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Wednesday, October 8, 2008

That's the Bottom, For Now

On Tuesday I said it was Oversold Bounce Time, Going Long: “So, I started going net long yesterday. That’s right LONG.

You can find my conversation here on the Slope of Hope and here on the Evil Speculator in the comments section.

I’ve gone long the NASDAQ and the S&P500 through QLD and SSO. I’ve picked up some of names the hedgies have puked hard: AGU, MON, MOS, POT and AAPL, BIDU, GOOG, RIMM.

These are all oversold bounce trades. If the wheels start to come off, I’ll hedge by slamming the Nasdaq and S&P 500 futures short.”

I picked up most of the positions near the Monday lows. I hedged those gains, although not perfectly, using futures on the gap up off the open Tuesday. Clearly the wheels starting coming off pretty quickly and I was glad for the hedges. I took them off a little early and flipped long on the S&P500 (ES DEC08).

I think this was the rinse. Everybody that had to get out, got out. The hedgies got their redemption notices and were forced sellers. Retail accounts got margin calls and were forced sellers. The weak hands have folded.

I’ve noticed Joe Sixpack has finally caught on after being smacked with headline after headline warning of a ‘financial crisis’ and ‘another great depression’. I’m pretty sure most of them have now sold their mutual funds now. Hell, even Jim Cramer capitulated hitting the “SELLSELLSELL” button. Jim Cramer Says Sell, Almost Guarantees a Bottom.


fajensen said...

I think that anyone calling "bottom" means that we are not nearly there yet.

All this 24/7 noows are scrambling peoples brains - it takes months for bear markets to die and years for recessions to burn out. People want to believe that "that's it, over with now we can continue as we did before".

For the real bottom to come in all hope must be crushed and lethargy set in - the kind of market where more bad news does not drop stocks further because nobody gives a rats arse anymore (and we need to reset interest rates to "High" before "they" can blow another bubble. That will take time and effort too).

PS: I know that *you* are not falling for it Ben!

Anonymous said...

Ben, sorry to see you have yet to psychologically come to grips with the fact that they want it all from us and YOU

Anonymous said...

Dr Doom.

Hi Ninja, I believe this is not the bottom, Look the futures, they did not buy the Fed's Interest cut.

Buy Gold

michael said...

I'm not sure if this is temporary bottom, but it sure isn't capitulation yet.
Only when everybody from Joe Sixpack to the average investor believes "OMG, these stocks will not recover in my lifetime, I will NEVER buy stocks again" we have it.

And as realitiy has just recently began sinking in (2 weeks at most), we might see a lot more panic (and deleveraging) to come...

khalid said...

Can someone explain what the hell GOLD is doing?

fajensen, love your comments.


Ben Bittrolff said...

Patience girls.

I said 'temporary bottom'. I said 'bounce time'. I didn't say, time turn into a Bulltard.

Believe it. We will go up from here.

Yes, I'm still a Bear. Yes, I will short again. But not now.

Anonymous said...

Dr Doom

The Next crash is the dollar, interest rate decrease is going to hurt badly the green backs.

Buy Gold, physical, Gold bouillon is a safe investment.

Storage food, it seems crazy but if they destroy the currency everything will go skyrocketing.

Anonymous said...

Iceland is showing us all the way

30% inflation now for them

toddpw said...

Ben's bottom can't be here quite yet! The Treasury just said they ran out of stuff to sell and have to print more!

This crash has now convinced me that the real purpose of the bailout was to authorize $700 billion in new Treasuries just in time for everyone to rush into them as a safe haven at crap interest.

The financials short ban ends tonight. Watch for financials to totally crater tomorrow as people pile in, and then take off like a rocket when everybody has to cover all at once.

Anonymous said...

so, went short around 10 AM (about 10 minutes after your 9:51 AM post)? that what you mean by temporary? or longer time frame?

Ben Bittrolff said...


Yup. I used futures to lock in the gap up. Then when there was no follow thru on the open, I held on to them.

I'm increasing my longs today.

Don't forget, I trade across numerous timeframes, have ridiculously low rates, retarded amounts of leverage and all the tools in the world (Bloomberg, Reuters, squawk etc.)

Takes a lot to catch us (guys in our office) completely flat footed.

Anonymous said...

i think we are near a short term bottom. any day now. we need a bounce to reload my shorts.......the idiots that think this is 'the bottom' are fools....we will fall another 50% over the next 1-2 years on all the major indexes. we need 305 of all businesses to file bnk. how many home builders have gone under??? we havent even begun to feel the pain. credit card debt, cre debt, auto loan debt....on and on. when we see vacant lots with 10,000 returned lease cars i think we will be near the real bottom.

VVi11y said...

Hi Ben,
so what I've heard is that although most hedgies can deny or throttle redemptions, they also have until the end of the year to honour whatever redemptions were done by sept.30. Could mean more selling.


Anonymous said...

Geezzzzz, I read that and you convinced me ... SELLSELLSELL ... It cost me a pretty penny. As usual, caveat emptor or in this case caveat vendor! In any case, I enjoy the charts and commentary. Thank for putting it out there!

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