Monday, July 28, 2008

Blue Monday on the Street

Top Line: The stock market looks like it has begun its descent to the 2008 lows. We had given the benefit of the doubt to the NASDAQ but remained cautiously bearish. That position has been firmly established on Monday and we are now firmly bearish on the stock market.

Our cash position is still about 20% in our trading account and we will be completing our short positions with any rally attempt. While we would have liked to put that money to work this morning, we had other commitments that didn't allow us to take advantage of the situation that presented itself.

This evening, we are looking at the possibility of a little bit of a rally out of the lows which should give us the opportunity to complete our purchases. We probably won't be able to match the prices that were available on Monday morning but with a strong move down on the horizon, we should take advantage.

We are going to be doing Update lite for a few days while we watch this market decline develop so we solicit your questions or comments while we sort of wait for a low. If any trouble materializes with our position we will of course let you know but we are going to be looking at when to exit our current strategy and what to buy when we do.

We did notice that MER (Merrill Lynch) announced their plans to liquidate $30 billion worth of mortgage securities at a huge loss (20 cents on the dollar, ouch) And sell some stock to enhance their capital position. We're pretty sure that the world will now think that's the bottom of the mortgage problems...and so it goes.

FSI: 79.73 (very volatile indeed)

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