WhipItAround.com

The Dow was up almost 400 points on news I consider very scary.  As far as I know, the discount rate has never been 0%.  Seriously, the Fed must think things are on the brink if they are reducing rates to 0% and buying all assets (they also authorized the PPT to buy equities like there’s no tomorrow, LOL).  Mark my words, the people buying this market have cotton candy for brains.  They are the same ones that propped the market up after all the alphabet soup (for those of you that dont understand the jargon, this refers to all the stimulus and capital markets acronyms introduced by Fed and treasury) and called 13000 the bottom on the dow (watch the link to the video i posted below).  Everyone thinks this is the cure-all and housing will be back by summer because rates will be going down to 4%.  First off, how can you refinance if your house is underwater or even breakeven?  The lenders want 20% equity in order to refinance your mortgage.  That means anybody who bought in the last 4 years with zero down does not qualify.  

We very well could rally to 1000 on the S&P in a naive stupor, but everyone that bought this mkt will get their nuts cracked.  It may not happen until Q1 when investors realize that 0% interest and all these programs still are not working.  With unemployment rising, people fearful for their jobs, and banks much more smart with their money, good luck taking this market much higher.  In the beginning of the Great Depression, the market dropped something like 45% then rallied 50%, only to drop 80% over the next two years.  Stop comparing this recession to prior post war recessions because this is different from anything else in our history so normal rules about bottoming do not apply.

The dollar was bushwhacked today and will continue to get hammered.  Maybe the trade is to go long commodities and short equities.  I almost pulled the rest of my 401k money from equities to cash before the end of the day, but i’ll bet on the dumb bulls and see if they can take the mkt higher.  

I lost 2% of my trading capital trying to short the mkt in anticipation that once the mkt digested the announcement it would realize how bad the Fed believes the economy is.  As you can tell, I’m pissed, but I probably should not have gone short in such a market.