Wednesday, July 16, 2008

Stay Smart

State Street (STT) was a beat yesterday and WFC beat today and raised the dividend. It was up about 30%. In my last post I said that I wanted to see a close at or very near the high on the financials. It was a good close and it makes me a little more confident we can resume things in the morning. I actually kept a little UYG long overnight. A good number from JPM should instill some more confidence tomorrow. This a two xanax, double shot moment at the bar for the shorts. Right now they are panicked and are praying we don't gap up in the morning. I am not all all convinced this is the bottom but I will trade what I see, and right now I see green for the financials. Keep in mind the last two big rallies we gave ALL back the next day. However, it does feel real this time. I made most of my money short energy right after the inventory number. Bids imploded and I killed them. I was short APA,CHK,OIH and XLE. I covered about 30 minutes later with nice gains. It wasn't until after lunch that I started getting long the financials, mainly UYG. All of these names were on the blog last night and this morning and twittered throughout the day.

Don't forget about GOOG after the close, a good number in a better market could make this one get silly again. Amnesia can be a killer, so don't forget how bad things were yesterday, the day before and the day before that. These rallies will lull you then rip your esophagus out if you get complacent. Right now though, it's all about emotion and sentiment and NOT the charts or the fundamentals and short squeezes take more than one day to get resolved. The key for me tomorrow will be the ability to sustain this move. If the longs don't use this financial rally to unload, which they've done every time in the past, then this rally will have legs.

As far as oil goes, I think we get lower prices for he rest f the week. After that it could be onward again. This move down is because of the thinking that China is slowing. We've heard that before and it always turns around and bites us. I worry more about Israel, Iran and the Straits of Hormuz more than a 1% perceived decline in China's growth rate. Right now though the momo is down and I still like the names that I posted last night and this morning.

The sad and ironic thing about today is that that Bernanke and Paulson and Cox will take the credit and they had NOTHING to do with it. A beautiful testament to how free markets actually fix themselves ON THEIR OWN!!!!!!!!!!!!!!!!!! and they always will. Go America.


OE Trader said...

Very well put! I also don't think all the bad news is out but when it gets too easy to short, it is time to go long.

George Jackson said...

Joe, I am not sold on WFC's report. Look slike they changed their accounting criteria on the lneght of time for nonperforming loans from 180 to 120 days, resulting in $265M less charges against their profits. If they did not change their criteria, they would have missed by 4 cents...

upsidetrader said...

OE-thanks and you are 100% right

George-great "get" and very, very interesting, more tomfoolery and skuldugery to come im sure

George Jackson said...

Thanks. I covered half my ZION today. Still have small pieces of STI and FITB short, as well as EWBC. If we have a couple of up days, I'll be looking to add to my shorts. Pay attention to MTG--they have little chance to stay above 2 like their peers, and OZRK is trading at a very high price:book value ratio as compared to its regional bank peers. Later.

About Me

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I am a former hedge fund manager, broker and capital markets dude who now trades for his own account. I love what I do. I will try to post some stocks and an occasional chart that looks attractive for entry.I will also try to point out the idiocy of conventional wisdom and the lack of value added by the mainstream financial media. These postings should not be viewed as recommendations.