|
PureBytes Links
Trading Reference Links
|
MARKET THOUGHTS:
- Until now, I was looking at the markets as having put in a Low and
recovering since, with prospects of a more or less slow progression with
some acceleration at some point during or after the summer. Trouble is,
pouring over a ton of single stocks and index charts, I got struck by
the fact that the whole recovery has often occurred in a very muddled
way, more indicative of B waves, you know the one in the middle of
corrections, where things look like they are resuming as before but they
are not, because the full bill has not been paid YET. Of course I don't
know anymore than anyone else what is going to happen, but this scenario
of a second leg to our 2000 TMT corretion, is definitely gaining focus
in my mind. Should this indeed be the case, I wouldn't expect any
particular trigger, as in C waves the news just gets worse all along,
starting harmlessly and ending in panic. The end of C waves is when you
see the white in the soldiers eyes..., with sheer fear.
- I have a "secret" oscillator indicator I have used for 20 years now,
and which I got from my father: I call it the "Paper Indicator":
Every week or so, I open up the stock section in the newspaper, and I
ask myself, "what is there to buy today?", regardlessly of whether I
have new cash to put in or old cash I need to reallocate. Typically I
have a whole list of things I like, and which I then have to chose from,
depending on price, trend etc. Once in a while, we get to extremes, when
I have either no list of things to buy, or nothing attractive to buy at
all at these levels, or on the contrary a list that long, I need several
pages and days to sort it all out.
- The times I got several pages were for instance in the early 80s, or
after the crash of 87. More, recently during the asian crisis, the
summer of 99, and to a smaller degree during the recent lows. Only at
the recent lows, the time window was too short as to allow me to be an
aggressive buyer, as often I like to step in gradually over several
days, weeks, because it is never safe to buy in a somber market.
- The times I had trouble finding anything to buy were for example the
summer of 87, the summer of 90, the summer of 98 and early this year.
- So what? Well, I went over things this week, and frankly I was again
running out of things to buy absolutely now. To be sure, I have a whole
list of things I'd be happy to own, but not that I would be willing to
buy at the current tag: It is sort of like going to a store for a
leisure dress, finding one, looking at the tag, and saying well "naah"
not at THIS price. In fact, in the "old econmy section" I have often
trouble to build any motivation to buy anything, as growth prospects or
trends rarely raise my eyebrows. In the "TMT section" I have many many
things I like, but please, would you buy a Nokia mobile phone for
$1000, just because it's a Nokia? That's the feeling I get mostly when I
look at the price tags today.
In a word: I am wondering wether we are not due for leg 2 of the big
correction. If so, be prepared for worsening news, and this time
relentless selling, over much longer time and to lower levels than
pleases anyone. All stocks having reached new highs, would retrace to
above last lows. Those close to old highs, may build some sort of
triangle base. Those still closer to their bottom than highs usually
display an abc recovery, which spells trouble, leaving me to expect new
lows, with diverging momentum at the end, sometime in september.
Indices might see DOW 9500, SP 1300, NDX 2700, NDQ 2900, DAX 6300, CAC
5800.
This is not a prediction, just a scenario to keep in mind, as we might
just as well be at the beginning of my long expected rise. But if
sellers take control again, that is what I would expect.
Leaving on holiday now. :-)
Best to all,
Gwenn
|