Post-Easter was expected to be weak especially with the intermediate term trend down. The morning was up in anemic fashion but with little volume or reasons to rally further broke down. A solid sell-off ensued especially the NDX however on anemic volume again. The market caught a bid and rallied anemically into the close. Pretty much back where we started minus a couple of points. A couple of interesting thoughts. This market has been so tight for so long in an upwardly pointed channel that many long-term sideliners threw (are throwing) the towel in for a small crash in which to get long. I don't know. I have been a firm bear in the SPX since 1310 as advertised unabashedly but this sell-off may not have big teeth and may wind down. In any event that would make it tougher to pick an entry for long-term funds and necessitate a scaling in approach and a stock picking approach over market timing. When and if the Fed stops raising rates the market will gain some traction until then I'm waiting and accruing a focus list for a long portfolio. I like market neutral approaches and used to applly that strat but it is alot of work.
OOOps, Maybe not. âThe conventional wisdom that the end of Fed tightening is immediately bullish for stocks is simply not supported by history. In looking at the last rate hikes in all 16 instances going back to 1920, we found that the Dow Jones Industrial Average declined by an average of 19.1% from the date of the last rise in rates to the eventual market bottom. In fact the Dow dropped by at least 10% in 12 of the 16 instances and by more than 20% half of the time. In only four cases did the Dow actually rise after little or no decline, and one of those times was in early 1995. That is why Wall Street likes to bring up that one case while ignoring the bulk of the evidence.â
Sheesh. Continued unbridled enthusiasm. All my long-term shorts pretty much blown out this week. 4/18 was ridiculous. Oil @ $75. Inflation even the gov. is admitting . Keep those presses rolling boys. Let's create liquidity and roll from one bubble to the next. Speculation I suppose fueled by the metals complex followed on the heels of the real estate money looking for the next juicy return. Penny stocks bubbling. In any event I got clobbered as I was without stops when the 2 pm "FOMC minutes" were released as I never thought we would see a 300 pt dow day. Been awhile since that type of action. The market done taught me a lesson I already knew again. Well, my new short this am is looking OK but I gotta say with speculative fervor awakened I could see us breaking out and away at least until the music stops. Call me trigger-finger Hoss.....
crazy thing here, came into the month about 60% short added on another 20% or so during the 1st week of April, and i'm actually up about 1 1/2 % or so. I short indi stocks with ugly looking charts and the qqqq's this time, but except for the dow 30 this looks to be all index related. I could very well be proven wrong, but in the meantime I am real happy with the way this month has gone so far for me.
That's great!!! I used to a have neutral bias and then screened stocks and shorted the chaff and went long the wheat but it is alot of work. With this market environment of primarily sideways action a diversified long-short strategy with options, cash, and maybe some covered calls would be a good safe strategy. I guess I'm lazy. If I was managing OPM and had a big AUM I think this would be my strat in the current market environ. But then I could afford to hire some minions.
From Bill Cara: "I donât know about you, but Iâm getting a little tired of the intervention in this market by the U.S. Administration and Fed. These people talk about a free market system, so where is it?" "When Earnings Season comes to a close in a few days, I think traders are going to be left wondering about the future. I think earnings growth rates will become topic du jour. You see, higher interest rates, higher commodity prices, roller coaster forex moves, and increasing global political tensions donât make for a healthy business environment." "Old-time traders have not seen a week like this since October 19, 1987. Itâs not that the market crashed or anything; but traders experienced unaccountable action they have not experienced for a generation. I told you a week ago I smelled it coming (âYes, I have that eerie feeling we traders are in for a different kind of religious experience in the not too distant future.â)"