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Post Modified: July 15th, 2008 at 11:29 pm
Tags: About9 Comments
9 responses so far ↓
are you going to post your weekly update/guess ???
TK - Yes, tomorrow before lunch. A lot of stuff lining up but price must co-operate. IndyMac could give a final low like Bear Sterns did. Or Fannie/Freddie may hurt some more. I think congress guaranteed them last Friday so they may be done too. The common stock with Fannie/Freddie and many banks may go to zero but the institutions will continue — maybe run by the government, but they continue.
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The cycles turned up a few weeks ago. When price doesn’t respect the cycles there is always something stretching the rubber band.
Andy, I am looking at another week of down, till Mon. the 21st, that will be 120 days from the march low, we are somewhere in the B wave down, or my 1st scenerio is the 3rd of the 1st of c, I need more time to figure if its a 2 going up on or before that date or the start of a larger degree 2 back to 1400 area on S& P, let me know what you think, Your doing a great job, Andy, keep the flow going, this is a hard time, listen to all the pros , they are having a terrible time of it. Thanks again Andy right or wrong, your damn good at this.
Libby - Thanks for the kind words. To be honest, I am lost. For the past 5 years this market has been easy to read/call. Moves started when they should have and finished when they should have. After the fact, I can always find the cycle that worked - but that doesn’t help now. July 16 is the anniversary of the high last July. The market doesn’t have to turn on the day, but the weekly chart usually works. The 21st will be fine for a low. I’ll get my weekend outlook up in the next few hours. Thanks for your analysis.
Andy - Yes, the govt assured support of F&F bond holders. The companies would keep running. With that being said, how can the stock go to 0? Also, their stock going to 0 might be very bearish.
I think it all comes down to raising capital. If these companies don’t raise capital in the next couple days, the stocks should rally and that would make friday the bottom.
One thing i find different between your comparison of Bear Stearns and IndyMac is that when we had a bottom on Bear Strearns taken out, no one was expecting a bottom. But these days EVERYONE i know is looking for a market rally and you know what happens when EVERYONE looks for the same thing..
TK - As for everyone looking for the bottom - that may be true in your circles. But the II and AAII sentiment surveys have not been this worried in 10 years (maybe longer). As I said in a post last week, I don’t care how they feel. But I do care if they sold already - which price and volume support. And of those you say are looking for a bottom, are they in cash or already long? Again, it only matters where their money is a not how they think or feel.
Andy - The hedge fund i work for is up 25% for the year. Each and every employee, which ofcourse is smart since the fund is up 25%, is long UYG. So that is some food for thought for you.
From what i know alpha based funds think the finance sector valuations are compelling. Our time periods are ofcourse long term.
TK - Up on the short side? If so, that proves my point on oversold. UYG (the financials) could be terrible fundamentally, but still bounce 20% before moving lower. I don’t know. But nothing goes up or down forever - so being long UYG could be a good idea.
Andy - we are a converts shop. stocks are for hedging.
we made some bets on some distressed financials. A situation in which a bank’s stock goes to 0 but then the company gets acquired and the bond holders get their money is perfect for us.
We make tons of money in the hedges (as the stocks kept going down) and then the bond we bought for 60 cents on the dollar, go for almost par.