Man, one part of me wants to back up the truck on financials, while another part wants to short the hell out of all of them via XLF and C which is a sort of proxy for financials.
Somewhere along the line someone is going to make a LOT of money buying up this sector at el cheapo prices. Meanwhile, the sector could continue falling.
Where is a wizard with his crystal ball when we need one?
Thoughts: Is it too late to short? Or still some room? Or back up the truck?
The correct move is to long stocks in the next 3 months, then switch to the short side after October.
First, the Fed will fight to death. That means, they will print more money to support stock market. We will see the last round of short squeeze to kill most shorts in summer. The correct move is to buy GOOG, BIDU, AAPL and other selected NASDAQ stocks. (You need to be careful. 40% of companies will warn in their July quarter even their current quarter is good. I think the three companies I mentioned are still safe for the next three months. Companies that will warn are DELL, HPQ, IBM, GRMN, EBAY , SONY, NOK, TXN, RIMM and AMZN.)
Second, when the fall comes and most shorts are already dead, the crash will begin, probably in October November. This will be the mother of all crashes. Normally, people who short the stocks will cover their shorts when they think the stock prices are reasonable. Unfortunately, this time there are no shorts left to be the buffer thanks to Bernanke. If you took risk to long techs in summer, you are the few who have to the cash to buy tons of puts now.
Monday we will see the market bottom at 2,250 (NASDAQ) and the summer rally begin. Load up October calls, my friend. You defintiely want to buy GOOG at $450 - $480 range. It can get to high $600's in September.
lol buy goog,bidu,aapl? lol. goog will fall to 200-300 in next 2 months and aapl will fall below 100, bidu will thats not a bad pick but that will come down 5-10%! just watch, we arent even close to being done, it just started. watch for nice "dead cat bounce" in the middle before it starts going back down again. if you wanna go long on any thing wait for 6-8 months and you will be alot safer!
Short financials until home prices stop falling. That is what they have over leveraged their future on. Lennar homebuilder says housing will get worse throughout this year into next. Either inflation will run rampant killing the consumer due to the fed not raising rates OR banks and housing will get hammered due to the fed raising rates. PICK YOUR POISON OR SHORT.
Whoops! Misspelled dilemma. But more importantly, another thought: The old adage about the dark before the dawn rings in my ears. Negativity is at a major PEAK. That's usually a contrarian signal that it's time to get in. Thoughts?
Yeah, I think you guys are right. Number one, they really did bank (no pun intended) on housing, and we know where that's at. And trying to catch the falling knife is always tricky.
But there will come a time when a lot of stocks become juicy targets. Meanwhile, I think you're right, sad but true, we might as well short this stuff for awhile more. Not that I mind shorting, it's just that I know there will be a lot of money made by some very smart people who back up the truck slightly in advance of the "herd."