no question about it, this is tough. yesterday had all the earmarks of godzilla swatting a couple troublesome planes out of the air. Shorting the spikes has been the order of the day for 18 months and there is no reason to change now. The last short trade will be a losing one, but really, as a trader on the right side of the market for the past year what's the difference? If you flip the charts upside down basically you're expecting trend traders to catch the top which isn't the game. The modus operendi will not change until there are no sellers left, and judging by the sentiment indicators and the wailing and gnashing of teeth over the next Intel meeting, I'd say there are some sellers still left. When the holders of Intel don't sell no matter what is said then we'll know it's over. When the owners of Intel stock are more interested in getting a good tee time than whether the sequential growth is down a couple more percent then we're there and this will be a bad dream.
Are we getting close to a bottom? I believe we are, but then I recall buying some cisco about a year ago at the bottom. There are signs that things ARE changing in the market but they aren't particularly clear. It *feels* like momentum money is leaving the interest rate plays in stocks. But defensive money still finds a home in fixed income securities. The dollar is flopping around like a fish in the bottom of the boat. Gold, the investment du jour one day is out of favor the next. Too much noise to KNOW what's happening next.
SOME early cycle indexes *look* to be wandering upward. Chemical industry, basic material and consumer non-cyclical indexes look a little better. Not a lot, a little. The energy spider has been moving sideways since the end of may. It's not moving up and might not for the next year, but at least it's broken it's downtrend for the moment.
This is a VERY hard market to know, so the tendency is to guess. I guessed yesterday on a couple tech stocks I like long term and got a dope slap. If you think something like ciena is going to 100 from 15, why not wait until it at least crosses a moving average or two and perhaps save the agony of learning it wants to go to 7 first. Years from now when it IS at 100, there will not be a disclaimer on your statement stating you missed the bottom and being up only 500% instead of 600% won't seem so bad.
The evidence of a bottom is anecdotal at this point and should be looked at like an interesting bug found in the yard. Examine it closely, but don't pop it in your mouth. Put that thing down, you don't know where it's been!! (or worse, you do)
mt |
