Kody, nice hammer patterns on all of the indices! You couldn't ask for nicer setups.
stockcharts.com|B|a12,26,9
Unfortunately, the condition of the market doesn't suggest we've seen the lows yet, in my opinion. We may get a nice relief bounce, a relief that we're finally going to pay back for the tragedy of last week. But then, where does that leave us?
Consumer confidence is still down. Corporate earnings are still down. Capital spending shows no sign of improving. Unemployment is still rising. The Beige Book, which conveniently cut off at September 10, still shows the economy weakening. We may finally see the GDP numbers go into negative territory. A market that was still overvalued before September 11 is probably still overvalued today.
I'm not an expert, but from my observations, when something is oversold to one extreme, usually sells off to the other extreme before balance is restored. A three year chart will show an "A" shaped market for the NASDAQ and indicates we still have some downside before we see it oversold to the other extreme.
bigcharts.marketwatch.com
The DOW has even further to fall. Would you believe a 7000 DOW?
bigcharts.marketwatch.com
Since we're in a down market, we must assume a body in motion stays in motion unless there's a catalyst to change the direction. What can stop the markets from falling further? We've always been told that earnings drive share prices. Earnings are being adjusted downward! Where does that leave us?
I'm leaving my short positions intact and I'll be looking to add some. Why fight the trend?
There are two schools of thought. Don't fight the trend and don't fight the Fed. These are in conflict with each other. So far it's the trend 8, the Fed 0.
I'll stay with the trend and let the market prove me wrong. So far fundamentals, Greenspan, Patriotism, trying to catch a bottom and hope have all failed to turn the market around. Why fight it? Sometimes it's best to be a good follower.
dabum |
