March is upon us!!!

Well February is over and March is here but the Market seems still to be in limbo with the possibilities of more fatal mortgage derivative news and that of stimulus from the now inadequate Fed . I have been thinking for the last three days of how to explain this weekend on the BLOG the mess we are in. After three days of hard thoughts I think I MIGHT be able to sum it up in a few paragraphs so if it seems like rambling I apologize.
I must say I wish I was not a trader and had Millions or Billions to set in motion which I BELIEVE will happen. There is just not a chance in the UNIVERSE the markets wont see new lows this year. Listening to Bernanke last week for two days set in motion quietly that many banks are currently under capitalized in their present structure, meaning they will have to raise substantial capital to stay afloat. The banks and Brokers are trading like they are on a death bed. Citibank is a noticeable stock here as they have lowered their dividends in the last 2 months and raised capital overseas and seem as if they might have to lower dividends and raise capital once more. Now I have no idea which banks Bernanke think are under capitalized but if Citibank was to go insolvent or had to be bailed out we are in a world of trouble.
Banks are just so loaned out with leverage that if the derivative markets dont turn around in a timely manner they will be shot. I believe the banks will see much lower prices and also the wall street heavy weights like Lehman and Goldman will see yearly lows. GS is currently trading at $169 but $150 is long term support, when GS breaks this $150 level I would not be surprised if we head back to summer 05 levels of $100. Don't get all so scared on this prediction as presently housing prices in the once boiling real estate areas are now back to 04 levels.
One of the greatest performing stock in this time is surely the internet giant GOOGLE, which should also trade back to its summer 05 level of around $250. That's almost a 50% cut from current prices but that's where I think alot of these stocks are heading. I have been hearing from people living in once hot areas of the country in real estate about massive sales signs and blocks of pre foreclosure housing seeking buying. What I DONT understand is in all of this chaos the FED seem to think we will avoid a recession by pumping the most money ever in the economy. What is happening here is a self fulling prophecy and old school economics of yesteryear. A short history note here: the 1929 depression was caused my money supply constrains. The FED suppling massive currency in the system is to fight the effects of this but where this is different in todays time is that the supply is not being filtered out because tighter credit is being applied to transactions. Where does that leave us? Leaves us in a situation that the FED is ineffective, devaluing the currency and ultimately having a little confidence by the financial institutions.

People it is time for us to get real about the situation of how we live in America. Wishful thinking is not going to protect you or make money in any market. This crisis is indeed a real crisis and it will not be fixed by giving out checks from Washington. We are going lower much lower, people who are calling bottoms here are just ridiculous and I see no bottom within the next 3 years. With all that in mind if you are long stocks in your IRA you will be in a world of hurt in the next few quarters. Being short or long ultrashort shares is the way to go. I knew I would start rambling but I will continue on this next week when I will share some information on trouble in the MUNI- BONDS world.

Talk to you tomorrow morning have a great trading week.

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