Reaching for the bottom
A fifteen percent bounce in how many days? Three? Not too shabby. Let’s be realistic though, 8726 for the DJIA and 887 for the SP500 still sucks pretty bad. My personal account doesn’t look so hot but it’s not as bad as buying a condo in Miami at the top of the market.
I’m a little, well secretly upset, that I didn’t buy any swing stocks last week. C’mon, weren’t you also making a wish list of all those companies, the names we all know, down over 60%, 70% and even more? You had GE, GS, X, AA just to name a few at the top of my head. Why didn’t I do it if it looked so obvious you ask? Well, I blame that one on myself and my wife. Sorry honey, you’re not a trader and I wish I didn’t have a talk with you about the economy. Things looked pretty bleak last week before we were all reminded that a fresh new Obama administration will manifest very soon. My wife and I talked about how the possibility of the big “D” word is a reality mainly due to unemployment and the slippery slope of what happens when a lot of people lose their jobs. We talked about the importance of keeping enough cash on the sidelines just in case bargains of a lifetime in the markets emerged. What? 50-85% is not enough of a discount for you from recent highs? Who knows. The point is, things looked and felt downright scary. However, they felt more scary in early to mid-October. At least that’s my subjective interpretation as a trader and a participant in this economy. It just felt more scary. Maybe it was because, way back only a little over a month ago, we had to accept that the Markets were getting obliterated. We felt a panic most have never felt before. It was a new pain. A collective pain. This most recent, slow bleeding selloff which broke those October lows last week(can CNBC PLEASE get all the people back on the air that called a bottom to admit they were wrong just once? PLEASE!) just didnt’ have the same sort of panic, fear and sense of dread. As one trader friend described it: “it just feels numb”. Numb. What a great word to say that the pain is there but we accept it.
I personally believe that the Markets price in whatever the imagination, real or unreal, investors believe. It’s like a mirror into the future. That is to say that there were, and still are a lot of stocks pricing in the Great Depression #2. I say a lot of stocks, not all stocks. What are the stocks not pricing it in? Well, just look and see what companies have been holding up. The Recession/Depression busters. Maybe. They’re the ones holding up the DJIA.
As a trader, it’s always maybe. Maybe Obama will create 2.5 million jobs. Maybe this new economic all-star team will be better than Bernanke and Company. Wait, he’s not fired yet. Who knows.
At least for now, it feels better but 15% is still a nice bounce in a very short period of time and companies are still laying off people at an alarming rate. In other words, I’m making a short list of stocks. Imagine that?
