Given the level of fear and loathing of the financial markets coming out of Asia and Europe, I think I am looking for a further pull back.
Is this the end of the world?
No, but the market was due for a pull back.
We did get a 62% retracement of the 2007-2009 market of characterized by projectile vomiting of all ownership of all equities. The recent highs we were enjoying just
3 weeks ago were : 4/26/10 we saw a high in the cash Dow at 11,258. More importantly, we saw 3 days in a row 4/23, 4/27 and 4/28 with settlements right at the 11,200 level.
The S&P cash posted its high at 1219.80 on 4/26. The Newsweek cover touting “America’s Back” came out on… wait for it…. April 9th… That about says it all.
The US as well as the rest of the world has a list of issues. We have the PIIGS (Portugal, Italy, Ireland, Greece, and Spain). They are lining up for more IMF dough.
Who will the IMF go to for help next? Could it be President Obama? That’s one sure way for the Europeans to once again love us.
Lets hope the markets calm down, fear is replaced by greed, and these markets get rational again. If it doesn’t shape up rapidly…., to borrow from Bananarama in the 1980’s (back when I was in High School in Pittsburgh), its shaping up to be a Cruel Cruel Summer.
And now a re-print of my May 8th blog:::
We have a higher dollar, with a lot of room to go on the upside. The dollar is relatively the best bet left in the world when it comes to ownership of currency.
Perhaps as traders we should heed the old adage, sell in May and go away. Take advantage of the coming slow months in equities.
Thursday was only a 30 percent correction. I would be more interested in a 50% pullback as a chance to get in, fade the misery, and pick up some bargains.
50 percent back in the Dow Cash would be
8861. 50% in the SP500 Cash is 942.50.
Ironically, Cramer on CNBC, just this Friday said don’t buy the Dow until 9000. I wonder where he got that big idea? I guess he has a calculator too. I will say that I admire Cramer, unlike most of the commentators out there he has an enviable track record of successful trading.
Trust me, 9000 Dow Cash will be a self-fulfilling prophesy for these markets if we can’t bounce back and go to new higher ground above 11,400. I am still pulling for 11,465. That fact alone makes me want to be careful.