Have I gotten too bullish?
As I’ve warned in the past, we’ve all let ourselves get a little too conditioned to buy on the dips when sometimes markets dip for very good and very long-lasting reasons. Yesterday morning, before the C meeting even happened, I posted this article for members and said: "Maybe not the bullish news people expected at today’s meeting!"
I have long said that we won’t be able to post a real rally until the financial community steps into the confessional and clears the deck so we can see where the floor is. As we suspected, the confessions we’ve heard to date have been sugar-coated (to use the very polite term for total BS) and we are not as near the end of this cycle as investors may think.
Perhaps now is a good time to review my 10/10 article where I called a top, detailed the housing crunch and made the statement: "$1.5 Trillion (of suspect sub-prime notes) and no reason to pay. Yet we are celebrating when Citibank writes off $3Bn in bad loans. What about the other $1,497,000,000,0000??? I’ve said before I’m happy to get behind this rally AFTER we hear from the regional savings banks and other lenders as they explain exactly how they think they will be collecting this money." My CONSERVATIVE estimate for sub-prime losses at the time was $200Bn and I said: "Let’s stay aware of the undercurrents that may actually start to matter and watch out for the home related sectors, no matter how beaten down they may look – they are not $200Bn beaten down yet!"
This is what led us to our Nasdaq bullishness for the past two weeks as I decided: "That’s why we have Nasdaq leadership, they’ve got the mix that is least likely to be affected when it all hits the fan. Much like the Titanic, even as one end of the ship begins to fall into the water, the people on the other end start to rise – even reaching "record levels" just as money flows from one part of the market to the other – it’s a temporary effect but, wheeee, what a ride!"
That was the week we had our first great BIDU play and today may be the next one as we went into the weekend with very heavy BIDU puts ($400s) that we doggedly refused to…