Financial history doesn't repeat itself, but it often rhymes. You can't be stupid enough to trade off anything I say.... I'm lucky they let me out of the straight-jacket long enough to trade.

J. P. Morgan

"Sell down to your sleeping point"

Wednesday, October 24, 2007

Shorting the market.

I've seen a lot of tough talk about how hard it is to short this market. I know it's hard, but it's like going long. Instead of looking for weakness to buy, you look for strength to sell. Since the last "all time highs", there are no buyers in the market. Every time we get close we sell off, because no one believes in this market. The 3Q earnings were based on a strong economy, as company after company misses unless it has international exposure, the fundamentals of all the companies weaken, The P/E's are too high. Even if the fed cuts... This market can't go higher on imaginary earnings, we may get a short covering jump. but that will be it. there is nothing for this market to hang it's hat on, besides higher P/E's.

As the sell offs get stronger and longer the shorts will be better and will be more willing to hold the short positions overnight. Till then if your chicken, wait for a bit of strength then short, if we get stronger cover, if you short into some early parts of the pull backs then as they get stronger and stronger, just cover mid day if you have to, take your profits. Shorting is Neutral to the market, you have to sell and buy, it takes people actually selling their equities to make the market go down. This pull back is about 20% into it IMHO, so there is plenty to gain from shorting. but you have to be strong. But if you wait till we pull back another 60% your going to miss most the move, then there will be a rally and you will barley make any money, cause instead of selling that rally, you will be covering for a minor gain.....
This bullshit with, "Fed Cuts" and other ways the Bulls get you to cover, just take advantage of the Timid nature of the Bears.(is that a fare way to say your a bunch of pussies.). The Fed Kicked your ass twice, because the market(credit market) was going to Freeze up, or had frozen, and they had to cut, but the short sellers covered, and that momentum was used to Rally for a few days. Then when the fed cut .5 again there was a short covering rally, using the momentum of "stronger earnings from a weaker dollar" we rallied again. Suddenly as earnings came out, those earnings weren't so good, because input costs were higher, and lots of companies had higher input costs and no international dollar exposure. In the short term Fed cuts are bad for U.S. Companies. Bad for the Dollar, the only good thing is that it makes it easier for companies to borrow money, and for people to buy houses. Long term, it will help.
Without the European union cutting, or the credit markets locking up, I can't see the fed cutting. Also.... If the fed cuts we will get fears of Hyperinflation as gold goes to 1000 and oil goes to 100. It's funny how that catch 22 works in the favor of the bears....

The laws of supply and demand, with most the money going into bonds, and few buyers at these levels... Who aren't short sellers.
This market needs big earnings to push it forward, not higher input costs. This market is done down to the august levels, if not lower..... Sorry, Game over.

In a Declining market Traders sell the strength, instead of buy the dips. Besides buy aapl and google and a handful of other stocks, your only choice is to jump into crowded trades.

Market Commie Downie.... unless someone can explain to me how in a weakening U.S. Economy, 70% of which is consumer driven, Which then drives Asia.... SOMEHOW the Bulls think that this means earnings are going UP. The only bulls left are the Perma Bulls, and they are as stupid as the Perma Bears that hide in the basement with piles of gold, bullets, and 3 years of freeze dried food. This is all dumb shit, based on momentum traders, and people who don't see the fundamentals, and can't see overall market moves.... EVEN BUFFET was saying we were in for some "Shakyness" for a few years.
Further more, the weakening dollar has more to do with a weak economy that printing money. The dollar fell more on the credit crunch than when Uncle Ben dropped money from his Helo... LOOK IT UP. The Fed Equity was sucked up by the European banks, as they issued bonds for that money, pulling it off the market, and into European Liquidity. so that they wouldn't call in the note from all our loans. Er something like that.... I'm not an economist.

but get short this fucking market.

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