Some thoughts...

Update-
This today was bound to happen sooner or later. This bear-fest still has a long way to go... perhaps after an upward bounce, perhaps even a rally, off of Dow 11,000, though I would not count on it. A break below 11,000 that holds is a watch out below. Most bounces need to be looked at as shorting opportunities or selling opportunities for longs. There are some exceptions (for example I have not sold MOS and POT... though I do go short to protect downside) but not many. I want to make it clear that while I like ANR, AAPL, etc in normal markets because they represent great companies the only stocks I have bought on the long side other than trades anywhere close to recently have been MOS and POT because they have the best fundamentals. This was still a mistake because you just don't fight the charts... things that you could not know about (hedge fund de-leveraging for example) may affect the action of stocks and can only be interpreted "scientifically" by looking at the charts rather than directly from knowing the underlying causes.

IF the Fed lowers interest rates we probably get some rise in the stock market temporarily but the best that would occur is another bear market rally. I wouldn't step in front of this on the short side but I would wait for it to turn back down and then go short. Roubini, who I read frequently and respect, says we have 20% more down to go in the market peak to trough. I think that this is at best. Elliott Wave theory demonstrates that we are in the 5th wave of the the 5th wave... the 5th wave indicates the end of trend and the start of a correction... the current bear market was predicted in 1979 and is a culmination of the 20th century bull market and more recently of the bull market, fueled by credit, that started in the early 80s. Whether you believe in Elliott Waves or not ( I do... but they are unfortunately often misunderstood) the market is in serious trouble just based on fundamentals. Smart and Careful is the rule here... Below is the original post
----------------------------------------------
Here are some quotes (paraphrased) source- Alan
Greenspan

Fannie and Freddie
"Socializing losses while privatizing gains"

"The type of occurrence that happens once every 50 or 100 years"

"Inflationary period we haven't seen in a long time-but not until after financial meltdown eases"

"I can't promise that will improve in 2009" (2009? Maria, are you on crack?... Alan thought)

"Why is the economy in the world still in positive territory?"
-----------------------
This is by far the most dangerous economy and stock market on the long side in a long long time in my opinion. It is interesting that Greenspan claims that we will have a tremendous amount of inflation because of the fundamentals Schiff and Rogers are talking about (weak dollar and growing wealth overseas) but that it will not occur until the deflationary pressure from this credit crisis abates.

The only way to go here in my opinion, except for a few trades and oversold bounces and maybe some very select stocks, is short. It has been since October, with the exception of bear rally in the Spring- which was just an opportunity to make even more when the oscillators shifted. I am primarily looking for shorts and some trades that have nice charts. That being said it is imperative to never be greedy and to take gains when you have them or at least use stops to lock in gains and minimize losses whether you go long or short.

This is a very different market from what most of us have ever encountered. The tactics that were effective in the past often don't apply here. I work hard to try to pick the best companies at the best prices when I go long. I always have. In the past this method has been rewarded. This makes POT, ANR, PBR, CMED, AAPL, and others some of my very favorite stocks.... but in this market longs should only be purchased as trades when the charts support it and with stops in case it goes against to protect capital.

As you can see from the last post, among other posts, POT is an excellent company and is trading at a very discounted price. I keep bringing up this company because it demonstrates that even the very best companies whose earnings will remain strong in this economy can have their stocks crushed in this market. Regardless of the buybacks and great fundamentals I made a mistake by buying these companies (MOS and POT only were bought) against the charts. I hope this is a lesson that you can learn from as well.
Generally shorts should always be considered before longs in this market unless/untils we go into the next bear market rally. And then again they are trades... even if the trades last for several months.

I am very busy partly because I want to do everything to try to protect my financial future. This is not the time to take chances. I strongly recommend that you do what you can to batten down the hatches, get your financial records straight, spend only what you can afford, pay off credit cards etc... and be smart now while the Fed is buying us time. This is where the smart people prepare while many others live in a bubble...

Cash is KING here. This market and economy concerns me quite a bit...
Just my opinion, of course.

Greenspan 1
Greenspan 2
Greenspan 3

Seeking Alpha on Dollar Manip Hedge Fund
Ospraie and the non-earnings related Commodity Sell-Off
Hedge Fund Commodities and More

"The Yellow Rose Street Beat" is for informational purposes only. It does not give investment advice.