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How Far Can a Dead Cat Bounce?
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Today I have decided to try to compete in round 2 of this contest. I have not found the rules regarding funds, trading or much of anything yet including where to make my trades or check my portfolio. I'm sure I'll sort that all out soon before the Feb 1st start date. With that in mind, it will certainly be a challenge starting out this 6 month period. As I write this, the market stands on the edge of a knife. Will the bulls take the reins after 2 gap down opens with huge recoveries by the close of will the continuing credit/housing/fed crisis drag us down and we will have just witnessed a dead cat bounce after the emergency Fed rate cuts? My first task is to assemble a shopping list of what I would like to buy. I guess the next week will determine how defensive or aggressive I can get. Given that, and the fact that I have at best sketchy information about what the rules for "conforming" portfolios are, I really have little idea on what I will assemble yet. Hopefully when I find the correct resources, I will be able to straighten this out. Until I hear more details about the whisper plan to rescue the monoline companies and have something concrete to work with, I have to continue to think these last two days were just a temporary reprieve to the continuing downslide that is gripping this market. If there ends up being no plan to bail out the bond insurers (or better yet, use the Cramer plan to dismantle them entirely), I have to believe the domino effect will be in place for the next 2 quarters and will try to research the previous bear markets to find a suitable strategy for that environment. On the other hand, things could change quickly and I will have to formulate a recovery strategy to take advantage of the over sold conditions and find those underlooked and underloved stocks that can rally from the depths within the timeframe allowed. Only time will tell. Currently I believe we have just witnessed a dead cat bounce similar to the beginning of the early tech bubble bursting in 2001. Considering I have mainly only paid attention to the market in it's last bull run, I need to check the history books to see how to handle this. To paraphrase "Those who fail to learn from history are doomed to repeat it." Good luck to my fellow contestants. | ||
