We went from mid day yesterday (Tuesday) breaking 1410 on the S&P (in which I got spooked since we were losing our last support), to rallying later in the day, and now are approaching 1470! Thats 4.25% in just about 26 hours. Amazing volatility for an index. I truly think with the influence of computers and buy/sell programs, these trends are so exaggerated versus even 3 years ago.
I have been clinging to S&P 1490 as a resistance but in fact the trend lines are pushing down to 1480. So unfortunately we are already nearing major resistance - just like that. Maybe times have changed and the 'bottom' is in and we run into a Fed cut rally (again) - we've played this game before haven't we? But until we break through that level on a closing basis, I remain neutral and assume we will break down. If somehow we break 1480 and are off to the races with Helicopter Ben theory that all our problems are gone ahead, you have to take the lumps on the Ultrashorts and join the kool aid party. Until reality hits again. But for now I will assume that won't happen, because the greater probability is we hit resistance and sag.
Here is the chart
On another note do you realize we have not had 2 back to back days of increases in the indexes in 20 days? That was reaching historic proportions. Further, Bespoke Blog has an interesting entry on just how putrid November 2007 has been (or was up to 26 hours ago). Since 1980, this was the 7th worst month ... period... at -8.57%.
Now for those of you new to the market, I keep referring to the horror that was 2002. 2001 gets a lot of press for the bursting of the bubble (which it was) but 2002 was the year, our hearts were pulled out of us. Want to know how bad it was? (I sometimes forget myself as I have tried to extinguish that time frame from memory), but since 1980 (around 320 months), 5 of the worst 20 months came in 2002. So 5 of the 320 worst months, were in 1 year.
Just imagine this month (outside of last 26 hours) repeated for half the year. That was 2002.
September 2002: -11.0%
July 2002: -7.9%
June 2002: -7.3%
April 2002: -6.1%
December 2002: -6.0%
So live through this month, and try repeating it again and again and again and again - in fact those 5 months came in a 9 month period. That my friends... was hell. Talk about not wanting to log in and look at your account.
This is why, while these moves down "suck", they are nothing in retrospect. That said, there were great riches to be made in 99 and 00, to offset some of those losses whereas the S&P performance since 2003 is nothing special to write home about...
Short 2002 memories
4 comments:
Just wanted to say I've been enjoying your blog. Great commentary and some humor too ;)
I wasn't investing in 2002 (thank god) but it's good to hear the horror stories -- it helps to keep the present in perspective.
Cheers!
thanks Ben. What humor? It's all serious around here! hah.
Much like being a parent I think one could talk about a year like that but until you live through one you won't ever really understand. :) Hopefully we go a long time without another one. Although now it is MUCH easier to play the short side than it was then with all these fancy interesting ETFs; so at worst you can hedge your long exposure and at best be heavily on the short side and actually profit the next time around.
An interesting comment I read: "In every trading day in November, the Dow has moved at least 100 points in either direction during the session, regardless of where it ended up closing."
Monday was talk of a recession, today, the correction is apparently over. Cheers for short-term memory.
and the beat goes on... investors have attention span of a 4 yr old.
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