Tuesday, April 1, 2008

April Fools Day Rally?

Sometimes you look at the stock market and say to yourself "Wow how did that happen?". Today was one of those days. The only news to trade on was the fact that UBS wrote down $19 billion in bad debt, and Lehman borrowed $4 billion dollars at less then desirable terms. I guess the loan terms on Lehman were better than expected? Still trying to see how you spin the Lehman news positive.

One interesting trend thats being discussed today is the fact that the Dow has moved up more then 350 points the last three Tuesdays only to give it back the last couple times. Will this move be different?

The way I see it this market is being driven based on wild speculation driven by shorts, hedge funds, and fund managers rattled by a bad 1st quarter..

I expect a lot of today's move was a short covering rally. UBS's Art Cashin has repeatedly said this is the weakest group of shorts he has seen in his 40 years of trading. The shorts seem to be covering with any hint of a rally. This propels the market even higher.

The most frightening part of these rallies is that many people seem to be buying based on pure speculation that the financials have bottomed when there is ZERO data that the credit crisis is over.

CNBC had their typical pump monkey analysts on calling bottoms all day today. Their reasoning as to why this is the bottom seems to be all based on speculation and history versus fundamentals. Making assumptions in the middle of a huge financial crisis is similiar to taking your money to a casino and putting $100 on red in Roulette. Its pure gambling.

My question to these genius bottom callers is this. We have never seen a credit crisis like this so how can you speculate as to how this will end? Remember when you ASSUME you make an *** out of U and ME.

The market is looking more and more ridiculous everyday. Wait for the fundamentals before jumping back into the markets and let these stock pumpers call their bottoms. Remember, they were calling bottoms the last few Tuesdays and look how well those worked out.

We are still right in the middle of this crisis no matter how LOUD Wall St. yells that its over. They are screaming "bottom" because there is a crisis of confidence on Wall St. and they need you to keep investing in order to make money. They call bottoms out of self interest. Tune out CNBS and be very cautious until Congress regulates the pigmen and you have transparency in the financials. Take a trip to Las Vegas if you want to gamble.

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