Thursday

Dead Cat Bounce ?

Post a Comment June 25, 2009 – 5:46 pm |   | Permalink |  Print This Post |

We are closing out on our long German Dax at 4840 - taking a profit of 93 points (after spread) x $5 ($465). The Dow is now at 8480, the high of the night and up 2.2%. Looks like our order to open at 8500 will be filled soon. We are concern this will go higher to squeeze the bears who have been talking very loud of late. This reversal may take a few days to roll over to suck in more bulls. 8600 is within reach, so if you plan to start shorting, be sure to have fire power to hold out to 8600. We will move our order to short to 8550. The Euro/NZ needs to collapse more before markets collapse (which usually leads to Euro/NZ going up). 2-3 days of trying to break above the 8600 will be good enough for the Euro/NZ to seal its fate in a continued downtrend. Using the Warren Buffett Index as a benchmark, our WBI portfolio is down quite significantly. Conocophillips (COP) and General Electric (GE) are below levels of WBI’s inception.

We wrote 3 hours ago:

We expect markets to remain volatile, and will not be surprised if the Dow recovers. The Euro/NZ is down and Gas is starting to recover - which could be a leading indicator that markets may reverse tonight. Bad news at the start of trading which send markets acutely lower usually is a false move. Rarely, it goes down and stays down. We just opened a long Dax at 4745 (minus 100 handicap is good enough for us) at $5/point. We will take profits (at least half) if the Dax does an intraday reversal.