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20
Nov
Buyers Strike
By: Mohan In: Trading Blog

Buyers’ strike continues on Wall Street. Once again, a rally in T-bonds today indicated a massive flight to quality and risk aversion in the financial markets. The 5-, 10-, and 30-year T-note/bond yields dropped over 7, 7 and 6% respectively. This is on top of the 10% drop till yesterday. VIX closed at all time high 80.86.

Today also financials led the decline. UltraShort Financials SKF closed at an all time high: over 260. It is up about $100 since Monday.

Latest worry on the street is about rising defaults on commercial real estate loans. The most recent first warning shot was when GGP (General Growth Properties) indicated that it may file for bankruptcy on Nov 13. Since that time, SRS, the ultraShort Real Estate fund had a moon shot – up over $100 in a week to close today at 259 (yes, I sold SRS too soon – when it was in mid 150s).

I am thinking that we may have a short-term rally from these 2002 lows. It is just a hunch. A good leading indicator will be sell off in T-bonds (they start trading at 8 AM) indicated by rising yields. Another indicator of a rally would be an intraday VIX (preferably opening) below today’s close (81).

If the rally does occur tomorrow and takes S&P to 830-840 range, some naked put-sellers can be (and will be) saved. If no rally tomorrow, it will be very ugly on Monday.

Name your own price

Regardless of where the market headed, I think this is about time most stocks are headed to their fair valuation levels (with a lot of undershooting). I personally despise people hyping “service based” economy and while at the same time downplaying the importance of manufacturing. To me, “financial services industry” is an oxymoron. I equate financial services “industry” to blood sucking leeches (by trading stocks for profit, of course I myself am a leech). Anyway, when web-resellers of other services and airline tickets like PriceLine have higher market cap than the farm products manufacturer like Agco, I take it very personal with these leeches. :-)

I think it is about time we can once again name our own price for PriceLine, the stock. :-)

Good luck trading, my fellow leeches.

The views, opinions and analysis expressed in this post are strictly those of the author.
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4 Responses to “Buyers Strike”

  1. tom says:
    November 20, 2008 at 7:02 pm

    if china tanks tonight it will be foreclosure on the world engine. I find it interesting that the Dow closed at 444. The number 4 means “death” in Chinese. I wish I did not sell my fxp today, but I still think China is step in big time tonight.

  2. Matt says:
    November 20, 2008 at 7:35 pm

    Like the PCLN play. I’m gonna look to short if it gets back to the 57/58 lvl

  3. zerosum says:
    November 20, 2008 at 8:26 pm

    never have so many borrowed from so few and shafted each other so much….

    we have squandered a vast national treasure (our manufacturing base) playing to our own vanities…building unproductive assets (ie. houses / monuments for ourselves) and gourging our egos on an every expanding service “economy”….

    well, we were well “serviced” for a while….ah, memories

    fellow leach,
    zerosum

  4. pmesdjian says:
    November 20, 2008 at 9:22 pm

    Here’s another interview with Tony C. from Monday (Nov 17) before the market fell through pennant support.

    http://www.cyclesman.info/Articles.htm