Excellent Mark-to-Market tonight (from Capitalstool.com):
capitalstool.com
Mark’s Market Commentary – September 24, 2002
Every single woman’s favorite television program is “Sex in the City”, where slightly above attractive women troll the streets of New York in search of Mr. Right. Every now and then they will meet a burly fireman or an overworked chisel-faced attorney. For a split second, they will instantly determine that “this guy must be the one”, and within hours, they are engaged in some type of night time extracurricular activity.
Unfortunately, that action is concluded pretty quickly, and the girls find out something is wrong with the guy or the guy ends up suddenly disappearing.
Each year this series airs, the women get slightly older and a little more angry, yet the one night stands continue with a fair amount of regularity.
The current bear market in stocks is no different.
Every time stocks get sold more than 3 days in a row, the dippers show up and mount a brief offensive on the typical moaners and screamers like IDPH, NVLS, or MCHP. But those sessions typically flame out, and it’s back to the grind down to new lower lows.
How long will this charade continue? Where every dip is bought with a vengance? Where any significant weakness is considered “The Bottom” and the start of “The New Bull Market?”
Today on the open, Europe was smoked once again and the futures were deep into the red. Of course, the most spectacular sexual acrobatics usually begin on these huge gaps down, so the 27-year old mutual fund manager (translation: HeatMap daytrader) decides to throw his .06% remaining cash reserves at buying some NDX futures right at the open.
That caused an immediate roman candle explosion, with some hysterical upside gaps on the intraday chart. It was amazing to see the desperation of these managers, so fast with the X-Box trigger that some gaps were actually found on the 5-second chart.
But I guess you cannot blame him. He’s been engaged in an incredible battle for the last two years to stay employed, catch up from the last two years’ losses, and fight off the never ending stream of richer and more successful men trying to angle in on his college sweetheart:
First, it was the Semiconductor Analyst for one of the big name brokerage houses with the unpronounceable Indian name making 6 figures for pushing Supermodels for a living.
Then, it was the Iranian Plastic Surgeon. This guy was making all kinds of money, as the entire population of females on Manhattan were flocking to his office for boob jobs, liposuctions, chemical peels, and all the rest. But recently, he’s disappeared into the background, with rumors of a dramatic slowdown in his business, caused by “funding difficulties” with respect to certain HIBIT (Household International Breast Implant Trust) securitizations.
Next, it was the FDNY fireman, who was achieving instant fame by posing for the Chippendales Calendar, but he bolted for Los Angeles to pursue some type of “acting” career.
Now she’s being chased down by Jewish bankruptcy attorneys and Russian pawnbrokers.
Then we waffled around in the usual high anxiety mode where there was some short covering into the FOMC meeting. Then Uncle Al started mumbling out of his black hole flytrap, where the entire financial planet is hinged onto any clue as to whether or not we are going to crash or trigger a derivatives meltup based on his comments.
He basically said nothing and did nothing, so the market immediately went into the wild swings which look like Sarah Jessica Parker’s Mood Meter in the middle of one of her one night stands:
“Ohh, what a great body this guy has!”
“Why did I sleep with this guy on the first date?”
“Oooh, he feels so good!”
“I wonder if I’m going to regret this tomorrow!”
“Oh, please…Don’t stop!”
“I’ll probably never hear from this guy again. Did I refill my Prozac prescription?”
Anyway, you get the idea. We made a brief attempt to rally in the afternoon, since so many are expecting a “double bottom” to be launched off a convenient FOMC announcement. Unfortunately the hopers are still waiting for a bounce and the dippers are already fully invested from the intraday meltups we had the last 5 days, so there was not enough buying power to push things to the upside.
But I have to say that we are getting a little extended to the downside here, and a bounce of some kind should be materializing. But the fact that we haven’t been able to bounce is becoming worrisome, so we might actually get some type of a washout low coming up.
In the meantime, the top stocks continue to trade at or near their 52-week highs, and other new “Enrons” like EDS keep surfacing. No real money has left the market, otherwise we would see some winners getting sold along with the losers.
After listening to Business Talk Radio this afternoon, I am simply amazed at the ongoing dialogue, blaming Iraq, corporate scandals, and pessimism as reasons for the market’s inability to rally. When are these guys going to get a clue?
Isn’t anybody paying attention to the “forced buying” going on in the Treasury markets?
Isn’t anybody awake to the fact that valuations are still absurd?
Isn’t anybody aware that we are sitting at the top of the market? The top of the greatest bull market in money supply, spread trading, and money market and bond arbitrage speculation of all time?
Isn’t anyone discussing the ongoing credit market meltdown evidenced by record spreads in the junk bond yields?
Isn’t anyone worried that the entire World Stock Market Index is co-dependent and trading in lockstep based on the slightest murmur from a U.S. tech CEO or the slightest move in a U.S. economic statistic? Since when did foreign markets not trade on their own fundamentals?
I have been getting some hostile e-mail from those of you who are growing tired of my cynicism and negativity on the markets. So I thought I would attempt to give an example of what should have happened during this bear market which would have ended at a tradeable bottom worth buying:
During the fall of 2000, we were coming off a huge GDP binge which peaked in the 1st quarter of 2000. Uncle Al was tightening, and the cyclicals and the retailers were sawing their way lower in slow grind. None of these “waterfall” collapses and spectacular short squeezes.
Instead of a “surprise rate cut” in December 2000, Greenspan should have remained flat and let the economy purge the excesses of the late 1990’s. Two years later, in the fall of 2002, the Dow might now be at 6000, the S & P around 650, and unemployment would have been very high. The real estate bubble would have never started. The greatest retail borrow and spend binge would have never occurred. Instead, the consumer debt levels would have been worked off, and a huge amount of pent up demand would have been built up.
And of course, with high unemployment, the stock market in the toilet, and retail buying at all time lows, it would have been a perfect setup for a long opportunity which would have resulted in a 2 – 3 year cyclical bull market rally within a secular bear market. Maybe by that time Maria and Michelle on Proctovision would have retired, gotten breast reductions, and would be pushing some type of exercise machine on a late night infomercial.
But instead, Uncle Al went on an acid trip, and decided to engage in a financial experiment with the largest economy in the world. He overliquified. He propped and he jammed and created a moral hazard which increased the speculative frenzy. Now we have record debt levels, record spending, record level of money supply, all the Fed bullets spent, and the greatest real estate and mortgage bubble of all time. At this point, I see little reason to be optimistic about the stock market condition in the near future, other than rallies which last a few months.
I continue to believe that we are now experiencing uncharted waters. We are participating in the greatest bear market of our lifetimes in real time. And we will be able to look back years later, and say that we saw it, felt it, traded it, and documented the madness all the way down. Yet only a few were listening.
The rest of the planet, oblivious to the unfolding disaster, will look back years later and say:
“What happened?”
“How did it happen?”
“Who saw this coming?”
We did, here at Capitalstool.com.
Position Summary:
No changes.
We are 72% short, 4% long, 24% cash.
Half Short:
XLNX at $22
CLS at $25
QCOM at $30
DELL at $28
TOL at $27
MMM at $128
COCO at $37.
T at $13
NCEN at $30
PG at $91
CDWC at $46
LEN at $56
COH at $28
Quarter Short:
FRE at $68
EXPE at $78
MCHP at $33
SBUX at $24
EBAY at $60
NYT at $51
WHR at $78
AMGN at $44
CCR at $49
NVLS at $52
SYMC at $42.
INTC at $31
MBI at $54
PNRA at $34
JPM at $35
YHOO at $19
BBBY at $37
MXIM at $39
THC at $47
KBH at $47
QLGC at $39
Half Long:
BGO at $1.31
HL at $4.10 |
