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After a long wait, probably for many years, the Bears finally had a reason to celebrate. They feel that their time has come. They have come out of hiding and celebrating widely in the open. Now it's Bulls time to run for cover. They are throwing every thing on the road and running to save their lives (the little money that is left). In a matter of one week the trading world has just reversed it's course. Fear and Pessimism are rampant in the market and they only seem to grow bigger. That's the current market condition. This condition is mainly caused by Citi bank which is the world's biggest bank by market value and revenues. The surprises thrown by Merryl and Citi have finally showed the markets what Warren Buffett has always said about the derivatives markets. People have finally seen those Financial weapons of mass destruction falling on our Stock markets.
At this time a lot of people turned bearish and being compulsive traders, they have started buying the Short ETFs like QID and SDS. I have noticed that lot of fellow traders in SLB Open are buying these Short ETFs. Some people are increasing their cash reserves. We also have a category of people who are trying to preserve their capital by buying safer stocks that have less volatility (low beta stocks).
So what the next two months are going to be like ?
A lot of people at this point are clueless about how the market is going to move from now to the end of the year. This period is traditionally a stable and good time for stock markets. But i feel that this time it is going to be a completely different time. We might have just entered a historic bear market. It is rear for this time of the year. Unfortunately that might be the trueth. But this bear market will have one difference with traditional bear markets. I predict that the markets will still have a lot of volatility with the Bulls making an occasional fight back only to be crushed by Bears within the next 2 or 3 days. The growth stocks like AAPL, GOOG, BIDU, ISRG etc should experience a lot of volatility and i am expecting that they won't be crushed the way they are being treated now. As for economic news there will be hardly any thing to cheer about but there will be plenty to worry about with these financial companies slowly showing their true balance sheets. All these years they have marked some weak assets at high prices and showed rosy balance sheets. Now, each week one or the other of these financial firms are coming out with some bad news to unsettle the markets. So i am expecting the overall market to remain bearish in the near future.
How am i going to play for the remaining period in SLB ?
In my SLB Open portfolio i have recently sold out my positions in GOOG and AAPL to cash out on the gains so that i can buy some bargain stocks. Though i personally continue to be an AAPL bull, i have temporarily came out of it because i have found that the earnigs season is the best time to make some bold bets and i am making some of those bets. I bought BX and EXM for that reason only. I am not sure how these bets will play out but if one wants to get some fast gains, one has to take some calculated risk. Different people have different levels of judgements. People with good judgements have higher probability of these bets paying off. I recently had some incredible success with my earnigs season bets on MSFT and WFR. I also exited AAPL and GOOG just before they went down 10%. So i have done some very good timely moves in the past few weeks and it has helped me to reach 88th rank as of today (NAV is 10.87). This past week, i have moved up 140 places and in the past 1 month i have moved up 450 places. To be frank i am little unsure what to buy now. I love LDK and WFR that are in my portfolio right now and i think that i am going to stick with them for a while. I might change the other stocks more rapidly. With the good tech stocks like AAPL and GOOG beaten so badly in the past week, i think that at some point they will start recovering. So i am definitely contemplating on buying some tech ETF like QQQQ or QLD. Yes, i am still a tech Bull but i am going to tread my line carefully. I might play the role of a contrarian in the remainder period of this SLB open. I would like to sell when the market is going up and buy when the market is going down. In a nut shell, i am betting on volatility to stay in the market in the near term.
Trade Safe and be careful with BIDU and DRYS kind of stocks, especially if you are buying them with your personal money. Bear market is not good for these stocks.
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