Fundamental Trading Diary

Fundamental analysis of the capital markets

September Fundamental Review

My bearish stance is paying off:  I’ve been shorting NQ with 1-3 contracts all the way down from 1965.  The market is now so over-sold that it’s almost certainly due for a bit of a bounce.  That said, the fundamentals just aren’t improving — in fact, we’re overvalued to the point of asset bubble prices.  The S&P 500 had towering P/E of 25 to start the week.

The current market capitalisation weights of the S&P 500 are most weighted towards financials, techs and energy.  I suspect that energy earnings are going to get crushed.  Financials are not done deleveraging.

This market is headed lower.  Every bounce will be an opportunity to short.

Update Sep 04 4:14PM:  Every once in a while, if you take enough swings enough at the ball, you hit one out the park.  Nasdaq is -3.2% today.  There is good reason for this.  My NQ position is now worth $2,850 which is boosting my 4 week return to nearly 6%.

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September 4, 2008 - Posted by | Uncategorized

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