Death By a Thousand Cuts

Two up days in a row too much to ask? Evidently, when there is not one piece of good news on God's green earth to make a rally last for more than an hour. Feb. 5 and 6 are still the last two consecutive up days and I'm starting too think I may create a prop bet in Vegas-if it's still open.

My "state of crash" theory is still in motion as things just meander aimlessly to the down side and it does feel like death by a thousand cuts. My current theory is that we could see more market pressure as we get closer to the "stress test" results. Any longs in the market will want to take chips off the table as the possibility of a bad result strongly exists. Uncertainty is a killer and these results will carry much weight. If it is worse than people think, it could open the door for full blown nationalization for more than just C and BAC but for WFC, USB and others. XLF would implode further and it would take the market with it. Just a theory, but I will be watching closely. As far as the meeting on the Hill about mark to market accounting, I have zero confidence that anything will be resolved on that front either, too little too late. Uptick rule? Bring it, the market still collapsed when we couldn't short stocks at all.

I'm still waiting for the rally that will last for more than 90 minutes.

Frustrating Action

Here are some names to chew on, I especially like WFC as a short. I believe the dividend is in major jeopardy and I am hearing strong chatter that they will be coming to market for a major cash raise which will be incredibly dilutive. By the way, we are killing them over on Stocktwits, and if your not on the inside, you're on the outside. have a great night. We boycotted CNBC on it today, what a gas.

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.

Healthy Pullback I Guess

I still don't trust my sister in this market but i guess today was kind of a textbook pullback. I shorted USO and it is currently working against me but I have updated everyone on my thinking in an earlier post and unless oil goes ballistic the trade should work. Bear Stearns has been a phenomenal short for me yesterday and again today. Look at the intra day moves on both days. I received yet another call from a well respected hedge fund trader that said there was teeth in the rumor that European banks were putting BSC on the "do not call list". Who the hell knows if these rumors are true but I caught it for three points short into the close from mid day. Lately with BSC, they've pulled a Dick Cheney with the rifle and asked questions later. Until this company gets bought out or blows out eps, this stock will be volatile. GS was a good trade in the morning but any progress I had there I gave back later in the day as all the financials folded in unison. Wells Fargo caught a bad rumor today as well, which added to the grief. Thank God the fed did what they did yesterday because I think we would have hit NEW lows with authority today. The band aid on cancer crowd will get louder in the coming days and weeks ,and only Jesse Livermore knows how this will play out.