March 17, 2008, 5:30 am -- $2.00 A SHARE. WOW!!!
$2.00 a share. WOW that was fast.
As I said a couple of days ago, the volatility in the next week or so has the
potential to be unprecedented. The speed in which events are unfolding at this
time are unparalleled to anything I have ever seen in 25 years. Bear started this
off in June of 2007 and maybe we might finally get the panic selling we need to
mark a tradeable bottom on the Bear news of 2008 coming to an end. Sad story,
but
the markets don't care who you are or what company you are. And if you are in
business one day and out of business the next, the market will keep on trading
with out missing a beat whether you have just gone out of business or not. Right
now, preservation of capital, as I have been saying, is very important. You have
to be extremely disciplined in this market if you are trading in and out. Longer
term, it might be time to start to nibble at these levels. We will eventually
come out of all of this, but it's going to take time.
We haven't seen a big currency intervention in years. It's almost time. Last
Thursday and Friday, Israel was in the open market buying dollars against their
currency. The risk with the central banks intervention in the currency markets
is if it doesn't work. If they intervene, it better work and sentiment had better
turn around, or it's going to be a temporarily blood bath until everybody is closing
out positions regardless of price. Currency intervention, in my opinion, will
have
gold and oil and other commodities crashing down if it works. Opec last week said
world oil demand is not going higher for the next year, so a lot of this bull
market in commodities is dollar driven.
For us at RED Option, we are fine. We saw a lot of this coming. We are not short
but we don't have many positions on and not a lot of risk and that is the way
I want it right now. It has worked and saved a lot of money. We are mostly in
cash in all advisories. So if you are in advisories and looking for new trades,
please be patient because this is no market to try to be a hero and pick a spot.
Let things settle a little. We are still glued to our screens all day and night
and will initiate trades even in this market, if we feel the trade has a nice
risk-reward, but we aren't pressing.
One other point. The extreme quickness in how events are unfolding could also
work the other way. The down move could just as easily stop and turn around and
we could melt up. Who knows, just watch and stay nimble and trade within your
means. We are anxiously waiting to initiate new trades of all kinds, but we will
be patient and we are on top of all positions. As I write this at 9:30 P.M. Central,
S&P futures are trading at 1255. Who knows, they could be up on the day tomorrow.
This entire down move of the last 2000 Dow points has been very orderly and not
the type of action that marks bottoms. Maybe today will be different. We will
have to wait and see, but so much damage has been done that it is going to be
a while before we get a recovery that is going to hold up. Individual equities
can still perform well. Just do your homework and there are always stocks that
will perform well in all types of different markets. We will try to find those
at this time. Good luck to all and trade within your means.
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