Monday, December 15, 2008

Its Awfully Quiet Out There!

Good Evening Folks

For the first time in months there is not a lot of news to discuss. I don't have much to say! Tomorrow will be a huge day as we hear Goldman Sachs earnings before the bell followed by Morgan Stanley. There is a lot of buzz around how large Goldman's loss will be.

It will be interesting to see how the market reacts to the results. Many bottom callers are out there screaming that stocks are now way undervalued after the 40%+ decline equities have taken this year. I of course think they are full of crap. Expect things to quiet down after tomorrows huge news day as the holidays arrive. Beware of the bulls during this quiet time!

FAZ and SRS worked well today.

I plan on being nimble with FAZ tomorrow. I will be closely watching how the futures react to the Goldman earnings. Either way, I will most likely get out of FAZ at the open. The reason I say this is if Goldman reports a disasterous quarter and we get a big drop at the open it will be time to take some profits. I am up nicely on the position and there is no sense in trying to be a pig whith the financials being as beaten down as they are. If Goldman beats, I am outta FAZ because the financials are going to take a moonshot.

I expect them to try and throw out the kitchen sink tomorrow. My guess is their losses will be a disasterous and the stock will get clobbered. IMO, this clobbering could create a nice entry point on the long side on Goldman. We will be heading into the holidays where trading volumes tend to get light. Rallies often occur is these situations, and many traders may attempt to take advantage of this and pick up Goldman if the stock gets clobbered at the open. Thanksgiving ring a bell anyone?

I can hear the "bubble buys" spinning the bad Goldman quarter already. "Its a kitchen sink quarter!..blah blah blah". If for some reason Goldman pulls a shocker and pulls of a miracle good quarter my FAZ shares will be renamed FIZ and I will get taken to the cleaners. Its a risk I am willing to take.

I plan on still holding SRS despite what happens tomorrow. I still think SRS will move much higher from here.

Gold continues to move as the dollar is beginning to show some weakness. I also think gold is moving higher because treasuries are paying squat right now.

Investors are desperate to find safe havens that actually pay returns better than the zero % seen in treasuries!

As a result, gold and commodities are starting to look much more attractive. If the dollar and treasury yields continue to drop I believe this is where the smart money will start flowing.

Here are the stocks on my radar on the long side as a result of the above trends:

DIG, gold, GDX, NUE, AA

Still short the financials and commercial real estate. Apple is on the radar but I am not ready to pull the trigger.

I will have a much more extensive update tomorrow or Wed. I may have to travel tomorrow on business so I might not get it up until Wed. Also, Don't forget we also have the Fed announcement tomorrow as well. ZERO RATES HERE WE COME!

Stay Tuned!

2 comments:

flipdippy said...

Looks like you may get clobbered on SRS.

Jeff said...

Flip

Bizarre day for me. I bought GS $80 calls this morning for $3 as a hedge this morning and they just about doubled by the end of the day.

I actually made money today. I will have a big post tomorrow about today.

The FED statement blew me away today. It doesn't solve the problems. They pretty much fired all of their bullets today.

It still doesn't solve the problems that we have in the economy.

There is plenty of money to borrow. BUT, there are no consumers that want to borrow ,and there are no banks that have any desire to lend to consumers that are loaded with debt and losing their jobs.

More delaying of the pain.

Sorry I don't have much time to spend on this today. It was a very interesting day. The holidays keep me very busy.

Much more tomorrow.