Check Into Cash

I still own my JPMorgan Put options. They're up like $30,000. And I plan on keeping them for a while. I still think JP Morgan is going to go down some more. Notice the megaphone pattern forming starting around June 2007. I bought this put option the day it was trading around the $50 level. On Friday the stock went up a couple of bucks. But not because of any fundamentals surely.




And I still think the market in general is going to go a lot lower.

However. I think we've gone down far enough for now. The next couple of weeks we're going to hear a bunch of talking heads talk about how nobody would have lost money if they would have just ridden out the storm and held on to their mutual funds. We will see a bounce and the DOW will grind upward a thousand points or so for the next 10 trading days.

The VIX will get down to 30 or so.

Right after Obama takes office (or McCain - yeah right) the stock market will crater. It will be a bloodbath. Everyone in the world will still be trying to dump all their money into treasuries.

Eventually, and I'm going to call this... within the next 18 months... the bond market will be in danger of collapsing and Ben Bernake will pull a Volker and crank up the interest rates. The stock market will fall further, and everyone's bonds they bought during the initial market drop will drop in value because interest rates go up.

THEN and ONLY THEN will it be the buying opportunity of a lifetime.

But until then keep your powder dry.

I'm thinking about selling some naked puts over the next couple of weeks. But I'm going to keep all trading positions small. I don't trust my judgment enough on a day to day basis to bet the farm on any one trade (except JPM and I'm not exactly betting the farm there).