GET THE HELL OUT

[Mvic]

QUOTE]Quote from ByLoSellHi:

2-28-2008

Get out. Get he hell out of the market and go short. Forget volatility and trading. Just get out.
[/QUOTE]

Today was the worst day yet in the credit market. I think that we at least restest the Jan lows. The divergence between what is going on everywhere but equities is unreconcilable. The amount of issunce that is coming down the pipe to cover all the auction fails and all the other instruments that were supposedly cash equivalents that are now illiquid is staggering. This is the repricing of risk that many of knew was coming only it will be a forced repricing like Thornburgh today. Look what FNM is trying to get away with (from its 10-Q)

"The total number of loans we purchase from MBS trusts is dependent on a number of factors, including management decisions about appropriate loss mitigation efforts, the expected increase in loan delinquencies within our MBS trusts resulting from the current adverse conditions in the housing market and our need to preserve capital to meet our regulatory capital requirements. For example, we recently introduced a new HomeSaver Advancetm initiative, which is a loss mitigation tool that we began implementing in the first quarter of 2008. HomeSaver Advance provides qualified borrowers with an unsecured personal loan in an amount equal to all past due payments relating to their mortgage loan, allowing borrowers to cure their payment defaults under mortgage loans without requiring modification of their mortgage loans. By permitting qualified borrowers to cure their payment defaults without requiring that we purchase the loans from the MBS trusts in order to modify the loans, this loss mitigation tool may reduce the number of delinquent mortgage loans that we purchase from MBS trusts in the future and the fair value losses we record in connection with those purchases."

Hard to believe!

Maybe there is small gain to be made on further upside here in the short term but the downside risk is huge. People have been waiting for the credit markets to start to function again but they can't wait forever, they need the funds that have been tied up and the market is still deteriorating. It is just a matter of time before forced selling occurs and then things will get marked to market and the potential for some nasty writedowns will surface.

Until there are real signs of improvement in the credit markets anything more than a small intraday long is probably not a great RR trade here with markets at resistance and butting up against a DTL in addition to all the fundamental crap.

BuyLo I think you are about to get paid!

I posted this link in another thread but I think it appropos to repost here:
http://www.house.gov/apps/list/hear...ubini022608.pdf

 

[ByLoSellHi]

Quote from Cutten:

No need to eat crow if you are wrong. There's no shame in being incorrect on a market call, only in *staying* incorrect. So, just make sure you have a contingency plan in case the market turns back up and resumes its bull run.

No, I'll willingly eat crow. I have never made such a broad call as this one, but I'm also backing it up with intense put buying on select sectors.

If I'm right, and the market takes a swan dive, I'll be hailed as a genius or lucky, or maybe with a few "anyone could have seen it coming."

If I'm wrong, well, you know...

Quote from Mvic:



Today was the worst day yet in the credit market. I think that we at least restest the Jan lows. The divergence between what is going on everywhere but equities is unreconcilable. The amount of issunce that is coming down the pipe to cover all the auction fails and all the other instruments that were supposedly cash equivalents that are now illiquid is staggering. This is the repricing of risk that many of knew was coming only it will be a forced repricing like Thornburgh today. Look what FNM is trying to get away with (from its 10-Q)

"The total number of loans we purchase from MBS trusts is dependent on a number of factors, including management decisions about appropriate loss mitigation efforts, the expected increase in loan delinquencies within our MBS trusts resulting from the current adverse conditions in the housing market and our need to preserve capital to meet our regulatory capital requirements. For example, we recently introduced a new HomeSaver Advancetm initiative, which is a loss mitigation tool that we began implementing in the first quarter of 2008. HomeSaver Advance provides qualified borrowers with an unsecured personal loan in an amount equal to all past due payments relating to their mortgage loan, allowing borrowers to cure their payment defaults under mortgage loans without requiring modification of their mortgage loans. By permitting qualified borrowers to cure their payment defaults without requiring that we purchase the loans from the MBS trusts in order to modify the loans, this loss mitigation tool may reduce the number of delinquent mortgage loans that we purchase from MBS trusts in the future and the fair value losses we record in connection with those purchases."

Hard to believe!

Maybe there is small gain to be made on further upside here in the short term but the downside risk is huge. People have been waiting for the credit markets to start to function again but they can't wait forever, they need the funds that have been tied up and the market is still deteriorating. It is just a matter of time before forced selling occurs and then things will get marked to market and the potential for some nasty writedowns will surface.

Until there are real signs of improvement in the credit markets anything more than a small intraday long is probably not a great RR trade here with markets at resistance and butting up against a DTL in addition to all the fundamental crap.

BuyLo I think you are about to get paid!

I hope so, Mv. I'm entering some large positions, everyone on the short side.

 

[S2007S]

Quote from phil1424:

Of these 3 ultrashort ETF's which should give most bang for the buck it the fallout of this size turns out to be true ?

1.TWM
2.SDS
3.QID
thank you for any responces .... jake

1st TWM

2nd QID

3rd SDS,

QID could take 1st place, but I see TWM outperforming the most out of those 3. GOOGLE, AAPL and RIMM have kept the NDX afloat for sometime now, QID should be trading around 55 range now...

 

[S2007S]

If anyone actually thinks Jan 22nd marked a bottom in this market you should think twice because that was not the bottom, I believe were in for another major fall as well. I think Jan 22nd lows will be reached again sooner than later. There isn't any catalyst left for this market, rate cuts are about the only thing, but lowering rates to historical lows also has its problems as you can see by the dollar falling to new lows on a daily basis. Its going to get even more volatile over the next few months, anyone thinking its headed towards new highs is foolish.

 

[mokwit]

Dude, you need to tune in to CNBC and get with the program. Maybe read a little Ben Stein.

 

[Mvic]

Quote from ByLoSellHi:


I hope so, Mv. I'm entering some large positions, everyone on the short side.

Good luck, maybe think about putting on some OTM March bear call spreads in case the move takes a while or we drift up a little first or look for some stocks that will explode if we get a massive rally instead due to some massive government bailout and buy some cheap OTM calls, maybe some calls on Gold stocks as any bailout will send gold through the roof and gold stocks are lagging still just about to come out from under the burden of their forward sales at lower prices. I admire your conviction but you have been around long enough to know how this works so take out some insurance. If you are right it will have been a small price to have paid.

 

[ByLoSellHi]

Quote from S2007S:

If anyone actually thinks Jan 22nd marked a bottom in this market you should think twice because that was not the bottom, I believe were in for another major fall as well. I think Jan 22nd lows will be reached again sooner than later. There isn't any catalyst left for this market, rate cuts are about the only thing, but lowering rates to historical lows also has its problems as you can see by the dollar falling to new lows on a daily basis. Its going to get even more volatile over the next few months, anyone thinking its headed towards new highs is foolish.

Not only that, and I have this on gospel, you can't even get construction loans from banks right now.

I never remember this. Never. There were bad times where they'd loan you the money but put you through collateral hell, charge you heavy juice and use a fubar LTV ratio, but I never recall a time where they said point blank no.

That's just one factor.

Add the credible info on the statistical sampling of projected bank failures that the FDIC is openly gearing up for, and the complete drought of LBO money, along with a hundred other factors, all negative, including an inverse relationship with fed rate cuts and mortgage rates, home, credit card and auto loan defaults, and you're never going to get a clearer sell signal.

 

[ByLoSellHi]

Quote from Mvic:

Good luck, maybe think about putting on some OTM March bear call spreads in case the move takes a while or we drift up a little first or look for some stocks that will explode if we get a massive rally instead due to some massive government bailout and buy some cheap OTM calls, maybe some calls on Gold stocks as any bailout will send gold through the roof and gold stocks are lagging still just about to come out from under the burden of their forward sales at lower prices. I admire your conviction but you have been around long enough to know how this works so take out some insurance. If you are right it will have been a small price to have paid.

Fair point. Just pondering this over tonight, but given my level of conviction, I think cheap, deep out of the money calls are my preference.

One other thing, and it's admittedly a digression, but somewhat related to the tenor of my point - lumber/building material stockyards are running so low on materials, that they have to special order common products. It's not because they are selling so much, but because they're selling so little that they aren't confident enough to carry inventory anymore. Obviously, that's housing related, but I have more than a feeling that the same thing is happening in other sectors of the supply chain (non-housing related).

 

[Nanook]

Quote from ByLoSellHi:

2-28-2008
Get out. Get he hell out of the market and go short. Forget volatility and trading. Just get out.

Quote from ByLoSellHi:
I think cheap, deep out of the money calls are my preference.

Chicken!

 

[pavlov0032]

Totally agree with thi, my friend already made 90k in 2008 shorting financials and USD, and ging long on euro,platinum, palladium, gold and nat gas..

Quote from ByLoSellHi:

2-28-2008

Get out. Get he hell out of the market and go short. Forget volatility and trading. Just get out.

There will be a vicious, swift correction in weeks, not months, as institutional finally lose any faith that the U.S. Central Bank can't deal with the problems we have. The Federal Reserve is impotent, and it will take a colonic cleansing of bad debt, wiping balance sheets clean, and bankrupting many companies, before clarity can return, and real economic growth can be possible again.

You will be able to buy equities at much cheaper levels once this process runs its course - probably in 9 to 14 months.

Stamp this date and see where we are 3 months from now. I'm not leaving ET if I'm wrong (although I'm highly confident I'm right), but I'll definitely not avoid this thread, and I'll eat crow in front of all if I am.

The market has given a final chance to get out of your long positions at non-catastrophic levels. Seize the opportunity to do so.


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