The rally today has been extremely fadeable. I stared in shock as I witnessed the Dow up over 200 with the Nasdaq and S&P up over 50 and 30 respectively. All this because of the news that the The Federal Reserve, European Central Bank and three other central banks are moving in concert to alleviate a credit squeeze by pumping liquidity into the credit markets via auctions. This move is just another way of the Fed signalling that the credit markets are in deep shit. I think the crisis is still in the early stages and will get worse over time. The Fed is better of staying clear of the mess and allowing the market to settle things on their own way. Sure a few big banks may collapse in the process but this is the only way to prevent future such occurences. A bailout will only make things worse in the future as financial institutions fail to learn a lesson.
Today I added more QID SRS and took a position in the double inverse financial ETF SKF. Short financials and real estate will be the play for 2008. This is a trend that will continue for a while.
I sold out of my C position last week. The new CEO does not seem to be the right man for the job. More of a follower than a leader. I think C will see more downside perhaps even into the teens.
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