Well I was grouchy going into the day, and not just because the server crashed.
I don't like to play the role of Chicken Little but I feel like the casting is forced on me because almost everyone else I talk to is a bull. I said my piece about the housing disaster on Monday and that's only ONE of the things I think are really terrible in the economy!
Today we had a market rally based on oil making record highs (maybe $100 tomorrow), the dollar making record lows and the fact that GS said (again) they do not have any more write downs. Hello – McFly – Goldman already won that game, they turned in a great quarter, they told us they called housing correctly… THEY ARE NOT THE ONES WE WERE WORRIED ABOUT!
This reminds me of the early 80s when the Mets were really terrible but we had Darryl Strawberry and Dwight Gooden and every Met fan (I was one!) would only talk about those two guys and how great they were (Met trivia – the geniuses fired Joe Torre as manager in 1982). Meanwhile the team went 7 straight years without breaking the 70 win mark (out of 163). Darryl Strawberry (call him Apple) was an obvious superstar and Dwight Gooden (let's say Google) was a couple of years away from becoming the youngest Cy Young award winner of all time but THERE WASN'T A TEAM!
This is the problem with the markets, we are rallying on leaders and, in the case of oil companies, the worst kind of leaders, while the rest of the market; retail, regional manufacturing, services, dining, discretionary… is in the doldrums. Rallying the market based on the energy sector is like a group of hemophiliacs electing a vampire as their leader, it's a recipe for disaster. And who are our other "leaders"? Commodities stoking inflation! Holy cow people, does anyone actually live on the planet we're investing in?
So while the MSM was celebrating the comeback of the markets (still barely breaking our very low levels) and Yadda Yaddaing the rise of gold and oil, the drop of the dollar, poor economic data, etc… I spent the day fighting the tide and feeling pretty silly about it:
- 10:03: This is a dollar crash rally, not my favorite kind but let’s just switch off our brains and see if we can break our technicals (ironic how we had technical difficulties on the site today..)
- 10:14: This is the worst rally I’ve ever seen: WFMI, SHLD, UPS, STX, LVS, SNDK, YHOO, AXP, EBAY, IBM, C (still)… lots of things going down that shouldn’t. Something that should be going down is BIDU and there she goes!
- 10:18: I said to Jared this morning “But I have to warn people not to fall for this rally!”
- 10:33: Staying more or less neutral but taking off profits where I can, very nasty market so far. Without the financials, this rally is toast. Right now it’s one of our famous commodity rallyies as the dollar dies. Woopie, what should we buy? BIDU in a power dive now!
-
11:07: BIDU with perfect 1% retrace (20%) off 5% rule back at $40, will be interesting to see what happens around this mark. Buying $420 CALLS for $12.75, will sell $400 calls as a mo play, can always sell $400s against. XXX
- Just so you know I'm not permanently bearish!
- 11:25: Watch NYSE at 9,999, if they don’t break up I doubt the rest will. S&P 1,505 of course, Nas 2,775 is bad to the downside (especially with all these hot performers and upgrades today).
- 11:47: The market looks like one of those really pathetic guys who doesn’t know when he’s being rejected and it keeps going after these levels that are way out of its league. Very sad to watch…
- 11:52: Retail – well unless teenagers stopped eating in order to buy clothes (and with girls that is possible) then the terrible restaurant sales should translate to terrible retail sales, especially as mall chains like CAKE took such a beating. I really just can’t see playing anything up until we break 13,600 at least – or am I setting my goals too high?
- 12:09: GS re-denying rumors of a write-down. That gave us a push yesterday, maybe they can deny it every day at lunch!
- 12:31: Sellers ran for the hills on GS announcement but I still want to see some breakups. HOV says he sees a bottom but I’m not sure people are buying it.
- 1:25: Lunch is winding down and we’re touching our critical levels: 13,600, 1,510, 2,800, this should be fun!
- 2:16: Man this market is one persistent guy! I guess he never sat through one of those “No means no” seminars at work… That’s a triple break up – BIDU’s going the wrong way as is BA, AXP, EBAY, IBM, LVS, MSFT, YHOO, SNDK, SHLD…. same as this morning so let’s watch this group for signs of a real rally. Nov $135 puts – rather than DD it’s really time to roll to December.
- 2:28: Energy is 20% of S&P and is up 3% so that’s +.6% of all market movement attributable to energy. Market move is…. .2% on the Nas, .5% on the Dow and .5% on the S&P. Add to that the fact that the dollar is testing all-time low of 76 and I am still inclined to short until we get a definitive breakout. COH discounting – that is a really bad sign.
- 3:16: Oops, Nasdaq perking up, been too tough to call all day.
- 3:42: Oh – I forgot about CSCO tomorrow! This is some sort of expectation of a big tech rally. If the market breaks up tomorrow we have to say Yee-Haw and BUYBUYBUY until we get technical signals to cash out.
- 4:05: Gold at $28 year high, oil at 20-year high, Dow at 13,666… So hard to switch off my brain but we have to follow the herd for the duration. Well, time to dust off the old rally cap and hope we can follow through tomorrow.
So it took me all day to cheer up but, if we get some follow through tomorrow, we've got lots of cash and we're ready to rumble but you can bet I'll be day trading as I can't get too bullish on this market until we break some real levels. If the Fed steps in or we get some amazing economic numbers (that aren't spun, like last week's GDP), then I can get behind this but so far, it's just a lot of cheerleading and rumor mongering that's moving the market and, while that may be fine for traders, it's no place for investors to be putting their money.
