Monday, November 12, 2007

Really Ugly Out There

This is another day the tape is not telling the story. Looks like the emotional selling is coming to fruition now - as many winners are being tossed out, and entire sectors with no regard for differences between 1 stock and another. Even the teflons, i.e Research in Motion (RIMM) are seeing double digit % losses. My watch lists look like a personal bear market, yet the indexes are flat for the day - shows you how much financials and consumer discretionary weigh on the indexes. Talk about a bipolar market.

This is very similar market behavior to the lows in mid August in fact (although back then entire indexes were falling whereas now we seem to be doing a rotational correction), but at least then we had a Fed surprise cut to change the mood. Right now we just have to wait for people to give up. People like me who continue buy on dips. :) I see page views to the blog today took quite a dip from levels of the past 3 weeks, so I am going to use that as a contrary indicator that otherwise bullish people have started to give up. Or it could just mean... that my blog is not that interesting today. ;)

On the good side, this is creating some nice values in sectors that previously were either expensive or fairly valued. This is also healthy to wash out the speculation we had been seeing roll from one sector to another over the past 2 months. On the bad side, we don't usually like things that are healthy for us, and this is no exception. This is going to be a very ugly day, and it's going to take a lot of work the rest of the quarter to make up for some of the damage done today.

Gosh, it seems like only yesterday that a NAV of $12.00 was so nice; now we've already crossed below $11.00. How fleeting the good times are. ;) And again, index shorts would not really be helping much today nor would UltraShort Financials or Real Estate which are down 2-4% today from oversold levels. The Russell 2000 is only down a fraction. So even the UltraShorts would be working against me.

Not much to do now but hold on for the ride and look at that chart in August (and February) and remember how that was a great buying opportunity. It is very easy to look back at a chart 2-3 months later and think "why did I not buy then" or "why was I selling into that pain" - the chart doesn't show the emotion of the moment. Actually the uglier it gets now the quicker we can begin forming a bottom in these former high fliers. And since its getting ugly we might be getting there by mid week at this pace.

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