Tuesday, March 27, 2007

Path of Least Resistance

From yesterday's action, the market's path of least resistance sure seems to be up. The dip buyers were there to scoop up the beefer index shorts yesterday, and the beefers had to cover. That's the sort of action we had all last fall & winter. A slow grind higher as real buyers bought the beefer bear raids at low prices, then a move back up higher as the bears cover.

I'm contemplating buying some index options - that was the best play last fall/winter. I'm still looking for a 20% gain in the S&P 500 this year. I'll have to evaluate the price of those options vs. trying to find leaders. I'm fairly long in the Alpha Fund - about 120% - with my Oil + Deep Water Drillers, other energies, miners and select picks like AAPL, ORCL, EDU, GOOG, CSCO, HD, etc., plus many India plays.

How to Play this Leg ??? Thinking ..........................................

6 comments:

mern said...

i guess if corporates keeping going up thats possible. still seems like a lot of inflation not being recogonized by the BLS or the stock market or the fed

LEN wont give guidance, visions of tech companys in late 2000.

at the same time, let the mark ups begin. what time today? right from the open or later

lol

Bunkerman said...

Corporates pulled back some, but it's nothing like 2002 .... yet.

I think eventually these "covenant-lite" high yield bonds will be a disaster. I'd be embarrassed trying to sell them. The buyers must be desperate for yield. Not good.

Bud said...

Bunkerman you really have me confused again. What is a 'real buyer'? Is there also a 'fake buyer' ? Huh?

P.S. How do you know 'beefers' were short yesterday morning?

Bunkerman said...

A "real" buyer is a buyer who is (a) not covering a short, nor (b) a flipper/slut beefer trading/computer trading fund who intends to flip the stock within days.

The contraposition to a "real" buyer is a "virtual" buyer (described above), from particle physics terms that I borrow: a real particle has staying power and can exist forever, while a virtual particle is quickly destroyed by its anti-particle and has a very short lifetime. A virtual buy is soon eliminated with an offsetting sell.

Yesterday, I thought from the 5 minute chart that the beefer ETF/futures shorting or trading flipping was obvious on that housing news yesterday. A real buyer wouldn't sell like that. They were just trying to run stops & see what sell orders they could uncvoer. When it ran out as real buyers stepped in, they covered.

Bunkerman said...

uh, Bud -> see my most recent post. As an example, I am now a "real" buyer. Mern is a "virtual" buyer or "seller" depending on the minute lolol. ;-)

Bunkerman said...

uh, instead of "lolol" I meant "ho-ho-ho" [ get it? ;-) ]