Stage set for a bounce
August 15, 2007
Few days of selling and panic has set up this market for a bounce in a near term time frame. Such bounce will be a oversold reflex bounce. Such bounce are only for short term nimble traders and does not indicate it is safe to jump right back in for long term traders. For nimble traders this will be a playable bounce of few days with good profit potential.
For the first time in this correction we are witnessing good selling and some washouts. The stocks down 25% plus in 65 days has quickly climbed to 1183 after making an attempt to stabilize at 800 area. The stocks up 100% plus is also witnessing deterioration. All these things are good as this can drive the market down to levels from where a multi month rally can develop.
For the first time in this correction we are witnessing good selling and some washouts. The stocks down 25% plus in 65 days has quickly climbed to 1183 after making an attempt to stabilize at 800 area. The stocks up 100% plus is also witnessing deterioration. All these things are good as this can drive the market down to levels from where a multi month rally can develop.
I hope you are right Pradeep, I need a bounce to exit my long positions. I'me suffering much with my funds.
ReplyDeleteBest
Is the call on a bounce based on an extreme on your market monitor? When was the last time the down 25% was at such a low level? Thanks! and great timing on the vacation!!!
ReplyDeletemkt oper - "When was the last time the down 25% was at such a low level? " Did you mean such a HIGH level? at 1183 this is the highest on the spreadsheet.....
ReplyDeleteYou may have read my "The Smart Money" post.
ReplyDeleteClike on
MarketSwimmer
I'm glad to be in cash.
ReplyDeleteWithin a matter of months, most "long term" traders and investors will be kicking themselves for not buying at these discounted prices. These are liqudidation, going out of business prices for many funds. Take advantage of it while it lasts.
ReplyDeletef.
ReplyDeleteare you sure this is not the end of of a bull market or a crash?. All look awful.
So much for the bounce.
ReplyDeleteThe market could still go way south. People saying that it is a great time to buy now have no idea what they are talking about. Everyone is simply guessing. If the US goes into recession all will go into the toilet much worse.
Do not listen to people saying buy now as a few months from now you will look back and see this as a great buy opp. Maybe it will be and maybe it will be much worse months from now. Today nobody knows.
It looks bad, very bad. I have some funds in a Schwab account, in addition to other brokers. Schwab's website is currently not functioning (you cannot log-in) and also its phone lines are down. Un-f-ing believable!! Main street must be in full panic mode now. Is this a sign of capitulation?
ReplyDeleteNote to self: Close the Schwab account and move to another broker. This is a perfect case in point for having multiple brokerage accounts!!
John,
ReplyDeleteYou must not have been in the market long. The market was hypershort before this fall. At the very least those shorts will cover for a large bounce. I have been buying for the past 2 days. I usually just stick to daytrading but there is real value down here. Anybody who has ever seen a real top form knows that markets don't just fall off a cliff, they take time to form meaningful, distributive tops.
F.
I love fading the retail trader. The clue today was Charles Schwab!
ReplyDeletehi f.
ReplyDeleteI've read also that CNN has a permanent image of the NYSE in a corner.
Now the Schwab thing..
Does this mean we are in the bottom?. More panic is difficult.
BTW why XLF (the bankers!!!) has finished today up?. They are not supposed to be the responsible of this situation?.
Today's XLF bounce was probably short covering. Most likely XLF's decline will continue. I'm waiting for the next shoe to drop. A major hedge fund collapse is coming and perhaps a major bank too? Remember, hedge funds have until 9/30 to sell to meet redemption requests (which are probably rising). So more selling is coming. The major problems are still out there and we have no transparency yet. Watch earnings in September (9/12-13) for GS,LEH, BSC,MS and MER in mid-October. Listen to those conference calls. Then 3rd qtr earnings warnings & announcements hit. Looks like downside pressure will persist for some time to come. Unless of course the Fed cuts rates then the XLF (and market) will blast up 10-15% or more. Which of course would be short-lived as that would indicate we are heading for recession in 2008. YIKES!!
ReplyDelete100% cash here...watching and waiting.
Pradeep,
ReplyDeleteWhat do you have on your buy list? I am going to be doing a good deal of research tonight. I'm going to be looking for stocks within 15% of their high with good growth... with post here later with some ideas
I bought CROX, its more then 15% off the high but its very volatile, i think it will recover strongly from here going into next earnings. 200% plus EPS growth.
ReplyDeleteExcellent call. To anticipate a bounce well ahead of time and put your neck on line saying so when the action was so ugly, is sure sign of market mastery.
ReplyDeleteWhile everyone was screaming buy dips, you kept saying no and were right about it. When everyone was convinced that there is more downside ahead, you predicted bounce. Simply amazing.
I am learning a lot from your blog. This is the best blog on market currently. Your market monitor is priceless tool.
Hope you are enjoying your vacation in India.
My watch list for things to take off:
ReplyDeleteEarnings acceleration + great RS:
AEY
AIRM
ANDE
ANSS
ATLS
BCSI
BKH
COGT
DK
ERES
FCN
FDRY
HK
HMSY
LWAY
MEAS
MLAN
NTCT
PETS
RAVN
RECN
RRC
SRCL
USM
VMI
WMS
WXS
Some others I'm watching are:
AVT
ABB
WCG
KTII
COH
CNH
HURN
DLB
ZUMZ
ARD
EBIX
SILC
CLB
AAON
PCR
NM