Over the last few days we've had a pretty significant rally. The market pundits are out in full force on CNBC all day long now calling the "Bear Sterns Monday" a bottom in the markets. I dont buy that. Firstly, with higher commodity costs due to inflation(avg. household grocery bills and gas costs have risen significantly), lower home values and the decrese in the USD have started taking its toll on the US population. This was reflected is the US Consumer Confidence data reported this morning. From Bloomberg:
"US consumer confidence has fallen to a five-year low, according to the closely watched Conference Board report. Its index of consumer sentiment fell this month to 64.5, its lowest showing since March 2003.
The situation was even worse regarding the Conference Board's forward-looking expectations index, which fell to 47.9, the weakest performance in 34 years. "
I feel this is just the tip of the iceberg. The full pain hasnt yet percolated through the system. As for trading, I have just made 1 trade in the last 2 days. Since i dont believe in this rally, i'll give it a little more room to run before i start shorting aggresively. However, if over the next few days if i do see a lot of market action that points to institutional buying, i'll change my views and probably go long the market. However, i dont see anything resembling that yet.
I shorted Mastercard(MA) through puts today around 225. I see the buying pressure in the stock starting to ease and selling starting to kick in. However, i do expect the stock to churn around a bit before breaking down.
As for my other shorts RIMM and RTH, they are down a significant amount. I have just 1 put each left now which are very minimal sizes. Both the puts are longer term (Oct 08 expiry) so i've held on to them.
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