Monday, August 8, 2011

Well, I never ...

8:22 am (Hawaii) I never really expected to see times like this. By that, I mean back-to-back 500-point drops. I mean seeing the banksters get punished in the court of public opinion (the market). As I fell asleep sometime around 5 am with the market just into its second hour, FAZ was around 68. Wow, said I, the guy who sold in the 40s and again yesterday in the low 60s. Can't chase it now, I thought.

I woke up momentarily a few hours later. Indices down 2-3%, it's pretty bad. And what? S&P has downgraded US debt and stuff ... nobody seems that bummed about it. I was too sleepy to explore any further.

Another few hours later, I'm up and FAZ is at 76. Holy crap. I think for a few seconds about a little position, and it's already up to 78. FAZ (and FAS) haven't moved quite like this in two or three years. I remember trading it in premarket one early morning, making $4k so easy ... then I had to use the toilet, came back, and I was down $4k on a new position. I was lucky to get out even.

As I type, FAZ is up to 80+. All of the banks in my Debt Sprial list are down at least 7.8%. BAC is down 20.3%, Citi down 19.3% (even after maintaining a BUY rating on BAC). It's freaking fugly, and I'm a guy who has no sympathy for the banksters. Today goes beyond what happened on Friday. This is the true Reckoning Day. And FAZ tells me it is getting worse.

DJ -552.95 (-4.8%), Nas -156.46 (-6.1%), S&P 500 -72.74 (-6.1%).

Now my thoughts are about possible bank runs in Europe, followed by runs in the US. I totally mistimed FAZ, so I don't really trust myself about timing of collapse with our banks.

Update 8:30 am (Hawaii) FAZ could not stay above 80 for long, not with traders making more than 25% in a single session. Here comes the profit-taking. It was crazy like this: the trading program in my laptop could not keep up with FAZ's updated quotes on the regular list. FAZ now at 78+ and selling off. One thing that kept me out was something Le Fly has written before. His philosophy is to gauge the potential for a huge snap-back. FAZ was moving up so rapidly and powerfully, there was the natural attraction to try and jump onto a speeding roller coaster. That would've been a bad decision.

Fibonacci levels probably don't pertain to a vehicle like FAZ. Would it really retrace 38.2% or 50% today. Really doubt it. Maybe during the week. But I doubt it. A 38.2% retrace of today's gain (let alone Friday's move) would put FAZ at 73.92. I wouldn't even begin to sniff around FAZ until it gets there, but if mass momentum starts taking it back toward 80, I might be a small-position buyer somewhere above that level.

DGP at 60.23, off its high of 60.64. I almost added shares yesterday. Another wouldacoulda.

Steady and slow works best here.

8:38 am (Hawaii) DJ rallying a bit, now down "only" 478 points.

CNBC posting that JP Morgan calling for $2,500 gold. Hilarious. The announcement on Friday by the banksters that they were bullish gold and not so much on silver was telling, wasn't it?

I hope the grocery store isn't packed when I'm done with work later. Doesn't matter if Helicopter Ben unleashes QE3 tomorrow when the FOMC meets. Prices are going higher by the week, so it's time to do some cheapskate discount hunting and pile up the food pantry.

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