latest thoughts

Been an interesting period what with lehman, aig, wamu and now wachovia all either gone or dealt with -- the market up until the bailout bill failed had been in a narrow range for the past week or so-- from 1180 to 1220.  with a 9% mini crash today I think we are getting closer to a better near term low -- the one from a couple of thursday's ago was manipulated due to all the policy response including the short selling rules -- incredibly stupid by the way.  This next low has the chance of being real -- based on a selling exhaustion that rises almost for no explainable reason -- that's normally what happens.  

at the end, the market just bottoms and starts rising.  there is no good news to drive it, in fact the news is universally bad at the time.  I can't imagine worse news that what we have now -- an interventionist government destroying as much value as possible -- causing a domino effect of bank failures combined with unbelievably horrible leading indicators of massively slowing growth.  earnings estimates for almost every company are wrong but stock prices reflect that in many cases.  

On the one hand I believe the market could bottom somewhere in the 800 to 900 range -- down 650 to 750 from the peak -- that would make sense from the standpoint of the worst financial crisis since the great depression.  Right now the decline barely ranks -- does that make sense given all that has happened?  

but its hard to believe we are going to get there right now -- I would say sometime in the spring of next year at best.  in the mean time maybe we drop more but I find it hard to believe after today's drubbing that we aren't getting closer to a bounce -- maybe we fall another 5-10% tomorrow but that gets you to 1000 on the S&P -- are we going to drop more than that before a near term bottom?  I wouldn't think so.  then a rally back up towards 1200 -- maybe if we are lucky.  a trading range for a couple of months and then further declines.  

but all that is just for fun -- key is stocks -- what are my latest thoughts:

well -- didn't pull the trigger on the FDS despite having opportunities to sell all my shares above $60 -- ugh!  Did sell some ILMN -- just trimming around $85 ($42.50 post split).  Also sold some CME at $400.  Sold the POWI today at $24.8 -- always use limit orders -- I put the sale order at the market in at $25.1 but my actual trade done 30 cents lower.  still with the stock around $23 by the close its not a bad trade so far.  I still like the company but wanted to raise some cash.  Of course the time to do that was in May (1400 S&P) or back in Dec (1400 to 1500 S&P) but I didn't realize the permabears were finally going to be right after predicting doom and gloom for many years.  

still looking to buy more TECH, LH and UEPS.  Today was the day to buy UEPS but I was too busy dealing with work issues -- stock closed at $21.59 -- the bottom of its range since 2005.  You either have to believe that the stock will break out of its trading range to the downside or that this is another time to pick up more shares.  granted global calamity is an excuse for breaking down but you also have the SA government finally suggesting a decision is at hand.  

I have been wary of ERII because it is a play on desalinization -- which requires really expensive plants, which requires lots of capital -- one would think that would be a problem in this environment.  Of course fresh drinking water is a priority too.   stock has remained quite resilient -- similar to MXWL.  

I bought some options on TSRA today (monday) because the stock got hit worse than other stocks and decisions on their cases should be due soon.  I bought the Nov 17.50's -- not that I am an expert in terms of picking contracts.  I decided I wanted to go further out than october but didn't want to pay too much per contract so I picked the 17.50s rather than the $15's.  

I also dipped my toes in the water on some S&P calls (actually based on SPY) I have plenty of powder dry to buy more if the market keeps selling off.  I will probably double down if the market continues to decline.  what I mean by that is to put the same amount of money on the next trade but because the price will have dropped I can buy more contracts.  

At this point the only financials I would think about buying are SCHW, CME and maybe GS.  Although I wonder about BX at some point.  SCHW because they don't make money on their own money but rather on their clients money -- which is declining for now but this gives you a nice kicker on the market.  CME because of their monopoly.  GS because they are the best, period.  BX because they have cash to take advantage of the downturn.  if you believe we are in for an extended flat to down market than none of these is a good choice.