Seemingly going into this Christmas trading week, no one is getting overly excited. Same can also be said for retailers and consumers it seems. As far as trading goes, maybe the Santa rally has come and gone sometime last week. In addition, as far as policymakers are concerned, as soon as the holiday is over, it's back to business in dealing with the headache(s). Friday's bailout of the big 3 does not mean Bankruptcy has been avoided for all. The market reacted knowing this mess is far from being cleaned up by not getting overly excited. This was not that 'new catalyst' the market needs to go forward.
It certainly has been a tough trading year. If you have survived thus far with little to no damage, we say there's a pretty good chance that you have survived the worst. However, it's certainly no guarantee that things will get any easier in the New Year. At least, for the better, we are all prepared to deal with anything that may be thrown at us in the future. Last week, we had a little taste of a Bear rally that lasted all but a few days. Although, we'd hoped for a little longer run, the rally was still nonetheless constructive. What does that mean? It means that with the decreased volatility, suggested by VIX, rallies, however short in duration are actually playable. We found some pretty good opportunities in Financials and a few material stocks that gave us some nice gains leading into final stretch of 2008. The key with a Bear market rally is that we should never get carried away with one.
At the end of the last weeks trading, we are actually back to the level where we started the week. Lately, with the handling off all the bad news by the market, we are quiet confident that we may see another push the next few days when volume is light as most institutional traders (whales) have packed it in for the year. We have seen the short term high, which is 918 and change on the SPX and we'll play it accordingly. Still, just because the idea of playing on the long side remains, it doesn't mean that we will be doing any sort of loading up for a potential move.
As far as plays go, we are very comfortable with the financials for the time being and maybe a tech or two here and there. GS, once again on Friday, despite downgrades finished marginally green which we may be a sign of a healthy market into the end of 2008. This is a short trading week and we'll try to make it as pleasant as possible. This means that we'll let the play come to us as oppose to mindlessly chasing potential setups. Bottom line, Christmas is near and lets all try to have a stress free holiday.
It's promising to be a quiet week, although with this market anything is possible and so we're sticking around...