Monday, June 19, 2006

Flirting with Disaster


Hi there, Miss 11,000. I passed by a couple times in the past, but today, I confess, I can’t get you out of my mind. I saw you from across the room, our eyes met three times, and I could feel the electricity. You are such a flirt, I can tell – and I know that you are bad for me, probably playing this game with all the stock market guys. But you had me – I just wanted you to know.



And then, I did something stupid, and I turned away for a brief second. And when my gaze returned to your direction, you were gone.

Until we meet again, I bid you ado, Miss 11,000.


With 11,000, such a psychological level, being whipped from underneath us, we are now playing a new ball game. There is no question (well, there are always questions, because, hell, I can’t predict the future) that a Bear Market could be lurking from around the corner. It seems like every hour, between economic indicators, FED rate hike warnings, and housing stats, there always seems to be a new article screaming “WATCH OUT! YOU SHOULD BE LEAVING THE MARKETS” – and you don’t need to be a market professional to decipher these headlines…



(let’s see how many I can scoop up in two minutes searching Marketwatch’s website, I’m sure we’ll be able to find similar articles at other major websites:


Housing Economic slowdowns:



http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B57D1C3F0%


2D3AA2%2D4DED%2DA259%2DC4E68DE13BFF%7D&siteid=mktw&dist


Fed increasing rates, and how this will effect economy:





http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BA1BD61BA%2D

0DDD%2D4179%2DBCE2%2D9D5E4236EB71%7D&siteid=mktw&dist

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B5FE1C1B1%2D
07C2%2D4D8C%2D9FB0%2D5BB2776129AC%7D&siteid=mktw&dist=



CPI and increasing worries:

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BD48581A6%2
D2D08%2D4BEC%2D9F07%2DDF205AFC7C29%7D&siteid=mktw&dist=



Retail taking a beatdown:



http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B28EA98F8%2D

9C79%2D43BB%2DB41C%2D73DFFCCAA191%7D&siteid=mktw&dist



And this list, just took me about one and a half mintues to whip up.



So, the whole idea/trader’s alamanc saying – “Make your profits from beginning of the year until May, and then walk away,” has proven to be correct thus far. And if Big Ben keeps up with the rate hikes, I am sure we haven’t seen the worst of the correction/emerging trend reversal – because the market is still left with the uncertainty of :



WHEN WILL THEY STOP?



And like what has been done in the past, our only answer to when Bernanke and team will stop, will be data depenedant.

(click to see larger picture)



Some people may argue that there is a bullish sentiment occuring right now, which started forming at the end of the day, today. I could see a bottom happening, but the two pieces we have to look at are: 1. Volume increaseing on the way down, not up (Look at volume in Ex. A compared to Ex. B) 2. Look at the evening star candle formation occuring - bearish to say the least.


Tomorrow, I’ll go over the technical standpoint of the markets.

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