I added QQQQ puts and QID today, since I don't think today's rally has any strength in it.
- I don't care how bad the credit crunch is, how bad the CDO issue is; and I don't care how good Fed's timing rate cut has cured all the issues. Let's put aside all the fundamental analysis for a moment. Even though I think they'll likely to lead us into recession soon.
- S&P had rallied 110 points from its intra-day low of 1370 on August 16th, to close at 1479 today, just 6 trading days!
- People argued this is the same as Feb.-March's rally off low, this is not. Check history for all the rallies recent years, they usually have at least try to retest the low for a second time before real rally resume.
- So either we'll test the close low of 1405 or the intra-day low of 1370 in the near future.
- The only thing I'm not sure is how high we can go this time, do we go to 1490, 1510? I have no idea. But I'll keep adding puts and short ETFs on this leg up. The higher we go, the better place to short.
- And economic cycles are stronger than Fed's cute timely rate cut, so I'll use any future Fed's cut initiated rallies to add short and puts.
- It's very likely we'll test the low, and may even break down to new lower low in the near future, probably sometime before November.
- And if we indeed have a new low, and Fed has not cut again, I'll go long to counter the trend.
- I think to bet on oversold and overbought conditions produce better trade opportunity than TA and FA.
- From seasonal perspective, Sept. and Oct. are known for its vicious dives, so for these who bought at the high of today before market closed, congratulation, you need a rally to unload these long positions.
- I moved to the short side.
2 comments:
Do you think the fed is gonna cut rates? After they punished shorts last friday I think a lot of people are hesitant to go short. I know I am. To me the fed changed the pyhscology of traders and investors and put a floor under the market I'm gettin long silver. What do you think?
I think Fed won't cut unless things are out of control, like the we had on August 16th, mainly the credit crunch issue. If that indeed happens, we'll have a new low in the market.
On the other hand, we won't have too much upside left in the market without a Fed cut. These issues won't disappear unless they're all faked issues.
I like silver too, think they'll out perform gold, which will out perform the market. But it has to be an investment. If the market crashes, PM will go down with it. Because when people start to liquidate, they'll sell anything, including PM shares.
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