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| Symbol | Sector | Return | Exposure | Trades | Last Trade | Status |
|---|---|---|---|---|---|---|
| IBM | Computer Services | -1.98% | n/a | 16 | 02-Jun-09 | Prior Holding |
20-Jan-08
Game Plan Week of Jan 13 2008: Entering the Panic Zone
Holding Rationale for IBM.
Last week's game plan played out nicely in terms of growing profits. I haven't closed down my short positions yet, though. Given the growing momentum, I have to apply one of my rules: "Let the profits run".
So far, the market was driven by FEAR about recession, inflation and deteriorating earnings. Last Thursday, we have officially entered the PANIC ZONE. Market participants started selling even defensive stocks with positive outlook, such as companies in the pharmaceutical or agricultural sector.
Since weeks, I was hoping for panic to develop as a sign of a bottom. Unfortunately, I feel we are just at the beginning. Several posts highlight the notion that oversold, high-momentum bear markets can stay oversold for quite some time:
US Market Gets Even More Oversold
Bear Market Rules Apply
Catalyst for a real panic could be the deteriorating situation of the big bond insurers, such as MBIA. Some articles point out the hope for positive earnings next week. Several banks and tech companies are about to report. I think, it is what it is: just hope. The market takes every positive news (GE, IBM earnings last week; government stimulus) as an opportunity to sell. The real problem of the market are the financials. As long, as
there is no solution for the US credit problems and the FED doesn't show that is "in front of the curve", FEAR will dominate.
So what does that mean for next week: let the profits run (if you have profits on the short side), but scale out of SHORT positions in anticipation of a reaction rally. Of course, I wouldn't open new short trades at this point. I still wouldn't play to much the contrarian in this environment. GO WITH THE FLOW.
Posted at 14:44 in Holding Rationales | Permalink | Top
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