Pre-market Monday, Dec. 8th, 2008: Is the rally real?
Many of my friends don't believe the rally is for real. But many counter with the fact that the stock market is a leading indicator and usually 6 months ahead of the news. This weekend Congress, President-Elect Obama, along with the Bush Administration, have worked out some differences on a bailout for the Auto industry. Markets in Europe and Asia all had big rally's overnight and in the early hours. So it seems as though we are off to the races at the open, and you can expect a significant rally up about 300 points early in the day.
But again, is this enough to dispel the market overall fear? The answer to me is No! Most of us believe that more jobs are going to be lost going forward, more home foreclosures, tight credit and not much good news. So this rally is a relief rally based upon the worst news any could imagine from the bad jobs report last Friday, where 533,000 jobs were lost, behind us and no other news expected for a while.
So what to do. Well, first don't sell your Ford stock. Enjoy the ride today, as it will go up to $3.50 today for a nice gain. And because of the bailout, it will continue to $4 and above per share. If you believe as I do, that there will be a pullback eventually here and retest the lows, you are going to be given another opportunity to by the ETF Ultra Short fund, symbol SDS for around $83/share. If you buy this here you will most likely make a good return. So folks who believe we are in a Dow range between 7,300 and 9,500 will be looking to add to our Short positions using ETF Ultra Short funds. Yes, we may rally for a few days this week, but ask yourself this question, Are we going to have the worst of this financial crisis behind us 6 months out?
UPDATE 1:15pm PST.
I took my own advice today and purchased more shares of SDS, this time at $80.50/share with a limit order in for that price before I left for a client. The shares of SDS actually hit a low of $80.06 today. Ford closed up as well at $3.38/share after hitting $3.54 today, which was another lucky guess.
But again, is this enough to dispel the market overall fear? The answer to me is No! Most of us believe that more jobs are going to be lost going forward, more home foreclosures, tight credit and not much good news. So this rally is a relief rally based upon the worst news any could imagine from the bad jobs report last Friday, where 533,000 jobs were lost, behind us and no other news expected for a while.
So what to do. Well, first don't sell your Ford stock. Enjoy the ride today, as it will go up to $3.50 today for a nice gain. And because of the bailout, it will continue to $4 and above per share. If you believe as I do, that there will be a pullback eventually here and retest the lows, you are going to be given another opportunity to by the ETF Ultra Short fund, symbol SDS for around $83/share. If you buy this here you will most likely make a good return. So folks who believe we are in a Dow range between 7,300 and 9,500 will be looking to add to our Short positions using ETF Ultra Short funds. Yes, we may rally for a few days this week, but ask yourself this question, Are we going to have the worst of this financial crisis behind us 6 months out?
UPDATE 1:15pm PST.
I took my own advice today and purchased more shares of SDS, this time at $80.50/share with a limit order in for that price before I left for a client. The shares of SDS actually hit a low of $80.06 today. Ford closed up as well at $3.38/share after hitting $3.54 today, which was another lucky guess.
Labels: Auto Industry, bailout, Congress, Dow, Ford Motor Co., home foreclosures, tight credit, Ultra Short ETF's
posted by Charles Amico at 5:54 AM
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