So, I am dropping car pool buddy Linda off this morning at the gym and she runs back into the car, looks at me stunned and said, "I forgot my dress clothes, I can't go to work like this." It will be nice to see retailers experience and uptick this morning and I am Glad to see I am not the only one losing it around here!
Yesterday I wrote about how bad the market "felt," but that most of my indicators suggested that it didn't quite feel bad enough - yet. After yesterday's reversal, the new Bin Laden tape and the unfolding rift between the US and the rest of the world regarding Iraq...the markets and society are rapidly approaching the end of the reality trade and beginning of the perception trade where the sentiment really is that "it just can't get any worse." The main problem that we have to grapple with is during this bear market, most of the dramatic action has been in the last few weeks of a decline to an intermediate-term low.
The good news is that the decline is likely approaching the end...but the bad news is that is when most of the pain and emotional drain came last year. The current market environment looks enough like the way it did before that final move lower last year to warrant some level of caution.
No matter how you slice it, angst is on the increase and ultimately that is a good thing for the market. The same thing may not happen this year as happened last year. The market might just bottom right here after the opening and never look back. The key question is that absent any proof of an imminent intermediate-term low - am I willing to make that bet? NOPE, not without some evidence.
As I have been suggesting, I continue to look for the resolution in this decline in my proprietary and publicly used indicators because there is so much noise and volatility in the news backdrop that I believe it would be impossible to make an investment or trading decision on any single "major" news item. For example, oil prices were spiking higher and stocks were moving lower at one point because Venezuela wasn't producing any oil. Now that the situation there is improving and some level of striking workers is back on the job, oil is reaching new highs and stocks are moving lower. Making a decision on that news would have made sense at the time but would have been a mistake because of other news is now dominating the action.
The only reason to be a buyer right now is that the market has been down for weeks and is oversold on a near-term basis. Neither one of those factors have worked lately, so what is one to hang their hat on for a sustainable move higher? Since that didn't work, everyone is going to do what I have been doing, which is waiting for the signs of a washout before making any commitment of size and longevity to the market. On the other hand shorting doesn't make sense either because a quick rip higher in such a near-term oversold condition can happen at any time. Isn't that just like a bear market, making everyone miserable.
On a seperate note, I would like to thank Toddo and all of you who sent me kind birthday wishes. I am certain of a few things.
- If my parents read Todd's last post, they would have been choked up (they don't really use computers)
- If Bill Meehan read that last post he would have been choked up
- When I read that post I got choked up and GRATEFUL. If one only has a few true friends in life, they are fortunate. I am blessed!
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