Too much Pessimism and too many shorts.

[Capablanca]

Quote from staffpro:

just interesting, after my previous post, why is it that you think this isn;t the bottom? can you give any concrete reason?

Multi-year bear market cycle began with year 2000 dot com bust. Yes I know it sounds strange. The 2000 to 2002 fall was the first down leg. 2003 to 2007 was the return move that did not convincingly break above the 2000 highs. We are now looking at what is potentially the beginning of a leg 3 downward move.

The fundamental backdrop to this is a bubble during the stock mania of the late 90s transferred to housing that has now burst. If one recalls the 2000 bust, the Fed initiated a series of rate reductions that were touted to lift the market. It took two years for that to happen. During that time excuses proliferated as to why the market would head higher yet after each rally a downturn followed. Hey maybe this time the market can discount its way through a recession---but I wouldn't bet on it.

If you want an extreme example of the kind of problems being faced examine Japan after its bubble burst in 1990.

 

[mokwit]

I think we have a lot more hedge fund deleveraging to come as banks call in their loans, including prime broker loans. Probably seen as the riskiest. If banks can call in loans that shut down viable real businesses they are not going to baulk at hedge funds. Could be moves to the upside as HF's shorts are covered to comply. Many pros may have sold and be cash n the sidelines, but have all the Walt & Irmas out there woken to the danger to the point where they are redeeming their mutual funds yet? I think early days with a lot more to come on that front. They are still listening to Ben Stein because he is telling them what they want to believe. The hypnosis at the early stages. Eventually the stark truth will prevail, a lot further down IMHO.

To me the real bottom comes when everyone feels there is absolutely no point in owning stocks - right now the public and many funds are still buying the last bull market just gone because they fear they are going to miss the next one - early correction stuff, they are 2 years too early IMHO.


That said, there are going to be inevitable rallies and fakeouts to the upside on the way down, maybe as early as suggested by OP - the bigger ones driven by ro money on the sidelines coming back in - as it did all the way down from 2000 to 2002.

 

[lp3yc]

Quote from day7793:

Technically the market is way oversold.
All the bad news are out,

That's a good one.

Markets can stay oversold way longer than you can stay solvent

 

[ASusilovic]

Quote from mokwit:

I think we have a lot more hedge fund deleveraging to come as banks call in their loans, including prime broker loans. Probably seen as the riskiest. If banks can call in loans that shut down viable real businesses they are not going to baulk at hedge funds. Could be moves to the upside as HF's shorts are covered to comply. Many pros may have sold and be cash n the sidelines, but have all the Walt & Irmas out there woken to the danger to the point where they are redeeming their mutual funds yet? I think early days with a lot more to come on that front. They are still listening to Ben Stein because he is telling them what they want to believe. The hypnosis at the early stages. Eventually the stark truth will prevail, a lot further down IMHO.

To me the real bottom comes when everyone feels there is absolutely no point in owning stocks - right now the public and many funds are still buying the last bull market just gone because they fear they are going to miss the next one - early correction stuff, they are 2 years too early IMHO.


That said, there are going to be inevitable rallies and fakeouts to the upside on the way down, maybe as early as suggested by OP - the bigger ones driven by ro money on the sidelines coming back in - as it did all the way down from 2000 to 2002.

It´s as easy as always ....trade what you see...

 

[MiniDowTrader]

Quote from Capablanca:

Multi-year bear market cycle began with year 2000 dot com bust. Yes I know it sounds strange. The 2000 to 2002 fall was the first down leg. 2003 to 2007 was the return move that did not convincingly break above the 2000 highs. We are now looking at what is potentially the beginning of a leg 3 downward move.

The fundamental backdrop to this is a bubble during the stock mania of the late 90s transferred to housing that has now burst. If one recalls the 2000 bust, the Fed initiated a series of rate reductions that were touted to lift the market. It took two years for that to happen. During that time excuses proliferated as to why the market would head higher yet after each rally a downturn followed. Hey maybe this time the market can discount its way through a recession---but I wouldn't bet on it.

If you want an extreme example of the kind of problems being faced examine Japan after its bubble burst in 1990.

Couldn't agree more. Millions have already lost their homes and millions more to come. Pessimism? Nah...that REALITY.

 

[GTS]

Quote from day7793:

Technically the market is way oversold.

All 3 major indexes are at lowest stochastics now. All the bad news are out, we had bad job report that did not tank the market to new lows. In fact we did not test Jan 23 rd lows today which surprised me and I think we will test them Monday and than there will be some kind of capitulation. The market has been down 8 sessions in a row and has shaved off 100 points in SPX. Nothing goes down straight. Not even bear markets. Bear markets need rallies, constant diet for doom and gloom bottom fishers.

We will have a reversal and than bears will start shorting rallies on the way up and it may take some time to work back.

Do not forget Fed rate cuts are due by March 18, 20008 or any day sooner at least a 0.50 point to 0.75 point doozie coming up..that will create a relief rally right away.

Technically the market may be oversold but in the long-term the market is a refection of the health of the companies in the market and with the economy headed in one direction (down) there is no other place for the market to go but down.

Now if you think this is the bottom of the economic downturn and all the news from here on out will be better then I can see buying here but most people would agree we are just at the start of this downturn in the economy - earnings will shrink and these cheap P/E's will end up being expensive. The economy is like a supertanker, lots of momentum and it takes a while for outside influences to affect it.

"All the bad news is out"?!? Wow, its hard to believe someone can be that out of touch.

Here's the real indicator everyone should be looking for:

When day7793 throws in the towel, gives up his cheerleading and says we are in a bear market - that will be the time to start buying hand over fist...we ain't there yet.

 

[9999]

Quote from lp3yc:

That's a good one.

Markets can stay oversold way longer than you can stay solvent

Shhh....don't tell him that, you're being too negative

 

[wee man]

Just the other day my pal Ben called and saught my council.

I told him to do something that will make them sit up and say... 'WTF?' and then stand back and see what happens after the dust settles.

So, on Monday or Tuesday of next week my pal Ben will make the following announcement....

'Interest rates reduced to 0%'

You heard it here first.....

wm out.

 

[nutmeg]

Paraphrase a quote from the Intelligent Investor, if the market fails to drop on more bad news, it might be time for a second look.

 

[EMRGLOBAL]

Take your head out of the sand. Bad news is everywhere and the Powers that be try to hide the news by distractions and dis-information.

The numbers were not bad, considering where they will be next quarter. Job loss was minor but its starting. This is going to be the SUMMER of pink slips for the majority.

Oil is a key factor and the "FEDS" decsion to kill the dollar has forced a flight to "Quality", that in oil and gold. Of course the gas prices will rise and continue to cramp the consumer.

All you bleeding heart socialist on this site can write your "DEMORAT" rep and tell them to suspend the "TAX" on gas if you want lower prices at the pump.

The mortgage bail out, ONE HELL OF A SOCIALIST PLAN, will not work if "Energy Prices continue to rise", the falling dollar continues and Food Prices continue to rise.

So, why should the market rally at this point? What is the logic behind the continuation of the BULL?

This Market is going a lot lower. We should break 11500 in a few weeks, with a little short squeez 200 point pops here and there.

Weds was the day I returned to shorting any rally. I will continue until otherwise.

Im still awaiting the first news of the "First" bank to fail in the US. Might be on the 13th page of the Times, hidden among all the other bullshit of dis-information and crap that is reported. But, it will be mentioned.