Wednesday, November 5, 2008

Pass the Salt

Once again, I am in the uncomfortable position of having my latest column written before the stock market tumbled this morning and published after the afternoon wipeout. Not only that, the editing process missed some of the qualifiers I added to recognize that my thesis was more than dinged.

The bottom line is that I stand by my conclusions. The problem is that Wednesday's late smooshing threw a giant monkey wrench, make than monkey poo, into the mix.

To me, the evidence is still on the side of the short-term bulls. No, the market is not ready to launch a sustainable bull market but with everything outside the market looking so durn (decorum prohibits other terms) rotten - from job losses to foreclosures to loan officers and their tight sphincters, anyone calling me a whack job for even thinking about stocks has a case.

But isn't that the best time to be buying? When eveyone hates stocks and ridicules the messengers who say there is value to be had?

Look, we had a stinko day but after the buy the rumor rally on Election Day, a sell the news decline seemed inevitable. And we got it in earnest. Futures are lower in early evening trading so I won't be sleeping well tonight. But then again, it was a wise trader who said that when a trade makes him sick enough to throw up he knows its right.

So, pass the salt. I have to deal with the egg on my face tonight but a single day - one with rather low volume - does not erase all the other evidence backing a short-term - repeat - short-term bull case.

10 comments:

Blog do Ma├žaranduba said...

When we think we know the market rules, the market rules are changed by itself.

The act of predicting the future is the art of the prophet.

;)

Doug said...

this market is a big fan of the new administration....God have mercy on us fools.

Larry said...

terrible outlook/forcast
http://articles.moneycentral.msn.com/Investing/SuperModels/a-credit-crater-too-big-to-fill.aspx

possible?

Quick Takes Pro said...

Larry,

We can now add Markman 4000 to Glassman 30,000 as the worst predictions ever made. As soon as someone trots out justification with P/E multiples and assumptions of the futures I glaze over.

Even I, as a pure chartist, know that not every company is dependent on debt. Some of them even make products we cannot live without - like food. No, not Wolfgang Puck TV dinners but the basics. But I digress into fundamentals and that just adds to the egg on my face.

jpmist said...

Isn't there some comfort to be taken from the 8/87 6 month DJIA chart? There were two major test of the original plunge, then 20 months later the index was back where it left off.

Seems the recent plunge was depression fear, logically, recession fear couldn't be worse. . .

Quick Takes Pro said...

jpmist,

Good observation. I have been looking at 2008 to resemble 2002-2003 but since this year was indeed a crash - slow motion - perhaps 1987 would be a better comparison.

jpmist said...

I was about to post today and say something like, there goes that whole 8/87 meme, but it looks like the comparison held up. The second test of the 8/87 low happened two weeks later than it has now, but that 87 MACD chart looks so similar. Or maybe I'm just seeing what I want to see.

So lets churn for a year or so. Fine with me as long as the bottom holds.

Quick Takes Pro said...

churn, baby churn was actually the working title of a recent Barron;s Online column of mine before the editor poo poo-ed it.

As for MACD and every other indicator, nothing is working as we expect. Don't rely too heavily on them right now.

anonymous said...

Michael, I thought you said in the Barron's article that the market is back to where we can trust the technicals again, but now (Nov 13, here in the blog) are you saying we are back to where they are not working ("nothing is working as we expect")? I also got some mixed signals on the Wednesday column where you had indicated that the "market is quite risky today". However, it seems to me that the market is making higher lows on a closing basis (intraday lows are not entirely outlandish either). The next challenge will be to identify the top before things start collapsing again.

-a

Quick Takes Pro said...

Anon,

I had to pull back on the thought that it was safe to take a nibble on the market and look at it as a dangerous place again. I think you read too much bullishness in the column. It had a bull slant for sure but it was far from a back to normal, start buying a lot type of piece.

At least that was my intent.

I don't think your view is much different from mine. The healing has begun but the wound is still open.