On Main Street you have reality
On Wall Street you have long stretches of alternative universe - the current one is named "It's all priced in"
From a fundamental standpoint there is no reason to buy anything - almost every earnings estimate is far too high and visibility is severely lacking unless the US government is your customer
From a technical perspective, dips are being bought because that's what the "charts" say
From a sentiment perspective, that changes by the minute.
In a general sense I've been going with a wide ranging technical playbook (since fundamentals are completely clouded) of "be bearish" below S&P 850, and "be bullish" north of S&P 920. That has served us well. In between those two its random white noise - which is where we sat much of December. The nice thing with that "white noise" range is it allowed individual companies with merit to rally. Now as we broke over S&P 920 as we moved into 2009, the merit companies were joined by the hope companies.
Now? We're at the cross roads - 50/50 probability of a move either way and hence why I sit in mounds of cash. When the market says "the herd is going this way" (ignoring everything for a bit longer) or (holy smoke! so that's what everyone has been worrying about) we'll move our cash in that direction. I am ambivalent on the direction.
And so we go... a very convuluted and inaccurate monthly jobs report awaits us, and a major knee jerk reaction shall ensue. It is never the news (we all know its bad) but the reaction to the news. Around 3-3:30 PM I'll determine my near term positioning for next week. Yesterday the retail news was completely dismissed ("hope if on the way") and if the same happens with the jobs report you have to throw away your brain and go with the flow ("everyone else is buying, so must I") - but have the rip chord ready to deploy when reality strikes.So we'll see the nature of the beast but to me, this is one of the more important days of the early part of the year... Based on valuation this stock market has a very good chance of revisiting November lows (or worse) sometimes in first half of 2009. But as long as people BELIEVE that everything will be fine in 6 months, it does NOT matter if it will once we get there. Sentiment. Thesis. That's all that matters in the casino.
4 comments:
EBS -15% this morning...fell below 21 briefly I think. Add more or dump? :)
that worked out nicely. Had a limit order at 22 so that hit. We'll see how she acts from here.
Guidance cut not a major thing to me...the loss of acquisition yestday porbably was part of mgmts thinking of 09 numbers so now its gone.
if it crumbles into teens I cut back. Happy with the oppt
I would have expected a small run-up up to the inauguration, then a drop afterwards. However, I get the impression that the market understands that Obama has no cure for what ails us and we might not even see that. Could be ugly. Can I pass on the Kool-Aid and go straight to scotch? I too am presently 90% cash. I opened 3 positions today and closed them with no profit or loss earlier. Just checked .. Would have lost a few hundred bucks had I stayed.
jegan
Yes market starting to turn over
The sad thing is the market is wickedly expensive on S&P 500 earnings which will probably be $45ish. $45 x 15 PE = 675
I realize Obama is worth $10 of S&P earnings but...
Once we break that S&P 850 (or IF we do) the time will be ripe to make "fast money" on the short side. All the "it's all priced in" folk will be quiet and then the financial media will recycle them a few weeks later. Really its the same game for a year and a half now. Same faces, same calls - one day they will get it right but anyone who listens to them has lost half their portfolio. The one day the squirrel finds a nut anyone who listens to them will have no money left. It is quite criminal really.
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