Well nothing too exciting happened last week, my volatility market indicator remained elevated though but overall the volatility clusters seem to be on a downtrend. Now that October is almost over we can “assume” that a Santa Rally will begin. I’m still net long and will continue to be that way.
Although I’m pretty Bullish right now, we shouldn’t assume that the Santa Rally will materialize. Who knows how much more of the subprime mess is hidden on balance sheets. Oh we have to remember that most of those subprime mortgages are starting to reset next year. I think my initial guess that we’ll see a housing bottom at the end of 2008 might’ve been too premature. I think 2010-2011 might be more realistic.
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