John Q, I think the direction will turn shortly for the following reasons...
-The economy is turning according to the Purch Mgrs index, less layoff announcements, inventory dropping to historical norms, BtoB's in Semi equipment turning up, retail sales stable at least, strong rate cuts with more in the bag, housing hanging in ( NOTE: the housing "price bubble is a non issue and boogyman bullshit, makes no difference to anyone really - you can't spend your house and if you already have equity loans it has no impact)
-Technicals are turning with ARMS 10DMA bumping 1.50, VIX breaking 30, COMP approaching April lows, emormous short interest, great A-D.
-The institutions are watching all this closely wondering how the hell they are going to beat thier competitors to the punch so they don't look like idiots 6 months to a year from now. ( remember Vinik )
-Valuations are reasonable with virtually zero inflation, low rates and decent profit picture twelve months from now. Hell , every stock I owned 12 months ago is down 50-70 %. Bubble or no bubble that is pretty much unpresedented. (I didn't hold them but somebody did).
- Capitulation has already happened over the last few months. ( Hell, I've capitulated 5 times in the last year GGG)It is simply a bear's dream from this point forward and not likely.
- When we do turn it will be violent because it will be the short squeeze to end all short squeezes. There really is a great deal of money that needs to be placed (and bonds are in deep stuff). The negative sentiment will not unwind totally in one swat but if 50% unwinds quickly it will drive alot of sharp price jumps.
Right now we are experiencing the reverse of the topping process when NAZ was 5000. Refusing to believe good news now opposed to refusing to believe bad news at the top. Some calling for NAZ 1000 now as opposed to some calling for NAZ 7000 at the top. Ignoring the real valuations based on fundamentals, low now, high then. Ignoring the rate CUTS now as not relavant ( can't help capex)ignoring the rate INCREASES then as not relevant( Tech/ DOT COM companies don't need to borrow so no impact), nausea now opposed to euphoria then.
In a nut shell, I believe we likely are very near the low point for the COMP and INDU.
As the obnoxious professor used to say " Come early and leave early"
Hitsoft17 |
