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The Morning Cup of Jo


Quicksand! I don't like quicksand.


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Yesterday the Dow posted its lowest close since 12/05/03, the Nasdaq since 10/24/03, the R2K since 12/15/03 and the SPX still refuses to break the ever-prevalent 200-DMA. This action is enough to wear out even the strongest man's patience. The technical condition of the markets, since last discussing the immediate danger levels has not changed and therefore, there's not a lot to discuss.

The longer the market pushes against these support levels the weaker they become. I believe if the S&P 500 does ultimately break the 200-DMA, the markets could be heading for the June 03 Levels. For a graphical perspective you may want to look at a 'Jo' I posted on April 20th which discussed a "what if" scenario dealing with the MLT (mega-long-term) trends of the three majors; that is, if you're not too scared to look.

How about this for a "What If?" Everyone and their brother, including me, have been talking about a bounce in the market because of the technical oversold condition. What if it never comes? I mean, think about it. When everyone is on the same side of the fence... you know the rest. What if instead, the markets just continue to waft sideways with little or no volatility, just drifting lower ever so slightly with every up-tick giving hope of a positive trend beginning.

What if it never happened, never came and the markets did nothing but glide lower? Would you know what to do? Would you keep saying to yourself, "Well it's not that bad, it's not breaking on volume, it's not falling through the floor, I can last through this." Until you look back and realize you've been saying this every day for the last quarter and your account has weakened significantly - whoops.

Hence, the need for a plan, a decisive plan; one you can live with if you're right or wrong. Like stated previously, this market can, and will given the chance, wear you down. These are difficult times investors face. It is challenging to make headway and/or profits for individual investors and institutions alike.

A word to the wise, "Don't fight quicksand by thinking standing still won't allow you to sink as fast and someone or something will come to your rescue!" Or, as Will Rogers said it, "Even though you are on the right track, you will get run over if you just sit there."

Until next time...


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