No longer exposed to the down side. Keeping a short to protect a portfolio is a good idea, but IMO most of the decline is in… for now.
Also, my limit order to get in some SPY April call options went through. Cash flows are real, and the market is cheap, especially on a lot of names outside of financials, but I understand the market negative sentiment… the economic situation is nothing to be happy at.
I got into the common. Looking to hold for a few month as everyone else keeps deteriorating, and AGO is allowed to take market share. There chart has been in a down trend for the past few month (due to macro conditions) but with this news that pattern may change.
Look to cover some more of the market short today. Just a heads up.
AGO and Buffett’s recently created entitiy. There are a few places to go to anymore to insure munis from a true Triple A rated insurer, and those two players are probably going to be the new big boys in the muni bond insurance game.
I never knew about AGO until this morning watching William Ross on CNBC explain the deal. I have to say, AGO recent upped their dividend signalling their health, and a deal of opportunity was coming.
I like it, added it to my focus list and will probably put an initial buy in today.
I covered some of the short I took out the other day. After reading the testomony yesterday, and seeing how the Fed thinks stagflation is no where in sight, I do not question that they will simply pump money into the system.
I am a bit troubled by what he stated to congress. And I think the market is too, hence the decline… but no one can really argue with the effects of what quickly pumping money into the system will do. After this decline, the market may rally to the upper limit of what I think will be a trading range.
As of now the upper limit is still in question, but the one thing I am sure of, is that the upper limit will not surpass 1450… I even doubt 1430.
The other day my girlfriend’s boss suggested I get into VISA. (Talk about an obvious play… I know, but he is not a stock guy so I let it slide 
.) Well, that is the mob psychology play, which means I will not do it. VISA is horribly over suscribed, and will be grossly overvalued when little fish like me can play it.
The play on VISA is MA. Let me explain… MA is going through a multiple contraction at the moment because Visa will be out soon. (More places where money men can put their dollars to work regarding a specific sector causes this, especially when the new comer is the leader in the field. IMO, the selling going on here is by Big Boys prepareing to get into VISA.) But MA is no second tier player. It is growing, knows how to grow and play in this world of virtual duopoly of plastic money.
This multiple compression is exactly what a long-term investor wants to see. It provides an entry. At the moment, here are the entry levels I am currently looking to see…
The daily is suggesting a retest of the 175-180 level of support.
The daily supports are backed up by the weekly SMAs as well, which is reassuring.
So, if VISA is interesting, then play MA… just have to wait for the right time.
Based on Bernanke’s talk with congress he will mostlikely cut by 25basis points on March 18th.
But he really is in a tough position. I mean we sit here with high food and energy costs, yet the government/administration is not promoting the proper policies to reduce these costs.
The Bush Administration flat out stated a veto to Energy Bill if the tax breaks to Big Oil are omitted from the Bill. By doing so, they veto the push into alternative energy, and solar tax breaks.
The biggest obstacle for Bernanke is the Bush Administration… we know where inflation is coming from… attack the problem with a specific solution and the problem will go away. (And no, I am not becoming a hippy )
Inflation numbers do not look pretty, yet the market is trending upward. Some view this bullishly, but I still do not. Some may view this as the markets are looking past these negative news, and inflation will go down in a few months, but the commodity prices are just not saying that. A longterm view of the SP500 indicates a real longterm shake out did not occur. As such, I am still leaning on the negative side.
(The VIX does not have to cross the SP, but the trend is fairly obvious. Over the years there has been a change in the dynamic with the VIX, as it has come down significantly. So I do not want to completely ignore a potential change in dynamic that may have suggested a bottom in the market.)
I started shorting again, as indicated in my previous post, and my charts are basically supporting this thesis. There maybe some upward move still to come, so that is why I just started, and plan on averaging up if need be.
The SP500 indicates a potential upside of around 1400-1410.
The VIX is oversold, severely, but can trend the 200SMA until the market becomes really overbought.
Other charts that would support a topiness are the ADRE approaching it negative trend line and Transportation Index approaching the 200sma resistance:
The VIX is approaching the 200SMA with an extremely oversold position. I do not like the set up, regarding the market.
Make no mistake, there is no news that developed that would merit a sustained rally. IBM is one of a few (very few) tech companies doing well. What is good for IBM is good for IBM, not the macro environment.
In general the market is cheap, as a lot of names were punished to levels that should not be, hence the market rise. But the macro back drop still sucks, and the markets will be range bound for some time.
I will post a more detailed view of the market later today, but now is a good time to start shorting the market again.
The S & P Rating Agency is an absolute joke.
I do not know what is funnier, the Joke of a rating got reaffirmed or the market went up because of it?
As if the rating agencies have ANY sway with their rating anymore. (Granted this does prevent further write downs, but its a joke… everyone, and I believe their mothers, know these firms should have been downgraded.)
