Online Stock Trading | Global fear of US Sub-prime Meltdown sends stocks lower

Global fear of US Sub-prime Meltdown sends stocks lower


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Nuke

News coming from France’s BNP Paribas suspending 3 of its funds tied to Sub-Prime mortgage loans added more fuel to the Sub-Prime fire.  Late day panic selling occurred sending a message that this market is VERY fearful of a meltdown in the US credit markets.  I’ve been saying this consistantly that this market will not lend us opportunities to land big winners.  Times like these it is best to remove yourself from the market and catch up on R&R. 

An interesting observation to day was the VIX (CBOE Total Market Volitility Index) made new highs today topping out at 26.48.  However, the broader market did not make new lows.  We saw the opposite last Friday where the market made new lows (exception of the Dow) but the VIX failing to make new highs.  Consequently, we did see on Monday the follow-through on the Dow.  Will we get a pop today?  I do not know but, it shows you the level of risk that is underpinning this market.

I must say, it is quite boring to be sitting in cash right now.  The temptation to even pick up a few points is great for many.  I ask you, what “edge” do you have to pick up a couple of points?  On top of that are you willing to bear the brunt of risk this market is presenting?  Can you take the daily, intraday swings?  From my vantage point this seems quite silly.  The present risk/reward situation is not in anyone’s favor, so do not take it.

GOOG and AAPL do not look good here, GOOG may even look like its setting up an excellent risk/reward short situation.  AAPL has a ways to confirm being a short but, at some point in time it will present an excellent opportunity.  GOOG’s volume is mostly to the downside, just would like the 50dma to begin to turn down.  But, I would advise against taking this short action at the moment.  Patience is where you can make your money.  Wait for stocks to confirm the price movement you are seeing in the chart.

Market Speculator

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Comments

2 Responses to “Global fear of US Sub-prime Meltdown sends stocks lower”

  1. Author_Ego on August 10th, 2007 10:44 am

    Priceless. I like that photo, my good man. “Dogs and cats, living together….”

    If the Average Joe is tempted to trade here, he better have his head examined. Might as well trade some pink sheets, too. “Rule #1: Do not lose money. Rule #2: Do not forget Rule #1.”
    Like you’ve said, show me the edge. There isn’t one…yet. All good things to those who wait. I’m mindful of what you wrote yesterday: the short numbers are high and anything can happen. It would be just like the market to squeeze them to kingdom come. Time will tell though.
    Thanks for the commentary.

    Your old friend and pal,
    Author “don’t call me SMB” Ego

  2. Market Speculator on August 10th, 2007 1:13 pm

    Thanks for the kind words Author…

    Can anyone see the edge today? If you can, god bless you because you should be able to make millions in this market.

    Don’t forget rule #1, don’t lose money.

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