Wednesday, July 16, 2008

A solid Short Covering Rally


2 comments:

jeroen on 1:55 PM said...

No short covering!
More banks will pronounce better then expected results. At least i hope so because our index relies heavily on the dow (dutch AEX)

Anonymous said...

listen buddy I realy hope you stay afloat with your trading this time but your style of trading is not the one that normally supports a family budget not to mention a pension. You are undercapitalized and sooner or later it will get you.... I hope not.
I know everybody got to start somewhere and it is not easy to work 2 jobs but my suggestion for you is to get comfortable with swing trades or trend following turtle style as soon as possible and move away from scalping a couple ticks,pips or cents. This is the only way you will make a good living LT and your potential family will thank you. A couple of quotes on the subject of SS ... Hedge funds convinced the SEC that short strategies were as important as long strategies and that they needed a level playing field. Almost overnight, financial stocks started getting punished. Short selling went from being a value play to a momentum play, with many more people in the game than the traditional crowd.
The thing is, short selling should not be on a level playing field with buying long. Financial markets exist to help companies raise money and to reward investors for taking risks by supporting companies, sectors and economies as they grow.
Shorting is essential to prevent excessive speculation and overhyping, but it does not deserve the level playing field its supporters claim. Because it turned into a momentum play that could be abused with rumors, we're in a situation where companies can be targeted and destroyed -- along with the fortunes, careers and even lives of their employees -- by these practices.
Was it an efficient market that destroyed Bear Stearns, a company with $18 billion in capital one week and no clients five days later? Ask anyone in the securities industry and see what they say.
For all the ribbing Wall Street takes, it is not a craps table where people can bet the Don't Pass Line (betting with the house against the players) as easily as they can the Pass Line. It means much more than that to the health of the economy and the country.
Many argue that the uptick rule isn't to blame and that the collapse of the financial stocks since it was changed is just a coincidence. Maybe they're right. But it's interesting that the companies that claim to have been targeted -- Bear Stearns, Lehman Brothers ,GS,MER and others -- are all financial companies, which essentially are run on their reputations and are highly vulnerable to rumor mongering. You haven't seen any stocks like Hewlett-Packard or Johnson & Johnson -- companies that actually make things -- affected by this phenomenon, despite the fact that the economy is in bad times.

regards
Peter

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