Today’s move on the S&P dropped us below 2002’s lows. Funny how we’ve declined about 13% in two days and yet the coverage doesn’t seem as shocked or as dire as it did late Sep/early Oct. A number of traders/managers have remarked that they consider it rather scary we have taken out 2002’s lows. But we still have yet to witness real panic selling. Fear is present but not capitulation. The drops have been, for the most part, too methodical, too orderly. However, this move below that key support might trigger automatic sells and if it does lead in any way to downdraft selling, I would be a buyer. (Brian adds: agreed. It’s eerie that we’ve had no trading halts or circuit breakers.)
Everyone thought that Oct lows would be putting in a bottom. (I was buying afternoon of 10/10 but when the rally didn’t follow through, I got out.) The tape is anemic, it’s unhealthy. But now that we have taken out that bottom, any panic selling could be a good entry time since everyone is expecting further declines now. You know my belief, however. We could get a stong rally out of this support break….but longer term I think we have no reason to sustain it.
The long term trend line on the S&P going back to 1932 is at approx 540-560 now (see attached graph). Every time we have tested that line (4 times in the worst bear markets since then) has been, obviously, a great time to buy stock. I don’t see us reaching that trend line in this current decline. But I certainly think it is possible we could reach it in 2009.
Be a trader-buyer on fear selling here. This is what usually produces big rallies. But be a long term investor if we get down to that trendline. If we break the trendline, buy a tent, a ham radio, fuel, and I’ll meet you in the mountains.
“Technical Analysis is a financial markets technique… that is considered by many academics to be a pseudoscience at best.” I found that quote at Wikipedia so it must be true. After all, if you’re not academic, you’re stupid - right?
Well, given the moribund performances of the supremely educated GS, WFC, C, BAC, WAMUQ, USB, JPM,
- oh and the petitio principii of the U.S. Federal Reserve, perhaps now is a suitable time to step away from charting agnostics and entertain (or be entertained by) the market wizards that peep and mutter with divination.
Here is the horo(r)scope for the S&P 500 (wait - this must be read aloud in a whisper with one eye closed while your other eye almost closed and your chin is in the air and your accent mimics a gypsy [or dracula]).
“I see you had a hectic childhood. You moved around alot before you found stability at age 12. Twelve is an important number to you, isn’t it?”
“Ah, and what is this? You blossomed and grew tenfold -but something happened at the end of that growth spurt. You stagflated and oscillated in what was some kind of mid-life economic cycle. The number 100 has two meanings, in the first case it represents the zone of your twenty year struggle; in the second case it is your triumphal increment of movement from then on - but beware of pride, for those movements can just as easily be downward.”
“Recently you have a Gemini top of equal heights. This could mean many things. If you fall below 750, your future is a quick death. If you can stay in the 750-1500 range, all will be well.”
Exchanges are like casinos. In fact, they are “the house.” Think about it, at the casino, who is the guy that slides cards across the table? Got the answer? Okay. Now, who is the guy that slides stock certificates across the table? The answer to both is “the dealer.” The casino dealer and the agent of the broker dealer.
Many Americans shop around for a good broker (lowest commissions, best executions, etc.) and some Americans shop casino’s for “the loosest slots,” but I’ve never met anyone that shops around for the best exchange. If someone did shop the world for the best stock exchanges looking for the most bullish pools of stocks, here is what they would discover: (found at the World Federation of Exchanges)
The common stereotypes that come to mind when considering Tehran and Colombia are guns and drugs. Which makes a lot of sense right now. In the earlier Great Depression, industries/producers of vice did extraordinarily well.
While I couldn’t find any Iranian stocks traded on the U.S. exchanges, here is the one and only Colombian ADR to consider. If you review the fundamentals of it, you may wonder why its price is going down. If you don’t get it, let me reiterate: it isn’t about the cards, it’s about the house.
