damned if u do, damned if u don't

The Government is hell bent on humbling Goldman, and all financial players should take note. There is only one Master of the Universe, and that's Uncle Sam.

My target remains: the daily 500SMA is my entry point.

I do not think much will come from this. There maybe discovery of some individuals with wrong doing, but I seriously doubt the SEC or DOJ will find a firm wide systemic issue promoting fraud or improper trading.

In the mean time, any action a bank does can be considered improper. Whether they manage risk properly or allow themselves to fail.

What annoys the hell out of me is that no failed bank or CEO got anywhere near a similar beating as the Goldman folks got.

SP500 chart, reply

My market thesis has not changed, and I am still looking for stocks to churn here. The market looks to be debating between #1 or #2 still.

I fail to see the head and shoulder on the SP500. To me, the recent high did not break from the 1210 market. Despite hitting 1220s, the action there was weak so I do not consider it significant.

Right now, to me, it is at the upper end of its channel.

But the real resistance is indicated from the weekly chart via the 320SMA (first) then the 200SMA.

I just do not know the catalyst that will break it from this major resistance just yet. The SP500 can glide upward due to valuation, but I am just not ready to count out a churn or correction yet. On that note though, charts of key stocks look really nice still, CSCO and AAPL being two of them, which adds internal support to the market and supports a potential churn vs. correction.

Congrats DNDN!

I noticed the Provenge approval earlier in the day, but did not have time to post.

Congratulation Dendreon. I hope you execute well in manufacturing to help as many prostate cancer victims as possible.

(I only wish the people that suppressed it years ago would go testify on congress and get the grilling Goldman got the other day. After all, the people that suppressed Provenge facilitated in taking lives.)

Kudos to the long journey, patience and determination.

Market Thought... bailout?

Within the Kudlow Report, it was indicated there maybe an $800B package in the works to cover the PIGS. (video) I have no idea whether or not this is true, but if it is, the markets will rally hard.

All the risks will remain, and inflationary pressures will ensue if the above is true. (Only reason why TBT is down is due to the PIGS, but TBT will bounce as this threat eases even if the ease is short lived.)

I think entering on declines is the best strategy right now. If we do not get this bail out, the markets may go lower, and I will keep entering as we go lower. If we get this package, I will be positioned as we rally. (For instance, I have been entering Citi on staged declines. I have one more chunk to purchase, but am waiting for a certain level.)

Market Thought... a wrench

My previous market thought (confirmation) has not changed. Looks like #2 is playing out instead of #1. But days like today really put a wrench in a short-term market thesis. :)

The Vix saw a dramatic rise, especially the last 20min of trading. It currently lies on resistance, which may facilitate a market bounce and should indicate a correction's bottom.

This could be the end, but I can not rule out every scenario. We may see a healthy SP500 correction to the 62 SMA (around 1150). This could translate into a VIX inversion with the SP500. This inversion indicating a true market correction bottom. (Although the size of today's Vix move would indicate such a correction's bottom, hence the wrench.)

I made no secret that I started to purchase names. At the same time, I have dry powder to go in heavy at the 62 SMA (which approximately translates to the 14SMA on the weekly.)

covered protection

With the P in PIGS getting downgraded, the market is hick-upping and so I covered the protection.

Some other actions:

1. Picked up more Citi shares, and will add more if it declines more.

2. Picked up more F with this decline.

Itching to buy some AAPL calls too, but am waiting.

The GS target

Sucks to be Goldman right now, obviously. The management must unload this deep, thick cloud of uncertainty if they ever want their stock to appreciate. I do not know if that will happen anytime soon, but there are clear signs to where it can potentially go. (despite its valuation, uncertainty always makes a stock go down)

I do not believe the analyst who suggest GS going to book value or 100. IMO, that completely negates their worst case scenario earnings ability, and as paid analysts, is irresponsible.

A chart that I did not think I would use, needs to be seen. IMO, this is where GS is heading, then I will buy 140 Jan 2011 calls.

This is a 5 year 500SMA daily chart of GS. Look how beautifully it acts as resistance and support throughout the years.

Looks like we are approaching a time when it will act as support.

As it potentially gets to the 142-143 level, there is support around 150 and 147, so it may bounce around first. But if the negativity keeps coming, I am expecting GS to see the 5oo SMA.