Financials: Held Important Low
August 20, 2008 7:09 PM
After the close of 08/07 I said I expected a reversal attempt on ”further weakness” and it skyrocketed. I had also mentioned that I expected XLF to hold $19.25. Today it tried it again and got to a low of $19.61 before reversing. I still believe that number is key for the group. It is the only low I like for the sector (no, I do not like the July 15th low the same as i do not like the same low for the SP). I believe we will ultimately revisit both issues, I just do not know when. Theoretically, the July 15th low is NOT the low on the SP. Period. Anything is always possible, but I will believe it when I see it and it has not been proven correct, as of yet.
Financials: The Wait Continues
July 14, 2008 11:17 PM
I have waited, and waited, and waited, for a call to be long financials. The bottom is seemingly far lower than even I imagined. And if you have read my articles the last few months, you would have noticed that I have been the most negative person on the U.S. economy in the entire country not named Peter Schiff over the last 6 months. Remember my call that Dick Green, the President of Briefing.com was 100% wrong? Unfortunately, my views continue to be correct.
The mortgage issues will likely take down another lender or two. Or ten, hard to say. The fundamentals are clearly still getting worse. These stocks cannot possibly turn the corner until the housing problems end, as I have long mentioned. I still believe we will eventually see one more, at least, big firm collapse before this is over. The market is obviously speculating on LEH, Washington Mutual, and C. I still would would shocked if at least one of these does not go under.
Without being privy to their “real: balance sheet, I would guess WAMU would be a strong candidate to lead the charge into insolvency. They and Countrywide wrote more pay option arms (read the most grossly incompetent lending decision in the history of the world, literally) than anyone, by far. I simply cannot imagine how they can survive without either insolvency, a takeover, or the government rescue Bill passing - and soon. These loans are growing debt by the day, literally, and most likely all are bad debt, regardless if they are disclosed as such.
Anyhow, I just find it hard to believe the market can move higher - and last - without some end to this. Even after 6 months, nobody actually has any idea of any kind of the magnitude of the problem. How many more billions are there? With FNM is the number more than billions, perhaps another 100 billion? A trillion? Nobody knows. These numbers are not to be laughed at. The risk of many firms going under is still a real possibility. In fact, my personal view is that it is likely.
Remember what I have said about 800 times lately? Never invest on so called “valuation”. Fundamentals is all that matters. Well, the fundamentals are getting worse for financials, by the day. This isn’t over.
I still believe, as I have mentioned, that the ONLY way this bear market has any possibility of ending is the Housing Bill. If that cannot pass (it will pass in some form) this bear market could easily last 5 years or longer, not 5 quarters as all these idiots on TV scream every day. I still believe that the long term fundamentals for the U.S. are VERY ugly, but that is an entirely different article.
Financials: Near March Low
June 9, 2008 11:12 PM
XLF made a March 17th low of $23.52. If you want to make a risk/reward trade, buy the sector on a flat/lower open right here. If the low clears, exiting is probably in order. i do not put 100% stock in ETF lows as the index could be different. But financials have to hold this area and should atempt to, at least for a bounce.
Does this mean I believe we are done with problems in financials? NOOOOOO. I have warned for months and months that this will get far worse, and there are billions of bad debts “hiding” on balance sheets that companies refuse to live up to. This is a risk/reward TRADE, nothing more.
XLF And Financials Made A Doji Today
June 4, 2008 11:45 PM
A Doji in the market means “indecision”. I am not a huge fan of them, and view them as mostly temporary, in general. I have also mentioned that I do not like any lows put in on the Dow or SP recently and eventually we should push lower. I like to view the markets as what “should” happen. Does it mean it will? No. But you have to have a bias to probability as it will take news to alter the outcome. If we never had one more ounce of news, we would eventually go “lower before higher”, as I like to say.
The financials and possibly the market was saved today by an upgrade of Lehman mid morning. I am skeptical of almost all upgrades/downgrades and especially so mid day. It tells me they likely bought yesterday, upgraded at a new low this morning, and try to get a reversal signal off the low. That is exactly what they got today on LEH. Today’s low on LEH is critical. If you want to be long the stock, you can be long LEH with a hard stop above today’s low. My only caution on that is obviously if they do disclose more bad debts, it is game, set and match and you will get crushed and will never get out at your stop. If you are an intraday day trader, look to be long above today’s low on LEH. If it clears, then the market is in trouble I believe.
We Have To Hold Today’s SP Low, XLF Should Be Biggest Gainer If It Holds
May 27, 2008 10:50 PM
I believe we HAVE to hold today’s low going forward or the market will get into a panic mode and we will fall all the way to 1350. Look to be long off today’s low. If we clear it I smell huge trouble. Financials reversed today and if we are going up, the best percentage gain should be long that sector. Therefore, look to be long XLF but know your exit point. I still believe there are tons of bad debts not disclosed and the market is wrong longer term - but this trading not worrying about “long term prospects”.
Today’s action was VERY important for the market. We are very, very close to melting down. That is why I believe we have to hold today’s low. I was reading a trading site i have subscribed to for years a bit ago, and his commentary ws the same - we are close to a meltdown if we do not reverse. So we are on the same page here. Again, for a trade, look to be long financials. Buy XLF, buy Goldman, buy whatever. BUT if we clear lows…run for cover as this thing is bye, bye Miss America Pie…not buy, buy…
Calls To Avoid AAPL, WLT and GS - Bingo
May 19, 2008 11:55 PM
I should have called the short on AAPL, my bad. I must be getting soft in my “old age”. I saw the short, had the number, but thought the Appleheads may try and pierce it in a lifting market. They couldn’t and down over $4.00 today and down over $5.00 today from the high. It really was an easy risk/reward trade, so I aplogize for not being more aggressive as it really was a gift to short it.
As far as Walter Industries, it was merely a “hunch” that it was extended, over hyped, and way over valued. Bingo, down over 4.00 also. Unfortunately, it did not make a new high and then sell down, so i still cannot call a short here. The trade will be long, I am just not certain where yet. And i am NOT a fan of the valuation.
Goldman traded as high as $189.42 today and quickly sold off to close at $184.40.
But I was correct on all three. Just “lucky” yet once again apparently since charts do not matter…., so you are welcome, lol.
Do you not yet see the market players do not guess? There are hundreds of millions of dollars trading - they do NOT guess. Joe Public guesses and hopes, professionals don’t. I am trying to provide clues here…. please follow along…
The Recent Reluctance To Call Shorts
May 18, 2008 1:37 PM
You may have noticed i have said “caution” a number of times, most recently on AAPL, GS and XLF, but have not called for an outright short, other than UPS. The reason is i would rather be short going with the tide of the market. Shorting against an overall uptrend market can work, but the profits are more limited, in general, and you can get whipsawed.
For instance, I saw trouble in both Goldman and XLF on 05/03, but never called the short. I should have, obviously, but I thought the market “may” hold them. It didn’t. However, once the market turns the other direction, and we get short chart patterns like those that formed in GS and XLF, I will go back to outright short calls and remove the word caution. For instance, right now, if the market sentiment (particularly energy) was negative, CHK would be a short right here with a hard stop above $59.60. But I would rather wait until the tide turns a bit…..
You may think my “lightbulb” has been turned off, but I try and make calls where I am reasonably confident that I am correct and I would rather not paddle upstream.
Avoid Strength In Goldman
May 17, 2008 3:16 PM
I do not like the recent lows on Goldman (GS) in any way. It “may” reverse near $180, on further weakness, but let other’s guess. It would have to clear $203.39 to be long up near $200. Strength in that range is to be avoided. If it goes higher before lower, then $200 is likely a short. Earnings are coming up in June, I believe, and that will dictate direction. Until then, be careful long. I would have said to simply shorted it back then, but as i mentioned on May 2nd, the market has to clear 1383 to apply pressure this month, and it tested that area once, and bounced off 1383.75 and has moved higher.
The financials as a group were also a short. But the same as GS, I did not say short because of the likely overall market direction. To be long XLF on any strength here, it would need to clear $28.17. If we get strength near there, it is a sell and/or short, until proven otherwise.
If We Are Going Up Post-Fed XLF HAS To Lead…Or Big Trouble Is Likely…
April 30, 2008 1:42 PM
I am not sure which way we are going post Fed - and I am guessing nobody does yet. If we do have a big rally, financials HAVE to lead the way. As I have mentioned, there is massive short interest in that sector, and if they cover, it would explode. I am not saying there WILL be a huge rally, but the charts certainly say it is possible here. If the financials rally, then the commodities will lag, and vice versa….the statement and how the dollar goes is the key… If financials cannot rally…the market is in trouble……IMO…
Laslty if we DO rally….we should close at the high of the day…so if we are obviously in rally mode after, do not take profits, we will close at the days high. IF, IF, IF….. We will know SOON…. Let’s get this going…
CAUTION: XLF, WLT, CHK
April 28, 2008 10:36 PM
If not for the Fed on Wednesday, I would say short WLT, and CHk right here and extreme caution in this range on XLF. AAPL cleared the possible reversal attempt attempt early on and took out that play. it had to clear Friday’s low to “technicially” put a short on, and it never even came close. Not exactly sure where this strength in AAPL is coming from as their numbers do not support this strength, IMO. But you have the “AppleHeads” that want to own this stock. Volume has dropped dramatically in the last 2 days on Apple however, so this rally is weak, at best. AEM fell again, not a shock at all. The Cramer heads are going to be beat to BK on his call to be long at the highs. If the dollar firms, AEM could easily see $35. Big if, I know.
The Fed decision on Wednesday takes all plays off the board, basically, as it is going to move afterward, most likely. But be careful here.
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