Paul, I only update the weekly charts on our Site on Saturdays but so far, GM has been respecting the weekly fork fairly well. Of course there is always that first break. I haven't found a good clean fork for the daily yet though to catch the shorter terms. FA wise, heck if I understand what could be bullish in car manufacturing when gas prices are up and the SUVs are their biggest profit item. Of course FA doesn't mean much in this casino we call a market anymore. My chart on GM is here.
marketswing.com
As for this bounce. I actually thought this morning looked pretty good. Buying was in FA sound stuff and the maniac stocks were barely catching bids mostly looking like a few dead cat bounces and some value stock buying. HOWEVER, around mid day, someone let the maniacs out of the cuckoo farm and then all heck broke loose with the nets taking off, NTAP and JNPR going nuts and all the other over priced crud going back to stupid levels. I was hoping those idiots were all broke by now but in view of the way the end of the day went, I guess we need to sucker in a few more and then tank this puppy. I really don't think we can have a good bottom until the morons are wiped out.
Not to Paul but I forgot who first addressed the issue - As for the post yesterday and then the re-addressing of the issue of 100% gains for 10 years on one of the hype stocks, this isn't the beginning of a bull market anymore. This is at best near the end of the bull cycle and at worst the last gasps of the bull ( also known as beginning of the bear -gg-) There also is fierce competition in the Networking, Storage and Fiber industries. Telecoms are hurting for cash and no one is in a hurry to buy risky corporate debt anymore. Venture capitalism, debt and IPO markets are drying up, that is why brokers are getting hurt now. A few years of big gains yes, 5 - 10 years I seriously doubt it. One other thing to consider is the rapid pace of change. Any number of companies can come in with a better mouse trap and take these guys out. It was only 2 years ago that LU was king, now you can't give that thing away. Can you make money trading the stock... Yes but don't fool yourself into thinking you are making a sound investment. YOU ARE NOT !!!!!
As Don pointed out, in many bear markets, PE ratios go to single digits for MOST companies which means the highest growth stocks could be trading at PEs at or below growth rate. If they do this, yes they will be bargains but they will stay bargains for a long time. It is the opposite extreme to what we have seen the last two years, now PE are waaaaay too high, in the bear, they will be waaaay too low.
Now don't get me wrong. I over paid for one the other day as some people here know. I got whacked hard for a few days but I also knew the risk and admitted what I really thought the company was worth. I was trading it though under the assumption that we are still paying too much and that there would be a sucker out there that would pay more. It appears I was right. It hit my fair value price the other day and has had two 15% or more up days in a row now as it climbs back to over valued. Is it worth today's closing price? No. Will I get more for it than today's close, probably. This is a greater fools game and it is risky. I traded a few more of them today, some I kept, some I dumped. That is why many of us want to get back to real valuations to make the game easier and allow playing with less risk. In the mean time, we play the risky game knowing we are over paying but hoping we are the closest one to the exit door for when the music stops. Dennis is one of the best I know at this but there are others here that do well also. Most do know that it is over paying and greater fool theory but being Fundamentally right doesn't pay bills, taking the risk and knowing when to leave does.
Just don't fool yourself into thinking that these valuations or that Analyst growth rates and the other junk they spew are real. There are very few real analysts that do number crunching and really honestly study the markets out there and those guys aren't on CNBC or CNN giving away their secrets. Most of those talking heads are there to regurgitate what the company told them while wearing rose tinted glasses, or else are there to get YOU to buy the stock their company wants to get rid of.
Under my most bullish view, I think we could go sideways or up through the election but then we go much lower. The bear scenario would be a bounce through early next week then by Wednesday's close, we go down for the count to levels most only have nightmares about including bears.
Good Luck,
Lee |
