Uh Oh

Welcome to the new blog home. I wanted to use a less "common" site but honestly nobody really cares about who hosts the blogs they read. Besides, this one was already up and running from a earlier attempt. Previous blog posts can be found at http://michaelkahn.tripod.com/blog. By the time I figure out how to move them here they will be old news anyway.

For those of you reading me in Barron's Online or in my newsletter, you already know I am bearish. Looking at today's action (Tuesday) I got even more so and as I was thinking about exactly why that was a few chat room posts came my way. Rather than reinvent, I'll post them here.

The first was posted by a trader by the name of Anindo Majumdar. I am unfamiliar with his work but this post really sums up my own thoughts. I have comments added in various places below.

Some of the things that bother me about this decline.

1. I don't see the panic that accompanied the August lows.The VIX was close to 40 on August 15 , today its at 23.77 and we are almost at that level. Where is the fear the panic ? Its almost as if everyone is expecting a successful retest of the lows. (Note from Michael: see my Barron's Online column dated January 9. )
   
2. The second thing is that the market has been oversold for days and it can only manage very feeble bounces, which are used as selling opportunities. (note from Michael - I always say that strong markets do not hang around support for long and this one is either on or just below support, depending on you perspective).
   
3. The third thing that bothers me is that Bernanke has practically guaranteed that the Fed is going to provide whatever liquidity is needed by the markets. We had that pop on the news which was again sold. (Note from Michael - when will everyone give up believeing the Fed can save the market?)
   
4. The fourth thing that bothers me is the lack of leading groups. Aside from the fertilizer group (that rally is long on the tooth), agriculture, gold and medical there are very slim pickings. (Note from Michael - True dat.)

And a follow-up from trader and teacher Ian Woodward:

1. Investors are not particularly fearful at the moment because after six months of hearing about an upcoming disaster have bought all the puts they want and/or are getting desensitized to additional bad news. (True dat again)
   

He added that sentiment readings may be skewer due to the new short and double short ETFs and I concur. But just because the landscape has changed does not mean the old indicators are useless. Just different.