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cbwang888 (25.84)

Time to go short again

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9

May 15, 2009 – Comments (18) | RELATED TICKERS: SRS , SKF , DOW

 

This time I really mean it.

Auto industry will have a big impact on the US economy. This admin pump money to greedy financial firms to keep them zombies but allowing lousy auto firms to scale down massively.

I just started shorting REITs, financials, resturants, casinos in real portfoilo and abandoning my calls on DOW 9000.

I liqudated all my commodity June/July calls and keep some commodity longs like DOW, ASH, ANR in case China turn out to be a big support of the global recovery...

 

 

 

18 Comments – Post Your Own

#1) On May 15, 2009 at 11:37 AM, cbwang888 (25.84) wrote:

My target is DOW 7500 in 2 months.

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#2) On May 15, 2009 at 11:42 AM, goldminingXpert (30.95) wrote:

good good. I agree.

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#3) On May 15, 2009 at 12:00 PM, GenericMike (< 20) wrote:

I agree we're headed down, maybe even to retest or breakthrough the march lows. But I don't know when. We could just have a moderate pullback here and bounce off a support level right back up to S&P 1000 before it happens. I've watched the market rally on nothing but air and hope for almost 3 months. I don't see why it would have to stop.

If you look at my current CAPS picks, though, it's pretty obvious where I think the market is heading. 

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#4) On May 15, 2009 at 12:03 PM, Collin757 (< 20) wrote:

Yea I went all short too(in CAPS), just too early, your timing seems better.

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#5) On May 15, 2009 at 12:08 PM, awallejr (80.10) wrote:

Well Marc Faber thinks equities and commodities will continue to go higher.  I think DOW 9000 before we see DOW 7500. 

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#6) On May 15, 2009 at 12:40 PM, cbwang888 (25.84) wrote:

 

I'm now call for DOW7500 before DOW 9000. Maybe stocks like JNJ, PFE, PG or KO like stocks will help its strength but I think financials, transportations, consumers, and technology has gone ahead of themselves.

I think the March low is the low of the year for many firms. The sense of collapsing has passed.

We had a suker rally that sparked by the biggest losers after they went down 90%+ from their peaks.

Now investors need to look for firms that can sustain the long term sluggish economy and maybe even benefit from it when their competitors are falling apart. Weaker ones will be eaten alive.

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#7) On May 15, 2009 at 12:44 PM, bridgeboy0 (99.82) wrote:

I'm not sure I agree with your classification of DOW as a commodity long stock.  Doesn't DOW do better with low commodity prices (because commodities are used by them to produce their final products, notably oil).  Please explain how you consider DOW to be an investment vehicle for when commodity prices go up.  I'd like to hear your reasoning.

Thanks.

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#8) On May 15, 2009 at 12:52 PM, cbwang888 (25.84) wrote:

Well, DOW (Dow Chemicals) has broad range of products. I bet on commodity due to (1) China stimulus and pent up comsumptioins (2) It Rhom and Hass aquisition liquidity crisis is over and they were able to sell bonds and raise cash by selling shares @ $15. That I'll think $15 will be solid bottom.

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#9) On May 15, 2009 at 12:54 PM, cbwang888 (25.84) wrote:

reason (3) will be inflation down the road as USD is getting weaker for a long run ... Companies who has global reach by exporting their products will be benefited most from the global recovery. The US retails, we all know, will continue to suck.

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#10) On May 15, 2009 at 12:58 PM, kdakota630 (33.34) wrote:

Do you think it will temporarily bottom at around 7,500, bounce, or continue to head down.

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#11) On May 15, 2009 at 1:13 PM, cbwang888 (25.84) wrote:

Kdakota630 :

 

My current bet is 7500 then rebounce higher. My reservation is that governments all around the world may continue printing money to support equity markets even though consumers from countries like US have lost their purchase power and credits until job and housing start recovering, which I think will be like 2012 or later...

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#12) On May 15, 2009 at 1:31 PM, EggplantWizard (99.68) wrote:

I'm going to start scaling out of shorts at S&P 870 (a better measure than the Dow, for a number of reasons). I'll probably pick up some longs in the high 700s, which I consider a good long term value (scaling), while still holding some shorts. If we hit March lows again, I'll be at least 50% long and 0% short.

 

When you consider inflationary pressures, stimulus, etc, I'm guessing that fair S&P value is in the mid 700s at the moment.

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#13) On May 15, 2009 at 1:36 PM, goldminingXpert (30.95) wrote:

Eggplant, gonna start scaling out this afternoon then (hopefully)?

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#14) On May 15, 2009 at 2:00 PM, bridgeboy0 (99.82) wrote:

cbwang888

I agree with your thesis on commodities and I agree with consumption and the acquisition helping Dow Chemical, I just still don't understand how high commodity prices will help Dow Chemical (I think they will hurt DOW).

I agree with Eggplant that SPY is a better gauge than DIA.  My prediction is a pull back to around 800 and then we turn higher up to 1000.  Good luck all, even the bears (who have no need for luck because they are all smarter, read do more research, than the bulls).

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#15) On May 15, 2009 at 2:05 PM, cbwang888 (25.84) wrote:

 

Yes, SPY is a better indicator of overall market. DJIA is easier to be manipulated because only 30 firms involved. 

Regarding DOW (dow chemical), I bought in this CS analysis:

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May 11, 2009, 12:08 pm Dow Chemical’s Capital Prompts Affirmation Posted by Bob O'Brien

Dow Chemical (DOW) went deep into debt to pay for its purchase of the old Rohm & Haas operations, raising more than $9 billion to help fund the acquisition - a deal that, at some junctures, it didn’t seem that Dow Chemical itself wanted to complete. Now that it’s done the deal, and raised the capital to redeem the expensive debt that it accrued to finance the purchase, one of its biggest skeptics has said the recent initiatives has given it a more-constructive stance on the chemicals giant.

The company unveiled plans last week to raise $6 billion in the debt markets, and more than $2 billion in new common equity, to retire some of the debt that it issued to finance the R&H purchase. Terms of the new debt looked more attractive than the obligations under the previous credit, because holders of those preferred shares collected a 15% dividend.

In a research note Monday, Credit Suisse boosted its rating on the stock to outperform from neutral, and raised its price target to $21 from the previous $12 - the stock traded at just over $15 a share ahead of the stock-and-debt deals last week - citing improvement capital structure, reduced financial leverage and better near-term debt obligations.

CS said that a modest economic recovery over the next 12 months, helped by an end to the inventory de-stocking that has taken place, gave it increased confidence in Dow’s ability to generate cost savings in its businesses.

The firm had been, effective, the biggest bear on the Street, anticipating 2009 losses of 46 cents a share, though the consensus called for a profit of abotu 17 cents. Though Credit Suisse hasn’t adopted the most-bullish take on the earnings, it did say that it expected the chemicals giant to record a profit on the year, saying it anticipated 7 cents a share in bottom-line reults for 2009.

 

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#16) On May 15, 2009 at 2:32 PM, EggplantWizard (99.68) wrote:

goldminingXpert (100.00):

 

We'll see. Stilll at 884. When we cross 870 or so, I will sell about 10% of my shorts (puts).

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#17) On May 15, 2009 at 3:05 PM, goldminingXpert (30.95) wrote:

Into the 870s now. Time for a final little OPEX surprise for the bulls.

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#18) On May 15, 2009 at 3:07 PM, EggplantWizard (99.68) wrote:

Looks like GMX might be right on here -- I have some *extremely* tight stops on a couple of positions set to fire at S&P 870.02, here's to scaling out a little today at a nice gain, and giving those who want to invest lower a nice opportunity to do so.

I expect a larger drop, but I never throw all my eggs in one basket -- actually, I've only recently been toying with timing this market, rather than buying and holding (exclusively --- I do that, too) -- so far, it's working out alright, though.

Obviously no one can tell for sure, but where do you see the bottom, GMX, on the way down here? I'd guess 760.

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