News Event Rally

In markets like these, we always learn alot.  There are always new variables and events that have never happened before.  So, what we have to do is continue to learn and get better at investing and trading.  One thing (among others) I’ve learned in this market is to sell news related rallies.  We’re oversold and should get a rally at some point, but looking back every rally we’ve had because of some news event was a good selling opportunity.

I’m using the news of Tim Geithner becoming the next Treasury Secretary as a selling opportunity.  I’m not going to over do it but I will continue to sell into rallies as the internals continue to deteriorate.  Don’t get me wrong, I think it’s huge who Obama is naming in his cabinet.  Remember that a bigger driver of equity prices in the short run is emotion.  When investors are fearful, they sell.  When they aren’t confident, they sell.  Investors haven’t been very confident lately partially because it looks like nobody is driving the bus.  The parents aren’t home.  So, for investors to embrace the pick of Geithner is a positive.  No doubt about it.  But, I know that what matters is demand for stocks and fundamentals.  And neither one is very good right now. 

So, enjoy the rallies as they are normal and part of every bear market.  But, don’t get used to them and don’t take anything for granted.


1 Response to “News Event Rally”

  1. 1 Place November 23, 2008 at 7:58 am

    Not knowing much about Geithner, but looking at Obama’s other nominations, I am more fearful than relieved. Hank, of course, has lost it, so I guess in that sense, anything is better than the current plan, which appears to be to focused on saving or not saving companies based on who he likes or with whom he has an axe to grind. Better hope you have been nice to Paulson if you need a hand. And while I am glad we have not been attacked militarily, Bush has been incredibly innept at addressing economic issues – what a dissapointment and political disaster.

    So what is Geithner going to do? Obviously we are under feconomic attack, either from outside (Soros, etc.) or from within – Ultra short ETFs, uptick or Mark to Market rules. Would Dodd or anyone else want our systems to crash, or lose a war for that matter, for political gain?

    Either way, at least in this case it obviously worked and is still working. Why is he still heading the SEC? There is no accountability. And, he has to know by now that he has been wrong, but he is either okay with it ot not man enough to step up.

    Just to finish us off, we have the promise of capital gains tax increases and corporate tax increases, direct and indirect (healthcare). It appears that anyone with capital gains has sold and those who haven’t probably will in the next few weeks. In this environment, what sane person would hold multiple equity positions for any length of time or even over night?

    Freddie and Fannie – just icing on the cake. First our schools, then the media, and now our government – it is going to take a long time to get it all back. To make it worse, you have tens of thousands of willfully-in-denial advisors telling people to buy and hold, buy and hold (and pay the fee), while their CEOs take tens of millions from their firms, cutting dividends, etc.

    How do we win? In terms of making money, I say trade – one position or two positions intraday. Bonds for preservation adn possible apprecation. In other words, don’t play their suckers investment game, which is setup to extract dollars from unsuspecting good people. Almost everyday, the market looks like an double ETF hockey stick, up or down, with smaller, identifiable and tradable trends in the AM as well. Learn to trade, or hire someone that will trade for you becasue it is a full time job. That is the money oportunity.

    As for the politics – we have ourselves to blame. If anyone knows what Geithner is going to do for us, please let us know. Is there something different, or is this just another trick to pull the herd into the market for another slaughter?

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