From the looks of the futures, those who have (recently) decided to short this market will be rewarded tomorrow. These news (or non-news, in this case) events always provide additional uncertainty to an already uncertain profession. Trying to predict market direction based on these events is a good way to watch your account lose money. Sure, you will get lucky now and then…but who the hell knows what is going to happen? I sure don’t
Example: The U.S. kills the guy who was the opposition figurehead behind the last 10 years of war and, whaddya know, the market sells off on this news. I’m sure there is an argument for why this happened, but, really, does that make any sense?
Now we are left trying to “solve” the debt crisis. I’m of the opinion that this problem needs to be solved…not delayed. We keep kicking the can and talking about how “the recession is over”…well, fuck me…the recession isn’t over.
This June, I graduated with my B.S. in Civil Engineering and passed the EIT exam. I live in Oregon, and I’ll be damned, but there isn’t a single entry-level CE job out there. My class graduated 80+ Civil Engineers…3 (yes…3) of them had jobs lined up after graduation in the field.
If Barry O’Bomber wants to keep blowing smoke up our collective asses regarding how our country needs to start graduating more Engineers…it’s going to be tough to convince high school seniors to put up with the bullshit rigors of an engineering education if there is no fucking pot of gold (or at least an entry-level position) at the end of the rainbow.
Changes need to happen…this type of Quantitative Easing ‘lifestyle’ is not at all sustainable. The longer we continue this, the more the bubble grows, and the more violent the reaction will be when it finally bursts. Shit, I was as liberal a fucker as you could find during Cheney…err Bush II’s reign of terror…and now listen to me.
So, what does this mean for the stock market? If we chose to not raise the debt ceiling (which is, begrudgingly, my preferred course of action), in the words of Clubber Lang: “PAIN”. DOW 8k, S&P 800, etc. My thoughts are that we probably aren’t going there in a straight line, therefore there will be plenty of opportunities to take quick (2-4 day) oversold trades along the way. I really suck at shorting, but hell…I might even try my hand in this type of environment.
Over time, the goal will be to play small and simply stay in the game and be patient. There will be stocks that show signs of life well before the market as a whole does. These are the stocks that will make you and I lots and lots of money during the next recovery (and there will be one).
I’m still sticking to my oversold thesis, as I think there is going to be a quick and violent rally some time soon. The indices will need to calm down before I’m willing to put forth any additional capital, as I have taken it on the chin the past week and a half.
Meat grinder indeed.