We Haven’t Been This Oversold Since–Tomorrow?

What a sweetheart welcome to 2009–down 24% and we’re barely nine weeks in. Scary, truly scary. I mentioned a couple of outcomes for the market in last weekends newsletter, both outcomes were lower, but it was how we would go lower. An outright capitulatory crash or a slow bloodletting. I now realize that we will not crash at all-we are in a constant state of crash, kind of like a state of grace, except not as pleasant. I warned on twitter yesterday not to get too excited about yesterday’s pathetic rally, the volume was light, the financials showed no signs of life and the close was weak. I noted that we didn’t have two “up” days in a row since early February. Broken markets do that. I asked the question on the blog last night whether or not it was real. I thought not.

The market isn’t stupid, the folks in Washington think they are though. Regulation, higher taxes and reckless spending is not the proper cocktail when Rome is burning. Come on guys, really. The China stimulus package is 100% geared toward job creation, ours is not, and it saddens my heart that we should be taking our cue from Communists. Do we really have to create a bureaucracy to research pig emissions? I have a million of them, don’t get me started. Truly disgraceful.

We have been having a blast over on Stocktwits and FAZ finally broke $100 a share today. We have been riding it from $40. The financials are toxic death, been saying that for a year, and even when I think enough is enough, the sector continues to surprise to the downside. I do believe that if Washington doesn’t get their act together soon, the possibility exist for stocks like WFC go to $5, USB to $5, GS back to $50……..Why not, did you ever think Citigroup would break a buck and trade in the pennies. How about Bank of America with a 2 in front of it?

Tomorrow is the unemployment number–again. I have been heavily short every trading day prior to the number, and it has been more predictable than death and taxes. Who would ever want to hold risk overnight in front of that number in this environment? I’m flat and in cash as usual, and the rally is close, I just don’t know when. Let everything fail and let’s have a do over. They financials have already failed, yet we’ve spent trillions, who are we kidding?

We are due for a bounce but am still sticking to my DOW 5000-5500 target, but will aggressively play the rallies along the way. I’ll be back later with some names. Hope you all had a wonderful day and thanks for stopping by. Later

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