If we can average 1% per day for the month, like we are starting out we'll have the best February ever.The futures obviously got a huge boost from MSFT buying YHOO.
It seems to me I sold Yahoo into a rumor about this deal last May and now it is happening for real. Very funny.
The averaging 1% per day is obviously a joke but as I mentioned the other day, massive feel good rallies in short periods have happened before so why not again?
Are you feeling good? I am feeling so good that I am wondering if I am wrong. I shaved off a portion of a stock yesterday into the rally as I view this as typical bear market behavior but I can't rule out that I have this wrong, this is always a possibility.
And there go the futures back down on a bad jobs number, no wait the revisions are not so bad, or are they?
The market may take a while to figure the jobs report out but the important number was negative, well until the revision next month lol.
I will say this type of volatile rally is consistent with bear market activity but maybe I do have it wrong after all?
31 comments:
In such an uncertain time, how would you think about handling a double short ETF like SDS.
If one is currently holding SDS, is it prudent to sell SDS for a loss?
Many thanks for your insights.
Stranger.
Could it be a Teddy Bear market
and not a Grizzly Bear market?
I can't give specific advice like that.
More broadly what was you plan going in?
My plan has centered on the 200 DMA. I view that as the Mendoza line for healthy or unhealthy demand for stocks. at that point I would increase long exposure by either selling some SDS or byuing more stock.
of course I may do something before then but not today anyway.
my position in SDS has been small and I actually think on the days the market is up that the cash raised is a bigger drag than SDS.
Teddy v Grizzly?
My thought all along was a normal bear market but maybe not as bad as that?
Not sure, that is what feel good rallies do, they cause you to wonder. For now, no trades for me, just some wonderment.
The psycology here is important. Second guessing goes with the territory. My second guess started yesterday, buying today would be a panic reaction so i won't. Slightly bigger macro the bear theme seems incredibily obvious but we'll see.
Oh boy, a new dog for the sled team!
lol, maybe in a couple more weeks.
roger,
no wonder you are so giddy...nice sale of yhoo last may. looks like you probably got the same payoff but the use of the money for another eight months. good sale!
commerce secretary coming to spin the jobs number on CNBC.
My guess is that the spin is the average gain over the last fill in the blank time period.
thanks re the YHOO sale but I learned a long tme ago, when news of takeout, real or otherwise, comes just sell.
I owned AOL when the original TWX news hit in 2001, or was it 2000 (before I was managing OPM), and I realized it would never get better.
Don't take that as a prediction of what cam next, it wasn't, i just din;t think could improve from there.
So any stock I own that gets a bid I just sell that day or maybe the next.
the "official" announcement of aol and twx was in january of 2000...by january of 2001 all tech looked rather toxic.
good call on that one too !
thanks but look at other deals, the theme repeats over and over. very rarely does the price keep going up ala the RJR Nabisco deal from Barbarians at the Gates.
This will be good advice more often than not.
Jobs numbers disappointingly down, and then this as a kind of counterpoint:
ISM manufacturing index jumps to stronger-than-expected 50.7 in January.
Roger, yes, it's a good idea to wait and see. The ISM, though, suggests that the market will go for the optimists today.
I think this is just a bear market rally. I also expect the bear to be worse than average.
I sold 40+% of assets today leaving 20% left from purchases last week. If I had to guess I think this rally has several percent left to go on the upside, but I am up 5% for the year and the rally is less of a sure thing now than then.
So while things may look good for 3 to 15 more weeks I think another big plunge is coming, but we will see.
seg
seg,
you have pretty much had this wired for quite a while
nice
What seg said; you three Roger.
thanks, as i grope around for answers (insert picture of hand slapping knee)
We could see another sustained bear rally when Q1 GDP report comes out?
Jim Jubak's journal:
http://tinyurl.com/3dx7xk
Ah, numbers. In the fourth quarter, the economy grew at a 0.6% annual rate, the Commerce Department has announced. That was well below the 1.2% growth expected for the quarter -- no such hot growth itself.
So we're headed into a recession and negative growth? Well, maybe, but not on the evidence of these numbers. Any one quarter's gross-domestic-product growth is heavily influenced by inventory growth. And that number can take a huge swing depending on whether companies are stocking up in expectation or future sales or selling off inventories that they had built up in past quarters.
Companies were selling off inventories in the fourth quarter rather than adding to them, and that took about 1.3 percentage points off the growth rate. Excluding the swing in inventories, growth was up 1.9%. Not great but a reading more akin to slow growth than a recession. The big drop in inventories also says, "Watch out for first-quarter growth." If a sharp fall in inventories is followed by a big build, as it often is, then first-quarter GDP growth will look stronger than it is. The moral, I guess, is follow the long-term trend and don't get too hung up on any single quarter.
are you kidding me? is that supposed to be a joke,
i wear a toup, i thought that was common knowldege
lol, i might have less of a face for radio if i was bald.
This is a market. It fluctuates. Speculators can loose more or gain more. Investors can loose some or gain some, almost always winning large over the long haul if they doon't become too smart by half.
I say, quit wasting time in angst over the market. Maintain a diversified portfolio and make a few sidebets on targeted funds or stocks you like.
Or, find an excellent advisor like R.N. and let him/her do it all for you.
Relax and enjoy the finer things in life.
the finer things?
like obessing over every tick
lol
Roger,
"you have pretty much had this wired for quite a while"
I can not figure out if we go up 15% or more from here or go down that much or more.
I do think we are in a bear market and that influences me towards safety.
I do think there are enormous credit risks out there.
I do think the easy money will have been made on this rally around 1425 to 1450 on the S&P (of course we could start retesting the lows at any time as well)
I do not have this wired by any stretch of the imagination. But I also thought taking profits and sitting on 5% would not hurt to much either.
The market may continue up, but who knows. If you remember my post when I bought I said something like figuring out if this is a one week, one month, or three month rally will be the hard part. I still do not know the right answer. At least I know that I do not know.
I also think getting rid of the up tick rule has increased the volatility. They really push the market down to gut wrenching levels on some of these sell offs.
I will be much happier when this bear is done and I can go back to longterm holdings of ETFs.
seg
My guess is we'll see some backing off next week, but we might see the market make a run to the 200 day moving average over the next month or so before we make another leg down.
Seg,
if you are trading this market, vs. position management or buy and hold, then it does not matter if we go up 15% or down 15%. What matters is to enter trades such that your risk is well defined and your expectancy is positive.
http://tinyurl.com/ynsauf
Keep in mind that the market as indicated by the S&P 500 is a poorly constructed, poorly managed, index that casts too wide of a net. You are much better off focusing on sectors than the overall market.
Born2Code,
I did mostly buy a sector, but I also bought the S&P 500.
I am not sure if I agree with you or most traders on the rest. All traders are wrong a lot IMO. The market goes up much more frequently than down. I do not like shorting.
I am not big on trading the market up either. I prefer longer term investments, but I could not resist the gut wrenching big dive with a 75bps cut by the fed.
I am really not a trader a heart. It may not be a random walk but it sure looks that way a lot of the time.
The market does not go up much more frequently than down. About a 1/3 of all listed stocks go to zero and/or get de-listed.
what goes up most of the time is a continuous index managed by a small committee at the Standard and Poors Headquarters.
It is managed to remove poor performers and keep stronger companies.
By definition if you are buying and holding the S&P 500 then you are trading.
The only difference is that you are letting 3 old men in a closed room do the thinking for you.
-- Sami.
Sami
Spoken like Nassim Taleb. He refers to the survivors as the only represented population in hs books several times. Well stated. Thanks for the post.
Sam
BWJR
A few weeks ago i posted a comment about a mini bear market and or a mini recession that started back in August and Roger corrected me that it wasn't probable that this occured back in august since we made a high in Oct 2007. I think we all agree that ther seems to be a feel that this is a very strange market with many conflicting indicators. Assuming this is true, isn't it possible that the three corrections of 10, 10 and 20 on the s & p might have been the mini bear. Isn't it possible that we have already experienced the final leg down and the V recovery rally is already in progress? I know i may be wrong and in the charts this looks like a bear, but it doesn't feel like one.
Blame the keyboard for the typo errors. Sorry!!!!!!!!!1
BWJR
Don't doubt that there's a bear out there......
US consumption is a credit driven affair...
And where's the credit coming from after the Fed's trickle is spent on imported goods and imported labor?
I don't see the Yuan or Yen saving the US consumer...I think they realize the US consumer has run out of debt serviceability blue sky.
If hope springs eternal, then its safe to say "sentiment drives volatility".
After reading Roger's blogs for the past 3 or 4 months, I think its remarkable how much more "sentiment" is in the posts these days!
"Doubt", "hope", "panic reaction" "disliking [shorting]" "prudent" "psychology" "giddy" "toxic" "disappointingly" "gut-wrenching".
Man, I am right there.
And no matter how often he says it, it helps when Roger tells us about "normal" bear markets, and admits that doing nothing sometimes is the right move - especially when the futures are up 150 pre market, and then drop to even at the opening, and everything is tingling and your guts are saying "do something!"
Does it make sense to simply find hedged positions and collect dividends and wait until we break out of a trading range? (e.g, Long Spy, Long SDS, long cash, long (low vol) dividend payers)
Rick in NY
BWJR
the 10, 10 and 20 could be it. In trying to navigate, i think you need to build a thesis (mine is normal bear market) and then be adaptable (hopefully some sort of pre-planned framwork for adaptability) and then just stay calm so you can act rationally.
Wonderment is part of the process.
Winston, I agree for the most part but I don't discount ever being wrong.
Rick,
I can't tell someone they are wrong I can only disagree. A while back I post 20 year chart of MO, JNJ and BAC (I think those where the three and if not they are all client holdings) They have trounced the market over that time period (no doubt survivorship bias matters here) but each endured the occasional nasty, and I do mean nasty, decline along the way. Point being that undoing everything to go into some sort of long short combo with just a couple of funds is extreme, IMO.
Just posted my models: www.regimenia.com
Weird shift towards Value underway. What's interesting is short term there is not a dominate style/cap underway.
My guess is short term we back off a bit, but intermediate term we head higher. I still believe we are in a bear market but that doesn't mean we go straight down.
As for the Super Bowl: I respect but dislike both teams - but it's a good excuse for a party!
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