Yes but he has to be right sometime, just ask the DELLheads that thought DELL could only go up and read their thread where they are getting huge margin calls. Many of these companies are not only no longer growing but will start shrinking earnings. When the layoffs accelerate, will those on food stamps still be willing to pay 90 PE ratios for negative to flat growth stocks. I think the honeymoon is ending, it is just the effects of the champagne haven't wore off yet.
There are worries about Y2K that even if not relevant, may cause the perception that people should pullout before their neighbor does. There is no value in this market, that was gone a looong time ago. The only thing that has been holding us up is liquidity. Everyone is ignoring the news, economics, fundamentals and even AG saying we are not an island of prosperity. I am looking at indexes that are way up over last summer yet the number of stocks over their 200 DMA is lower than that time frame. My scans are showing each sector being decimated while everyone parties like it is 1999 (couldn't resist). We'll as Jim Jones would say, pull up a chair and have a drink of Kool-aid and everything will be fine.
I spent all weekend going over various indicators, running scans, looking at sector charts and they all point the same way. While many have said for a long time this is coming, the writing is on the wall that IMO the top may have been here already but if not, there won't be much rising the latter half of this year. I feel we could have another rally possibly, but I am more inclined to short the living heck out of everything than to try and play the upside.
Some weakness here is to be expected as earnings warning season come so playing the downside bias is a no brainer IMO rather than playing the bounce. Once that passes, I will have to see if anything is improving. I doubt it will. Each rally has been narrower than the past rally, the field is getting extremely small and all signs are the big boys are leaving in droves while the little guy is buying the dip. The dip may be him. Even stocks I like are over priced. AOL is considered the blue chip of the internet but do you really think that all the telecom companies and especially T are just going to sit idly by while they build structure that could replace long distance? Some of the stocks running right now are the same ones that stated growth was not there. PG trying to run again last week? Give me a break. It is up because they can prop the index with it.
Everything read about PCs says that the last half of the year is going to be bad for PCs and DELL the leading model of PC distributing just barely met expectations and the other ones are hurting or showing signs of a reversal in growth soon yet they are still trading in the 60-90 PE range. Companies with single digit growth are trading at multiples 4 times growth across many sectors ( or they were before they started being quietly sold off). Economic booms don't last forever and with the rest of the world running into hard times, we can't consume and produce enough to make up for it long.
Call it gut feel, a guess, intuition but I think we will have our annual drop this fall but it won't bounce this time. The market will just start resembling the Nikkei, the oil index, etc etc etc. Buffet is usually a couple years ahead of everyone in his buys. He started buying metal last year for a reason!!! I will take his leadership over those that buy knowing they are over paying because someone else will over pay more later. The exit door is only so big and there may be a lot of people trying to exit soon. The only good thing is most are programmed to buy the dip so it will provide more time for the rest of us to sneek out the back door while they are buying and get in the bomb shelter with the funds that are already dumping as I type this.
Look at the percentage of stocks over their 100 or 200 DMA. MSFT could lose this case and who knows what will happen plus IBM is already offering Lynix software on it's computers, the DELL honeymoon is over, most of the internet companies out there right now will be replaced by companies we either never heard of or conglomerates that have the capital to take them on (T, WCOM, GE, who knows?), Telecom stocks are up but who says the future won't be wireless where all that fiber optic cable will just be something for archeologists to dig up some day. The sector charts all look horrid. I see a bounce for merely technical reasons soon but the weekly and monthly charts are showing some danger signs.
Then again, maybe I just woke up on the wrong side of the bed today. <g>
EDIT - Thanks Gersh, do you have the trigger numbers for the open yet. In case you didn't notice, I have been putting them on my site (crediting you of course)
Have to go eat now, will log back on later to check Asia and the GLOBEX
Lee |
