The market is a 50/50 proposition and I can only assume the Federal Reserve will announce some ground breaking intervention this afternoon so I am not going to make any major bets ahead of it. The market, interestingly, is at a major resistance point as we squirrel our way to S&P 875 so by the end of the day or tomorrow morning we'll have a good idea of where we're headed; north of 880 ignore everything I've said and believe the government will save us. Buy stocks without regret.... if 875 is not broken, then back to the dark side.
I own Jacobs Engineering (JEC) in a 0.6% stake on the long side so I am going to make a hedged trade. The 50 day moving average is $43 - today as the stock is in the $42.30s I am going to enter a short position with a 2.4% stake; I'll stop out at $44. If it breaks through the 50 day moving average, I'll add to the long side at that price point and away we go. Downside risk will be 4% with this set up. I'll target $38 on the downside. The stock has been stalled at its 50 day moving average each of the past 4 sessions intraday and thus far today has also not broken above it. (I'll post a chart later in the day)
There are a couple of REITs who are now interesting to short here but I just cannot commit with the threat of the government destroying me in a few hours. You know they are going to bail out commercial real estate at some point .... hoping to see more strength in something the government won't bail out like Las Vegas so I can have less risk on the short side.
Obama should have everything bailed out within the next 60 days and then hopefully by April we'll be back to a more rational place. By the 2nd half of the year when people see all these bailouts still don't stimulate demand we'll face a new wave of angst. But it's going to be tricky until all the plans to save us are unleashed.
Remember, 2009 will be the year of ping pong: reality vs hope. A week ago was despair. Now everything is fine again. Human emotion dominates.
Long/Short Jacobs Engineering Group in fund; no personal position
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