Tuesday, November 11, 2008

Trading Alert

Warm November Greetings to All Forward Thinkers! The ongoing global financial crisis has made perma bears look like geniuses, yet the Psychology of the Call team (POTC) senses the imminent appearance of a bear market rally for three good reasons. 1) President elect Obama's first speech, and his chief of staff pick, Mr. Emanuel, are very bearish for the market. We are confident both of those negative developments will change soon. POTC believes Mr. Obama's goal in the coming days and weeks will be to do everything popular in order to be re-elected to a second term in just four short years. It's that second pivotal term where most Presidents are more inclined to show their true colors, especially in terms of openly hell bent policy. We remain confident and are prepared for the Thanksgiving Day Obama rally to begin this week, as his centrist appointments begin being leaked by hedge fund insiders. We are not waiting for New Year to enter long positions, as that seems to be the easiest and most ‘herdish’ trade today: we remain forward thinking contrarians and are going long on Tuesday. We believe President elect Obama will appoint some Wall Street friendly names to his first cabinet/administration. He will do this to satisfy his political appetite to win that critical no holds barred second term in 2012, agree? Please answer the poll question regarding this issue on our blog: http:psychologyofthecall.blogspot.com/ Yet, IF he chooses to select only hard line left wingers, the market will not rally. After witnessing the extremely well planned and hard fought victory, we would be shocked to see a concentrated cabinet: it won't happen. 2) The pressure from Warren Buffett on President elect Obama to call for a change in mark to market accounting or announce a huge infrastructure stimulus plan plays a factor in our short term bullish call as well. Berkshire Hathaway just reported a horrible quarter, and even if Buffett is okay with paying higher taxes, we know he does not want to see his almost perfect legacy wither, wilt, and die in his waning years: http://www.thestreet.com/_yahoo/newsanalysis/insurance/10446832.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA Other recent Buffett investments in Goldman Sachs (GS) and General Electric (GE) have underperformed as well, and both of those companies will survive this wickedly panicked market. 3) The financial sector could begin to stabilize as it shrinks. The S&P is heavily weighted with oversold financials, about 20% of the S&P value lies in financials. Regional banks could begin bouncing with 50%+ buy-out premiums. Rumors abound that Citigroup (C) is very close to bidding for a regional bank with government TARP money. http://biz.yahoo.com/ap/081110/citigroup.html?.v=3
This would ignite a type of forest fire under financials, forcing many perma bears to cover their seemingly bullet proof short positions. We will take advantage of what we view as monopoly money about to be used to boost stocks like Regions Financial (RF) and/or Suntrust Bank (STI). POTC feels the S&P index could settle above 1,000 by Thanksgiving, and as the bear rally gains momentum from one or two other positive developments mentioned above, then 1,100 on the S&P could well be reached before we wish you a Happy New Year. We hope this trading alert helps you profit. We will be writing our standard Psychology of the Upcoming Week's Earnings & Economic Data and sending it to all subscribers this Saturday night... Thank you for reading & sharing The Island Where Forward Thinkers Evolve, the Psychology of the Call team.

4 comments:

Anonymous said...

Excellent, I see a rally as well.

Anonymous said...

Thursday or Friday rally?

The Call Team said...

As we retest 7,900 Dow and 840 S&P Thursday, then a very fast wicked type reversal will lead to a rally, hopefully the climactic sell off and capitulation swing up will occur on Thursday morning.

Anonymous said...

WOW, IF this is truly time stamped, congrats!
I will read and pay better attention now.
Friend of Bill W.