For almost six months the stock and commodities markets have been struggling. First under classic Distribution and then through tremendous internal deterioration under cover of the major indices. Those indices masked and camouflaged the true nature of the market’s day to day activities which was one of the broad breadth of stocks moving succinctly in a clear downtrend. Each drop met with furious buying that was notable as classic Bear market bounces. And to top it all off, the few favorite stocks gained massive market cap as there was little else working–and this focused buying was the final leg of the whole six month cycle.
As we are now in the Fourth Quarter, the anxiety level is high and confusion with regard to the fundamentals reigns supreme. Headline risk, liquidity risk, earnings risk, government risk and market risk are hiding behind every market hour. The number one question asked by the media, by traders and by investors is the same; what are “They” going to do to help the markets and economy? Everyone is always concerned with “They”. Is that a healthy way for a supposedly free market to operate? And the most recent market downfall? Blame it on no free QE3 money. It is not a coincidence that this leg began on September 21st. Meanwhile, all the problems, issues & concerns are the same and getting bigger and more pronounced.
Today is the first break of the August 11 low intra-day print in what was a market panic that occurred the day before S&P downgraded U.S Debt. That was certainly a panicky market. There was no panic today on the break to new lows. In fact, most everyone, as far as I can tell, is simply dying to buy the breakdown and to play the hopefully hearty bounce. Listen, we are in a Bear Market and today made it official. Call it cyclical or secular. Call it whatever you want. But the most you should expect at this time is AT BEST a retracement to the latest breakdown area for many individual stocks. Play it if you dare, but make sure your exits are clearly marked.
Many folks feel that today’s breakdown to new yearly lows is THE signal that we’ve been waiting for to identify a bottom. Interestingly, few thought we would break to new lows. In fact, each area of support throughout these past six months has been percieved to be THE bottom and each time it eventually breaks. My advice is to fight the desire to call the bottom. End of year seasonality MAY bring some stabilization. After all, even after the crash in late 2008, markets stabilized until the end of January before the next brusing leg lower towards the eventual low when “They” began doing things to prop up the markets.
My long-standing target was to give back all of QE2’s gains, to the SPX 1050 area. Today we tagged 1075. Is that close enough? Maybe not.
With the markets remaining defensive, the Wealth Effect will be hard pressed to bring us much holiday cheer.
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party pooping logic and reason killed the asshole dip buyer
I am a party pooper…
you really are!
Good points. One thing I have noticed is that this market has been very difficult to short as everytime we get ST oversold the bottom pickers are eager to rush in and the nervous shorts are quick to panic and cover. In my experience before the market puts in an important low it gets really easy to short for a while, just long enough to get the bear confidence up and get the bottom pickers to disavow any further bottom picking. The sentiment right now is nowhere close to that IMO. Which is really scary when one wonders what it will finally take to turn the sentiment.
so why does everyone think that there is gonna be this monster pop to the up side.people are just acting like there is gonna be one because we have retraced so much. just not happening. now that the qe cord has been cut,the market barely can stand on it’s own. this year will prove it,with the worst retail numbers since 08. so what is left to lift the tide…….damn.you been spot on for the last 7 months..
The last 45 minutes today was the sickest of all the rallies in this down cycle
Major face ripper. Perfect example of what I mentioned about the shorts being quick to panic and the bottom pickers being eager and confident.
As you said
“Do you want to use technical analysis to pick your spots? You will have to buy when things are overwhelmingly negative and at the bottom of the range and you’ll have to sell just when your getting comfortable with a mending market. I don’t know if Europe can be fixed and neither does the stock market. But they do know that the end of the quarter is the time to make hey, because if they don’t, they won’t get paid. Plain and simple.”
Today seem like one of those days to me. All the dip buyers were suddenly panic-mode, fear was high.
“Meanwhile, all the problems, issues & concerns are the same and getting bigger and more pronounced.”
So well said Scott. I agree with DanBear’s comments too and drummerboy is right, you have been spot on for the last half year +.
So who was buying at 3:20 pm, the bulls? Machine drivin. I bet many were caught on the short side when the quant’s black boxes read the FT news and went into full on buy mode. First they covered and than chased into the close.
Despite the slightly lower low for SPX below the 8/9 low today’s action shows that for all intents and purposes the market is still in trading range mode. In a legitimate bear trend all this buy ST oversold cuteness would get steamrolled. A bear trend gets oversold and stays oversold. But this market refuses to give it up and is just torturing the bears with all the false breakdowns followed by face ripping rallies. How many more months are we gonna have to deal with this mind numbing chop?