Tuesday, January 19, 2010

Gut Shot

Today was a complete gut shot to bears after Friday. Talking about tearing down your psyche. I just wanted to roll over and wither and I know I wasn't the only one.

So I did what I didn't want to do. I took a very risky short overnight personally. (Not for my fund, high risk high leveraged short that doesn't fit gambling with the fund). I will have a tight stop and if the market runs a little more I will lick my wounds and get out.

Things are changing, at least they seem to be changing to me. I continue to expect some sort of market pullback. Credit has started to vastly underperform. Today had 4 wideners to every tightner in high yield land. This has been the theme the last week in a half as credit has snubbed equities heading lower (yields higher). The ABC NEWS Consumer Confidence Index came in at -49, the lowest reading since June. The NAHB index (measures home builder sentiment) fell to 15, also the lowest since June. Germany seems dangerously close to falling back economically, and earnings are not being treated well. (One could argue today was because of Citigroup but I don't think Citigroup was even looked at. It was about the Massachusetts election. The market likes gridlock in Washington)

Anyway, I know I have continued to be bearish and sound like a broken record but it has been awhile since I have put real money behind those words. I don't think the housing numbers are going to look good and the underpinnings of the market are questionable. Like I said though, if the market runs just a little I am out. It is an easy trade with where the markets ended up today and how they ended there.

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