Wednesday, October 22, 2008

StockmarketImplode!

My thinking has been that the market is short-term oversold, but still fundamentally inflated. Without a clear direction I did not want to enter, but now that Nitro and glycerin combination is set to explode. Whether or not it does only time will tell, but since we won't have to waite long we may as well try to ride shockwave to some profits. First read this piece by Karl Denninger and see what you think.

America, and Americans face a stark decision - and a choice that must be made now.

We now sit literally days away, with a high probability, of a credit market "dislocation" that will change American finance and decimate the stock market.

That is, worse - far worse - than what has happened thus far.

Try on for size 2-3,000 points down on the Dow from here. 25% more than has been lost thus far, more-or-less "all at once." The probability of this event is now in excess of 70% - within the next few days to two weeks.

The Politicians know this.

We can play the Dow Jones down by either going long the DOG or by shorting the DIA.

The problem with this is that it carries some excess risk and here's why: if this move comes it will likely be on an opening gap and drop which you will miss unless you're already in. We will probably open with a half position instead of the usual quarter position.

5 comments:

Anonymous said...

And what would cause a 2 - 3000 point one day drop in the DJA?

JBF said...

Great picture . . .
Regards,
Jeff

www.mysafg.com

Anonymous said...

WOW....get out of the way

The Edgy Bear said...

What's a DIA? What's a DOG?

Big George: What's a Phillistine?
Sally: Well it's just a real dirty person.

StockMarket -Implode said...

Sorry.The DIA is an ETF which tracks the price of the DOW, but divided by ten. So if the DOW is 8621.8, then the DIA is $86.23 or something close, check it out on BigCharts.com

The DOG is whats called an inverse ETF which goes the opposite way of the DOW.Is long name is ProShares DOW 30 shorting fund. Compare the charts of DOG and DIA to the DJIA=DOW 30 on BigCharts.