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Signs

October 24, 2009

I am not a perma-bear, but I like to always keep an eye out for disparate facts that unite  together to give me an idea of risk versus reward over the intermediate term. All of my trading is short-term and non-discretionary, but ultimately the bet sizing and exposure decision is judgement based.  Several signs seem to suggest the possibility of another meltdown in  2010.  As always you should wait for technical confirmation.

1) Citibank is now jacking up interest rates on certain credit card borrowers to nearly 30% whether they have a pristine credit record or not. No warning and no good reason—-desperation? http://globaleconomicanalysis.blogspot.com/2009/10/citigroups-hail-mary-pass-how-to-know.html

2) FASB is scheduled to lift suspensions on mark-to-market accounting starting November 15, 2009 which forces zombie banks to show what they are hiding.

3) Fannie Mae and Freddie Mac are effectively worthless and finally their charts show a breakdown: http://stockcharts.com/h-sc/ui?s=fnm&p=D&yr=0&mn=6&dy=0&id=p94154849511

4) Commerical Hedgers (Goldman Sachs, JP Morgan, the Fed)  are out of the market while everyone else is “all-in” see DowInd

http://www.insidercapital.com/BullishReview/COTINDEX.HTM

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3 Comments leave one →
  1. Alex permalink
    November 2, 2009 7:25 pm

    there were numerous occasions 09/08 – 03/09 when the government interfered with the downward path of the market. my read on beta may be right, but their alpha is biggern than that many times over. other than that… yup… wonderfull spot to short for the next intermediate wackage… stop at the high

    • david varadi permalink*
      November 3, 2009 1:45 am

      the history of government interference doesn’t bode well….i certainly wouldn’t assume heavy long positions here even as a short term trader.

      cheers
      dv

      • Alex permalink
        November 4, 2009 11:11 am

        absolutely. if anything, the plays are to short into waves of short covering following government interference(s). we just had a majort one so it’s a good spot, but once the ball gets rolling they become more and more likely to interfere. dont’ get me wrong, those bozo’s only interfere with free markets and progress, they rarely fix or contribute anything useful.

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