John Sky's  Instablog

One of the most impressive sectors in the Last 20 days has been Industrial sector, and more impressive the sub-sector of Airlines. One stock in particular that sticks out is US Airways (NYSE : LCC)  which is up more than 70% in the last 20 days.  In the beginning of September, this was a $3 dollar stock, and is now trading at $5.37. They’ve made it to an interesting point on the chart where they are hardly above their first level of resistance. Keep a close eye on this stock because if it keeps trading above $5 or at least consolidates above $5, there is a good chance that U.S. Airways (NYSE : LCC)   can run up to $7. Now I must say that it takes  a certain type of investor / trader to buy and hold any airline stock as they have become extremely volatile. Whatever you decided to do, long or short, I caution of the risk that lay ahead of you as well of the reward that compliments your technical entry and risk management.

According to a recent news article there are talks about Citi to unload 34% of the government own interest. One of the only ways they can accomplish this is by selling off whatever viable business units they have or of course the obvious of doing yet again a secondary stock offering which means the stock will be diluted. For those of you who are long the shares, expect some volatility coming up ahead. It is also said that the government maybe selling their interest or maybe have been selling their interest in Citi. Not too sure what to expect short term for the stock, but long term this is good news for the company. Ultimately the existing share holders will be the ones to finance this exit strategy unless there is a buyer big enough, or buyers with deep pockets to take over the government stake in Citi. I have to admit though, their timing is ever so perfect on the one year anniversary of the Lehman Brother collapse.

Disclosure : I DO NOT OWN CITI

After watching the CNBC interview with President Obama, it's an obvious fact that Wall Street will face a regulation overhaul. It make sense for the financial systems to go through some type of reform because the system we have now is vulnerable to systemic risk. There are many hedge funds, and financial institutions that have access to leverage on a scale one can only question. I mean does it really make sense for a $10 Billion hedge fund to the ability to leverage $40 for every $1? This has always been the problem and the cause for many of the market meltdowns. It happen during the crash of '29, crash of '87, the Asian crisis, and many more. It's an obvious problem that Wall Street firms concentrate too much on return and not enough on risk. There's been a big flaw in implementing risk management, and by all means it's not all of Wall Street, but only the Big and powerful. Great examples are Bear Stearns, and AIG, risking not only their money but money lent to them, to make pennies on the dollar and look where that got them?