Nov
3

BNI – Burlington Northern

BNI

Berkshire bought Burlington Northern this morning. I’m quite glad I covered my IYT short yesterday as this will send all the rails quite a bit higher. Reminds me a little bit of 2006-2007 when Buffett announced his interests in the rails. IYT is quite oversold and is running up to the 50 day SMA in the pre-market. I’ll be watching this and if IYT runs to the 50 day I’ll likely cover the QQQQ short I rotated into yesterday and rotate back to IYT short.

I don’t watch CNBC, but I can guess that the discussion will be that Buffett is buying companies here and therefore it is a great time to buy. “Buffett wouldn’t be buying the railroad if he didn’t think we were headed for an economic recovery.” This could be a classic fade the news trade.

 

banks

I’ve noticed for the past week that the banks generally and especially government owned banks such as AIG, IRE, LYG and C have really been getting hammered. IAT has broken its 50 and 300 day moving average. This kind of price action is putting in my brain whether some kind of imminent credit related threat is hanging on the market. I don’t see any evidence of anything besides extreme weakness in these stocks, but my antenna is up. IRE has sold off about 50% in the past month. Will the 200 day be taken out?

 

es_010

The overnight range is 1026-1043. I’m following my trading plan from Sunday and staying hedged up to avoid the whipsaw like we had yesterday. I thought yesterday would be a noise day and it turned out to be one. I think today will be similar. The real action starts tomorrow and ends with the job number on Friday.

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  • JoeMarc
    Hi, most likely the unemployment numbers wont be so great. Hence I think that if your really short term long you should sell today or early Thurs. Whats your take on this? The market is just waiting for bad news to take the market down
  • Hard to know how the unemployment number will go. I think a number with a 10 scares the market. But let's say it is a 9.7%. Might be seen as good news. I'm really just focused on the dollar. Unless something big comes out of the FOMC meeting, I'll likely keep my portfolio hedged up like it is now going into Friday.

    I like trading hedged when it goes well. If you're making money, it means you've got your portfolio balanced properly and you're generally picking winners and losers well.
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