"No Shaking, No Tenderizing, Down You Go"
There are three parts to the story today in regards to markets and things economic.
The first part was the 'make you puke if you are long' morning open, which was pretty nasty and was sure to have triggered plenty of sell calls first thing. This needs no real coverage. For about 30 minutes this morning it as just like back in the days of Lehman Brothers.
The second part is more the part I want to spend time on because if I am right this could get ugly pretty quick.
After the terrible open, stocks caught a bid all day and moved steadily up to the day's end. Please note that I closed my positions in GG, NGD, and KCG around 3pm for bad losses, but not terrifying ones. The indices closed lower, but it was not as bad as it was. The volume involved on the upside was dwarfed by that of the selling in the morning, but that is pretty common in this market. Many observer's were watching the action and were amazed. Trader Mark offered:
While we have to wait until the major averages get back over their respective 50 day moving averages to feel more comfortable it appears nothing short of aliens invading will cause speculators not to believe in The Bernank. Natural disasters are now clearly bullish because it means rebuilding.I left the following comment:
I think an alien invasion would be bullish due to all the new technologies we would be exposed to :)Indeud.
It was just like at Camp Mohawk in the film "Meatballs"! All of a sudden all the problems of Japan and a market collapse just didn't matter! II JUST DOESN'T MATTER!:
A late day selling deluge was the warning that caught my eye and makes up act three of the day.
For quite some time people have been conditioned to buy the dip, or BTFD. Most pull backs have been benign in nature so this has worked well. The action today seemed to be a mass dumping followed by a baby walk up to attract Pavlov conditioned buyers, and then a hammer at days end. As of now futures are ugly and there may be another big dump at the open tomorrow.
This made me think of the line from the film "Jaws":
"No Shaking, No Tenderizing, Down You Go"
No one can possibly have any idea how the Japan disaster will play out. No one. Many argue this or that, but it is far from clear. I will go out on a limb and predict that Japan will not be getting to work rebuilding the region on a grand scale by this Thursday. Long term issues are not even on the radar right now.
The markets were damaged again on a technical basis and that coupled with how the selling is being done is reason for caution here. The perfect setup for distribution to BTFD chumps is in place, and I do not mean the good kind of distribution. I mean like wash out coming distribution. I could be wrong.
Have a good night.
