This is Bill McLaren's chart. He said the S&P 500 is in a downtrend and lows don't occur at double bottoms like we have now, during downtrends. Bill says double bottoms offer support in up trends.John Hussman sees a small prone to fail rally coming and so he remains fully hedged.
What did W say to Tony Blair?
There is violence, fear, market dislocations earnings concerns and where is Charlie Gasparino? Bringing us more stories that people don't care about. Is the Brain in the house to give us the latest on Time Warner?
A reader left a comment that I took as complimentary saying that I have been/would be cool in the face of the current events we are dealing with. Maybe, maybe not but if I am cool it is because this is not really very different that past downturns, other than how shallow it has been but how much fear it has incited. Magnitudes may change over time but how new is violence in the Middle East?
This is not a Battipaglia/Riley call to bullishness as the market is scared will need to work through this with what I think could be lower prices before anything else but the market goes up the vast majority of the time but it also goes down sometimes too. Both are normal, need not be feared but must be endured.
If I somehow turn out to be right about 2006 being down a little, maybe 2007 will line up to be an up year but if it doesn't a subsequent year will be up. Since the time horizon of my clients goes beyond 2008 I feel very little need to worry. We all need to manage for a down market but I don't think we need to worry about what is normal market action.
2 comments:
Roger - you've been telling your clients to raise cash and now have added a short position. For the trapped longs that is still lets say 90-100% long, what do you suggest is the best action to hedge currently?
Looking at the chart, I think it's too early to call it a double bottom. A double bottom is something that can really be seen after the fact. Then you can trade off of it once you recognize it. Until then, the chart looks as if it is still forming. It could easliy be just a downtrend still in the works.
We're at a tricky time to be calling things, I think. I feel more comfortable saying that it's better to be in cash until the total picture unfolds. Until then, risking good money without enough information is a tough call.
I've been unloading everything the past couple of hours and am taking an ultra-ccnoservative approach. Once I feel more sure about the situation unfolding, as well as the interest rate situation, then I'll get back in with a vegence.
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