Wednesday, April 15, 2009

Ready To Go

Back from sunny Florida and I'm looking forward to trading these markets. We've enjoyed a wonderful rally and now we will see if we can see some healthy sideways actions and another leg up.

According to some preliminary data leaked to the NY Times all 19 banks with assets above $100 billion will pass the stress test.
The official results are due by the end of April.

According to RGE Monitor this requires a peek below the surface:

"“In brief, banks are benefiting from close to zero borrowing costs and fewer competitors; they are benefiting from a massive transfer of wealth from savers to borrowers given a dozen different government bailout and subsidy programs for the financial system; they are not properly provisioning/reserving for massive future loan losses; they are not properly marking down current losses from loans in delinquency; they are using the recent mark to market changes to inflate the value of many assets; they are using a number of accounting tricks to minimize reported losses and maximize reported earnings; the Treasury is using a stress scenario for the stress tests that is not a true stress scenario as actual data is running worse than the worse case scenario."

We'll see how this all pans out but one thing I've learned is that you shouldn't get in the way of the market when it's made up its mind, and has momentum in its favor. It is however something to watch closely as the financials reversed strongly yesterday and FAZ had a huge volume day, maybe it was a one day wonder, maybe not.

I'm still catching up and getting my bearings but I'll see you on stocktwits. Good luck today.


Guzzo said...

Yeah, but what's important is will I pass the stress test?

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.