Go Figure

Today, the long GS/ short BAC trade starts working. A day after I took it off. Go figure.


Anonymous said...

Tsachy, do you foresee any significant downside in this market tomorrow or Thursday?

Anonymous said...

The OL DAWG is still bullish.

Tsachy Mishal said...

I could see it going either way. There has been a lot of buying during the slow holiday trading the past two weeks. Some people might want to lock in profits before everyone returns from vacation next week and it is thin out there.

At the same time the powers that be might want to mark up some merchandise for when they put up their year end numbers.

PJ said...

Anon @ 1:48, the market wants to go down but a big buyer won't let it. The signs of manipulation are up overnight in futures, up at the open, down during the day, back up to a positive close right at closing. The general public doesn't care what the open and close are, manipulators do.

So the market won't go down in this low-volume holiday week. But when volume returns in January, the intra-day weakness is probably a good tell for market direction.

PJ said...

Tsachy, the long GS / short BAC trade might have another four months in it. GS earnings are driven by Fed/Treasury buying which won't wind down until March 31 2010. So they should have good quarterly reports through April. BAC earnings are driven by asset prices on MBS/CMBS, which have been flat since September, and will go down as we approach the end of Fed buying. So BAC is going to have weak earnings now that they can no longer markup securities.

Given that the market seems to be discounting no more than a week ahead, that should be a good news for GS vs BAC.

I do like a GS short after April though.