T.H., January 08
MARKET QUOTES - Road Map
JUNE 20, 2007
This distribution that is underway won't lead to a sudden and significant correction - short of something that is event-driven. Instead, a new and higher trading range will be established as the market churns. This process takes time as the market will not roll over and play dead. It will work to suck in the remaining investor's dollars who are late to the game and think they are buying the dip. Only after that occurs, and the market seems truly correction-proof, is when a real correction can begin.
JULY 17, 2007
My prognosis at the beginning of the year was that we would have a very strong first half of the year and a weak second half. Though the second half has started strongly, I am maintaining that prediction.
SEPTEMBER 25, 2007
So many investors are hoping and preying that the FED has and will rescue them from the end of the business cycle and the lowering of corporate profits. That hope, I believe, is what is keeping the market afloat. But both the fundamental and technical signs of those hopes are cracking everywhere.
OCTOBER 17, 2007
Don't get me wrong, I don't think the Great Depression is around the corner and I'm no perma-bear. I'm just a realist. I believe the stock market should and will accurately reflect the current and future economic reality. Once it does it creates a mega-opportunity to find the next round of justifiable and justified market winners.
DECEMBER 11, 2007
We are in the process of fundamental economic change as years of tremendous leverage must be unwound. And we are tracing out a formidable long-term top in the major indices. The pattern is unmistakable, but takes a long time to manifest itself.
JANUARY 9, 2008
It is expectations and the changes therein that move the market short of major news, and expectations are being lowered every day. Yet the market is holding at major support. True, we are down 1400 points from the October highs, but some indices are still holding to their long-term uptrend lines. Does that mean we are getting set for a bounce? Yes, but we may experience a "crashette" first.
MARCH 25, 2008
There will be more financial fallout to be sure. There are more write-offs coming and there will be more hedge funds abandoned than Vegas condos. That will keep the pressure on the financial sector.
APRIL 30, 2008
I believe that we are at these big levels of resistance because of relief that the world did not end. The market is dealing with its credit crunch and other issues quickly as Wall Street usually does. Nobody eats their young better than us! But this will continue to be a trading market and there will be a better long-term buying opportunity going forward.
MAY 28, 2008
It has become a game of following the trend and chasing performance from the wise men who manage everyone else's money. When things are finally most lopsided, it all ends with the destruction of tremendous amounts of capital. We have seen it play out - right before our eyes in each of our examples - and now it is about the time that the latest craze destroys itself and everything it has touched. Get ready because it is going to happen again.
We like to think the markets can discount all that is occurring and look forward and past any problems. But sometimes markets would rather be in denial as to what is obviously coming. It's part of the trick that the market loves to play called resiliency. If it doesn't go down on bad news then it has to go up. We usually have to look past the counterintuitive market-oriented conclusion to get it right. Once consensus believes the market's truth, then the real move begins.
JULY 1, 2008
Usually when the leadership fails after prolonged weakness, it is about time for an ending of the current trend - and the current trend is clearly lower. But that doesn't mean the new trend will be higher. Instead, I expect there could be a cathartic "crashette" to new range lows for most other of the major averages.
JULY 9, 2008
From a technical perspective, markets are more washed out and oversold as any time since 1990 and sentiment is as bearish as it was during the 87 crash. This type of environment is the most dangerous to the market because markets can really drop hard and fast when the market is most oversold. That would jibe with my expectation for this phase of the market to end with a "crashette".
AUGUST 6, 2008
The fact is - as we have been saying - there is plenty of oil around, all you have to do is pay for it. Prices have not been reflecting the dictates of supply and demand and those who say financial speculation is not to blame is talking their book, ignorant or lying.
SEPTEMBER 5, 2008
This current bubble has been brought about by hedge funds. They have levered themselves and borrowed multiples of their assets under management primarily from brokerage houses - hence their troubles. But now the only asset that had been working - commodities - is broken and falling. It is creating the same rush to the exits in an illiquid market as the CDO market or any market where a bubble has burst and once overwhelming demand disappears. It also creates the need to sell anything that is "not nailed down", like most stocks.
SEPTEMBER 16, 2008
The government has good intentions in trying to bail out those who are too big to fail and leveraging themselves (us) in order to stem the tide of capital destruction. But they are doing nothing more than delaying the inevitable - like putting their proverbial "finger in the dike". It's a noble effort but there is little that can put off what must eventually happen.
As I have said many times over the past year, "Bull markets and an expanding economy can only come with credit expansion - and we are experiencing credit contraction".
SEPTEMBER 30, 2008
So, what's next for the markets? In a more normal time and circumstance we could use technical analysis and some fundamental forecasts to guide us. But these are not normal times for the simple reason of the liquidation and deleveraging that is heavily underway. Many markets and individual stocks went way too high as the greater fool theory had played out. Now the opposite is occurring and many stocks are overshooting to the downside.
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