Does anything about this ride feel familiar?
Oh yes, that’s right – good old 2008, when the “minor correction” of 2007 was behind us and the Dow rallied back from 11,500 to 13,200 based on stimulus packages, fake economic data and even faker earnings reports where banks, builders, automakers and retailers all lied, lied and lied (or perhaps they were just totally, densely ignorant) about their outlook and their operations and CNBC et al lied to investors and told them to BUYBUYBUY while the smart funds were SELLSELLSELLing as fast as they could.
The August 5th, 2008, with the Dow at 11,500, the Fed had a meeting and decided to keep rates at 2% saying:
Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.
That gave the Dow a 332-point gain that Tuesday – kind of like yesterday’s gain. Our “friendbuddypal” Cramer says “Even after today’s run, the market is still oversold” but I had to disagree, telling Members in our 9:41 Alert: “Don’t be greedy, 5% in a day is A LOT” and I followed up just 15 minutes later with a comment in Member Chat saying: “Time to take money and run at 5% rule – we can reload if 4% holds.” The only bullish play we made was on UNG, but it was well-hedged, we did go with DIA $105 puts at $1.16, which went over $1.30 during the day and should be better this morning.
Although we did finish in the bullish end of our 5% range, we got there on a big stick into the close so my closing comment to Members was: “Very indeterminate close. Cash still king. Europe does look like they can follow through and Asia has to catch up so we SHOULD get a nice, up open tomorrow, gapping back up to and maybe over today’s highs but I’d be more inclined to come in on the short side there.” It’s a difficult thing to stay on the sidelines but I think last week’s market taught many people what I mean when I say a market is “unplayable” -…
