Thomas wrote:
On Tues, LEH and GS report, which, imo, will be as important (if not more so) than the FED cutting ir (unles they cut less than expected) b/c even the market now realizes this has little to do with ir and everything to do with confidence the losses are quantifiable, as well as deleveraging. Just take a look how the market reacted to the S&P news.
From an earnings pov, what LEH/GS report is almost irrelevant....what will matter is what their impairment charges and more importantly, what the guidance for future impairment charges will be, as well as their general comments on the economic outlook. GS especially will be watched b/c as the golden child of Wall Street their comments will carry more weight.
As today showed, the market is very nervously short, pouncing on any shred of positive news to cover shorts. We saw volume on the NYSE +20%dod, although not as high as Monday's volume. Since the big longs are (still) mostly out of the market (with some cash positions in some funds as high as 50%) what this tells me is that the market WANTS to rally and that, as Heinz correctly points out, the bearish sentiment is still too extreme for the market to sell off decisively.
If GS and LEH even hint at things getting better (as opposed to some credit analyst at S&P saying subprime losses are now done), I would not want to be short. Obviously if they don't the reverse will occur. Next week will be a bifurcated outcome; there will be no inbetween.
Also, I respectfully submit that imo the US govt will NEVER allow the banking system to fail, no matter what. They will nationalise any bank(s) they have to (a la Northern Rock) that they deem is too big to fail. As such I would not get too excessively bearish from hereon in. Just look at the BKX; the Jan lows held last week, and if we test them again and fail to break on a closing basis, by the rule of 3 the next move likely will be sharply to the upside.
Lastly, bear in mind the cycle work of Armstrong, which usually works pretty well; his next target after 2008.225 (Mar 20 or 24, an expected low) is 2009.3, an expected high.
J wrote:
<<the US govt will NEVER allow the banking system to fail>> ... probably true, but ...
how exactly did Northern Rock shareholders make out in the 'rescue' operation? messily quivering still, or perfectly still on a stretcher?
shorting the wastrels until close to zero is a viable approach, even if exciting.
simple mathe says the obligations are not supportable, the debt will be defaulted, the tax payers will be shafted, electorates will get mad as hell, and the economy will shrink in real terms, more so than anyone is prepared for |
