Comments on: STEEL IMPORTS DIVE 50%, NO RECOVERY IN SIGHT

By: Jack

Jack — Wed, 28 Oct 2009 23:18:10 +0000

Tomorrow is judgment day:

Will the key technical support level of 1040 on the SPX hold?
Will the tech market leaders (Apple, Google, Intel, Amazon) that have reported revenue growth and good earnings start to roll over with the junky stocks?
Will money managers buy this dip?
Will the market sell-off even if GDP and unemployment meets or exceeds expectations?

I’ll have 2 windows open at the bell, one with a market sell order and one with a market buy order.

By: James

James — Wed, 28 Oct 2009 22:17:26 +0000

Rob, you have to look behind the scenes…the markets may go down further and shorts will begin piling on. Then you will see one last HOORAH and desperate fund managers and retailers who missed this whole run up will pile on as well at the lower levels.

By: jt26

jt26 — Wed, 28 Oct 2009 22:13:32 +0000

Not likely we’ll make a new low and although cash may outperform the broad indices on a buy-and-hold basis it’s not a great alternative. All the indicators of the cost of credit (yes, even the ones that aren’t manipulated by the Fed) don’t put a high value on cash (yet). When will this change? There are no wars, no major trade conflicts (yet), no fights in any national legislatures, no riots. Of course, there is the usual stuff (XXX bubble, CRE etc.), but I’m beginning to think the world will survive without the US consumer and a lot of the global losses will just get happily aborbed by all those arab sheiks (I think there’s something like $6-7T in unregulated Eurodollars, mostly from OPEC; I don’t see everyday Saudis rioting over losing money on subprime mortgages either.) and our grand kids.

BTW, maybe because of the increasing reliance on the Fed put of 1990-present, but I have never seen a market environment that is so devoid of “fundamentals” and so reliant on front-running the government and watching price action. Besides, TPC’s good timing in calling March and Nov, he also picked a good time to start a macro trading blog. All those guys that started buy-and-hold investment-club-analysis blogs must feel like idiots.

By: SS

SS — Wed, 28 Oct 2009 21:20:52 +0000

Why does the money need to go into one of the three? Has anyone ever considered the fact that maybe stocks, bonds AND real estate are all a bad value now? With zero real inflation cash is not as bad as some would have you believe.

By: Rob

Rob — Wed, 28 Oct 2009 21:13:26 +0000

Even at this level equities probably still offer as good or better a long-term return as cash or bonds – unless the world (not just the US) falls into a Great Depression which everyone (except me) is now convinced will not happen.

My gut (which I no longer trust) tells me that the current correction is another attempt to draw in shorts for a final run over 1,100.

Quality was bid both yesterday and today. All my quality stocks are up to flat over the last two days. A few were up 4%-5% today. The sell off was strongest on junk. Some junky stocks have lost 15% to 25% over the past two days.

By: James

James — Wed, 28 Oct 2009 20:53:40 +0000

If you noticed the crap stocks (X, RIMM, ODP, banks) have been correcting. I mean…U.S. Steel has corrected almost 50% from its high, for example. The stocks that have good outlooks in the future and had solid earnings and profits that now make up the indices like AAPL, GOOG, XOM, WMT, AMZN. They have not corrected much which is why you aren’t seeing a total collapse. There has to be something that changes the market’s minds about these big boy stocks that will crash the market. Like if AAPL lowers guidance, etc. Until then, the crappy, fundamentally and technically weak stocks can still have some more correcting to do…

By: Rob

Rob — Wed, 28 Oct 2009 20:43:49 +0000

My original guess in September 2008 was S&P at 550 by sometime in 2011. But I no longer think that is likely. Only if GS makes the call. They called 650 for March 2009. They called 1060 for YE 2009. (Who really controls the market?) Otherwise, I would think a correction to maybe 10%-15% below fair value. The market won’t stay there. It will rise back to fair value fairly quickly unless short interest is extremely low at the bottom. Unless earnings turn down or interest rates rise dramatically a value of 900 can pretty easily be justified. I would bet that the market bounces between 800 and 1250 for several years.

By: HankB

HankB — Wed, 28 Oct 2009 17:37:34 +0000

I’d like to think that you’re crazy, but it’s not.

By: VCC

VCC — Wed, 28 Oct 2009 17:34:46 +0000

Final low of S&P 350, but most likely a year or two out. If you say impossible, look at Japan or Nasdaq.

By: SS

SS — Wed, 28 Oct 2009 17:28:17 +0000

So, if we can confirm that the real economy is so weak why does it feel like the stock market is gonna push higher?