OK, the market did what it had to short term, take out 12,000 and bounce hard. Now I believe we're going to get a 1 - 4 week rally ranging from 2 - 5% before the next leg down. We're in the last two weeks of quarter end, where news tend to be quieter ahead of earnings season. Of course there will be earnings warnings and economic data, but the market needs some relief after the volatility over the last 3 weeks, and a small relief rally would be just what the doctor ordered (a.k.a "Bear Trap"). Now having said all that, would I buy into the rally, NO. In fact, I would use the opportunity to move to almost 100% cash and wait for the opportunity to get short. If you're not a short seller then go back and review your trades from the bull market and prepare and keep a watch list for the next. Otherwise, you probably have a few weeks to take a breather. Why am I so scared of the market, even if we get a follow through confirmation rally day? The politicians got involved in trying to calm us down. They seem to be trying too hard to tell us everything is ok. Not only domestic politicians but foreign one's. Now that's scary. I feel like something is about to give and global governments are holding on to the last fiber of a string about to snap. So prepare for more calming talk from the fed, white house, congress, and other foreign leaders. Then prepare to look out below if you buy into it. Does this have to turn out to be some multi year bear market, absolutely not. Does it have to go further lower, yes. But as always, that's when the opportunities are the most plentiful and fruitful!! PS If it were up to me, I'd love to see 10,000 on the DOW violated. That would set off a panic bottom worldwide!!! Good Luck. WHAT DO YOU THINK?
This week brings on plenty of news. FOMC meeting Housing #'s FEDex earnings ORCL earnings. For the fomc meeting Wednesday dont expect a rate cut, 99% chance they keep rates unchanged at 5.25%. Housing #'s will be very important this time around, any weakness could cause more selling in homebuilders and the overall stock market since anyone hoping for a soft landing may be surprised. As for a 1-4 week rally I give it a 30-40% chance, I think the market still heads further down, a close below 12,000 would be something interesting and a drop to the 200 day around 11700-11800 area would also keep bulls up at night. The futures tonight show a very positive opening for the markets tomorrow, I think this is being led by the rally in the ^n225 tonight. The bulls may lead the opening strong but its the anticipated economic reports that will move markets once again this week.
"Does this have to turn out to be some multi year bear market, absolutely not. Does it have to go further lower, yes. But as always, that's when the opportunities are the most plentiful and fruitful!!" Why is everyone so afraid of this bear market that could be occurring at this very moment. You cant always have the bull market you want. The bear may finally have taken the market by surprise.
calibertrader you hit the nail on the head. the amount of effort to manipulate this market and tell people things great by our leaders assures another huge leg down. i don't think we get 5% but i can see 2-3% then in a few weeks a huge plunge of 1000 pts or more
If you're a swing trader the macro or change in the macro trend is extremely important to the p&l. If you lean against the market too long, major pain will be suffered. Just pointing out that this may be a great setup to the short side if another leg or bear is in the cards, which obviously I believe it is. Just not sure of the severity. If you're a day trader, who cares, bull or bear, it's the intraday volatility and follow through that matter.
I'm curious wht straw breaks the camels back? Sub prime spills over to prime? Major Terrorist Attack? We're already in recession and don't know it(always know after the fact)? Major currency collapse? I also believe that earnings are going to be a disaster. If Q1 is any indication then the skeleton's are going to be coming out of the closet this quarter. Guidance in Q1 was terrible and I don't think it's all baked into future estimates.
it might just fall on its own.its so hard to say as nothing has mattered to the market for so long its impossible to know what the market cares about anymore.
earnings will be coming down, corporate profits should slow during the second half of 2007. Sub prime will eventually spill over into prime and as for the recession, I see a more than 50% chance of that happening due to slower consumer spending, drop in GDP, housing collapse and inflation worries.
Depending on your time lines, style and instruments traded these market conditions present tremendous opportunities for fabulous wealth IF you keep a cool head and use your knowledge and skills. At any rate, bull or bear...I don't care.