Sunday, September 27, 2009

Ominous Undertone

Some traders are born to short stocks.

I am terrible at shorting.  It just never seems to work out -- completely against my psychology.  And yet, I keep finding myself sucked in by the allure of making money when the markets drop hard.

I can't tell you how many times I have told myself: Do not short stocks ever again.

Well, once again, I am feeling the urge, the powerful urge to get into SRS or FAZ and lose a quick grand or four as I buy the bottom, average down, and sell out at the top (bottom) of the range.

But there's something ominous on the horizon now.  I can feel it and the futures are already deeply red even though the markets already sold off last week.

Definitely some ominous developments out there... take your pick.  The fact that the Fed is not going to be able to buy back long-dated Treasurys in bulk anymore... leading to higher rates... is good enough for a massive exit into $USD.  The Fed needs this to happen to keep the 10 and 30-year bonds from collapsing.

Remember when you first learned how to ride a bike?  Your Dad pushed the bike behind you and then when you got the hang of it, he let go and you rode down the street in all your glory?  The Fed is about to take its hand off the markets.  But I think the market is more likely to crash into the curb and rip its need up on that broken beer bottle lying in the street.  Not a pretty sight.  Time to pay very close attention.

I've been scanning the 'nets all day and there's an ominous undertone that's about to turn into a blaring siren of panic soon.  I think it's okay to panic.   As long as you panic before everyone else.

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