Let me test my predicting powers.
I think today market action was very bearish (and I loaded more puts). First, the very happy rally of +170 points in the Dow was completely reversed to the -12 decline. And that was the 4-month intraday high combined with a complete reversal – fit the final exhaustion move.
Second, in the bear market, for any meaningful accumulation at the bottom you must expect financial stocks to outperform general indices. They are early leaders and they must lead. Today the broad financials XLF closed -1.01%, broker dealers IAI -0.94% and small mainstreet banks KRE are distressed and closed -2.08%.
Third, this is May. Sell your stocks and go away.
And finally, if this post is about stocks I need a chart. Here’s the chart, the discount (stigma) borrowing:
I think the rally from March 10th $SPX of 1273 to today intraday 1404 (nice 10.3% correction for a bear market) is over and we will start long and painful slide back to 1273 and below. The trend moves are usually slow and I expect the 1273 to happen somewhere in late June or even July.
Disclaimer: I’m just an anonymous blogger, my opinions are for entertainment purposed only
Update: Another chart, just to make the post longer. Here’s the ration of financials to S&P:
Financials are very early cycle leaders. Last time the ratio bottomed in a very beginning of a bear market, about 2.5 years till the bottom. But this metric we may easily have the bear market till 2010
The Theroxylandr in Flame 
May 1, 2008 at 5:04 am
Let me test my predicting powers.
This is a test.
Disclaimer: I’m just an anonymous blogger, my opinions are for entertainment purposed only
This is only a test.
I don’t know much about TA. Not sure if I trust it — if it works. I tend to think that if it did there’d be a lot more rich people. That said, I do look at charts.
I pay more attention to fundamentals and outlook. Not much different than most people.
The crazy thing about the market recently is that stocks reporting the biggest losses and the biggest revenue declines and the darkest forecasts have been the ones rising the most, e.g. financials and homebuilders. Due to the poor fundamentals and outlook, these are two sectors I’m short. When LEN is rising and GE is falling you know something is screwy. And every time I thought the market and these sectors could not rise again…they did. Aargh. So there’s been some recent pain. But I did not cover, except to sell some DSL puts.
Obviously it would have been better to trade — e.g. using TA in some way. Since fundamentals have not been working, often spectacularly so. I have to learn more about it. This makes sense because ‘fundamentally’ I’m not an “investor”. Although I will hold long term if it suits.
QQQQ has done well too. I’m wondering if that advance has been as narrow as it was last year? Meaning take out RIMM, GOOG, AAPL, a few others, and where is QQQQ?
May 1, 2008 at 9:09 am
eh, same with me, I’m trying to use TA to find better entry/exit points. Working so-so, but at least better than before. But I look at fundamentals to at least anticipate what should go up or down, then look at charts to see when it will happen.
I’m a big fan of intermarket analysis, please look at the tag for all posts:
https://theroxylandr.wordpress.com/category/economics/intermarket-analysis/
The chart above of the ratio XLF/$SPX is another example of intermarket analysis
May 1, 2008 at 12:23 pm
Could be a long kiss — looks like the rally won’t be leaving until at least tomorrow.
May 1, 2008 at 1:50 pm
Car sales:
http://www.bloomberg.com/apps/news?pid=20601087&sid=alvEzhFUFYuA&refer=home
>>> Long kiss
Yes, top is long. As I’ve said in the post I expect the market to tumble through March lows in June-July. That translates into average weekly decline of about 1%, while the average decline this month will be about 0.5% and then it will accelerate.
Just IMHO.
May 1, 2008 at 5:13 pm
FWIW: I think the market will remain flat:
1. IRS checks are in the mail. Whiles its very likely consumers will use them to pay down debt or buy low cost staple goods (food & fuel). I believe the market will take a “wait and see” or they believe the checks will really stimulate the economy.
2. Fed Remains very accomidating to the market. 2% is still a very low rate, and the Fed has made cash directly available to investment banks.
3. GSEs and other gov’t lending agencies are expanding there loans to consumers and businesses.
4. http://www.prudentbear.com/index.php/BearsLairHome
“St. Louis’s MZM is a decent measure of broad money supply. MZM increased by a moderate 9.18% in 2007. However in the three months to April 14 2008, it has increased at an astounding annual rate of 30.3% reflecting the massively expansionary monetary policy the Fed has followed since January.”
5. Interest rate yields on Money market and Safe bonds (ie Treasuries, FDIC insured CDs, etc) remain very low.
With these items in play, I think the market will remain flat for at least the next two or three months.
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