Buying Streak Ends - March Perspective

executive bonusesIt looked as it was going to be another straight trading day in the green this morning, as once again the market was soaring, having the Dow almost reach 7400 at one point in the day. However, as the anticipated "last hour" of trading arrived, the selling began, and the Dow gave back all of today's profits closing down 7 points. I am actually surprised it took so long for people to take profits. I thought I was the last person waiting until Monday to cash in on my financials. As I said I was going to do on Saturday, I ended up selling my BAC in the morning at about $6.75, when the market was still good. I felt that a 6 day consecutive rally in one of the biggest bear markets we've seen is more than I could ask for and that I should take profits and run. Good thing, as BAC ended up closing at $6.18.

Nothing significant came from the FASB meeting on mark to market, as expected, which could have contributed to slow up in financials today. I didn't see much that they would be able to do, but of course we had to hype it up. These hype rallies can be dangerous.

So what kind of perspective does this last hour sell off give me for tomorrow? Not much. The trailing trend looked like your standard, profit taking slope to close out the day. Even though after-hours is also down, I do not necessarily believe that this trend means that we open up tomorrow in the red. The profit selling was, in my mind, overdue and Mondays always like to start out the week with some adversity. I am not ruling out a red day for tomorrow, as always, there are continuing negative influences that keep surfacing. In fact, as I said on the chat today, my plan was after selling my BAC, to buy a light round of FAZ and SRS, this being earlier in the day when FAZ was at $35. However, due to a forgotten immediate lunch meeting appointment and some technical difficulties with my Blackberry, I was unable to buy either of two. This was too bad, considering that now FAZ is at $42 and SRS is at $72. Even though I feel I will have another opportunity to buy them, I did miss out on a nice, quick 15% swing. Oh well, stuff happens right?

We will see tomorrow just how good/bad a decision that was for me to go to lunch, since as of now, I see the market going either way. Another mixed day of trading is what I really see happening tomorrow, which could be a good opportunity for you day traders. We may see some more of these intra-day 10-15% point swings for FAZ/FAS, which is nice for a quick profit, that is if you time it right.

Obama got a lot of flack for a survey result that polled Americans in their feelings of the recent corporate bailouts. It seems that over 80% of Americans disagree with the government's choice to write checks to the big companies and in fact over 30% are considered "very angry" in the decision. This is all happening while more news surfaces about AIG executive's cash bonuses, which can't make it any better for Obama.

I still think we have potential to see the Dow climb up back in the high 7000 range. Sure, there are going to be selling days, we're in a bear market, but last week's rally streak is a big move for technicals and should definitely stick around the next week or two, the keyword here being "potential." I never rule out the possibility of a sell off, but my current expectations are what make my short buying "light" at this time.

There are still some lingering elements, which could still cause some significant momentum in either direction. First, being the GM problem. Yes, they're still around. They are like a scab that won't go away. GM still faces the big possibility of going under. If such a thing happens, I would expect a pretty dramatic response from the market for a couple days, even though most have expected it.

Second, the uptick rule. As I have said before, I don't feel that any changes with the uptick rule will directly effect the ETF's I play, from a value standpoint, but they may effect people's confidence in them. Either way, we could see some sluggish movements for a couple days with the shorts if that's the case. It was this way when the financial short ban was announced in October. The shorts got killed the first day or two, only to end up tripling their numbers.

Lastly, new stimulus rumors of a number in the trillions. If Obama has the tenacity to unfold such a trillion dollar plan, that could have a huge influence on short term trading. Stages of planning may be in early or not at all, but if indeed signs of a plan of this measure are shown, I would expect a large short-term rally.

So March remains unsettling for me, which is why I still remain in mostly cash at this point. If shorts remain reasonable tomorrow, I will look to buy a light first round of SRS, FAZ, and maybe QID. With there still being some risk of rallying, I will make sure to not overspend myself. However, I'd like to have some, in case of a 90 degree crash.

So tomorrow should be interesting. It is amazing how many less and less cars are at my office building everyday. It's not a good sign. More and more people are trying to work from home. If you've made recent occupational moves, Try RingCentral Online FREE for 30 days, which is a great company that does phone and fax services. Rates are some of the best I've seen, and is far cheaper than going through Pac Bell or Verizon. Perfect for a job at home, or a company you are working on the side. Check it out.

Expect a podcast tomorrow for those who are subscribed. Like I said yesterday, I plan to do two or three a week (or more), depending on the significance of the day and what news was given. If you have not already and are wanting to, CLICK HERE TO SUBSCRIBE TO CRASH MARKET STOCKS PODCAST. There is a 7-day free trial for you to "feel it out." Have a great evening, Happy Trading and see you tomorrow.


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