Newsletter 09-26-08

Previous Issue:
I stated: The DOW 30 industrials continues to show way to much volatility for most traders to record consist results without day trading. Most swing traders and investors should stay on the sidelines until the financial situation has been quited somewhat better. Remember "CASH" is a position, too.

For the most part I see no reason to change that position.

This Issue:

I believe that "CASH" is the place to be until our Congress and Senate stop the political posturing. This financial crisis did not occur overnight. Those same CEO’s that pull in millions in “Bonuses” last year knowing full well they were in deep trouble are now asking for a handout with no restriction or accountability.

One should find it interesting that Paulson, Bernacke and Bush claim they had no clue things were this bad until a week ago last Thursday. Do they really expect us to believe that Paulson with all his wallstreet contacts was kept I the dark? Whether he was or not really is not the point right now.

As upset as we may be about the situation we have NO CHOICE, right now we need the situation addressed and addressed with adequate oversight to ensure we do not fall into a depression. We are already in a recession even if they again fail to admit it. We simply cannot let the financial institutes fail. I, for one, believe we need controls in place to make sure these financial crisis do not occur every 15 -20 years and that no one should be rewarded for bad management. I sent my Senators such a message and I’m hoping each of you will do that as well. True, the Senators will probably never read the email but their aids will and tally it with all the thousands of others

I am 90% cash and plan to stay very lose to that for the time being. However, being addicted to trading, I know I will make some day trades but I’ll be using very tight controls. As one cannot afford to be wrong long the way this market is bouncing. So if you must trade tighten your rules and stay tuned to the markets. If you can’t do that stay out. Go to the dog track if you must gamble.

Late Friday, I purchased XLF the ETF for the financial sector. As I expect it to see some positive movement this coming week. The below 10 minute chart shows the buyers late Friday coming back into the financials that make up the XLF. The last 10 minutes saw a big pop to the upside. I believe we'll continue to see an upside this week while the talking head give us way to many opinions on what is happening.

Financial sector ETF - XLF