Bad Sentiment Everywhere
Got out of my leveraged position today given how the market was behaving. Bank of America posted positive news…yet the banks were tanking. Not good. I decided to sell my most leveraged one (FAS) while maintaining my position on UYG. I’m not quite ready to sell since it’s at a critical level and may see a bounce in the next few days. See the below chart on XLF (Financials Select Sector SPDR) that’s at a yet another important level.
In the meantime, everything I read today tells me things aren’t quite as “recovering” as those seasoned analysts at CNBC state. After all, CNBC is owned by General Electric who doesn’t benefit from tanking markets. Even though GE is surviving OK on the industrial business, their capital business is not in good shape at all. Without the tax benefit they received, GE would have lost $153 million this past quarter.
I found a fun blog that I’ll be reading up on more often for sure. www.goldmansachs666.com is getting sued by Goldman Sachs because of its abusive posts. In reality, it’s a very legit site if you ask me. Since April 11th 2009, the blog has gotten over 270K hits. Impressive.
Yahoo Finance Tech Ticker has a video of Joshua Rosner’s interview discussing the inevitable bad news of the banking sector and its bank stress test result coming out soon.
JP Morgan analyst Matthew Jozoff sees another $400 billion in losses as a result of the continuing credit deterioration and is confident that the banks will need another round of capital injection by the government.
We find that TALF 2.0 is likely to benefit securities with the least amount of writedowns and lowest haircuts —fixed rate bonds and long-reset hybrids should have the most upside. We estimate that banks will experience about $400bn more in losses, and stress tests will reveal the need for more capital for certain institutions
I also read an article on The Daily Reckoning talking about how the only reason why Citi made money is due to its derivative position designed to make money as their Credit Default Swap (CDS) spreads widened. Citi freaken made $2.5 billion dollars just because they essentially made a bet that the cost to insure against Citi failing will go up due to its increasing risk of a default. Hell they were right! They are virtually insolvent and the only reason why they’re still around is cause of the government. They were confident not that the company will survive but rather on the opposite side. That’s something…and rather sad when that’s how they made most of its reported earnings.
I’m still holding my financial long UYG simply because it’s at a pretty significant support level. I’m just not a good enough fortune teller to know what will happen tomorrow. So I’m going to wait. Financial Ninja is certainly bearish…he has been for a while.
Tim Sykes Challenge DAY 21 – KIRK
I’ve been so damn busy traveling for the last 2 weeks full throttle…haven’t been able to trade much based on Tim’s advice. I’ve tried a few of his trades but unable to find any shorts. Not to mention Scottrade not allowing any shorts under $5. I’ve signed up with ThinkOrSwim so hopefully I’ll have better luck finding shorting stocks. One thing I’ve learned for sure…TIM Alert could be a very good tool if you have the time and will to day trade and be VERY quick with your trade. He doesn’t mess around with his speed of trade most of the time. If you’re a swing trader like me, it’s gonna be much harder to profit.
Shorted 2000 KIRK at $6.46ish…first down day after a massive runup, nice morning panic down to $5.60 and rebound…now its put in some solid sideways price action all day in the mid-$6s, just broke intraday support at $6.50, small position because this stock is dangerous for short sellers…this could be the beginning of the end, but not sure…good news it is easy to borrow, risk reward looks good, I look to cover around $6 or below (gotta see how it act at that psychological support level, if it gets there)
Let’s see tomorrow how KIRK does. Given this is above $5 still maybe I’ll take a piece of this pie.