The Grass is always Greener on the Short Side

Updated: Feb 27 at 7:27 pm

What a day its been do far and a Great day to be short some.

  • The Dow Jones Industrials Average fell 3.3% placing it -2% for 2007. Nasdaq fell almost 4%. There is much speculation as to whether this will trigger a comeback rally or future selling (just take a look at the video section on Bloomberg). Whats this? “Japan’s Nikkei 225 opens down 276.31 points…” I reckon we’re in for more selling
  • Recession Fears. It seem that Big Al’s comments meant something after all. I don’t think that the markets will be recovering that easily. We will probably see either further declines or continued sideways action around current levels as we have seen over the past few weeks.
  • Asian Stocks may be the cause for the sharp sell off in equities in the U.S. markets. Chinese stocks fell 9% yesterday.
  • Precious Metals got hit hard but then bounced back fast. If this is the recession we’ve been looking for we still await to see how the PMs will react. So far they’ve been modestly unaffected. IMO, buying in now is still speculative as I expect a broad decline to be reflected in the metals as well. As Warren Buffet says “Holding cash is painful, but not as painful as doing something stupid”.

Here’s what Jim Sinclair had to say

“When I was asked yesterday in Toronto during the informal question-and-answer session what would happen to gold when and if the equity market broke, I answered, ‘At first the equity market breaks will bring in temporary sellers of gold. However, quite quickly thereafter and most certainly when the U.S. dollar also gets hit, gold will steady and start its move to all the angels”.

Darn Right.

  • Bonds are being bought silly by someone who’s probably busy selling shares. The yield for a 10-Year Treasury currently stands at 4.56%.
  • Housing numbers came out again today. Amazing though how they’ll always mention the part how sales are up, but never the follow up… that prices for houses are falling. This time prices fell from 218,000 to 210,600 – a decline of 3%. Maybe the recent sub-prime havoc is knocking some sense into potential sellers.
  • Energies have also come back strong, with Oil toggling around the $62 mark and Natural Gas at $7.53
We shall see… More to come.
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