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Thursday, March 12, 2009

Is the Bottom in?

I think we have a good chance of going higher for a couple of weeks, but I believe we'll have to retest the lows. With the possibility of the uptick rule change we could see a very nice bounce especially in the sectors shorted most like financials. This will certainly slow down action on the down side but may not be the ultimate savior. In perfect markets there needs to be perfect information, and if they suspend mark-to-market accounting it may cause a short rally, but then a massive sell off once people realize they have no idea what the company really has on their books. However if they can suspend mark-to-market for the short term, and things get better, and reinstate the mark-to-market accounting rule, and these banks show profits we could see a huge stock market rally. Lately I have been keeping an eye on the small caps. I have been buying a short cap etf that trades 3 to 1 ticker TNA. I will most likely buy some more on the next dip. There has been a lot more than expected M&A activity lately which shows companies are getting financing (a very good sign), it could cause some small caps to heat up in hopes to be taken over. If you want to play individual stocks, check into small cap bio techs, and pharma but I suggest buying a small cap ETF maybe a Russell 2000 ETF or something.


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