Tuesday, September 30, 2008

Stock Purchase

Today I bought SKF @ $101.98.  SKF is an ETF which bets that financial stocks will go down.

My reasoning for this play -
  • Stocks rose big today, despite bad news for financials in that lending rates are rising, this suggests a downward correction in the near future.
  • Financials are sheltered by the current ban on short selling.  When this ban is lifted, presumably at the end of the week, financials should fall due to the reintroduction of a downward correcting force.
  • While a bailout may well be passed by the end of the week, the market largely factored in a bailout today.  Also, for a bailout to pass, it will need to be less favorable for financials than the one that was voted on yesterday.
  • On Friday, a myriad of bad economic news will be released.  The first target for this bad news will be financials.


Austin Johnson said...

I just put in a STOP order @ 104.98.

(if you don't know how to use STOP orders to manage stock trades, please let me explain it to you sometime)

Austin Johnson said...

The market had a brief rally that I didn't want to sell in. Thus I reduced my stop to $103.98.