Sell the Rips

Ok people, remember we’re in a BEAR market and don’t get too into the euphoria.  A lot of money is in the side lines and they are still waiting so calm down.  The run in financials is probably a nice sign as well as the run in technology today.  But hold those horses and keep that cash as it doesn’t seem like the big money are in yet.  There may be some window dressing as we move toward the next quarter but we should probably take this opportunity to sell what losses we have recovered on our longs or sell to keep our profits because the financial crisis is not over.  Here are a few reasons:

1. European banks will slowly reveal more damage as they should come clean as well.

2. Banks with large lines of credit loans will see large losses as those loans are based on extended values of homes that will reach peak default status within the next 6-12 months.  Expect more write offs.

3. Consumer spending will dry up more as credit cards are being used up and cannot be refinanced with lines of credit.  Expect more defaults and write offs.

4. Although there is more liquidity, lending standards are more strict and that is not going to change anytime soon so consumers and businesses still don’t have the money although the institutions that lend are in better shape.  But less lending equals lower profits and revenue.

So sells the rips and buy the dips.  It’s ripping so at least start selling.

Currently: Holding NMX out of money calls and COF in the money putts.  Net short.