Archive for the 'short term plays' Category

Market Inefficiency

Published on 12 December 2008 in delusion of crowds, Financial Markets and short term plays. 0 Comments

The recent climb for the Dow to just under the 9k mark has been surprising to say the least. If markets like to climb a wall of worry then they had quite a high one to get over of late, economic data in the past two weeks coming in worse than already poor expectations.

But last night the penny dropped, albeit in the form of disappointment over the automakers bailout. That in itself may prove to be unsuccessful even if it passes the senate eventually. The Whitehouse is now looking to use some of the bailout loot reserved for the banks instead. Either way it’s messy and the outcome will be highly uncertain at best, a waste of money from the outside at worst.

The Dow came out of it’s benign hibernation to finish down 200pts. It’s also poised for a triple digit decline today, although just how bad may be tempered by the news that retail sales came in not as bad as expected. Barring a high profile pre-Xmas bankruptcy, I’m looking to find support around 8,200 or if a bankruptcy occurs, somewhere around the mid to upper 7,000 (ie no lower low for the time being).

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The Next Opportunity

Published on 30 November 2008 in Financial Markets and short term plays. 0 Comments

The market now appears to be in the midst of it’s 2nd bear market rally.  Or is it?  Some people are feeling confused.

 After the Dow hit another lower low a couple of weeks back the following question occured to me – what level would be seen as the beginnings of the long equity-led road to recovery?  Closer inspection of the current toing and froing shows quite uniform reaction to support and resistance levels.  The 1st bear market rally died at 9,400 resistance.  This week ended with the market breaching the 8,600 level.  A move above 9,000 next week would surely mean a worthwhile bet on a move towards 9,400. 

The reaction to consumer data next week should be followed closely; a sanguine reaction to the surely inevitable bad news will be taken as a sign the market thinks it has priced in the slowdown, over the Christmas period at least.  A negative turn and it’s back on the look out for a lower low, most likely.

 It’s reassuring that others are thinking & looking at same.