Global Growth Suffering Along With Financials
...the most dedicated of the Buy the Dip on Growth stock buyers didn't catch the bottom; they bought the post-spike rally of last week. Those buyers are now underwater.
The YTD charts in the group bear more than a passing resemblance to financials of all stripes (Goldman (GS), Bear (BSC), Citi (C), Lehman (LEH) or pretty much whoever else you'd want to throw in there, including the XLF).
As a group, the financials peaked the morning the Fed announced its presence with authority with the Expiration Friday Discount Window move. The "stuff" stocks (metals and ag plays like Potash (POT) et al) which were crowded longs for all of 2007, took a few more days to claw their way back but are rolling over again in earnest today.
Two Points: First, from where I'm sitting, the most dedicated of the Buy the Dip on Growth stock buyers didn't catch the bottom; they bought the post-spike rally of last week. Those buyers are now underwater ("weak hands").
Two, as is the case with the Dip Buyers, the Fed and its statements have used up a lot of dry powder. We already know it is intervening; now the question becomes one of whether or not they can help (and, yes, I know the voting from most here is "No, the Fed can't help").
I'm expecting Diminishing Upside Returns for rallies off Fed Statements and Snapper efforts in general. You can try anything long or short, but the most critical thing here is to have an exit plan and the discipline to use it; if I were long the financials here, I'd be hitting the gates.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter