Getting Close & A Few Potentials

As I watched the market down 200 this morning, all I could hope for was an even bigger sell off.  Remember, being short means we make money when things are lousy.  And, boy have they been lousy and yes, we’ve been making money.  Having the market go down 300, 400, or 500 makes covering shorts easier.  But, we finished with a mild sell off today.  So, what do you do with with mild sell offs?  You scale out.  In other words, cover your shorts gradually.  In my case, that mean taking some profits on the Ultrashort S&P 5oo ETF (SDS).  If you don’t start covering your shorts at some point, when will you ever cover them?  Many of my shorter-term oscillators are getting oversold and I think we’re setting up for a rally, even if it only lasts two weeks.  But, I’m not so confident in the market that I covered all my shorts.  I covered about 1/4 of them today locking in some gains.  

We’ll probably bounce off the November lows and all the “professional” traders will be saying, “see, we held the November low and successfully tested it.”  And, maybe we will for a while, but I’m not seeing anything fundamentally or technically that makes me share that thought at this moment.  I think we’ll eventually break through the old November lows and make fresh new lows.  Things can always change and I certainly want to be bullish.  But, it’s very difficult right now to do that.  We have a stimulus package that seems too back end loaded.  We have the average investor feeling as if they can’t trust anybody with the Madoff & Stanford situations.  We have building fear of future inflation.  We have the threat of nationalization hanging over the banks.  Is that a good backdrop for risking your capital?  Not really.  Therefore, we are left with good old fashioned trading.  Buying low and selling high on a shorter-term basis.  

If we’re left with just trading, then we need to find some stocks we can trades.  Both Transocean, Inc. (RIG) and Freeport McMoran (FCX) look good to me.  All I’m waiting for is a breakout from either one of them, or both.  I wrote about FCX a few weeks ago and said it needs to break above $30.  It hasn’t done that and has struggled but I think it’s setting up for a breakout and will soon, especially if money keeps pouring into gold.  As far as RIG, it would certainly have an easier time breaking out if oil would start heading north.  So far, no dice.  But, keep an eye on both of these for possible trades.

Have a nice weekend.

This post published at www.karleggerss.com

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4 Responses to “Getting Close & A Few Potentials”


  1. 1 Lee February 21, 2009 at 9:34 pm

    Karl,

    I tried to get biz radio on my radio this weekend and it was not at 1110 am in the Dallas area.

    Did you guys move and if so where can find you on the radio?

    Thanks

    • 2 keggerss February 22, 2009 at 6:15 am

      Lee,

      We ran several commercials prior to us going off the air temporarily in Dallas. We are moving to 1160 AM KVCE on March 2nd. So, until then, we are off the air in Dallas. This new station is much more powerful than the old one and it’ll be a huge upgrade. You can stream at http://www.bizradio.com anytime as usual. In addition, we are having a special Emergency Market Update at Tre Amici Prime Steakhouse and Seafood restaurant in North Dallas on Tuesday February 24th at 6:30 p.m. You can go to http://www.bizradio.com and it’s the first article which goes into a lot more detail.

  2. 3 Raja February 23, 2009 at 8:13 am

    Is there a chance we get 10 to 15 % bear market rally from this depressed levels for the indices ?
    I cannot wait until March 1st to hear Biz Radio on the Dallas Radio. The whole station is awesome filled with quality programming.

    Raja


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