The markets are a very long way from discounting the ongoing
credit mess in roughly 1/2 of the banks. We could remain
oversold for a while longer if this is a start of the bear.
12K sounds about right, but we could BK too, since options
selling has become a major business for the banks, brokers
and hedge funds. That's what behind my BK call for a start
of the bear market, but the timing is very hard to nail.
The sell indicators will just fire up at once for a lot of
folks, and since this market has been so technical in
nature, we may see a sharp wave of selling, helped by
all the puts sold short (read portfolio insurance, on a
scale of 100:1). DOW theory indicator went on a sell as we
crossed 12800. This is a cautious buying range, but one needs
to have full risk control. I would not buy stocks here, just
calls (downside protection). Slippage in the futures may
also be a problem, as these markets can reverse on a dime,
as we have seen so many times lately. I got scroomed a bit
on execution, but the bank rally paid for it <G> |
