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Strategies & Market Trends : Sharck Soup
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To: DebtBomb who wrote (27988)6/14/2001 11:07:46 PM
From: cthd  Read Replies (1) of 37746
 
To Thread-

While I am overall very bearish (like I believe we will retest April lows sometime this year... or early next year), there is too much bearish sentiment on every thread right now.

If everybody is already short, who's going to SS tomorrow? Only bulls can take the market down tomorrow.... and judging by AH and futures, I don't think we'll break 2000 tomorrow. Actually I'm going to stick my head out again and reiterate NAZ pulling back up to 2080.

Here is what we know:
1. Fundamentals are horrible (every sector is showing continuing signs of a slowdown).
2. Technicals show strong downward trend. (H&S broken everywhere)
3. Short interest is all-time high.
4. Economic factors weakening (unemployment, retail sales, GDP, you get the point).
5. Lots of smart money is still "parked" right now waiting for a "Black Monday".
6. Most mutual funds didn't get sucked into buying the latest rally, so any sell-off will be done by individual investors.
7. Insider selling is very popular right now.

My Assumptions:
1. We've only begun to see economic numbers weakening. It will get worse. Come'on unemployment at 4.5% is rosy.
2. We still have positive GDP. It will go negative despite alot of wishing and hoping from eternal bulls.
3. Retail sales have only begun to drop. Consumers increased their credit usage in April dramatically (although it could be attributed to paying taxes w/ credit) and will run out of credit soon. What then can consumers do?

What's next?:
1. Bears need some rest. Taking the NAZ down from 2300 to 2040 took alot of work.
2. Greenspan Minting Co. needs to be stopped. All those open market treasury purchases need to slow down (the FED pumped more money into the economy in the past 4 weeks than the recent tax refund).
3. Investors need to start realizing that a "V" or "U" shaped recovery is very difficult with our current slowdown (I know its hard for bears to believe, but there are people out there that think stocks are "undervalued" right now).
4. Companies need to stop all their BS. What kind of a mid-quarter update is "Our gross margins and expenses will fall within the lower end of the previous guidance we gave you". Why don't they just come out and say that we fired 25% of our workforce so we can write it off as a one-time charge (so it doesn't effect net income) and not have to worry about payrolls reducing earnings per share.

That said... even though it would be nice to see a sharp fall tomorrow, I am taking the contrarian position that we see a rally after the open tomorrow. I also believe that we will sell off all next week into AND after the FED meeting (who cares if its 25 or 50 or 75 basis points.... 5 rate cuts this year and the market is lower!!!!).

CTHD
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