I have been expecting a near-term bottom in the market. I am not so sure now.
A near-term bottom may be at hand, but the market action this week has been terrible. Rather than stocks absorbing bad news, bad news is being sold, hard. Citigroup rocks the market. Retail sales hammers the market. Intel smacks the market. Even with the market so very oversold today, and a mid-day rally possibly signaling a bottom, stocks could not hold.
We did get a rally in some very hard hit stocks, such as financials, retail and some tech. Previous winners, such as ag, were taken out and shot. Perhaps the reversals are indicative of a near-term bottom forming, as the winners need to get whacked before the bottom is in place, but I'm not sticking around. The rally in the dogs is most likely a dead-cat bounce before the downward pressure resumes.
We are in a bear market, and I was being too cute liquidating a portion of my shorts to take a trading long position last week. I was wrong, or at least what I was looking for did not materialize, so I unwound the long position and took a small loss. Best to be wrong small than wrong big. I did not re-establish the corresponding short position but I am again net short stocks. I will increase my short position on any strength.
Investors are playing Whack-a-Mole with equities, banging the market down every time it lifts its head up. At these levels, the market could just as easily crack heavily on the downside as it could bounce.
My preference would be for the market to rally so I can get heavily short again.
Rumours are that a large, well known hedge fund is liquidating several billion dollars. The hedge fund is not going under - it has many more billions of assets under management - but it could explain the intense selling as of late. These rumours are always floating around, and I have no idea if it is true or not, but that is what I heard yesterday.
For anything other than the long-term, the only positions to have in a bear market are either sitting on the sidelines in cash or short. That is where I am.
T, I feel exactly the same
"too cute" looking for this tradeable bounce. I think when everyone on Wall St is looking for it, it doesn't work.
I've been hoping to see a 4-6% type of life so I can reinitiate shorts/cash exposure. But its nowhere to be found. Looking like 2002 all over again.
Posted by: TraderMark | January 17, 2008 at 01:34 PM
"Looking like 2002 all over again"[TraderMark]
that's great news.
I was afraid it was just 2001 and we had another 12 months of orderly decline ahead of us . . . a grueling wait that would've been.
Posted by: psychodave | January 17, 2008 at 02:01 PM
lol
might be May 2000, 2001, or 2002
pick your poison! :)
Posted by: TraderMark | January 19, 2008 at 05:35 PM