Excuse That Momentary Lapse of Reason
OK, so I did say there were some reasons to consider going long but I also said I was staying out of it. That's where we've been for several weeks and where we are now, mostly cash with a small short bias in some cases. Yes, some of those big banks look good and they should: the Gov't bailed them out and they are going to make sure they stay afloat and (become more) profitable. But the rest of the market looks terribly weak. Advances/declines & highs/lows look lousy and indicate poor demand for stocks. To boot, several indices went to new lows today: Mid Cap, NASDAQ, Small Cap, and Utilities to name a few. The S&P and Dow are close but holding. So far the volume isn't extreme and some might say that this break is not a "major" one. To that I say "nonsense". So much damage has been done on low volume and I expect that to continue. We have yet to see that massive wipe-out day which might indicate an end to the selling.
The Small Cap break may be significant because that index had held its ground around 650 since January. It finally broke through to a new low today. Usually when an index holds a level as this one did - 4 times over 10 months - it is deemed significant. However, leading into today's break to new lows, the Small Cap had already fallen 15%. It may be unrealistic to expect another major decline from here without some backing and filling. After such acton it may be that the index slides again or fakes out and rallies. But I expect more weakness and that decline could play catchup to the S&P 500.
With the market down so much with the House vote in front of us I think it may be smart to think of the upside. The market seems to be discounting failure. And why not? Our leaders seem to have failed us from many corners and why should they succeed with this massive proposition? But when everyone is leaning on the market it often surprises...just a thought. (I keep trying to think of reasons to go long...) If the House turns it down again, then all hell should break loose.
Stay tuned - it will get more interesting.
The Small Cap break may be significant because that index had held its ground around 650 since January. It finally broke through to a new low today. Usually when an index holds a level as this one did - 4 times over 10 months - it is deemed significant. However, leading into today's break to new lows, the Small Cap had already fallen 15%. It may be unrealistic to expect another major decline from here without some backing and filling. After such acton it may be that the index slides again or fakes out and rallies. But I expect more weakness and that decline could play catchup to the S&P 500.
With the market down so much with the House vote in front of us I think it may be smart to think of the upside. The market seems to be discounting failure. And why not? Our leaders seem to have failed us from many corners and why should they succeed with this massive proposition? But when everyone is leaning on the market it often surprises...just a thought. (I keep trying to think of reasons to go long...) If the House turns it down again, then all hell should break loose.
Stay tuned - it will get more interesting.
posted by David Geller at 2:53 PM
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