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Tuesday, September 30, 2008

Bailout = EPIC FAIL, But Just Won't Die!

In Short Ban? What Short Ban? I explained how there were different ways to get ‘synthetically short’…

I went short… and stayed short right through the vote.

I first warned that the market could go ‘no bid’ now that a large number of the shorts had been squeezed out in Disgusting Super Spike:

“After this, the markets will absolutely crash… and for the first time in a long time, you’ll see ‘NO BID’ in even the most liquid stocks after this squeeze sorts itself out.”

I snuck another warning into my Banking Index Chart (BKX) on September 23rd:

“I expect that we will soon hit the point where the longs try to sell in quantity and there are no bids from covering shorts covering to firm up the market. I expect prices to just absolutely melt then.”

I can tell you that the only individual stocks that vaporized yesterday were the ones that were on the short ban list. Whole prices were ‘skipped’ on the way down.

Stocks NOT on the short ban list traded just fine.

In Baltic Dry, Commodities, Bubbles I summarized why I’m Still Short Commodities as the Hedgies Puke.

That was before the meltdown. I've to reduced my short exposure on EVERYTHING by 50% on the close yesterday.

Equities are now deeply oversold and the donkeys in Washington will try to revive the bailout monstrosity with all their might.

Naturally, I will re-short on any significant bounce.

Any bounce should fail to clear 1200 on the S&P 500 (SPX). A roughly 50% rectracement would take prices back to around 1155. Heck, we could snap back to the 1180 area.

Despite the large percentage move, volume wasn’t awe inspiring. This was not capitulation selling. Expect more liquidation over the next few weeks… bailout or not.

My short discussion with Tim Knight of the Slope of Hope on Sunday night as the GLOBEX opened for Asia (click to enlarge):
Continuation of the quick discussion on Sunday about staying short into the vote on Monday...
A quick post on covering half of everything Monday on the close...

The Slope of Hope is a great blog, with a great community of active traders.

The Bailout wasn an EPIC FAIL, but just won't die! So be careful out there.


Anonymous said...

So Ben,

In your opinion, is the bailout a good thing or a waste of time?

Seems $700 billion is a spit in the ocean, so even if it passes we're doomed anyway?

A Proletariat

Ben Bittrolff said...

A waste of time.

I doesn't address the real issue: Over valued assets and excessive debt that can't be covered by current income.

A real solution would include recapitalizing or greating a host of 'clean' banks... and firing up massive (productive) infrastructure projects such as roads, bridges and hydro damns.

Money needs to be spent on these things anyways. So spend $700 billion on that...

Anonymous said...

Yesterday was a day I was glad I met Ben Bittrolff.

Anonymous said...

Ditto. Thanks Ben.

A Proletariat

Vijay said...

Ben, what's the best ETF to use for tracking the S&P500? SPY and IVV don't seem to track very well. So how does one translate technical analysis to these ETFs to find entry points? Or are you shorting something else?


Anonymous said...

Did you know many of the fat cats who circulate from board to board and from job to job throughout the financial industry are also members of the Bilderberg Group and or the Trilateral Commission, founded respectively in 1954, and in 1973, in New York City? When someone takes your money and steals your car, it makes an impression. When they belong to such a secret political clique, it leaves an indelible impression. Many elected officials even belong to these cabals, hence the secrecy. When Bill Clinton eased banking restrictions, he dished out $8-billion dollars for community reinvestment loans. When the financing schemes fell through, as is their wont whenever 30-million Mexican nationals buy inflated properties and default, it left banks in the lurch. Hillary Clinton counted on the loan giveaways to buy votes. Interestingly enough, had Hillary secured the nomination; she, instead of Barack Obama would preside over the bailout. So, where’s that $8-bilion plus dollars? Where’s Hillary? Why the caveat in Section 8 of the bailout: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” The Global Initiative people (code speak for car thieves) took my money; they stole my car. If you or I did half the things these people have done, we’d be serving consecutive life sentences. Wise up, get angry, and let the bubble burst. Besides, Ben Stein says we’re going to be just fine. You have my word on it too. Gentlemen, I want my money back:

Anonymous said...


A Proletariat

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