Ho-Hum Monday
First of all,
thank you Mr. Kaltbaum for the compliment. Coming from
someone of your experience and knowledge, I am very flattered. Gary is
certainly someone whose every post I read, so it was nice to know he
reads mine as well.
Mondays are always somewhat exciting because you never know what will
emerge as the driving force for traders. Will it be deteriorating
fundamentals and earnings? Or will it be a resumption of the
liquidity-driven rally with cheerleaders (analysts) doing backflips,
and urging us to get a marker from the casino floor boss, so we can
buy more stocks?
After the market closed today, Bob Pisani (the new
Mr. Hanky) was trying to convince us that Americans didn’t need to
save money. His reasoning was based on some thoroughly flawed report
that the American consumer has been able to eliminate the necessity to
save money, because the relentlessly appreciating stock and real
estate market has been doing his “saving” for him. By
relying on a steadily increasing stock market and home values, the
American consumer has felt safe and comfortable racking up record-high
revolving debt, all the while holding the dubious honor of creating a
negative savings rate. Mr. Hanky then concluded that this was a
justifiable reason for the consumer to continue spending unabashedly.
Thank goodness for The Land of 100% LTV loans.
Is it just me or do you feel like you are watching a cheesy horror
movie, where the teenagers who are having mindless sex in their parents’ summer cottage while they are out of town, are about to get
slashed by a guy in a hockey mask? (I hope my use of the word
“sex” hasn’t offended anyone.) In the meantime, the Fed
governors continue to play the “everything-will-be-just-fine-in-the-second-half” tune to the masses, and expand the money supply,
which is now beyond a terrifying rate.
Richard Russell, who has been trading the markets longer than most of
us have been alive, tonight stated: “Meanwhile, the US economy
continues to sag. Worse, the entire world is now sagging. From Taiwan
to England, from Brazil to Russia, the word is that business is
sluggish-to-sinking. This is a problem that Greenspan and the Fed have
never dealt with before. It’s called a reversal in the primary trend
— better known as a bear market. Bear markets are basically
deflationary. And what the Greenspan Fed is doing in their frantic
efforts at ‘reflating the balloon’ is, in reality, simply
masking the bear-market forces of deflation.”
Gary, there is a very good chance that I am wrong. But siding
with people like Richard Russell is like bringing Michael Jordan to a
pick-up basketball game at the gym, to play on your side. There ain’t
no thing as a sure thing, but I sure like my odds.
What new news did we obtain today to help us with our trading? Not
very much. Dupont Photomasks coughed up a hairball for the chip
sector, which experienced widespread weakness. Nice call, Carolyn
Lueck, on your chart of the SOX index last
week. As such, with the
weakness observed today throughout the Technology and Biotech sectors,
I am once again focusing on the short side of the market (this must
come as an incredible shock to most of you).
However, with the Kraft
IPO looming large this week, you can count on a futures jam session
prior to the IPO to catapult the market higher to warmly receive (buy
and absorb) all the shares that are going to be sold. Does anyone here
remember the 3Com and Palm deal? I rest my case.
Let’s go to the charts:
Have a good night.
Goran
P.S. Did anyone notice the Infonet CEO Jose Collazo on CNBC
after the close today? If you missed it, try to find the saved
footage on the CNBC website. Check out those eyebrows.