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O.K.,Ike. The silence is deafening. So at the risk of hanging myself out on a limb to fall like I have done before, I am going to let my thoughts wander. We have had an unabated uninterrupted run from the sept/oct 98' lows in DOW, SPX COMP et al. And because we have had minimal pullback along the way -- quick 5% - 7% adjustments 3 to 5 day V-type reversals, it has increased the probabilites of a nasty correction now rather than later in the year. Up 7 solid months. Unlimited returns. And covers of magazines everywhere coming out like Money promoting how easy it is to make money and how you can make it rich and get your stake in the American Dream and retire in 1 year. The game has come too easy these last 4 years since 95' and it is promoted in the media everyday about glamour and wealth when the reality is people are hurting right now, frozen in tracks and looking for answers. I take no joy in anyone's misfortunes, believe me. I have seen it happen, been there done that. Buy the dips has been the rule of law and been REWARDED EVERYTIME. Think for a minute, what if this time it is different. If average investor waits for 20% correction and then throws everything he's got full ammo into market and we go down another 15%, problems could incrementally develop. I just read a report tonight Trim Tabs study shows sharp increase in margin debt has increased almost 30% from Feb through April. I mentioned in earlier post that 5 day market volume peaked in Mid-April. A blow-off in upside volume. This margin debt is going most likely into internet stocks or some other high fliers that are going to take us to promisedland. I am amazed at denial in press on Monday,~~ low volume no big deal. And today, itching heads, ~ but the market always rallies. In the past you always had compelling argument of leadership sector. Today there is none. Only dead-cat bounces. This thread is not meant to scare anyone or raise alarm, only awareness that market rules can change at anytime and market does bidding for no one. I see market contraction into July 4 holiday weekend with bits of minor rallies along the way. This is my biased opinion only. June is the second worst month statistically for market last 50 years at it is down 28 times and up 22 times for SPX and DOW. Stock Traders Almanac says June tends to be a down month during bear markets. And if we have had this tremendous bull run since early Oct low, whither and when comes the correction? My bet is now. Followed by summer rally in July. I look at DOT at beginning of Jan and it stands at 406, Oct 8 98 low DOT @143. I ask myself is 500 out of question since it was only yesterday in Feb did we close above these levels. I think you are right 440 interday blow-off when market is getting washed out hard b/w now and Independence day weekend. FUNDAMENTALS NEVER LEAD MARKET DIRECTION. But excesses are always corrected. SPX p/e ratio for some time now is over 35 when historic valuations are more like 18 and Fed model is 22. DOW above 27 p/e only to be eclipsed by AUG 87 still way too high imho. We will have tremendous buying entry point but if we rally off these levels and hold I may indeed miss rally. That is why your support/resistance is so helpful to me. In the meantime, I do believe we will test 8750 DOW in this period laid out and other high fliers will overshoot supports. 8750 DOW is not out of question when you have circuit breakers at 1000, 1950 and 2950 (10%, 20%, 30%). I will try to post as best I can going forward. The only way to make money now is quick cut and run kills long and short. Sometimes you will win other times you get scalped. But this market is meant for active trader like Ike now where he can pinpoint his moves and not violate his discipline. Other stocks as core holdings can slowly start picking away like stocks you mentioned for long haul. I will try to focus on supports resitance tomorrow. Best. J.T. |
