If you are very short, you are doing far better than me.
I just recently went to the "dark side"
Actually I have known about the "bubble" for quite some time, but I got sucked into the belief thet "this was an election year and blah blah bla ... " the crash would not happen until next year, blah bla bla bla.
Right now I do not believe one can accurately "predict" the bottom. Those in tune will know it when they see it. It could be a slow death, a sudden crash, a rounded bottom, or panic buying with the tick count in excess of +1000. I believe we will see some combination of the above. Best guess is slow death, followed buy a complete panic sell, followed buy a complete panic buy. Left out of course is the gradual rounded bottom which is the "stand alone" possibility.
Please bear in mind that I am a very new investor. Hopefully I do not sound like one. I am now paying attention to all viewpoints and the conclusions I am presenting, is a summ of HOPEFULLY the best evidence I can put together at this time.
Now back to your question.
The baby is clearly being thrown out with the bathwater IMHO. But there is still so much overhead resistance, and complete sector selling by the idiot fund managers that absurd values are present as we speak. I believe RMBS and SSTI are absurd values. I also believe that even if these pass us by there will be others. I also believe the the "absurd" values are few and far between, thus the naz will tank, taking everything with it.
Furthermoe I think that most of the new leaders, (if one assumes AVNX is indeed a new leader), are still far OVERVALUED, especially for a bear market. PE's are the clue. Earnings are another. Growth just does not matter now. WHAT CAN YOU PROVE TODAY is the question. Right now, if you are not making money you are toast. RBAK will likely get slaughtered. CIEN with only a couple customers same thing. BRCD with a PE of over 500 will get crushed. etc etc etc etc etc. JNPR - most absurd.
Not sure I am answering your question, even after all this.
Best advice I think I can give is:
Stay short
Go long only for a day trade
Rallies last no more than 1 1/2 days
Do not be greedy
Cash and/or Puts in an IRA
Cash and/or shorts in a regular account
3 day to 1 week rally on settlement of election.
Possible rally at beginning of Jan with fund influx.
In the meantime why bother with longs? Rallies will be short. Rallies are for covering shorts and/or reloading PUTs. At the end of this mess, go long with the best available stocks at that time.
Why predict the bottom? Unless it is a rounded bottom, which I doubt, stay cash rich and worry about bottoms in March and/or August of next year. Those months are my probable candidate bottom months.
Another very good indicator is, when stocks stop falling on bad news, the bottom is in. Right now we just saw near panic selling on gateway bad news that we all knew was coming. We also saw a failed rally attempt, with longs cashing out at the close, and/or shorts willing to hold over the weekend. Thus no bottom yet.
Comments Anyone?
M |
