A note I posted to Kevin on the tech-stocks thread:
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Kevin, hopefully I can post this message befor the next year. -g- Our network gods have turned against us. I have wasted a lot of time in trying to get-on to the net. This type of time-kill is only possible in the "information age" where reboots of your windows based machines are as frequent as your lost work due to customary reboots. -g- OK, call me a skeptic, which is exactly what I am!
As I said to Nemer, feel free to pay no attention to my numbers or my opinion. I don't have a system to make daily predictions. I am 90% FA and 10% TA guy. I do look at charts to see how the chartists are going to sabotage my FA so that I can take cover. -g- If you look at DOW chart or S&P chart, all you see a whipsaw, possibly with no trend. However a big chunk of the large caps have already established a down-trend. Take a look at these dow stocks.
quote.yahoo.com
As of yesterday, most of them have tested the upper bank of the down-trend channel. If the down-trend were to continue, which I think it will, it is very likely that we will see at least a re-test of the recent lows for these issues. I guesstimated it to be 3-500 point down move in the next 5 trading days. However, it could take longer than 5 days barring no external events. Makes sense?
Keeping the TA aside, other really important issues which reinforce my bearish bias are:
1. A lot of people are skeptical about the latest stock-market recovery. Normally it is a positive for the market. But for the reasons Tom pointed out, this recovery seems to be anything but "normal." I don't expect this recovery to last.
2. Based on a totally unscientific probing done by me, some people who bought at previous dips of October (before 27th) are shaken out and some are "relieved" at current recovery. Those who are relieved don't seem to be selling. But neither of them seem to be buying more. Those who have raised cash in Aug-October period, put it to work last week and early this week. I am guessing that quite a few shorts were taken out in the last week and early this week. Quite a few advisors are advising to stay in cash until the storm subsides completely. That prevents some buying. Net result is that, per my SPECULATION, we don't have many buyers left. Let me ask you this, to which group do you belong in this?
3. Stupidity is back with a bang. Of course, it never got a clean-shot on last Monday. Look at AOL! Contrary to what a few wise folks on SI think, I contend that the shake-out is not over yet,
4. I read on one of the SI threads that a recent poll (after the last weak turmoil) the professional money managers are extremely complacent. They expect 18% returns for the next 3 years (though modest compared to the little guy's expectations of 34% for the next 10 years.) Even if the markets go down 10% or more from her, they think that their portfolio's will not go down much because they are "diversified." They also think that the markets will not go down much and even if they do, it will recover very fast. Duh!
5. The international market turmoil has calmed but the issues have not gone away. US may not have a significant direct business expoposure in the far East, but it does have indirect exposure through some European (Germant, France and UK) businesses which sell in that region. Well, US businesses sell in Europe, don't they? How can one dismiss the turmoil in Latin America as insignificant to US? Already economist have started trimming their growth forecasts. Soon the analysts will follow with earnings revisions, downward.
All the above factors reinforce my bearish bias. BTW, if we close above 7750 today or tomorrow, all bets are off.
Good luck!
-Mohan |
