Historically, a major bank bailout by Government is very bullish for the stock market 6 to 12 months hence.
Generous government financing announced today by Treasury Secretary Tim Geithner will underpin the so-called Public-Private Investment Program aiming to rid banks of up to $1 trillion in toxic asset-backed securities which are road blocking the economic recovery. Dept of Treasury kicked this Program off with $75-$100 billion that comes from its existing $700-billion bailout fund approved by Congress last fall. Both FDIC and Federal Reserve are also partners in this program to provide additional debt financing as a way to leverage up both TARP and TALF resources. This morning, both PIMCO and BlackRock have expressed strong interests to participate. This is all very good news.
This Program could be classified as the Mother of all Bank Bailouts. I say could, because, given all the recent false starts, it may take the Treasury up to couple months to properly set the Program up and then up 3 to 6 months to see any concrete results.
Given Stock Market is a forward discounting mechanism, it may be the right time to slowly step back in. As many of you know, to conserve capital, we scaled back our trading tremendously since October-November timeframe as our equity markets became over driven by outsized fear and not by logic. Now, with the events of last two weeks, my thinking is that we may want to slowly put our toes in. Initially, our trades will not be swinging for the fence. We need to hit a few singles and doubles first.
Given how everyone is on a very tight budget these days, we offer two avenues:
A) For the next three months, we will email 2 trades per month (from entry, stop management and exit instructions) to all MSA Members free of charge. This List has over 10,000 opted-in (3X of last year) and it may take several minutes to email out the order to all. The trades will be biased both long and short. As in the past, each trade will offer a rationale, a clear entry instruction (normally at a limit price) with a stop management price once we are in. Exit orders will be either limit or market orders.
B) Reduce our monthly fee by 50% for those who want to receive 1 to 3 trades per week very fast. Again, they will be both biased long and short. Here is the link http://www.hamzeianalytics.com/phoenix_spring_special.asp
And, do not miss our webinar this weekend. We will go over these items this Saturday and answer any questions you may have.