Recounting Capitulation & Massive recovery
2 weeks ago
Freddie/Fannie Mae required a bailout, massive rally followed follow by dropping again and drop further
1 week ago,
Lehman brothers had some issues, they had the weekend to find a buyer, failing which they have to file for chapter 11. At that point of time, I felt that with the Fed digesting FN/FM, they would not have appetite for this.
Monday,
STI started dropping early in the morning. I covered 7 S&P futures which was down around -30 points at 1212. I quickly shorted SIMSCI at 7 lots 304. (went down 4 + points )
Monday Night, Lehman file for Chapter 11, Dow crashes 4 % to 1190
On Tuesday 16 sep, I covered at 6 lots 296.4. Made an order the same day sell 4 lots at 301 and got it as STI recovered. As you can see, my shorts was getting smaller and smaller..... cannot be too greedy.
As I know with STI dropping already 20+% since June to Sep (4 months) the odds are great that a rebound was coming. I know I am getting overwhelm with fear. I would probably have capitulated if not for my shorts shoring up my longs.
On Wednesday, Dow was flat the previous day. So STI recovered. I also covered back 301.6 at a small loss.I wanted to change to the DOW as Dow futures were up 18 points around 1220. I wanted to change to Dow shorts, but I put an order at 1222. So, I did not get it unfortunately.
Wednesday night, AIG ran into trouble.....they have 1 day to sort out to refinance their capital. Fed was unwilling to bail out AIG, and was pushing the banks to help bail them out. S&P crash 4.5% to 1155. I watch in unbelive as my potential profit of 37K vanished !
So how.... I was overwhelm with fear and pek chek..... so now... I have to buy from blood on the streets. I put in several orders... Hong Guo 0.18 (0.22), Beauty China 0.445 (50.5), Hi-P 35 (38), Swiber 1.03 (1.14), Celestial 0.485 (0.55) DBS & SGX (did not want to put as the minimum bid that can be placed is 10 points which is little). In the end DBS 15.50 (16.14) ...I wanted about 80 cents shortfall and it has a daily buyback in place.... and SGX 5.55 (6.04) one of the most shorted stocks.... SIMSCI 282.2 (297)
Thursday...as expected STI crashed 100+ pints or 3.8% in the noon.... a few things happened......unfortunately a friend was distracting me asking me for investment advice...this made me not monitor the SIMSCI closely...also I had to settle FixMarket stupid issue again....
In the morning, I got 100lots BC which dropped 13%, in the afternoon I saw STI climbing already...so I quickly bought 100 lots celestial. In the end only about 5 % bought ( 90K).
In the afternoon, with Central banks intervention pumping in 100 billions of money into the financial market, most Asian countries made an astonishing rebound !
Thursday night , AIG got bailed out and massive 400 point for the DOW. After Britain's Financial Services Authority (FSA) imposed a four-month ban (January 16 next year) on short-selling financial stocks on Thursday the U.S. Securities and Exchange Commission followed suit on Friday with an immediate 10-day ban (799 Financial stocks till Oct 2)
Friday STI went up an astonishing 135 points (5.4%). DOW also went up another 300 points. What a roller coasting week !
What is next...I expect something postive to happen over the weekend or next few days probably Morgan Stanley.... massive shorts covering and novice investors pouring in should boost market up another 2-3 % at least.
STI 2559 (SIMSCI 317.15), DOW (11388) S&P (1255)... SIMSCI 324.4 will look nice, S&P (1280)
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