12/6 – The weather outside is frightful, but the Powder is so delightful

Snowing heavy in Breckenridge. The markets rally heavy. Yet the bailout program seems a little light on substance.


Well the snow came overnight. About 12″+ on the mountain, with steady snow all day. Best of all, more on the way. And in sympathy, the markets rallied hard to eclipse their 50 day MA, and the 61.8% retracement. I say that, because the bailout plan looks like a joke, and I can’t figure out why investors think this plan will solve the nation’s lending crisis.
The rally didn’t treat my portfolio well, I trade 3 of my accts. I was off .8%. I have a delta neutral trader trade another acct. The rallies of the past few days hurt him, 5% off on the day.
Thursday and Friday in Breckenridge:

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The Administration put together their Subprime plan. I am happy to see that it is not going to require a 50bps drop from the Fed to make it work. Hooray!
But, here are some lowlights of the Bush plan, which favor the lenders more than the borrowers:
Lenders have to approve changes on an individual basis.
Owners must be current in their payments- I am in favor of this as a fiscal conservative, yet many people which need this are probably already late on pmts.
NO MORE than 3% equity in their home: Now this is a load of crap! The reason for this bailout? This is saving the bank, not the homeowner. By definition the bank owns 97% or more of the devalued home.
1.8 million resets this year, the administration says this plan will help 1.2 million of them. Hmmm, doubt it.
So why should the market rally? Fundamentally, it beats me.
Technically it makes more sense. Remember, the market will tend to find a way to disappoint the most investors. Today’s action of moving through the 149 area stopped out many bears. Then it moved above the 50MA to gather some late bulls. No the S&P moved to the 61.8 retracement 151.5, and the downtrend line. I am looking for a selloff at somepoint tomorrow. I have put my money where my mouth is. 900 negative deltas with 500 theta points.
Technically it is perfect. However did I make much on the up move. Nope. I positioned myself for a downmove tomorrow. We will see.
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