What a crazy day!
Unfortunately, I'm going to have to keep this very brief but generally we played this one just right as my call to shift to "Robot Mode" and simply follow the bouncing market led to a ton of great trades.
It was a real James Bond investing day where we shorted in the morning and turned fairly bullish by lunch and back to neutral at the day's end as Fed rumors trumped all reality and sent the market flying.
Don't let the fact that the dollar is collapsing (back at 77.5 and heading lower) or that oil is flying back to $90 stop you from making massive bets on the ability of the consumer to borrow themselves into full bankruptcy in order to sustain 11.5% growth in China and India.
We're not letting it bother us because, as I said at 12:21 (we flipped to bullish at 11:06): " Remember, my big mistake last period was underestimating the idiocy of the rally over a Fed cut so this time let’s take the upside more seriously." We made positive calls on AMZN, SLB and SPWR (Daily Double) along with a ton of DIA plays that worked in both directions. There's an extensive discussion of the mattress plays at the end of the morning post and I advise all members to read that as today was a great example of how to make money on big Dow moves in both directions.
There was nothing to this rally other than the sentiment that things are so bad the Fed just HAS to lower rates – I'm not clear on how that will help anyone other than the brokers but that's all it takes to get them to put their Trillions to work in a market buying frenzy (sort of a way to show Ben they will reward him for cutting).
ZMH gave poor guidance and dropped 8% after hours and HLYS flat out missed despite heavy promotional activity as roller skating sneakers are the first thing to get cut when budgets tighten. HLYS took a 14% hit so far and things look pretty bad over there!
September existing home sales were a disaster, down 8% from August and down 19% from last year and home inventories were at a record high and the DOE report showed a massive, surprising drawdown in crude but there's nothing we can do but drink more Kool-Aid and party on as logic has left the building…
