Friday, March 6, 2009

State of the Market - 3/6/09

It's the weekend so I will keep this relatively short and just be back later on with the summary video. More of the same today - more selling. More new lows (including a break of the November lows for the Nasdaq). No fear. No panic. Total complacency. The VIX still hasn't broken to higher highs. The put/call ratio was under 1 all day. No sudden spike or "whoosh" downward. No washout. Yeah, we bounced into the close, but from where I sit, that is bad in that it will just stretch this misery out longer. I wasn't watching it but it doesn't look all that impressive. We just continue to grind lower and lower and lower and I continue to be amazed at what I see going on. This market just seems to go beyond description. An article going around talks about "slow-motion capitulation" and maybe that is an apt description for what we are witnessing.

I made a very small trade today in FAS near the open - entered at $2.88. I kind of expected another one-day bounce today, so I took a chance with a tight stop. I was stopped out a little later at $2.81 with a loss but the position was so small it didn't bother me. The fact that we once again sold off a rally attempt did bother me. And the fact that it still didn't lead to a selling crescendo is disappointing. Perhaps we won't ever get that washout. Perhaps just too many people are expecting it, waiting for it. Perhaps this painful grind lower is exactly what Mr. Market has in store for us. I hope not, but I don't know what to think anymore.

I have never traded a bear market before. I hear stories about how bear markets end when "all hope is lost" and people finally just give up and throw in the towel. I hear stories that at bottoms, no one wants to hear the mention of the stock market because of all the psychological pain it brings up. These are just stories and since I have no personal experience with a true bear market bottom and sentiment, I don't know how much I can draw from them. I do think however, from what I read and what I see, that this country, investors or non-investors included, is getting to that point where "all hope is lost". I don't know if this means we are close to a bottom. I hope that's what it means. Shorting is fun and everything when you're making money, and I did make some the past year and a half on the short side, but after a while, it just wears you down. I worry sometimes, however, that maybe this situation is just so bad that in reality, all hope IS lost. I hate to think that way, but based on what we are seeing, both from Washington and Wall Street, I think it is human nature to do so. As the Today show put it this morning, when you can buy a share of supposed American icons such as Citigroup or GM for less than what you pay for a gallon of gas, things are pretty bad.

It'll be interesting to see if the government tries to prop this up even more by pulling some more intervention stunts over the weekend, but I am 100% in cash so I really don't care - it won't affect me. I will be back with a video this weekend looking at all the measurements, indicators, and oscillators I have been showing this week in an attempt (perhaps in vain) to try and find out from where we might bounce and how soon that may occur. Enjoy the weekend - looking forward to the big game for my Pitt Panthers tomorrow against UConn. Go Pitt!

1 comment:

1option said...

Perfect thoughts... all hope must be lost.
My first bear market as well. I have been lucky to be extremely bearish throughout it so far.
As far as government props, they all become the same after a while and have less marginal value each time.