Glenn - a couple of interesting excerpts from Helen Meisler's column in TheStreet.com:
thestreet.com
>>On what it takes to reach bottom...
"What we have now, what we have had since April, is distribution. Stocks have rolled over, but very slowly, not the way they did last summer. Last summer was quick: It was upon us before we knew it, then it was over in two months. When we get market turns like that, one that happens so quickly, stocks do not have the time to form tops. This year they have had plenty of time. Didn't I just read somewhere that 70% of stocks are trading below their 200-day moving average lines? The 200-day moving average is the average price investors have paid to own a stock for the past year (approximately). So if 70% of the stocks are below that price, then there are an awful lot of investors who are losing, not making, money."
"And if so many stocks are below those moving averages, then it is likely most investors who own those stocks are looking to sell into rallies. How many times have you bought a stock, watched it drop, and said a little prayer, "Please get me back to even"? But the stock keeps going down. So eventually you can't take the pain anymore and you sell; you eventually throw in the towel and say, "Hit the bid and get me out." That's the sort of selling that's missing from this market; it's what cleans out the sellers. Currently, we are still in the phase of praying to get even, which is why the rallies are so stinko."
>>On Tax-loss selling...
"As we begin to approach year-end, it occurs to me that I haven't heard anyone chatting about tax-loss selling. It has been a lousy year for most stocks, similar to 1994 in many respects, and the tax-loss selling that took place in November of that year was difficult for the market at best. For that reason, I suspect some sort of tax-loss selling awaits this market between now and year-end."
-Eric |
