Monday, December 8, 2008

Low risk trades while waiting for steam to run out.

If you have 401k with no load fee either front or back end wait up for the international market to sell hard (like on Friday -4%) while the US was going solid green into the close (+3%).

Put 100% your nest egg in from cash to international growth stock, sure enough by 6 pm it's up, but only by 1-2%, depending on fund. You already nailed 3-4% arbitrage at this point. Then on Monday you get an additional session in which most of the SPX gain happens before 11am (30pts, we closed at 33pts) and add 3-4% more to the "arbitrage" gain we forecasted off friday.

The result is a 6-8% risk free. You only need $200-250k to make the ENTIRE of next year contribution and some change to boot.

Now turning to more serious topic and maybe, philosophy.

Roads add to supply. Adding roads don't add demand.
Buildings add to oversupply. Building houses/malls/buildings don't add demand.
Basic education adds to oversupply. Cheap labor is ALWAYS on the rise. Only specialized training gets you somewhere new.

Black dude doesn't get it.

That's fine.

Grab his money hand over fist. TC, AA, CX, BGC. Then run.
In the mean time, watch the 61.8% Fib and 100% Fib of your favorite consumer and financials name. (If you can find the shorts, that is.)

2 comments:

gtt said...

WFC doing an amazing levitation job. I'm thinking of some July 25's here. Thoughts?

MTGSPY said...

Yeah, that one has burnt way too many people. The problem with this grinding portion of bear market rally is that yes, a plunge gets you in the money in an hour. But - if that is so, why is it called the "grinding portion of the bear market rally". I am also surprised to see that this thing lasts as long as it does today. It was just a few speculators saying that 500k print on NFP was it. Well I got news for you, that wasn't it. And internal DOL # will tell you the peak is 2010, it's fairly certain based on behavioral/migration/seasonality pattern. The uncertain part is whether we print significantly above the 1M mark.