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Stock Calls: I Can’t Say Long As I Still Do Not Believe The Move

August 14, 2008 5:37 PM

friedeggfork.jpgI 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.

Written by Tom@StockBlade.com · Filed Under General Market Comments 

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