The major market index (DOW, S&P500, Nasdaq Composite) had a short rally since a week ago. The three major index are now at their first resistance level.
While there are many Bulls in the market saying that the market have somewhat bottom, I personally do not believe it is. The market diarrhoea is not over yet. If this is a normal pull-back, I would agree with the notion that we have reached a bottom. However, this is not a normal pull-back. This is a systemic problem that affect not only the US financial market but also the global financial market. In the meantime, let's watch what happens next.
In the coming weeks or months, I foresee more bad news. These news should include more credit card defaults, more private education loan defaults and worse - the credit swaps defaults (a US$45 trillion industry - as per Moneynews.com).
The latter are basically insurance policies that buyers of mortgage securities (CDOs) bought against a mortgage default. Banks and hedge funds 'wrote' this insurance, a highly leveraged speculation. Now that the mortgages are defaulting, the sellers are saying they don't have the capital to make good on the insurance - as per Moneynews.com.
Currently, a number of financial and housing stocks seem to offer good setups for shorting.
- PersianCat (Millionaire-in-progress)
Trade Like A Persian Cat reminds me that I should be like a Persian Cat, waiting for the right setup to trade and not act on impulse. This blog documents my trades, thoughts and reflections in playing Options in the US Market. "Bulls make money, Bears make money, Pigs Get Slaughtered, Cash is King"
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Interesting Read
- Are You An Academician Or Practitioner?
- Are You Winning The Battle?
- Comic Strips
- Guidelines For Intraday Play
- How The Markets Really Work
- Jewish Holidays 2012
- Optionquest Online Game
- Play One contract only !!!
- The Average Investor Mentality
- The Market Cycle
- US Market Holidays 2012
- Who Are You Trading Against?
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