The Bears Vs. the Bulls

This Week Will Tell

April 8-9 Update
Sold for Gain
AEN - $1227
SPSN- - $1110
LVS- $780
CNO - $341
PIR - $156
Sold for Loss
EBHI - $199
VG - $202
Total Gain - $3213

These last few trading days I've been on the sidelines waiting to pounce on anything that might present itself as the market seemed abit toppy going into Thursday so imagine the surprise to wake up to the news of Wells Fargo's earnings which helped the DOW surge 246 points.

Up early before the PM per usual I had the opportunity to purchase WFC at the first dip in PM at 17.50. I didn't pull the trigger because I figured (wrong) that Citi would follow in sympathy and being the laggard of the financial's might just have a stronger return with their upcoming Earnings next Friday the 17th. Besides, with short interest at 22.28 % of the float or 1,209,885,200 shares with 1.6 days to cover, an explosive short squeeze was and is possible.

In a letter to Employees from Vikram Pandit dated March 9, 2009 Pnadit states,

Dear Citi Colleagues,

After a broad sell off in the markets last week, I thought I would give you a quick update on our position.

Despite the steps we’ve taken to strengthen our capital base, I am, like you, disappointed with our current stock price and the broad-based misperceptions about our company and its financial position. I don’t believe it reflects the strengths of Citi; our newly strengthened capital base, our unique global franchise and most importantly, the quality of our people. These are unprecedented times in the markets, but over time, the markets will recognize the many strengths of Citi.

In addition to our strong capital position, I am most encouraged with the strength of our business so far in 2009. In fact, we are profitable through the first two months of 2009 and are having our best quarter-to-date performance since the third quarter of 2007. In January and February alone, our revenues excluding externally disclosed marks were $19 billion.

So this gets me thinking that if we get any positive news from earnings and with all the shenanigans the Fed Gov is taking in this financial debacle to instill "CONfidence" a Bull run "may" be get another boost.

BUT, and this is a BIG but, I'm still not so sure that this just isn't another bear rally to set up a big trap. Most would agree that Bulls live above the 200 MD average and the Bears below so technically we are still in a Bear Market.

And we know past bear market rallys from the 29′-32′ years average 33%. So this rally isn't so special after all but just seems that way because Green has taken over the color Red on our watch listings. So with this rally being not even higher then the average bear rally of 29-32, Longs might be a little too optimistic, so hedge your bets. I know I am ready at the trigger to see what Monday will bring as we are right at resistance and we could easily see a pullback on this next leg. And generally when everyone gets a little too excited about what goes up, we must temper this enthusiasm and now that what goes up, must come down. So tread carefully, a Bull could break thru and run with a great Earnings week or fall if there are those companies that come short. Remember that six stocks, GOOG, MSFT, CSCO, AAPL, ORCL, and INTC all make up nearly 25% (23.8%) of the entire Nasdaq and they are up 24%, 26%, 33%, 35%, 35%, and 27% respectively. So if just one has a bad day, so to does the Nasdaq. Generally all ship rise or fall with the tide.

I posted the trades I made over the last few days in the update and won't go into much detail as they were mostly quick Crack plays that ran up in minutes for some quick juice. To manage risk, I went almost all cash and sold both LVS and CNO on the flat Thursday, only to see Fridays run, as both, hell almost all stocks went green Friday.

So I'll be waiting for Monday and the week to see what earnings will bring as I'm also watching one battered penny stock for news of a possible buyout. So needless to say I'll be up bright and early Monday morning.

GLTA

DEO