Oil dip!

Now this is what I’m talking about!  Oil is down HARD in the past 2 days.  I believe this is a good buying opportunity in some energy plays.  This is a sector-wide correction, which means a bottom is near. 

As for the market, down -4% is nothing compared to ’87 -20% correction, so don’t make any hard swings just yet.  If you’re short, stay short until the Vix goes haywire to the high 30s.  There will be ample day trading squeezes on the long side here and there, but attack quick, take a profit here and there, and move with the volume.  We could see a good intraday bounce tomorrow off of AIG’s news, which I believe was mostly absorbed in Monday’s panic.  Be prepared for anything.

Remember the stutter?

… she was probably dumping her shares then.

R.I.P.    ….Lehman Brothers Holdings Inc. [[leh]]

Download it now:  http://www.google.com/chrome

Screw I-Explorer and short MSFT.

(In my previous post, I wrote a message for investors, especially those who are hoping for a turnaround in our market.  This post is a follow up and is mainly for traders, especially those who keep chasing a bottom)

Vix under 19 was the ULTIMATE SHORT SALE SIGNAL OF THE YEAR.

… the government is flagrantly stupid.  Do you guys really understand what is happening to our market here?!  Simply evil!… they calmed us all down to a Vix under 20, then opened Pandora’s financial box. Damn.  I’ve been warning people too long the Vix under 20 was NOT GOOD for the market.  And the way we got there is even more appalling.  A bailout for everyone, even YOU, via Bush’s stimulus payment plan.  Violating laissez-faire is NEVER GOOD for capitalism.   Tampering with the laws of supply and demand ALWAYS leads to disaster.  Look where we are at now.  Hitting lower lows after low after low.  Finally Paulson threw in the towel, leaving LEH hanging there to dry, saying “to trust our financial system” and let everything bottom.  

We are going higher on the Vix, no doubt, as the market trends lower.  I will not get long until the Vix extends this extreme level.  I am aiming for Vix 40 before getting comforably long, and for the Vix to get under 26 before re-shorting.

This is a message for investors, not necessarily traders.  If you are trading (traders), then go with the trend, which is down, and trade the emotions of the market, not your emotions.  In the coming days you will hear news- lots of crap, lots of talk of what people want the the Fed to do, what they think the Fed to do, what will happen to housing, oil, gold, financials, banks, and of course, rates.  Do not believe any of them!  Do not pick a side!  Fade all of them… whatever the market gives you for that day will be unwinded in the next two.  Its gonna get REAL VOLATILE here as we experience more bull-bear tug of war.

For those who invest, just remember, when there is panic, that usually is the best time to buy long term positions, perhaps feed your IRA.  But if you buy, average in, please!  Buy it in 10 blocks instead of 1.  History has shown that after virtually every sudden drop the market has experienced, it recovered within a few years.  Six months after the 1995 Oklahoma City bombing, the S&P 500 had gained 17%, and six months after the lows of September 2001, it was up nearly 19%. Even if the rewards aren’t immediately obvious, in the long term, objective analysis of the opportunities and risks will prove superior to an emotional reaction.  But did you notice… it took MONTHS to recover, so don’t get all cute and think, “oh hey, the market is under 11K, time to buy.”

The market is a cycle.  Period.  That is why I am a “wave trader.”  I see stocks, sectors, and markets move in waves, or patterns, while the majority of traders see the market move in flashes of green and red triangles.

The response from Wall Street and the financial press will range from euphoric to despondent, and much of the advice you hear will be emotional and short-term in focus.     You, my fellow trader, must not feel anything.  The best way to feel nothing… go to cash.

As much as I like to make money, its not in a market like this.  Honestly, I think of all the hard workers who put their money into a buy-and-hold strategy, only to see it gone like this… I feel really bad for them.  But if that’s how its done, then that’s how we’ll do it.   But if I make money shorting this crisis, I won’t be the one who brags about it.  I just can’t imagine how tough it is for anyone who had a pension funded by these financial companies.  We are living in epic times.  The hand writing was on the wall [street] for long enough… Babylon (financials) has fallen.

Mr. Dow -500

“I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers,” Paulson said. 

Translations:  “Up yours.”

Lehman to file for bankruptcy protection, making it the largest bankruptcy in history in terms of assets, surpassing the failures at Worldcom and Enron earlier in the decade.  … epic times!

Here we go.  Dow to get under 11K.  I’m sitting this out 90% cash, and OSTK puts.