Unless something (else!) happens over the weekend, I imagine this will be my last weekend post.
Regular readers are acquainted with what I call the $SLIX indicator, which is basically the readership of this blog. The old saw was that spikes in readership marked market bottoms, because all the folks that don't have the good sense to read this blog daily are so rattled by a given day's drop that they read the bearish blogs for a change. So in a way, the popularity of this blog became a pretty good contrary sentiment indicator.
I'm not so sure it works anymore. Readership has recently been growing steadily. I'd like to think it's because Slope is just so danged good, more and more people are (finally) discovering it. It's also probably because the market's downward grind has become much less of a one-time drop down and more of a regular way of life.
If you didn't watch the video I did on Friday afternoon, please do so. All I've got to say is that I think we're in store for one of two possibilities. One, the market wrings out the last of the sellers (for now) and brings the S&P down to about 1077 and the Dow to nearly 10,000; or, Two, we have an honest-to-God crash, bringing the S&P down to about 942 and the Dow to about 8,850.
No matter which of these take place, I think we're in position to have a good, sustained bounce higher, and I will spend the entire time with the word "Patience!" tatooed to the inside of my eyelids, because once the bounce is finally done (and I'm bound to jump the gun a few dozen times before it does……….) we're in for an amazing time.
Even though the very soul of technical analysis is that history repeats itself, I actually don't get that sanguine about comparing, say, the chart from 1929 to now, or the chart from 1987 to now, no matter how many "eerie similarities" (that's always the phrase used………) appear. I do, however, want to offer an interesting comparison between the last bear market (about 8 years ago) and this one. First, the old one:
I've put a circle at about where we are at this point in time (assuming these falls are similar, which they probably aren't!), and I've tinted in green the true bottom. Now let's look at where we're at……..
I've taken the liberty of hacking out what the market would look like if we replayed the 2000-2002 bear on top of this one. We'd bottom out a little below 800 on the S&P, and we'd had a couple of amazing retracements to play beforehand. The green arrow I've drawn is sort of my life's mission at this point…………that is, wait until we've retraced, wait until people are calm again, wait until the VIX is in……..I dunno……….the mid 20's or so………..and then completely pork out on my (much larger) warchest, buying puts and shorting stocks like crazy.
I'm torn as to what this week holds. People are obviously incredibly nervous, and with the failout package out of the way, at least we don't have to wring our hands over Nancy Pelosi anymore, now that Congress has totally sold the country down the river. I guess if I had to pick between the two scenarios, I'm inclined to look for just a little more of a drop, but I've got to say, a couple of sources whose work I really respect makes a strong case for a true crash by the middle of the month. America, we all know, will never be the same. I would suggest to Slopers that they make as much cash as they can out of this catastrophe for the sake of themselves and their own families. See you Monday.
