9/29/08
It certainly look like the end of the world today. What? The bailout plan was rejected because Republican objection. This is surely a shock to the market as expected. I would expect a more than 1000 points drop. Actually, today 778 point drop is actually equal to more than 1000 points drop. Why? We cannot sell short over 800 stocks or even buy puts options and for other shortable stocks which SEC requested to be deliver back within 3 business days ( mean cannot short in longer time period easily without a plan).
I still believe something will be worked out soon to resolve this crisis. It is totally a political game. As always, political unsure is superior to any economical or technical analysis. It is news driven market right now. Technical is not functioning too good these days.
What will you do if the market does crash from here?! I hate to say it, but for whoever not expose and have large cash reserve at this point, this is a heaven for them. As much as I do not suggest bottom fishing, if the market really crashes another 10-15% form here with great panic, or reach the 50-60 months MA. This is a once of lifetime golden chance. However, wait the extreme panic mode and get in. Otherwise, it would be wise to remain on the sideline if the market does not dive tomorrow and the situation is still uncertain. In other words, I rather see a quick and severe drop than dangle with uncertainties. This is not the time for panic. Instead, this is exactly the time that we should be calm and access all our options and decide how you will react to the market if it does crash. Have a solid plan and you will prevail. It is just for my opinion and it does not simply to recommend an idea to buy or sell stocks here. This is a great time to learn to be a superior and wise trader or investor. Welcome to contact me if you need guidance.
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