Market thoughts
#1
Posted 04 June 2009 - 05:58 PM
#2
Posted 04 June 2009 - 06:05 PM
Chances are tomorrow's NFP report will show that the economy lost less than 500K jobs and the market will celebrate. I am not sure though what we are celebrating. If I am a trader who loses over 500K for several months in a row and one month loses 450K, do you think my clients will celebrate and say "he is stabilizing"? I don't think so.
Also the most upbeat earnings projections for S&P 500 index for 2009 is $40 (right now we are at 10 or so, but we are hoping for $40). That makes it a P/E of about 24 at S&P 950 (current P/E is about 100). This is our hope. This is on the absurd side of the fundamental equation. Other economic reports are pretty bad too. I also hope for the improvement in the economy, but at these levels it is becoming more and more difficult to invest based on hope.
We are also celebrating high oil prices and higher interest rates. Are we sure? Every time the stock market starts following oil, it translates in parabolic moves in NASDAQ. It never made any sense to me, but it is probably attributed to the fact that 9% of people who are unemployed and now can't afford to drive, sit at home playing with apple gadgets and google job search. Let me know if there is a better explanation.
I know these are funnymentals, which have very little to do with market timing, but the above mentioned thoughts were subjects of my recent conversations with many hedge fund managers, who manage a lot more money than me and who are very successful. What I picked up from those conversations is that at current levels they are not interested in buying stocks any more and many are shorting or looking for a place to short or unload longs. They are not advisors who should be faded more often than not.
In other words, I am no longer interested in the long side of the market. I am getting bearish here, but technically there is nothing compelling going on to justify a short position. And this is kind of a delema. By being bearish, I don't mean that the market will go to March lows, but I believe it can easily go to 800ish.
Tomorrows celebration of 450 or so thousand people losing their jobs might actually make me start building short positions with options and futures.
That is just what I see. Sorry, no technicals in this post. Technicals are neutral right now in my book (some are bullish, some are bearish).
Denleo
Thanks for taking the time to offer your professional oppinion Denleo. It means a lot to me.
zz
#3
Posted 04 June 2009 - 06:12 PM
#4
Posted 04 June 2009 - 06:13 PM
#5
Posted 04 June 2009 - 06:19 PM
#6
Posted 04 June 2009 - 06:19 PM
Stock goes up.
Investors sell stock.
Investors pay taxes.
Investors short stock.
Stock goes down.
Investors cover shorts.
Investors pay taxes.
Hummm.... Not sure I can figure this out.
BW
#7
Posted 04 June 2009 - 06:20 PM
#8
Posted 04 June 2009 - 06:29 PM
Chances are tomorrow's NFP report will show that the economy lost less than 500K jobs and the market will celebrate. I am not sure though what we are celebrating. If I am a trader who loses over 500K for several months in a row and one month loses 450K, do you think my clients will celebrate and say "he is stabilizing"? I don't think so.
Also the most upbeat earnings projections for S&P 500 index for 2009 is $40 (right now we are at 10 or so, but we are hoping for $40). That makes it a P/E of about 24 at S&P 950 (current P/E is about 100). This is our hope. This is on the absurd side of the fundamental equation. Other economic reports are pretty bad too. I also hope for the improvement in the economy, but at these levels it is becoming more and more difficult to invest based on hope.
We are also celebrating high oil prices and higher interest rates. Are we sure? Every time the stock market starts following oil, it translates in parabolic moves in NASDAQ. It never made any sense to me, but it is probably attributed to the fact that 9% of people who are unemployed and now can't afford to drive, sit at home playing with apple gadgets and google job search. Let me know if there is a better explanation.
I know these are funnymentals, which have very little to do with market timing, but the above mentioned thoughts were subjects of my recent conversations with many hedge fund managers, who manage a lot more money than me and who are very successful. What I picked up from those conversations is that at current levels they are not interested in buying stocks any more and many are shorting or looking for a place to short or unload longs. They are not advisors who should be faded more often than not.
In other words, I am no longer interested in the long side of the market. I am getting bearish here, but technically there is nothing compelling going on to justify a short position. And this is kind of a delema. By being bearish, I don't mean that the market will go to March lows, but I believe it can easily go to 800ish.
Tomorrows celebration of 450 or so thousand people losing their jobs might actually make me start building short positions with options and futures.
That is just what I see. Sorry, no technicals in this post. Technicals are neutral right now in my book (some are bullish, some are bearish).
Denleo
great post
#9
Posted 04 June 2009 - 06:33 PM
-Scott O'Neil (son of William O'Neil), Portfolio Manager at O’Neil Data Systems, when asked where the Dow would go in the coming months
#10
Posted 04 June 2009 - 07:03 PM
That's the nature of a bubble.Thank you for your observations here, Denleo. Seems like they are setting up time after time again to totally ignore bad news and bust up on less bad news. Will keep working till it don't.
As Dennis mentioned, the pros aren't interested in buying anymore and now have their fingers patiently waiting on the "eject" button. It seems like some are already exiting. The "yahoo traders" are counterbalancing that with they always do, chasing what's already been hot. The market, as a result, is churning tediously lately. I expect the drop Dennis is looking for is close at hand.
Edited by milbank, 04 June 2009 - 07:04 PM.
"The power of accurate observation is commonly called cynicism by those who have not got it."
--George Bernard Shaw
"None are so hopelessly enslaved as those who falsely believe they are free."
--Johann Wolfgang von Goethe