Longs are getting rude awakening tonight. JPM mess is going to kill their hopes of overtaking 1370 on SPX. This said, I am advocating for shorts to still cover at 1330, if not already out. Why? If market takes a shot at that area tomorrow, we may see a bounce and may not retest until Mon. You will have plenty opportunity to have a run at that area again, but weekend may bring some unexpected European news, which may gap up the futures into Mon. Simple reward/risk ratio here, nothing more...
Quickly on JPM. I am assuming Mr. Dimon did not know... Let me rephrase that, longs are praying he did not know about the magnitude of the problem. If he did, God help JPM and banks... Because if he did, it makes for a pretty crappy risk management at what many regard as the highest financial institution, which may now look virtually unmanageable due to its enormous size (imho).
I bet Mr. Dimon wishes now he did not openly confront Mr. Bernanke on June 7, 2011, when he launched at Fed Chairman with a rant about Fed's inability to calculate dire consequences of excessive regulatory burden on banks. Not taking any sides here... :)
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