Tuesday, February 24, 2009

Where's Wall Street?

I joked Sunday during my presentation at the Traders Expo that I was not wearing a suit because Wall Street was dead so there was no need. That got a chuckle from the crowd but when you think about it, all the majors are either gone or magically morphed into banks.

What makes me more afraid is not the natural capitalist selection of the broker/dealers. Rather, it is that there will be no replacement structure for several years. Trading, investing, raising capital and similar activities could be on hold as the recession takes its toll.

And with that, the demand for publications such as Barron's and my own newsletter can decline.

Now, I am not saying Barron's readership and/or advertising are down because I just don't know. But seeing all the accompanying businesses to Wall Street fade back into the shadows for a few years is not out of the question.

Yes, I know, getting out at the bottom is the sign of capitulation. But I do not think people in this business are getting out permanently. They may just want to take some time off and recharge while the economy and the market does the same. After all, Wall Street is in our blood.

Anybody want to buy a newsletter? (tongue near, if not in, cheek)

9 comments:

paulocuana said...

I'll wait to see Investors Intelligence's data tomorrow to see if there is something to this capitulation idea,
but what are the chances that this is a double bottom formation? I mean they're not always perfect formations. The second leg down can go a bit lower than the first.

jeromek said...

I don't think so, 2nd leg should be +/- 3%, currently 2nd leg down 5% on the Dow, also often on double bottoms the second leg is slightly higher than the 1st, not the case here.
Additional price volume confirmation required, but would unfortunatley say no double for now.
There is plenty of capitulation here in the market, but it remains opened ended as to weather or not it is "final" capitulation.

Quick Takes Pro said...

See my column from last week where I call the Dow irrelevant. As for the S&P, sure it can be a double bottom but that suggests that there will be a breakout above the Inauguration peak.

Rather, I view it as just another low and test of support in an ongoing trading range that will last many months.

As for capitulation, I was talking about my own type of capitulation in wanting to just get out of the business for a while and come back refreshed into a market that actually works.

As for investor capitulation, I say it happened in July 2002 months before the lowest low and October 2008, again months before the start of the next bull.

paulocuana said...

If this is the bottom of a trading range then it would be foolish not to buy here.
Money markets are just over 1% and Equity Income funds are yielding better than 5%.

The question is will there be another leg down?
Is it just me or is there a consensus forming around the belief in another leg down?
Not that the Bears are wrong. They'll only be wrong at the end.

Kiyoshi said...

I covered 50% of my inverse MF positions at the close on Monday because at least a few of the indicators I use were not confirming the lows of the Dow and SP5 with about 20 minutes left. Who knows maybe I should have closed 100% !!

Bloomberg reported today that Prechter advised to cover all shorts today. A friend pdf d Prechter's Elliot Wave to me but didnt have time to read it. It gets me how the media still credits him for calling the 87 Crash! A group of us subscribed back then and he clearly did not forecast Black Monday, not in his newsletter nor on his telephone update !! In fact the newsletter the week before the Crash was short term Bullish !!

Anyway, the next few days will tell me if a Double Bottom is in.

Michael, any thoughts on EW ?

gingersue said...

I'll never forget back in early 1994 when Prechter predicted the end of the "grand supercycle" at Dow 3710, and that we were going to drop in a big way.

That didn't work out like he said it would, did it? LOL.

Kiyoshi said...

Gingersue,

You sound like a veteran!!

Hot hands come and go, Prechter was hot before the Crash, but he was preceded by Joe Granville, followed by Elaine Garzarelli, Abby Joseph and so on.

EW seems like dropping bread crumbs on a lake to make your way back, i.e. just too arbitrary in numbering the 'waves'

gingersue said...

Remember back in the 1996-1998 time frame when Don Wolanchuk had the hot hand with his version of the Elliot wave? He had his 15 minutes of fame as well.

I made a ton of money trading the COT (Commitment of Traders report) on the S&P from 1992 to 2004 which is when it stopped working and still doesn't work anymore. 2004 is also about when momentum investing and buying breakouts stopped working, a la IBD and Bill O'Neill.

Kiyoshi said...

Gingersue,

Where is Arch Crawford and the moons, stars, and planets !!