Oh, my goodness, its already begun. Summer’s apon us, earning season doesn’t kick in strong again until next September, and the Stock Index bears are waking up.
Stock indexes are generally accepted as a forward looking indicators. In March of 2009 S&P Cash was at 666. It doubled in in February of 2011. Two years of rally. 666 times two is 1332. Today the S&P Cash is at 1320.
In the CASH Dow, the March 2009 low was 6470. A double would be 12,940. We never got that double. Our high, 12,876 we just picked off on May 2, 2011. We missed the exact “doubling” at 12,940 by 64 points. That was 29 days ago. Quite honestly, I still think we have to go and get that print. How does a market rally 6,406 points and not come get the last 64??
Today’s low at 12,344 is just 500 points off that high.
Yet, I see the Bears are out once again.
Drudge’s afternoon headline is “GREAT GREAT DEPRESSION … So I looked up Mr. Peter Yastrow of Yastrow Origer.. Unfortunately for Mr. Yastrow, the Web has a long memory. In March of 2010, with the S&P at 1166 and the Dow at 10,666, he was, SURPRISE– A bear.. The Dow proceeded to rally up 400 points after that article. May of 2010 we had the FLASH CRASH, which I am sure, this individual told all his subscriber’s that he “saw coming”..
Last July 4th weekend, with the Dow hovering at 9600, I wrote then, that CNBC’s bearish ness had to be a FADE. HAD to be.. They were running end of world stories that weekend…
Now, Is Mr. Yastrow just trying to make a name for himself? Call enough tops and sooner or later you’ll be right, and write a book about it. My guess is that this guy makes a lot more money from his blog than he does actually trading. But no one will ever know, because its all “proprietary information”. In other words, he could tell you but he’d have to kill you…
Now, one caveat, this guy may be the greatest trader since Jesse Livermore and Joe Kennedy…. I have no idea, nor do I care to know…
For my intents and purposes, the fact that CNBC has chosen to publicize this prediction at precisely this time, gives me pause.
WE could very easily roll over back down to 11,600. There is a sweet long term support trend line on a longer term weekly continuation chart for Dow Cash. That trendline intersection for this week is 11,690. The March Tsunami low was 11,555 ..
Quite frankly, we could break down to 11,230, or even 10,843… Any of these lows could come into play if the bears get running. The bulls ran us up for 2 years. Who am I to say that the bears now won’t have their day?
Typically, the only people trading at this time of year are professionals. 99 percent of professionals like to sell. They like to sell because markets move lower 3 times as fast as markets that are rallying.
Like lab rats in a giant experiment, market professionals learn that very often the QUICKEST way to profits it to sell. Hence the bearish bias.
Your average person sitting at home at night after dinner trying to trade against the professional day traders are at a loss by the very nature of the game. And buy and large those traders have a bullish bias. They are willing to sit and be patient because the mechanics of their involvement in the market demands patience. In the end, bulls get fat, bears get fat. Pigs, however, who try to catch every move, will most assuredly get slaughtered.
Just food for thought.
Bottom line. CNBC runs a bearish story, and I am keeping with my strategy of buying cheap out of the money calls on both the Dow and the S&P.
Limited loss, unlimited profit potential. Or, if you are trading outright futures, get long but have your sell stops in. Mr. Yastrow, may in fact be right. Let’s face it, he has a 50/50 chance.
If he’s right, then so be it. I’ll get stopped out of my longs and flip short. But I’ll do it because the market tells me so. Not on the word of some self styled “expert” or guru..
After 25 years trading and investing, I know its more important to be right and make money, than to have your ego fulfilled with the need to be “right” on every market turn.
Good Trading
CER
thanks for timely update of your thoughts