Fundamental Trading Diary

Fundamental analysis of the capital markets

Neutral For Now

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Dow 11,000 turned out to be the staging grounds for some strong rallying. I’ve closed out my two shorts for the moment. There is simply too much of a concerted effort to bring this market up, rescue the over-leveraged banks (and apparently the over-leveraged consumers), and to stimulate the economy. I’m calling a temporary bottom here.

I’m not _that_ bullish. In the end, this is just some stop-gap measures, and the market will follow the economy into further misery – just not yet. To a large degree, that doom and gloom has already been priced into the major indices. Earnings estimates are so low, and many companies that are in relatively good cashflow shape are so depressed in the _anticipation_ that earnings will sour. The already lower P/E value small-cap stocks have been very resistant since their inital clobbering early in the year. My efforts to short the market were not nearly as profitable as I sold Russell 2000 futures instead of financials dominated S&P 500 futures.

I’ve gone long 1 Dow e-mini.

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July 28, 2008 - Posted by | Uncategorized

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