The news today is bad, bad, bad on all fronts. Here are some real headlines:
• Corporate layoffs near 7-year high,
• Job losses may hit 30-year high
• Services contract at worst pace ever
• Bernanke says efforts so far have failed to slow the foreclosure rate
• New orders for manufactured goods falls 5.1% in October, the biggest decline since 2000
• Plunging orders for durable goods
• OJ gets 15 years
OK, that last one if for comic relief. But hasn't the market already discounted this? After all it already crashed in September and October. The market saw it coming, didn't it?
And the risk now is for some sort of positive surprise. OK again, today's jobs numbers were not positive - at all - but "darkest before the dawn" and all that. When was the last time job loss resulted in a recession? It is always the other way around. Business gets stinky and they lay off workers - in that order.
Look at retail. Lousy news Thursday and the sector closed up while the market closed down. And as I write this after lunch Friday it is up again (the Dow is down 100).
The market did indeed sell off this morning on the jobs report but it has come back significantly. Premature to declare victory but this market is getting stronger, not weaker. No, not a bull market but a tradable rally. I fully expect another bearish few weeks after that.
Friday, December 5, 2008
Wednesday, December 3, 2008
Bear Market Rally Framework
A reader pointed out a pattern that is not readily visible on the normal bar charts most of us use. Using a close-only chart, a megaphone or expanding triangle pattern appears and it has one interesting implication. Check this:
Is it possible to see Dow 10K in the next few weeks to months? It sure looks that way.
This pattern is usually analyzed as a topping pattern so I am not so sure that the reverse is true as a bottoming pattern. But it does give us some sort of structure to follow.
How about this? After reaching 10K it forms a regular triangle on the back side - creating a diamond pattern. Again, diamonds are thought to be tops so who knows what it might really mean? But then again, who ever expected the VIX to hit 89!
The old rules are up for rewriting.
Is it possible to see Dow 10K in the next few weeks to months? It sure looks that way.This pattern is usually analyzed as a topping pattern so I am not so sure that the reverse is true as a bottoming pattern. But it does give us some sort of structure to follow.
How about this? After reaching 10K it forms a regular triangle on the back side - creating a diamond pattern. Again, diamonds are thought to be tops so who knows what it might really mean? But then again, who ever expected the VIX to hit 89!
The old rules are up for rewriting.
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