I've thought long and hard about how to play tomorrow's Fed announcement. After much back and forth, I've decided to just hold onto my current positions and let the trades play out according to my original analysis.
I feel protected by the fact that I have taken on smaller than normal position sizes, set stops at key levels, got rid of a few of my weaker positions today and hedged my longs by taking positions in ETFs that short real estate and financials. If I incur a few losses, so be it. That's part of the game. Unless tomorrow ends up rivaling 1987's Black Monday, my recent gains will more than offset any losses.
An irrational market dip might provide a good buying opportunity in some momentum favorites. Of course, to trade on the dip we'll have to see signs that a momentary dip is all we are seeing. The following 25 stocks are on my primary watchlist:
DRYS, LFC, MDR, FWLT, NOV, AGU, ATW, RIO, SII, NVDA, OII, MOS, BIIB, VDSI, VMI, ISRG, FCX, MON, GRMN, USO, CROX, LIFC, AAPL, JEC, SAM, POT, BIDU.
Somewhat Off Topic:
Much has been made of Alan Greenspan's recent comments. Personally, I give no weight to anything Greenspan has to say. Did he really criticize the idea of rate cuts? That's like O.J. rebuking jealous, abusive husbands. The one time Fed Chairman has become the Jose Canseco of the markets, willing to say anything to hawk a book. It seems he has taken his mentor Ayn Rand's "rational self interest" approach to heart.
1 comment:
I agree with your rant. He's been making comments to create interest in his book ($8M advance). He lowered rates for too long, easy money fueling the credit fiasco and the housing bubble. Then he raised rates too high, at least 2 increases past a neutral bias. But everyone says he handled the economy beautifully.
-jvh
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