Oh, I agree it won't be straight down. I actually think gifted traders (true traders) can have a feast on the volatility here, too. We'll see sharp up and down days. But I'm convinced earnings (a few companies like RIM excepted) are going to absolutely tank. Some sectors will perform better than ever. I see, taste, feel and read recessionary forces. I'm not just piggybacking off of Bernanke's or anyone else's views. The consumer has a look of mixed angst, anger, frustration and fatigue painted on their face, as they fill their gas tank, or buy groceries.
ByLo, you may well be right but when volatility picks up like it did the last couple of months it becomes less about the actual numbers and more about sentiment and perception. How else can one account for 3% moves in a day? Certainly earnings didn't suddenly get appreciabely better in that time frame but sentiment did. The sentiment was so bearish that the market just wouldn't go down anymore no matter what was thrown at it, that is always a tell. You had a great call starting this thread but recognize that while you may still be proved correct, as ultimately the numbers do matter and perception can only rationalize reality for so long, that when volatility picks up sentiment often trumps stats. Good trading to you.
I agree that there can be a time where there is a disconnect between earnings and market performance, but Mr. Market will ensure that this arbitrage opportunity will close eventually. I don't think it's likely that the market marches higher while earnings march lower. If you buy now thinking earnings will come in better than the market anticipates, or that there is unwarranted fear about earnings shrinking over the next year or so, you will do really well on the inevitable upside surprises.
No conviction to go long outright other than some LEAPs in some gold stocks (NEM, GFI) but have on a large position of put credit spreads that will pay off nicely if we don't make new lows by expiration this month. After that will reevaluate, sentiment can only drive the market for so long.
But we might have to price in inflation, its effect also rises the price of stocks. So if the real inflation is around 10%, there isn't much downside left beyond the so far bottom of 1255...
if the dollar continues to fall and the world needs to park money us stocks wil be cheap,or cheaper with currency conversions
Highly inflationary pressures are not conducive to equity market performance. Did you hear the story of the industry (airlines) that lost 1 billion dollars because of fuel prices? Okay, it's not a story. It's true. And ATA just filed for liquidation BK today, ceasing all operations. Hey, and refiners are basically refusing to refine oil because they can't get appropriate margins, as they have to buy crude on the open market. Chain restaurants are taking huge hits as the price of their food supplies has risen at the fastest pace in 20 years, and they have to choose between raising menu prices and passing the costs on to customers (reducing customers), or absorbing the costs (reducing profits) - I guess either way they lose.