Even on October 1st, 2008, when I wrote "Hedging for Disaster," where we added 3 ultra short ETFs at Dow 10,650 (SKF Jan $100s at $19, DXD April $55s at $14.20 and SDS March $77s at $9.95) we still had some hope that the Congressional bailout would stabilize the markets, although my comment at the end of that post is just as relevant today as it was at that market top:
Congress many think Paulson and Bernanke and Warren Buffett are kidding when they say we are about to go over an economic cliff but I think there is certainly enough evidence to merit serious concern. In part, we have a crisis of confidence and – even if it were true that we could "muddle through" without a bailout, if just 1/3 of the investors believe that we can’t and pull out of the markets, what good will it do the remaining optimists?
You know how that story ends, of course – the stimulated "recovery" was very short-lived and we went right back off that cliff, dropping 2,000 points that week and another 2,000 by March 9th the next year. Our hedges worked out nicely, of course, with SKF topping out at $1,200 on Nov 21st (up 5,600%), DXD was at $110 on October 10th for a nice $40.80 profit in 9 days (287%) and SDS ran to $130 on the same day and returned 430%.
The other day, I published a list of 12 Long Put Plays for Members (see yesterday's Alert), which I worked at in the morning, after I put up my 10 Bullish Ideas in the morning post. Why? Because, after watching the open and reading the news, I could only conclude that this rally is still fake, Fake, FAKE! Back in October '08, we were already 25% off our 2007 highs where I used to make fun of the market going up every day, like on October 2nd of that year, when I said:
Up, up and away – it’s Super Market!
Up, up and away – it’s Super Market!…
