So far, we are right in line for a crash, just not quite now. Of course, none of this is certain, but I like to keep some faith in the technical models. We could indeed drive right into a crash this next week, so I'm not ruling that out either.

TBT was back in business today, closing over 3%. I love that fund for right now. I can't picture treasuries more overbought than they are now. Buying in back at $36 in December was a good move. My FAZ put option reached some new highs today. It got all the way up to $18. Having gotten in at $10, I was very close to pulling the trigger. However, I didn't. Hopefully I do not regret it tomorrow. I just need to keep reminding myself to not be greedy in this market! So far the put option has worked very well for me.

I expect tomorrow to be much like today was, a lot of volatility and some uncertainty. If bulls plan on taking this market for a rally, they best get involved soon. With the GDP announcement coming Friday and more AIG woes next week, they are running out of time.

I still see a lot of strength in SRS. I do feel though that it may be reaching the low 60's to mid 50's soon, so I'm waiting patient to start loading up again. A lot of the commercial real estate problems still haven't surfaced. I mean this week GGP (General Growth Properties) announced in their earnings that they are $1.12 billion dollars overdue in debt and have an additional of $4.09 billion in debt. How on earth do they plan on solving this problem in our current market? Oh the woes heading for commercial REITS. Ouch.

So, I am staying tight, waiting for the right time. It's getting real tempting for me to get back into a strong short position, but I've been caught before on the wrong side of a rally and I don't want to experience that again. It's worth it for me to wait until the timing is right and then really go for a ride. Good chatting with you today on the site, I'll see you all tomorrow. Happy Trading.


  1. Anonymous Says:

    FF, are you still shares in LVS? I know you mentioned that you have a serious loss-stop on it. Thx.

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