Is it really a "happy new year"?
wow, what a mess. the stock market acts terribly, particularly the main indices. way too many issues are breaking down: only 25% of stocks are above their 200 day moving average. this is one big definition of poor market health. the only thing that looks ok is the advance decline line which is an important indicator. i'm not sure just how this thing is holding up since everywhere i look weakness is what i see. i'm not pinning my hopes on one lone indicator but it is worth noting.
the best move had been to lighten in late december and again in january. i know that geller capital can pick the right stocks at the right time so the trick is avoiding major losses until then. therefore the thing to do is stay light, sell weakness as it happens, and avoid increasing losses. there will be a better time to go long and take risks. the best wall street maxim regarding this is 'don't try to catch falling knives'. its certainly a good visual! i hate being pessimistic after a near 10% decline but there are not that many reasons to be bullish. maybe that in of itself is a reason but there is a large overhang in the market - essentially anyone who bought the s&p/s&p look-alikes over the last 14 months is holding a loss. my perception is when that happens the upside will be limited. in this case its more a market of stocks than a stock market since there are some good names out there. but if it looks and acts like the s&p 500 then it will be hard to gain an edge where "everyone" is crowded around.
a surprise rate cut would not surprise me here and that might help in the short run. the biggest concern is that the fed is going to fight this recession with low interest rates but that will spur inflation. lets face it - an ok economy with inflation is the better alternative to a depression. keep in mind the billions in mortgages that will be resetting this year and what would happen to our beleagured consumer if they reset at higher rates. so rates will come down for that reason and to make the banks healthier from the carry trade.
its a mess but there are solutions. they will just take time. i plan on being in place when that time is right. for now, stay warm and dry!
the best move had been to lighten in late december and again in january. i know that geller capital can pick the right stocks at the right time so the trick is avoiding major losses until then. therefore the thing to do is stay light, sell weakness as it happens, and avoid increasing losses. there will be a better time to go long and take risks. the best wall street maxim regarding this is 'don't try to catch falling knives'. its certainly a good visual! i hate being pessimistic after a near 10% decline but there are not that many reasons to be bullish. maybe that in of itself is a reason but there is a large overhang in the market - essentially anyone who bought the s&p/s&p look-alikes over the last 14 months is holding a loss. my perception is when that happens the upside will be limited. in this case its more a market of stocks than a stock market since there are some good names out there. but if it looks and acts like the s&p 500 then it will be hard to gain an edge where "everyone" is crowded around.
a surprise rate cut would not surprise me here and that might help in the short run. the biggest concern is that the fed is going to fight this recession with low interest rates but that will spur inflation. lets face it - an ok economy with inflation is the better alternative to a depression. keep in mind the billions in mortgages that will be resetting this year and what would happen to our beleagured consumer if they reset at higher rates. so rates will come down for that reason and to make the banks healthier from the carry trade.
its a mess but there are solutions. they will just take time. i plan on being in place when that time is right. for now, stay warm and dry!
posted by David Geller at 11:49 AM
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