For the week, Dow, Nasdaq and S&P500 all dropped about 1%.
- From technical analysis, it's a good sign for bears. All indices broke below 50MA, and it rallied to touch the lower end of the previous channel and then broke. Some calls this "kiss goodbye" pattern, which indicates another failed attempt to resume the up trend.
- From fundamental analysis, it's a good week for the bears as well. More data point to weaker economy growth, elevated inflation, and more risks from the Middle East and a sudden change in trade policy to impose sanction on China's import.
- The market action last week is very volatile, several days in a row, it reversed early direction and moved to another direction quickly and forcefully.
- I think the market is heading much lower later this year, short term, it could be difficult to predict. I think it's going down.
- Gold didn't live up to its status as a hedge against uncertainty and the dollar's decline. I think there is lot of hot money in gold already, that's why it could not take off with tailwinds. But eventually, it will separate from the general market and take off. So PM is still my main long idea in the long run.
- Uranium play another idea considering the growth of the world economy and the short of energy supply. But short term, I think it will go down with the U.S. stock market in 2007. So I'll wait for better entry.
- RIMM will release its earning on April 11th. Actually, it will report its preliminary earning, which means it doesn't need to report the details and can do whatever it wants to put the best spin to its favor.
- I believe even the preliminary earning will show weakness in earning and reduced margin. And they'll likely to guide lower.
- CFC and other banks associated with mortgages will have a tough 2007 and maybe tough 2008, depends on how the housing market plays out. So I'll put this as a better short play than RIMM. It's safer, specially when there is a big rally in this sector.
Plan:
- Since the market showed its weakness, I didn't sell any short ETFs and puts.
- I may sell portion or all of them if I think there is a chance it's the short term bottom.
3 comments:
A comment re CFC. I was short using puts in CFC twice in the last month and made money. The problem is that it's the biggest lender by far and it's considered the beneficiary of smaller lenders going out of business so there's support in the 32-33 range where buyers come in.
I won't short CFC again.
You might research a smaller lender that is not already shorted up the wazzoo for a better short. JMO, if the float is already 25% shorted, that's a bounce play candidate not a short....
CFC is a bounce play. IE, if a big down happens, jump on CFC with calls for a solid ride up because of cheap option premium vs the major etfs.
JMO, thanks for your blog, curt
OBTW, HOG is a sub-prime short that isn't too shorted.
OBTW: another short op that has time to get in still.
http://www.safehaven.com/article-7282.htm
Good luck curt
Post a Comment