Dilution, Infusion and Collusion - Push em’ Higher!

May 2, 2008

I agree. I have been too bearish into the recent rally. I have been concerned about the trivial write-offs and more concerned about the side deals that are designed to ensure companies live on, even though they may continue to bleed hemorrhage.

So what if Bank of America (BAC) is re-evaluating the “promise” to back to Countrywide Financial (CFC) debt? Push the shares higher I say as it is a clear sign that Countrywide has a greater chance to back out of the deal and the share price cap is now removed. Don’t worry that they may actually have a tough time with staying solvent absent Bank of America. Why? The FED will surely step in to help Countrywide if they falter.

Credit Card companies colluding? Push em’ higher! (COF) (AXP) (V) (MA)

Companies issuing shares or accepting much needed infusions? Push em’ higher! Push em’ higher up! (C) (WB) (NCC)

Be right back, need to finish the morning shock treatment session.

Table- WSJ.com[Spreading the Pain chart]

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Written by Andrew Horowitz · Filed Under Economy, Stocks 

Comments

2 Responses to “Dilution, Infusion and Collusion - Push em’ Higher!”

  1. Jonathan Lawson on May 2nd, 2008 5:24 pm

    The market simply does not care. The bulls are running this up on increasingly lighter volume. The idea that the “market is overtly not as bad as had been priced in” is winning the day. It is just a matter of time before the markets pause to scratch its collective head.

    I think the market is in “screw as many people as it can” mode. Suck ‘em in, Suck ‘em in. Then stick it to ‘em.

    For what it is worth I am playing sideways type option strategies around these levels. 1390 and 1440 SPX

    There are a few key level coming up. And this should coincide with the CNBC “celebrations of the worst is over”.

    IWM - 50% retracement from high to low is 74.66, that should pretty much coincide with the downtrending 200 day MA.

    SPY- We hit and were rejected of the 50% retracement (141.94), and we have hit the Primary downtrend line, the 200 day MA is @ 143 .25

    It seems to me this disconnect of logic vs relief is coming to a head. Albeit, it may just end with a fizzle.

    Unless we find a bottom in housing very quickly (doubtful), the height of the ARM reset month (JULY) will upset the fragile balance of optimism.

    I should be an interesting time ahead.

    thanks for the posts and podcast

  2. LB on May 3rd, 2008 1:13 pm

    It might behoove investors to recall this photo before they jump on the bull-wagon: http://voanews.com/english/images/afp_bush_iraq_mission_accomplished_16mar07_210.jpg

    LB

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