I've been dead wrong and I admit it, I'm long FAZ since 6.12 and praying I can get out withouth losing much.
But with all the news recently out and price action in some stock and bonds make me wonder if we are close to the top.
Just to name a few recent events:
- Foreclosures at all time high
- Unemployment above 9%
- Commercial Real State next shoe to drop
- 10yr yeilds at 3.65%
- Dollar getting destroyed
- Oil at 68
- S&P up 40% since march lows
- FDIC running out of money
- Bank seizures to reach 1,000 by 2011
- Consumer spending lower than expected
- GDP shrank more than expected
Again, I've been wrong all this time, but, could someone make a good argument why this market continues to fly?
Know how you feel,but this trade has been choppy for me.Bought once at 4.85 and sold 5.40 average,then rebought at 4.99 average and forced to sell out at 4.89
when it broke down in the 60 minute channel.
I like to buy channel bottoms and hope for the market to break my way.I was as surprised as I'm sure you were,when the market broke to the upside.
With all the added liquidity from the Federal Reserve
lately,whose to say that money isn't being funneled into the market.You can always speculate anything as to why any market rises or falls.One thing I do know, is not to fight it,and cut lose fast when I find myself on the wrong side of the trade.Preservation of capital is everything and profits are secondary in my way of thinking.
I'm JAFO at the moment.
Everything you say is correct, and the market foresaw it 3 months ago when it bottomed out. Remember the market is forward looking. Don't be surprised to see much better data in the next couple months. The market has never made sense to me, and probably never will. Keep in mind, the shorts had a hayday for 2 years, and the market always gives everyone a second chance. For the next month, I wouldn't expect any major downside, because hedgefunds "have" to get in the market now, because they can't underperform the indices, or they lose clients.
I like to see who the largest percentage decliners for the day are and then go to that company's message board and just kind of laugh at all the bagholders.
It's something I like to do
amir....to survive in this game one must always be willing to adapt...and while I made 19% last year and am up 17% ytd thru May, I think that is just ok, and not even good.....but yeah honestly, I'm ok with it as it has been what I do well and where I've a bit of an edge. I will not change when what I do has worked overall for 10+years...and arguably is working now. arguably.
I apprieciate your discussion, enjoy any/everything that makes me think a bit. thanks my friend, and please keep posting your thoughts. you know I welcome them.
Nothing surprises me anymore. We have a radical leftist runnung the White house elected fair and square by the American people. Why shouldn't the market go up with no fundamental underpinnings? Nothing else makes any sense.
We've got the fundamentals right...just not the new paradigm...which is: "bad news is good news". New paradigm won't hold up for long!
Alt A loans, option arms and jumbo loans don't hit their reset highs until 2010 and peak during Oct 2011. Those are the huge mortgages that will crush the banks. Maybe we're just early.
Income up.4, bank margins improving, capital investment increasing, housing sales increasing while prices are still declining, means more affordable going forward, which leads to a rebound. I go to auction each week, tons of money chasing the foreclosures, tons of cash on the sidelines moving back in to markets.
Wow, when do I stop?
The home auctions for foreclosures on the city admin building steps only accept 100% cash for those purchases. I've been to them as well and these people are bidding but the sellers aren't taking their offers as they are way low ball. Every so often some will go, but those are ones that need total re-do.
Most people I know are making less $$ this year, easily 15-30% less. Their homes have lost 30-40% of their value yet they still pay mortgage on inflated price they bought at 3 years ago. The state is broke,CA, and the layoffs have just started. The foreclosures might be selling but the banks are selling them for 40% less than the last owner that foreclosed on it bought it for. Is that a positive that the banks are taking these kind of losses? Oh, not to mention the interest rate on the people buying the foreclosures is less than than the ones who had it before, at least 2-6% less. I have a friend who worked for biggest Commercial Real Estate company in town and just took another job in a different industry and says the industry is in trouble.. Whatever, I use FAZ as a hedge to the rest of my trading portfolio so I'm not too worried. If the rally continues I'll still make $$..