Market Appears To Be Deciding
August 16, 2008 7:02 PM
The longer we stay up without reversing, the stronger it may become. I am extremely skeptical of almost every sector here however. Retail going up is a joke. Big financials like American Express (AXP) should not be bought - period. Energy and commodity stocks, which have been the primary source of SP earnings increases are in trouble. The only sector that has been strong is tech. If we get that to roll over with bad data, the game is over.
ADI appears to be a short under $33.58 here. But the sma’s may hold the stock, not sure. But I would not be long it here, for sure.
It is difficult for me to make firm calls here as the market keeps trading on trends and sma lines and refuses to reverse. If we and when we do get a firm reversal, the action may pick up in a hurry.
Stock Calls: I Can’t Say Long As I Still Do Not Believe The Move
August 14, 2008 5:37 PM
I could say long some stocks here. The problem is I simply do not believe in this rally and think we may reverse soon. Maybe we will, maybe we won’t, I am not certain. But I do know this. The moves we have seen do not make sense and likely cannot last, long term. I know, I always warn against letting logic and fact get in the way of the market, but still.
Retail leading us higher when the U.S. Consumer is completely falling apart? In the CPI data today, it further outlined that real median incomes continue to fall and consumer debt levels continue to rise at a rapid pace. And this is a reason to buy retail stocks? It is complete nonsense. Macy’s warned yesterday that things are getting worse and the stock trades higher? American Express has warned at least twice that they see things getting far worse and the stock is marginally higher? If you recall, the last time i said “people are completely ignoring facts and trading it higher” - it plunged off the recent highs. And then we had a firm low from March. This time, we do not.
There are two reasons that we are seeing these moves. one is seasonaility. People tend to buy retail and tech in late summer getting ready for the supposed fall rally heading into the holiday season. Second, huge money has been likely flowing out of commodities and energy and it has to go somewhere. Once retail and tech top out, it is game, set and match. The higher we go here, the increased chance of a huge plunge in - gasp - October. So let it run higher, if it must, but people will be left holding the last card on this at some point. Sooner rather than later is my best guess.
The economy is toast and the european economies are rapidly getting worse. Like it or not, those are the facts. This is and has been a traders market, not an investor’s market. This will not change anytime soon as I see things.
Rising Dollar? What Comedy
August 8, 2008 9:49 PM
There has been much talk lately about the “rising” dollar”. Let’s put this in perspective. The King Dollar, as Kudlow likes to refer to it as, was worth more than the Euro about 6 or 7 years ago. It is now worth about 67 cents. This is nothing more than Europe beginning to have problems and has NOTHING to do with improving fundamentals here. And I mean nothing. Our economy is getting far worse, but Europe is just beginning to get far worse, Take your pick.
if other economies were even stable, the dollar would not be rising, on any level. This is all about picking your “ugliest pig”. Point being, do not get fooled with all the talk of the rising dollar to mean that our economy is about to rebound. Not even close. This is about a massive worldwide shipping of dollars and Euros to the Middle East And China. it isn’t about so called strength. It is simply a relative number.
Nest Week: If We Clear The Recent Highs - Caution
August 8, 2008 8:37 PM
The easy money was made today. Going forward is FAR more difficult. If we sell down and NOT clear today’s high first, then the trade should be long above today’s low. If we clear today’s high first, then you better be careful. If that happens, I believe we will either reverse Monday or Tuesday, depending on whats going on and where we close.
A trader on CNBC, who likely was short today and got demolished, said that there have been 22 days in the history of the Dow of 300 plus point gains, and zero of them have been in bull markets. If that is correct, and seems reasonable, then extreme caution much higher here. I am personally VERY skeptical of the SP low. Today’s call to look for a reversal to be long was for TODAY, not long term.
I am just not certain how the dollar will impact the market. I mentioned long ago, that we have not seen a market like today - EVER - because of the plunging dollar, and wasn’t sure what to expect. I wondered if the market would be used a proxy for the dollar if the dollar saw strength. Meaning, I wondered if overseas investors would buy U.S. equities to be long the dollar. Basically, sell the same securities overseas, and go long them in our markets. I am still uncertain of this, but I do believe it played a role today.
Market View: House Of Cards
August 6, 2008 7:19 PM
The higher we go here the increased chance of a serious plunge, IMO. This thing is a massive house of cards, as I see things. All of the lows the last 2 days have been SMA related other than the gap low of yesterday. This is not good on any level. Once the trend turns, this may get very ugly, in a hurry. We saw the same exact nonsense before when the market got crushed a week ago. You will have to be very careful long much higher, IMO. Once this turns, and we get more bad news, which is coming, eventually, there is once again nothing to stop the fall.
Every time i see these patterns i believe it is nothing more than short covering. If there is real buying I tend to see very clear “buy points”. We definately do not have any of those. This is short covering and related to the no “naked shorting” rule that was extended on the large financials, I believe. If and when the naked shorting is allowed again, they are going to rip this thing apart. This still seems to be a “fabricated’ rally because of that.
Fed Meeting Tomorrow
August 4, 2008 10:18 PM
Tomorrow is likely to be lackluster until the Fed announces their decision. As a general rule of thumb, it is best to avoid Fed days as it may get very volatile after and difficult to trade. It is difficult to say what will happen if they do indeed hike. My initial reaction would be the market would get crushed, but I am not so sure. i think the market wants a hike here to possibly reign in inflation, to some degree. The reality is if they hike, it is a mixed bag. The economy “could” get far worse if they begin hiking, but it could bring down oil and commodities enough to offset the hike, or more. I am just not sure how the market will react.
The bottom line is this - you will have to wait and see how the market reacts. Some market theorist said long ago, and is completely correct, that market news does not drive the markets, human reactions to the news does. Basically, it is how people collectively perceive things, i.e. supply and demand. Rate hikes will clearly pressure the financials, long term, but a .25 move would likely not do much damage, in reality. This is all about a signal at this point.
Market Update: If We Clear Yesterday’s Highs…
July 22, 2008 11:26 AM
If we clear yesterday’s, especially late in the day, my guess is we will close at or near the high of the day. The market is clearly trading on another big drop in oil, currently down over $5.00. We had a reversal off the lows within 30 mins of the open. I would guess that is the low of the day. TBoone is on CNBC at the moment, I believe he just said he is long oil. That may give traders some confidence, who knows.
Keep in mind, I said “if we clear it late”. Of we clear it this early, who knows. There should be a big pop either way. But if it clears it early, it could check back down. If it clears it late, shorts are likely to panic, IMO.
Opening Low Was Bought Again, But Fed Statement On FNMA Changed That, Close Is All That Matters, Once Again
July 11, 2008 10:07 AM
This has been the same game for the last 2 weeks. They are buying near 11,000. Same game, different day. Not sure where the strength is really coming from. GE outlook was “ok”. MI sentiment was far better than expected. How in the world is that possible? Every person alive that i know thinks the economy is rapidly tanking and the number was good??? Hmmmm…very hard to believe.
Anyhow, it “appears” that if we clear today’s low late, the pressure should be on. But this is difficult, to say the least. Once again, the close is all that matters.
Update: That early low cleared on the fed statement on FNMA. There is no telling what is going to happen. They just keep buying near 11,000 it seems. if those longs finally get broken, then we may finally see real pressure.
Bernanke: No Firm Is Too Big To Fail
July 8, 2008 11:47 PM
Bernanke’s comments lately about “no firm is too big to fail” and his insistence on this issue has me wondering. Does he know something we do not? Is there a big firm, presumably a financial that is near collapse? Why would he make these these comments several times for no reason? I get that he gets questions about Bear Stearns often and that people perceived the company too big to let fail and they had no choice but to bail it out or risk a financial collapse.
But is there more to it than that? Something does not pass the smell test on this. We will see.
Market Recap: Surprise Bounce, Kinda
July 8, 2008 10:11 PM
Ok, I was mistaken. According to BigCharts the Dow low yesterday was 11,094. I guess I missed that as I never saw it get that low, my bad. Well, that does not bode well going forward, IMO. If this rally holds, it will be the first important low I have ever seen without a strong rejection of a low. Possible, as anything is always possible, but I will take the side of history and suggest it is very unlikely. This smells a lot like an oversold bounce and not a bottom. We have no firm low on the Dow and we have no firm low on the SP500. To say that I am skeptical is the biggest understatement ever.
The bounce did not overly surprise me as I said 2 days ago that the sentiment was so overwhelmingly bearish that it could bounce. When every person alive thinks it is going lower I become skeptical it will. That is why I have become VERY skeptical that the 10,600 range will be the Dow low, if we get there. If every person believes that is the low, then it won’t be the low. But that is how I view the markets.
In addition, oil caused the “bounce” by falling another $5.33 today. The big picture on oil is this however. Oil dropping $5 bucks is NOTHING. That is not going to help the consumer in the least and nothing has changed. It would have to drop huge to make a material impact on the consumer, not $5 dollars. The direction is good, and that is giving the market some hope, but that is all - hope.
I am not sure where the area is to be careful here. It appears to be 11,510 on the Dow and 1292 on the SP. One thing is for certain, if the market does get serious pressure again, there is nothing to stop the slide, IMO. Be careful on any and all rally’s as the odds of it being permanent are very, very slim.
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