Registered User
Joined: 2/17/2008
Posts: 132
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does anyone here entertain the possibility that the financial sector has already seen its worst days, that the new stimulus package and bad bank system will cure their ills? i ask this with a straight face, in all seriousness. today did not turn out to be the bull trap i thought it was gonna be. i remember a similar week in november i think, when major bad economic news was coming out every day, and yet the market rallied fairly strongly.
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Registered User
Joined: 1/28/2009
Posts: 5
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Yes.
Will it? I don't know.
I think they can get functioning banks that can lend again.
But this will play out by the weekend. Next Wednesday anyway.
The stocks will go up and down as the details are revealed and debated on.
There may be more bad news we haven't seen yet.
They all made too big of moves and too close to resistance now for me to go long.
I'll probably buy some puts once it peaks out, but I'll have to see what's going on when that happens.
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Registered User
Joined: 9/25/2007
Posts: 1,506
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Well ...
That's sort of a loaded question ....
Do I think that BAC is going to fall another $50/share in the next couple of years ... as it has in the last couple ?
No ... at $7/share ... I certainly hope not ... therefore I guess the worst has to be behind them ...
Truth is ... most of these money center banks are insolvent ... being proped up only by taxpayer dollars ...
So ... if they're not going to let them fail ... maybe you should go long the banks (if there's going to be any equity left) ... and go short the US taxpayer (TBT) ....
The big question here is what will be left for the shareholders ....
Will the government take an equity position so large ... in exchange for it's infusions ... that it dilutes shareholders into oblivion ?
At this juncture ... the best that I can rate these banks is as a "trade" ... not an "investment" ...
But ... that's me ...
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Registered User
Joined: 2/17/2008
Posts: 132
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cheers reality. i just wonder whether at some point in the near future, at least one or two major banks will need to be nationalised.
looks to me like the dow has hit a key resistance level at 8400. if it breaches up through it, this rally may continue for a while. if not, the next major leg down is on the cards. but i really wasn't expecting this strong a rally at this point in time. i thought the 8000 level was on the verge of being breached.
bigblock, have you been surprised by this rally? reading between the lines of some of your posts last week, i got the impression you were expecting dow 7500 to be breached any minute.
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Registered User
Joined: 10/7/2004
Posts: 2,181
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dj;
The banks have already been nationalized.
re: Rally: The VIX has been telling us for some time that the favor was on the side of a rally, however brief.
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Registered User
Joined: 9/25/2007
Posts: 1,506
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The market depends on money flows ... and for that reason this typically a bullish time of year ...
Most 401(k) / 404(c) contributors are small to medium sized businesses ... and most of these have their fiscal year run with the calendar year ....
That means ... they have until March 15 to make their corporate contributions in order to be deductible for 2008 ....
I learned the hard way not to short the market between about the 3rd week in Jaunary through the 2nd week in March ...
Few companies can close their books, determine their contributions, and make them in less than 3 weeks .... but they have to be made by March 15 ...
On the other side of the equation is the obvious ... an economy in a tailspin ... and the news coming out each day is just a bit worse than the day before ....
These countertrend moves typicaly last 3-6 months before they begin to reserve ... so ... it could last into April ...
But ... see it for what it is ... not for what you hope it will be ...
Some companies are doing better than estimates ... some worse ... but in virtually all of them we are seeing lower sequential revenues ....
The employment numbers ... and durable goods numbers out this morning ... along with record layoff announcements ... tell us which way we are ultimately headed ...
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Registered User
Joined: 1/28/2009
Posts: 5
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QUOTE (realitycheck)
The big question here is what will be left for the shareholders ....
Will the government take an equity position so large ... in exchange for it's infusions ... that it dilutes shareholders into oblivion ?
Exactly. Shareholders could be left with nothing.
QUOTE (realitycheck)
At this juncture ... the best that I can rate these banks is as a "trade" ... not an "investment" ...
But ... that's me ...
That's for sure. Is there anything out there that can be an investment in this economy? Maybe Metals...
Also, some of the rally yesterday could have been short covering. Is there still a ban on shorting some of the bank stocks?
I consider myself a partial owner of all the banks with tax dollars anyway. Don't expect a return...
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Registered User
Joined: 2/5/2006
Posts: 1,148
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have they seen their worst days? my answer would only be a guess.
however, the last time the banks had these sorts of problems they were flat 40 years.
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Registered User
Joined: 9/25/2007
Posts: 1,506
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QUOTE (bluegolf) That's for sure. Is there anything out there that can be an investment in this economy? Maybe Metals...
Well ... depending on your time horizon ...
There will come a time when world economies recover ... and when that happens ... the supply/demand attributes of oil are going to drive it right back up ...
The pipelines in my area are pumping at a level not too far below their max capactity ... even in a crappy economy ...
China's demand will continue to grow ... and they will soon surpass the US as the world's largest consumer ...
Meanwhile ... back at the ranch ... production numbers out of Mexico and the North Sea continue to decline ...
Even the Middle East does not enjoy an endless supply .... and that brings in a different dynamic ...
I have little doubt that Obama will have our troops out of Iraq at a wreckless pace ... leaving a power vacuum ...
Iran will soon gain control of Iraq ... and since they're alreadty in bed with Syria ... it will put them in a perfect position to effect control over the overwhelming majority of the region ...
And when that happens ...
Do you remember the Arab Oil Embargo ??
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Registered User
Joined: 2/17/2008
Posts: 132
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today was interesting. i did expect a sell off to a certain degree, but the dow fell 150 points or so more than i expected it to.tomorrow is very unpredictable, and by the time the media are done putting a spin on how bad the GDP is, and the market manipulators are done doing their thing late in the day, and amidst further hope of obama promises over the weekend, who knows we may rally a little. but whatever happens tomorrow i'm a little more convinced that we'll see 7500 next week.of course the other scenario is that we gap down big time tomorrow morning. that would be interesting!
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Registered User
Joined: 2/17/2008
Posts: 132
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i'm getting very bored by this continuing resistance at dow 8000. how much more news do we need to break through it convincingly? i wonder who it is that keeps buying at that point, and how much longer any manipulation can continue before the next leg down?!
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Registered User
Joined: 9/25/2007
Posts: 1,506
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That depends on who is doing the manipulating ...
It could be someone with the ability to expand their balance sheet without bound ...
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Registered User
Joined: 10/7/2004
Posts: 2,181
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QUOTE (djdhrubs) i'm getting very bored by this continuing resistance at dow 8000. how much more news do we need to break through it convincingly? i wonder who it is that keeps buying at that point, and how much longer any manipulation can continue before the next leg down?!
Being bored is exactly where the market wants you to be. It is the one who remains bright, optimistic and alert that is prepared when the market moves. Be ready to profit. A move is coming.
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Registered User
Joined: 2/5/2006
Posts: 1,148
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QUOTE (djdhrubs) i'm getting very bored by this continuing resistance at dow 8000. how much more news do we need to break through it convincingly? i wonder who it is that keeps buying at that point, and how much longer any manipulation can continue before the next leg down?!
with this kind market volatily you should day trade it.
if your uncomfortable daytrading use less capital.
daytrading will sharpen your skills.
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Registered User
Joined: 2/17/2008
Posts: 132
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does anybody have the feeling that something is brewing today with the financials, which have been doing comparatively badly next to the general market direction today.
as of this point in the day, the dow has flirted unsuccessfully with 8000, unable to breach it convincingly. a storm might be round the corner...!
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