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What a difference a day makes. Just a day or two ago I was contemplating selling everything and going to cash - perhaps in my mattress - today I got back a bit of my usual bravado and tried a trade.
The market, by the way, closed on Thursday at 11,019.69, up 410.03, and the Nasdaq was up 100.25 at 2,199.10, and the S&P closed at 1,206.51, up 50.12 on the day. Wow, that was quite a bounce.
On Thursday afternoon, as I watched the market, all of the financials seemed ready to roar ahead. In fact, as this report relates, it was quite a move and it was the financials that provided the engine for the move:
Sept. 18 (Bloomberg) -- U.S. stocks rallied the most in six years on prospects the government will formulate a ``permanent'' plan to shore up financial markets, while regulators and pension funds took steps to curb bets against banks and brokerages.
Traders erupted into cheers on the floor of the New York Stock Exchange as the Dow Jones Industrial Average jumped 617 points from its low of the day after Senator Charles Schumer proposed a new agency to pump capital into financial companies. The Standard & Poor's 500 Index climbed 4.3 percent as 68 companies in the gauge rose more than 10 percent.
Wachovia Corp. (WB) soared 59%, Citigroup Inc. (C) added 19% and Bank of America Corp. (BAC) jumped 12%, sending the KBW Bank Index to its biggest gain since July. Morgan Stanley (MS) erased a 46% tumble and Goldman Sachs Group Inc. (GS) recovered most of a 25% slide after the nation's three largest pension funds stopped loaning shares of the brokerages to investors betting on their declines.
Quite frankly, I thought that the financials were oversold, and that efforts were being made to stabilize their prospects. With this in mind, I took a 1,000 share position in Citigroup at a cost of $14.81. A little more than an hour later, with Citigroup rallying strongly, I went ahead and sold the entire position at $16.86. That was a gain of $2.05 or 13.8% - all in an afternoon on that position! I don't think I can easily repeat that trade. Just as much luck as good timing.
With my own purchase and sale of Citigroup shares:
CITIGROUP IS RATED A HOLD
In any case, I wanted to share with you my unorthodox move in the context of a disciplined trading portfolio.
I guess I am very aware that my performance is public, what with my Covestor Page available for perusal, and anything that can add a little bit of zip to my portfolio is something I am looking for.
Back to reality for the time being. I must be very cautious about over concluding anything with my good fortune. Sometimes the worst thing a gambler can have happen to him is to get lucky when he enters a casino.
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This article has 5 comments:
After yesterday's humongous move to the upside....after Thursday's....I feel about as comfortable with the market as Cramer. I heard him advising people to sell a bit.
The market is being driven now by the short-sellers and Hedge Funds who like sharks have been taking down financials one by one and now the Fed and the U.S. Government which is intervening as well.
I am having a hard time knowing what is 'fair value' any more.
I guess that is why I am back to my usual portfolio management strategy and not jumping in whole hog.