Kibbles n' Bits
Friday, February 13, 2009 at 07:24AM Coincidentally or not, the night CNBC is about to air a 2hr special, 'House of Cards', the root of the credit crisis, word spreads the Obama administration is working on a plan to subsidize mtg payments causing the bleeding market to wildly shoot up off the SPX February lows (806) in the last 40 minutes of trading. Besides curbing foreclosures this of course would help stop bank write downs. It is just amazing this plan idea is just coming around now after months and months of doing nothing for the housing- mortgage- banks- toxic assets circle of market troubles. Whatever the details, whatever the arguments for if this is enough or not, it is something finally and that is all that matters. As far as the special, strongly recommend watching it, if you missed it tonight. It will leave you bewildered at Wall Street's role and probably question if these guys deserve a penny of your bailout money!
As far as the markets volatility, it is clear Geithner's failures will continue to make the shorts nervous. What do we mean??. Simply, the door is wide open for 'Clarity and Details' , like we got today off Geithner`s recent shortcomings. When the door is this open, it leads to only one thing and that is a rush out the door. Not a rush into it, as in new buyers coming in (conviction buying), but shorts covering their latest set up shorts!. As we said, we covered our positions in the SDS near the close Tuesday and were not short the broad market today because of the possible surprise factors abound. At the close, despite market pain throughout the day, today our SDS positions would have been a few dollars lower than at Tuesdays close. Just a reminder lesson in taking profits in this market, it is never too early, especially when it revolves around a big move day.... "The words, mark- to- market` … If you we ever hear those words speculated on or something on the asset guarantees front, we`d almost guarantee a day opposite of today. Today, we got noise that clearly falls in this loop and we expect more to come in pieces. They will continue to feed this dog of a market in kibbles n' bits. Still, as we said above this was not conviction buying, so it`s not a clear to pile in. We`ll see tomorrow if the banks can follow through as they are the main beneficiaries to trade off such noise. Still it was good to see a close above 820SPX and V shape bounce. ( a few Hammers on daily charts)
If the market can hold into the afternoon, we may see some short covering late in the day. This may be spurred by a Presidents day gift rumour or just the fear of one piece from the Geithner puzzle over the long weekend. Have a good one..