"Medic! Medic!” That’s the rally cry being heard across the Wall Street battlefield. With the market looking more like triage at a front line Mash unit, investors have to be asking where the morphine is. Even for Hedge Fund managers when every short works and every long doesn’t (wat's new!), it can become quite uncomfortable.Yesterday there was no place to hide. There was no rotation from losers to the new winners. Nothing worked. Stocks at 52 week lows continued their slide and stocks near their highs began their fall from grace. The sick are infecting the healthy.
Pessimism is hitting peak levels and the market has crossed market lows first set last year. Add to that the high probability of an emergency rate cut and you have the ingredients for a massive oversold short covering rally. Nothing works ! Not the hopeful stimulus package. Not even the combine stellar results of GE and IBM. Shits just hit the fan, again..!
Nothing can cure the damage that has been done. Whether the economy is in recession or not is beside the point. It sure feels like one is in right now! The Fed will do their job despite the fact that this one seems to get its cues from the newspapers. No, the real cure is time. Over the long run the economy has been able to withstand shocks, recessions, terrorist attacks you name it. The US and the economy need to regroup and regain strength before the markets can truly recover. The fundamentals and the economic backdrop don’t have to start getting better but they do have to stop getting worse for a true bottom to be put in.
Know in advance that there will be many of these oversold rally’s and trust me during each one you will feel that this is it. The bottom is in.. and I am not going to miss the rocket to the moon. In deep corrections the biggest challenge we face is often psychological. We are more concerned about missing the rally than losing money and as a result overstay our welcome with long positions for fear of missing the big bounce. Let see what happens when Dow hits 11'989..
1 comment:
ACtually, technician called it a bear market now because of the 10% drop from the high.
I called this a confidence crisis. No matter what stimulus package or interest rate cut you have in stall. the market just keep tumble. Like 1997/98 in Malaysia.
My forecast there might be a bank run in US in near term if sudden big bomb shell explodes in any of the current financial debacle.
My secret formula is let time to stop the liquity leakage and restore the financial order. Other than that, it is useful to have G7+2 to make influential statement on the currencies. More importantly, all US Banks have to declare all losses are fully accountable for. Once you see this, pump in fresh capital then the effect will be better than now.
Post a Comment