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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (71571)	11/23/2007 5:37:34 AM
From: Chispas	Respond to of 116555

Fiend Commentary - - Of course the big news of Wednesday's sell-off was a Dow Theory sell signal being achieved. The Dow closed below its closing low of August 16 to finish at its lowest level since April 17. The trannies hit another 52-week low with their lowest close since September 2006. The trannies along with the S&P 500 are now in the red for the year and the Dow is not too far behind along with most of the other major averages. Momentum for the Dow's long term trend is now at its lowest level since December 2005. The indicator isn't negative but its strong uptrend has clearly ended. The Dow is now 3% below its 200 DMA which is its lowest since October 2005. It is hard to believe the Dow was above 14,000 early last month. November has been mostly weak with two sessions of 300+ point losses and three sessions of 200+ point losses. Oil is still hovering near $100 a barrel and gold continues to hang around the $800 an ounce area. The dollar continued its free fall and the 10 year Treasury dropped down near an even 4%. The Fed is almost certain to cut rates again next month but the economy seems to be working its way lower regardless. In reality and cuts that the Fed performs is not likely to have much impact until the housing/credit bubble fully deflates. Many folks are just not going to be in a position to take advantage of the lower rates. The fact that banks are struggling mightily with liquidity means that it is going to be difficult for consumers to get financing. I'm not sure what the Fed can do at this point besides go back in time and not create the bubble in the first place. Even with the bruising over the last few weeks sentiment amazingly remains fairly calm. The VIX is way up again but there is still a general faith in the Fed's amazing Wand of Liquidity. Folks just figure no matter how bad things get that the Fed will find a way to bail everyone out. Art Hogan gets quoted a lot in the usual media channels and he had a bizarre one on Wednesday. Asked to explain the heavy selling he stated (presumably with a straight face) that it is not unusual to see selling ahead of a holiday. Huh? What? Really? Well I checked back for the previous 16 years of day before Thanksgivings and I found that there was NEVER a big loss like on Wednesday. The biggest loss during the period was a 0.9% loss (95 points) in 2000 which was early on in a bear phase. Other than that there were only four other periods (out of 16) that had losses and they were all moderate to small. In fact, the past five years in a row have seen gains before Thanksgiving. If the Dow was making gains you would hear everyone talking about how this is the best period to be in stocks and how Santa Claus was just around the corner. I wish everyone a safe and Happy Thanksgiving. -------------------------------------------------------------- fiendbear.com