Market:
- For the week, even though there are lot of drastic movements early in the week, at the end of the week, indices were down down: Dow -1.4%, S&P 500 -1.1%, Nasdaq -0.6%, and Russell 2000 -0.8%.
- Everyone should remember, after the 2% drop on Tuesday, on Wednesday, Nasdaq were down more than 1% before closed up 1%. That is the so called reversal day and bulls cheered the move to indicate the end of this down turn.
- But from weekly chart, Nasdaq was down 6% two weeks ago, up 1% last week, and down less than 1% this week. It's hardly started. I think from long term perspective, Feb.27th marked the turning point, from bull market to bear market.
- Housing bottom is not hit yet; subprime mortgage issue will spread into other mortgage sectors, the Alt-A and ARM areas for sure, so the worst is ahead of us, not behind us. Even prime mortgage is not immune from it.
- Yen carry trade's unwinding will accelerate the market's sell off. But it will be anything but smooth.
- Housing (subprime) issues and carry trade unwinding are among the issues facing this market, other issues are not completely out of wood yet, recession, inflation, geopolitical issues.
What's next:
- I'm using ultra short ETFs (QID, SDS, MZZ) to play the market's slide into bear market. My core positions are these three. May consider TWM or exchange into TWM.
- I have some QQQQ and MDY puts and RIMM puts, plus CFC and CNB puts.
- QQQQ and MDY is to play the overall market.
- RIMM is a speculative play, so far, it's not working well.
- CFC and CNB puts are the play on mortgage and housing downfall.
- Will watch PM, oil, uranium closely and add them when I think the sector are closer to the bottom.
- I'll use a small positions to play swing trade if I find a chance.
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