We’re AA+ now – so what?
Did we not know this was going to happen? Are we shocked? Are we appalled? No, of course not. We got the rating we deserved and now we have to deal with reality. It is not our fault if many market participants are not prepared for the reality we have been discussing ALL YEAR LONG. This is the Global slap in the face we expected and our only real shock is how long it took to get here.
I talked all about the Downgrade in our weekend post (“S&P Downgrades US to AA+ – Tied With Belgium!“) and I strongly advise reading this week’s Stock World Weekly (“Dungeons and Downgrades“) to get a full perspective on how we got here and what position we’re taking into this mess (PSW Members can use their same passwords to access the SWW site). Go on, I’ll wait, give it a read…
Sorry if you missed it but our Market Day began yesterday (Sunday) at 6pm, when the futures opened and I sent out an Alert to Members saying I was PLEASED that we had a sharp 2.5% drop: “We just need to watch those bottoms from Friday and the 2.5% lines but, if they hold – we’re over the hump on the downgrade crisis already.”
Our early plays were shorting oil futures below $84 (now $83.12, up $880 per contract) and going long on the Russell (/TF) over the 700 line (stopped at 704, up $400 per contract) and the S&P (/ES) over 1,170 (stopped at 1,175, up $250 per contract) and we hit our highs just after 9 and called it a night.
Well, a night for us, which ends at 3am in the Futures, where the usual 3am trade began a rally in the Dollar that brought our indexes back down to test their lows so, at 4:32, I sent out another Alert to Members, getting ready to reload bullish (a nice, quick primer on futures stop-setting here) and our first set was a series of nickel and dime plays but, by 5:37, I called for bullish re-entries on the sell-off saying:
So, let’s not take our sell-off too seriously, ONCE AGAIN, until and unless we break the lows, which were 690.04 on the RUT (/TF), 1,161 on the S&P (/ES), 2,123.25 on the
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