Since for the most part, I feel like that is the important part of this blog.
Tony likes to talk about my right brain. But this is what I see:
I have 2 points:
First, When I look at this chart and think about the Technicals... I realize that there is a point where it gets HARD. Where the boat rockers stop moving from one side to the other..... Sure there is always more people on one side of the boat, or the other but there is a point on the chart where it's not so Clear.... and that the "unclear trading" is going to help to define the sentiment.
Second, It seems like each of the "Bounces" has changed. We keep getting a bounce each time we have a non panic emotion.
One can sort of draw a conclusion from that, but..
I want to share something else I've noticed. Seems like the day traders have been pushing the market in one direction for most of the day, they have a tendency to start in the morning, then stop at about 1am. This kind of shows a "Cautious" tendency in traders. this could indicate another part of the cycle.
My tenancy in the macro sense is that.... this will not be over... won't be over for years... of course this won't convince the great unwashed masses to decide that it must be over... at one point and start moving into funds again.
Saturday, February 7, 2009
I wanted to share some sentiment
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4 comments:
I enjoy contemplating sentiment, maybe because it's the one thing that I can always be correct on since there is no objective standard. I'm wrong on individual stock picking all the time because they go up when I say they are going down, and vice versa, but sentiment is another thing and a case can be made for several different opinions since objective standards are lacking.
Discouragement. There is no doubt in my mind that we are in the discouragement phase of the broad indices. The phase on the graph shows violent upswings and downswings within the discouragement phase. Maybe last week's Naz rally corresponds to the upswing over the "n" in discouragement.
I'm just really sure that we have not reached the wall of worry yet. Anecdotal evidence from people I talk to about their retirement funds elicits responses such as: "Investing? I may lose my job tomorrow so why would I put money into the market now?" or "Heck, it's all a racket anyway and every money manager is just a shade above Bernie Madoff." That's discouragement.
T.Lo attempts objective sentiment analysis with her new highs and new lows assessment and even that shows no evidence that we are approaching a bullish phase or capitulation.
Vince Farrell on CNBC said something that made sense and re-iterated one of Brian Shannon's memes. "The bottom is a process." This seems to be a verbal representation of the "discouragement" phase on the graph. It may take a year to develop and the bouncing may be quite impressive, but there is no clear evidence that we are emerging into the wall of worry phase.
T.Lo has set a level of 459 on the OEX as an "all clear" and that is another 15% or so from where we are now; this level would come about only after we break through all the resistance levels between October and today... and that's a boatload of resistance.
Reading day-to-day sentiment within the discouragement phase seems nearly impossible to me... at least reading it clearly enough to make investment decisions... with real money since it driven by news headlines, presidential speeches, etc.
as much as we want to hope about the naz... it's all hope, the only earnings growth will be healthcare, and yet in the near term the momentum slows. My guess is because "They" think that they can put money in the naz... which they can for a bit. t.here are too few chairs for the current available cash.
What I'm saying is that the free cash won't be able to be sidelined for long... but it will be a sucker bet.
for the most part I agree with you, I just caution on drawing a definitive conclusion.
The interesting thought I had.... which was pertinent to you... Months ago Cramer had a thesis that Tech was more a... "Staple" or a low growth item... maybe even a utility.
Based on the maims thesis, that may bode well for the big cap tech. AKA new consumer staples/utilities.
It's interesting... what would be interesting is if we get more Teppid rallies, where we can't get any Mo-mo going.
But... Let Me just agree, it does seem like hope has not Died.
Tech as a staple is an interesting meme. I usually think of staples as consumable products that need to be replaced often, ie, toothpaste, soap, even Kleenex (Kimberly Clark).
The problem I have with tech as a staple is that people will just use their iPod and laptop one more year if they get laid off and not get the newest model.
Big cap tech may be rallying due to the infrastructure aspect: telecom equipment, semis,-- or it may just have been an oversold bounce. To be honest, I don't buy the big tech staple argument.
I wrote my last comment before listening to T.Lo's podcast but she said a couple interesting things. She first seemed to be saying that the inefficiencies in the market are overstated and the random walk holds more water than a lot of people think.
Thge second thing that was interesting was nearf the end of podcast when she said that it was impossible to invest in this market because nobody knows if the financial system will survive, so that leaves only trading based on momentum--- and there is no momentum. So, that leaves: nothing.
Then she went on a tangent about buying real estate and slum properties which actually made sense. If the financial system is indeed broken, then slum properties bought really really cheap is the ultimate "staple" play because everyone needs shelter no matter what... even more than toothpaste.
And if the converse is true and we are indeed at the stock market bottom, real estate should still do okay... although maybe not as well as growth stocks, but you still won't lose any money. In short, slum real estate or vacant land is the ultimate value play.
hmm.. I think her thesis was "if you think the world is going to end. and you are dumping your money into diamonds and gold... it makes more sense to invest in land. cause you can at least farm it.
But then you need the guns to protect your chickens.
lol
You know me, I'm not falling for tech long term. but with tech not being "Growth" and ... companies and people need computers. You can also say that they don't need soap and shampoo as well... but even a TV is a staple of life.
So they will buy "Some" computers, Some Operating systems, "Some" Routers from cisco... etc..
Not that that is cooked into the numbers yet.... but in a way it's just the musical chairs... for some reason they have run to tech.
don't get me going about random walk...
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