I rarely get ill, but when I do, I'm a complete baby about it. But does that stop me from my self-inflicted duties to my readers? No!
It does, however, mean this is going to be a very quick weekend post. I think there are a couple of 800 pound elephants in the room right now:
- The Last Plunge Elephant – – the final "wave 5" sweep down that makes super cheap stocks super-duper cheap but terrorizes the pants off of everyone. This is something we've all been waiting for, it seems, forever, yet it never shows up. It seemed to show up on Thursday, but it lasted ten – count 'em – ten minutes (breaking the October 2008 low, making a terribly rude gesture with its fingers, and then exploding higher).
- The Giant Countertrend Rally Elephant – – which seems like it would need to follow elephant #1, and which would lead the market on a mombo, multi-month push higher to lull bulls into a genuine sense that everything bad is over, and which would allow us bears to having the rocking good time we had in September and early October instead of the frustrating chaos we've been dealing with the past several weeks.
Friday's action was interesting, to put it kindly. Not as interesting as Thursday (during which time I gave back a portion of my ridiculous Monday-Wednesday gains), but interesting nonetheless. I don't even want to bother calculating the intraday range. 500 points? 600 points? What difference does it make? Anyone attempt to trade this market has a 95% chance of getting turned into hamburger.
I am the last guy on the planet to talk about how it makes sense to buy stocks Because They Seem So Cheap, but it's got to be said. Here's a graph of GM for the entire history I've got; it's a weekly graph with a 200 week moving average. Take a look at the spread between the m.a. and GM at its deepest, darkest hour near the end of the completely brutal 1973-1974 bear market. Now look at where it is today.
Also take note of the e-mini markets. The NQ is sporting a sorta-kinda double bottom, whereas the ES, although now a multiple bottom, at least has "new lows" which are only a little bit lower each time.
I would also point out that my "buy" suggestion on DBA actually ended up in the green on Friday, in spite of the nearly 400 point whack on the Dow. That is what I call strength in the face of advertisity.
The cold fact of the matter is that at some point, people are going to realize that a whole ton of stocks have the capacity for 100%, 200%, or 300% gains within the span of a month or two. If a stock goes from $90 to $5, it doesn't take a heck of a lot for a buyer at the $5 level to have some massive percentage gains. Take, for instance, LVS, which I bought on Thursday (and is still in the green, despite two really horrible days). The volume recently has been beyond gigantic, and in spite of all the selling, its most recent low was a meaningful level higher than the prior low.
Not that my own wishes enter into it, but the absolutely positively most profitable thing the market could do is have a honkin' big rally. It doesn't have to go up 300 points a day for a month. Even if it was up 100, down 50, up 100, down 50, etc. for a while, it would simplify life for everyone. We, as bears, are not going to have the opportunity to make any serious money out of this market until it returns to attractive shorting levels. And those levels are a long way up from here. Period!
I think commodities are going to lead the way, and, God willing, we will see the Dow approaching 11,000 again before too terribly long (it might take months, but we'll see). We will have the shorting opportunity of our lifetimes if people can just start buying again and holding a rally together for more than 37 seconds. We bears need people to believe in stocks again. We need them to buy again. We need them to make peace with the market again. Because a market made entirely of terrified people is just going to chop everyone into liverwurst.
And with that, your favorite bear will trundle back upstairs to collapse in a heap. But I didn't want my pledge of a post to go by the wayside. I'll see you later.
