Abby…Normal
The following scene
was taken from “Young Frankenstein” by Mel Brooks.
Dr.
Frankenstein (Gene Wilder) (calmly): Igor, may I speak to you for a
moment?
Igor (Marty
Feldman): Of course.
Dr. F: Now…that brain that you gave me…was it Hans Delbrook’s?
Igor: No.
Dr F: Ahh…good…Would
you mind telling me…whose brain I did put in?
Igor:Â And
you won’t be angry?
Dr F: I WILL
NOT be angry.
Igor:
Abby…someone.
Dr F: (repeating)
Abby someone…Abby who?
Igor:
Abby…normal.
Dr F: (repeating
again) Abby…normal.
Igor: I’m
almost sure that was the name.
(They both laugh)
Dr F: Are you
saying I put an abnormal brain into a seven-and-a-half-foot long
fifty-four-inch wide…(grabbing Igor and looking maniacal) GORILLA!!??
(shaking Igor violently) IS THAT WHAT YOU’RE TELLING ME!!??
Goldman
Sachs’ Abby Cohen came out again yesterday to her sales staff and
told them that the past week’s selloff
represents another buying opportunity. In
addition, she put on her “Don’t worry, be happy” face again and told
us not to worry about the Japanese
financial crisis, as the problems with their banks
were known all along. Yeah, right. Regardless of whether or not they were
known, I wouldn’t be that quick to dismiss the potential ramifications of
this emerging crisis. Everyone on Wall Street knows how much money the Japanese
have invested in our equity markets, although they may not admit it. If
Japan begins pulling their resources out of our equity markets, we may really
begin to see a meltdown.
With Abby coming out last week and
telling us to buy stocks before they run away from us, Goldman Sachs looked
desperate. With her coming out yesterday and
again telling us that the 1000 points shed since her last call represented
yet another “buying opportunity,” Goldman Sachs looked pathetic.
Abby has made billions of dollars for the
firm. It is time they retired her number
and hung her jersey from the rafters. This obscene game by the brokerages
needs to stop and only the public can stop it. If we stop following
their analysts like lemmings, they will lose their power to move the market
in favor of their firm’s trading positions.
There was a great quote by
USB Warburg strategist Edward Kerschner that William Fleckenstein of Fleckenstein
Capital included in his daily commentary yesterday. The highly ranked
USB strategist Kerschner said: “With the economy weak and estimates in
freefall, we admit that our preferred approach of trying to construct a bottoms-up
sector-by-sector forecast of S&P earnings does not work…Frankly, it
amounts to a pooling of ignorance — strategists manipulating the estimates
of analysts who are following the guidance of managements who are clueless
about the near-term course of earnings…Given the failure of us and
most other observers to predict the current downtrend, why is the forecast
of an economic rebound in 2002 credible?” Could it be that someone
out there is actually honest? Thank you for your candor and professionalism,
Mr. Kerschner. You set the bar too high for your peers to follow.
Now that it is universally accepted
that the markets are extremely oversold and
all eyes are waiting for them to rally, why haven’t they? In the past, an
oversold condition of this extreme in the Nasdaq would spark a furious rally
within a few trading sessions. It’s not happening now, however, something
is different this time…… something feels broken. The bear once again
showed his stuff yesterday by knocking off everyone’s early session rally
caps. I still get a kick out of watching strategists from Merrill Lynch
on television refer to this market period as “a correction.” Indeed.
An important thing to remember is that an
oversold market can always get more oversold
just as an overbought market can get more overbought.
Back in August
of 2000, the Nasdaq Composite traded up almost every single session that month.
The technical indicators were amazingly overbought yet it just kept
chugging higher. It is more important to determine whether stock supply or
demand is in control. At present, supply is clearly in control for numerous
reasons as we have seen relentless selling into any and all rally attempts
the market has attempted. This trend looks to be intact for the next
few weeks, and although we may have a big party next week when Uncle Al gives
us the magic rate-cut pill on Tuesday, the party should be very short lived.
With PPI due this morning and triple
witching, the going will be treacherous. One
of those days to flip between bubblevision and Crocodile Hunter and not take
this day too seriously.
Goran