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Tuesday, July 22, 2008

While on Vacation, Trading Gods Mock Me

I sure picked one helluva week to go on my cruise…

Just before I left, I wondered Indymac: Failure by Friday? Fannie, Freddie: We Need Capital! Sure enough, as I was at the airport my Blackerry damn near exploded with news headlines after hours. So the third largest bank failure in US history had to happen while I was stuck in the airport…

I knew then that the Trading Gods would mock me with one explosive trading week while I was trapped on a beautiful cruise ship for seven long days.

I insisted it was Time to Short Commodities and wondered Oil and Gas: Will They Break Down? I switched from Mohitos to Champagne by Wednesday as oil sliced down through $130 in a series of massive red candles. Those double inverse ETFs, DUG and SNM hit my profits targets and are now in consolidation mode.

Fannie Mae, Freddie Mac: Downgraded by Traders foreshadowed that final rinse in both stocks. I mean seriously, even a Former Federal Reserve President Says Fannie Mae and Freddie Mac Are Insolvent. Despite the bounce on various empty promises by the clowns in Washington, FNM and FRE common are still worth exactly zero.

Just like speculators were blamed for oil’s sudden rise, so too are they now being blamed for the sudden drop in financial stocks. This time a subhuman species of speculator known as the notorious Short Seller was blamed for causing the failure of financial institutions. A debate over ‘naked short selling’ began and the government finally and SUDDENLY decided to actively enforce an EXISTING rule banning such short selling. Basically, the big boys on Wallstreet were happily selling short naked while they benefited from doing so and the SEC turned the other cheek. Now that they are the target of the same game, they cry foul and their political bitches listen. Classic. Just banana republic classic…

This resulted in a massive, coordinated short squeeze in financials that put in that tradable bottom that I was looking for in How to Spot the Next Tradable Rally.

More as I catch up on the markets…


Anonymous said...

glad you are back!

Any comments on SKF while you were popping the mojitos? crazy week last week.

with wachovia news, I'm guessing its time for another run up...unless Ben & Ron step in and try to rewrite economics 101.

Ben Bittrolff said...

I like SKF here. Just don't go 'all in'. There are going to be more bailouts and political manuevres that might breathe some temporary life into things... kinda like how the rate cuts spiked the S&P 500 from 'lock limit down' @ 1255 to 1440 before this last shit.

Expect bounces. But dont' lose sight of the fact that the economy really is in deep shit.

Anonymous said...

yep. maybe some "dollar cost averaging" since you said about the economy. I was away for 4 days when it hit ~$200...and in a few days, BOOM! down to $130-$140. argh.

i was at a target store last night. normally very busy on a summer night. place was a ghost well as the Outback parking lot. times-a-changin'!

Brian said...

Any (free) internet on the cruise? Those things should have boat-wide wifi by now I imagine. Would make it more appealing to me.

Ben Bittrolff said...


Of course there was internet... The whole ship was wired.

As hard as it was, one week a year away from the markets is probably healthy. Hehehe.

I just drank more as I watched the tickers scroll by without me... It was like a drinking game. One shot for every $1 crude fell... One shot for every 100 points the DOW moved in any one direction.

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