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The Intelligent Trader's - Long and Short of It
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From: Robert A. Christy Editor/Publisher, ‘The Intelligent Trader’ http://www.intelligent-trader.com http://www.christyinvestments.com
Date: October 6, 2008
This weeks’ ‘Long and Short of It’
This is getting old and it is clear that there is simply no end in sight. I have spent the better part of the last three days reading as much as possible on this market meltdown in order to have a better understanding how and why we have devolved into this mess.
First, the latest Bullish Percent numbers:
BPNYSE Os @ 22% DEFENSE BPOTC Os @ 24% DEFENSE BPS&P 500 Os @ 20% DEFENSE
The Defense is still on the field and we are doing what we can to minimize the risk at the current levels. The Offense is cowering under the bench and is no where close to wanting back onto the field. Subscribers to the Intelligent Trader should be in cash as most if not all of the stops have been tripped on our recommendations. I will leave the portfolio as is for now because the are the same names that I want to own once the Offense heads back onto the field.
I have been inundated with questions this past week asking what to do if: (a) no stops were used and the account is simply adrift and (2) what happens if my stop is jumped. I will respond to each question individually because each and every situation is different.
This market is the perfect reason that we use stops in our trading. It also the reason that we make sure that each and every portfolio is hedged with different asset classes. Our managed forex accounts are profitable on a year to date basis and are offsetting stock account losses in a major way.
THE BAILOUT
The bailout sailed through both houses of Congress last week and the back slapping was enough to make me ill. If McCain loses the election, he can look at last week as the final straw that did him in. His maverick status as a RINO (Republican in name only) has been reconfirmed.
This legislation is bad for a number of reasons. The primary being that it does not address the root cause of the problem which was government intrusion in the mortgage market in the first place. Another is the pork that is tacked onto the end of it. Third, I will bet anyone that not one legislator read the thing before they signed it. The final package came in at more than 400 pages. Give me a break – our Constitution is probably three pages at best.
The currency market is telling us in no uncertain terms that $700 billion isn’t going to cut it. The de-leveraging or unwinding of risk has moved from the US stage to the world stage. We are now entering a period that can only be described as a crisis of confidence. Gold is higher and Oil is falling with no end in sight for either. A quick look at corporate balance sheets shows some carnage and the consensus forecast is that we can expect global growth to slow.
If I had to bet, I would say that Dow 9,000 is a real possibility and the dollar could drop to 100 versus the yen. The Euro is gasping for air as it is now clear that an economic region and political region are not the same.
Look for a coordinated easing of interested rates among all major banks sometime during the month of October. I would not be surprised if it didn’t happen in the next day or so. The powers to be have to convince people that it is OK to stick in a buy order.
I wrote an op-ed piece last week on Bush’s legacy. You’ll find it posted on our blog at http://intelligent-trader.blogspot.com.
As I said last week, this crisis will pass just like all the others. We’re beaten up not broken. I just wish some of the people who created this mess would feel at least a little of the pain. Look for some real mudslinging over the next few weeks as the political parties really bring it on. I expect Barney Frank to be in the crosshairs along with just about all of the Congressional leadership.
Also, I expect that the Presidential candidates are going to go negative. Sarah Palin’s thrust at Obama on Saturday regarding his relationship to Bill Ayers has been totally overlooked by the mainstream press. I spent some time reading up on Mr. Ayers and it is bothersome that someone who loathes this country as much as he does could have a direct line into the White House.
Look for the market to wreak havoc for most of the week. Hopefully, the central bankers will run something up the flagpole that can help us start to put this mess behind us. Until then – hang loose and work on your BUY lists because this too shall pass.
That’s about it for now. Let me here from you if you have any questions.
Robert Christy
P.S. Are you interested in trading along side me? There are 2 ways to do so. The first way is through my stock trading service, The Intelligent Trader. For just $249 you get a front row seat and the chance to get up close and personal with the market. Just click to learn more. The other way is through my dynamic forex trading service. If you have an interest in trading and/or learning about forex, just drop me a note. I am in the process of finalizing a new mentoring service geared to just trading the forex markets. In your email, please let me know when would the best time to get in touch with you.
P.S.S. Please fee free to forward this to your peers, friends and associates you think would benefit from its contents. They will thank you for it - and so will I!
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Robert Christy is a professional stock trader, money manager, author and speaker. Mr. Christy is the President CEO of Christy Investment Group, Ltd., a registered investment advisory firm. He is also the Managing Partner and Portfolio Manager of Crabapple Capital Group, LLC and the editor/publisher of The Intelligent Trader, a subscription based long/short trading service. At the time of publication, Mr. Christy may from time to time write about stocks in which he, Christy Investment Group Ltd, Crabapple Capital Group, LLC or The Intelligent Trader has a position. In such cases, appropriate disclosure is made. Under no circumstances does the information in this column represent a specific recommendation to buy or sell stocks. Mr. Christy appreciates your feedback and invites you to send it to rac@intelligent-trader.com .
Robert Christy The Intelligent Trader c/o The Christy Investment Group P.O. Box 625 Alpharetta, GA 30009-0625
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© Copyright 2008 Robert A. Christy
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