If Bernanke were a CAPS poster he would get zero recs a post by now

Copied from my CAPS blog:

I think his whole “Subprime is contained” speech would have lost him his last readers… anyway…

This is not another “I told you post” from a bear. An “I told you post” would have been in order if on top of getting in near the bottom of the crash I would have said to hold all your longs until 950, THEN told you to sell… Oh well.

Either way, the market has given up the all of May and June’s gains and more impressively took out the lows from 2 weeks ago at 888.

Personally I am not trying to profit on the decline anymore.

I sold FAZ in the low 5’s back in late June, since the XLF has been DECIMATED yet FAZ only trades at $5.35 today. I sold my put positions back then as well and I look at them now and the quotes are only slightly higher then for what I sold them for because of the time value/IV crush even though the stocks are much lower.. WYNN is the only one I am kicking myself over.

Bottom line is it is tough to profit on a decline unless it is steep and exactly where/where you call for it to happen. It is much easier to profit in a bull market as you can buy a stock and be wrong for quite some time and EVENTUALLY be right. I am starting to think if you really want to profit on the decline of stocks you need to just be straight short the stock but really I am also starting to believe what a friend (Dawgs) told me a while ago that shorting is gambling and not investing.

I never though I would type those words but back in mid-April when the market was at the same levels I did say…

“I am not as concerned with making all the money that will be made on the downside as shorting is stressful and dealing with Ultrashorts or put options is like juggling chainsaws….”

After some juggling I guess now I just believe my words more!

So where are we now on the market? The P/E of the market is still high, earnings and earnings growth are still horrible. The economy is still getting worse, not better. House prices are still falling, we are still losing jobs, blah blah blah…. I could write a book on this but that’s why you have all the other CAPS blogs…

The long-term timing signals for a LONG TERM buy on the S&P are still VERY far away from being triggered… From eyeballing the long-term chart I would say if the market stayed exactly where it is today it would take AT LEAST 8 more months to get the long term moving averages in a place where you could tell your Grandma to buy. That 8-months also assumes that the market does not drop back down into the abyss and that is not an assumption I am willing to make.

So bottom line is even with the market pulling back 8% from it’s recent highs, it’s not a good time for an investor to be buying much. The market is probably headed lower in the short run and even more so in the longer run (multi-month) but lots of people are piled on the short side yet again so the chance for another “get shorty” ramp job up back to 950 or 1000 always exists.
California IS the short term:

Really in my opinion the short term performance of the market is NOT dependant on the “Head and Shoulders” on the S&P or some MAGIC Elliot wave pattern, it has 100% to do with the situation in California right now.

If California were a country it would have the 10th largest GDP and would be ahead of Italy, Mexico, Spain and Canada. It has been paying its debts in ponzi-notes for the last week. Banks came out yesterday and said they would not accept the notes anymore come FRIDAY OF THIS WEEK. So you have this behemoth that is a good portion of the ENTIRE United States GDP that is completely bankrupt, starting printing Monopoly money and now they are saying the Monopoly money is no good. I think a 6 year old would understand why this is a huge problem for the market.

So it comes down to this… Do the men in the smoky room who knowingly or unknowingly control the market (in the short run) let this situation in California go on or do they throw a few billion their way and band-aid the problem.

Letting the situation get worse and talking down the economy at the same time would continue to hurt the stock market which would get more votes in congress for the second stimulus bill that everyone is talking about now. The more 200-300 point down days we have the more chance this bill has to pass…

So maybe that is the route they go, personally I am tired of making investing decisions based on what some folks in a smoky room decide. I realize that this has been the short-term market since 2007 or so, but at this point it has gotten ridiculous.

So I wait in cash for the buying opportunities that will be presented to INVESTORS in the future. I have been closing out my CAPS picks over the last week as I do not intend on following the market as closely again for quite some time, until the investors can come back. From looking at the volume of the market over the last few months I can see quite a few people have probably made the same decision I have.

Understand for me that means only reading about it for 10 hours a week instead of 50, but still… :)