I did not get a chance to update my blog, but the title of this brief summary tells all. Once this miserable retarded uptrend is over, the Nov low of 2008 will be most likely tested.
The year of 2009 could be as challenge as 2008, if not worse. The world is full of unknowns. How the economy and the market will evolve is in anyone's guess.
My number one priority in 2009 continues to be preservation of cash. At some point down the road, we will have a strong bear market rally; but until it arrives, I make no second guess and all my money will be meticulously protected like my baby.
Sunday, January 11, 2009
Saturday, January 3, 2009
A Look Back at 2008
The year of 2008, in many ways, is like depressing black humor Hollywood classics, gripped the hearts of Wall Street audiences. It has been a year like no other with the worst global economy in decades; and the elect of the first black president in history. The year of 2008 was unfolded with the collapse of the US corporate giants; unprecedented government intervention; the debacle of the hedge funds and the biggest Ponzi Scheme scandal in Wall Street history. The DOW industrials lost 33.8%, the biggest one year drop in 77 years. Only 1931 (-52.7%) and 1907 (-37.7%) were worse. The S&P 500 dived 38.5%, the worst since 1937. In this article, we look back at 2008, the events, the implications and especially, what we can learn to protect ourselves financially in bad times, and eventually thrive and prosper in good times.
I will start by filling up the "Current Market" section before moving on to other topics.
The first day of the 2009 started with a bang. S&P500 went up 3.16%; Nasdaq Composite went up 3.5%; Dow Jones went up 2.94%; S&P 600 Small Cap went up 1.32% and IBD100 went up 0.64%. The leading stocks continue to lag the big board. All Major indexes held above 50MA and cleared the trading range to the up side. This is no doubt a short term bullish development.
The troubling factor of the whole move up from the Nov low continues to be the low volume rally. The entire move is characterized by the buying from the retail crowd and the MMs raising the bids.
The best performing groups on the first day of the trading of 2009 were all from beaten down commodities.
No Expansion of New Highs. In a healthy market, with major indexes breaking above a trading range and going up 3%, you would expect a major expansion of new highs. We don't get it. New highs in NYSE and Nasdaq are lingering around 20s.
In the landscape of the leadership stocks, the quality of the leadership remains to be a big concern. Other than a few stocks in medical/defense/education, the rest are all thinly traded, LPHI, AIPC, CSKI, LOPE for example. These are not the landmark showing the strength of a strong bull market.
The market is off the oversold condition from the Nov sell off. The market is no longer oversold. As a matter of act, it is getting very overbought in both short and intermediate term. In short term, the upside limit should be limited.
Could this market go higher? Absolutely, the enthusiasm of the bottom callers and retail crowd certainly could push the market higher as big institutions continue to sit on the sidelines with no buying, but no selling as well. This is not the kind of the market I am interested in playing, at least based on the market condition as of now. Without institutions on my backing, I won't make big bets. Majority of all my money will be continuing to park in the safe, locked waiting for a better opportunity. In stock market, the best advice I have ever acquired is that you don't need to play the market all time. This is the time I won't play heavy.
Today I was reading the market message from John Murphy (I find he is very good in discussing inter-market relationships as well as some historical repeating market patterns). He talked about the January effect as well as the first-five-trading-day-effect. Here is an excerpt,
"As January goes, so goes the market ... What the market does over the next week is important. As I explained the previous Friday, what the market does during the first week of the new year often gives a clue about direction for the remainder of the year. According to the Stock Traders Almanac, "S&P gains during January's first five trading days preceded full-year gains 86% of the time". The predictive ability of the month of January is nearly as impressive. "The January Barometer predicts the year's course with a .741 batting average. 12 of the last 14 post-election years followed January's direction" (Almanac)."
Next week is going to be important after business gets back to normal. The big boys will show their cards. If we can build on further gains on higher volume and then drop back to test the break out on lower volume, I will deploy some capital to work.
At this moment of time, all I am doing is to wait and see how things unfold.
I will start by filling up the "Current Market" section before moving on to other topics.
- The Burst of the Wall Street Levee
- The Government Intervention
- The Hedge Fund Debacle and the Scandal
- The Destroy of a Living Legend -- Bill Miller
- The Start of the Dive -- 2007 Market Top
- The Final Thrust of the Commodity Boom -- March to May Bear Market Rally
- The Great Shorting Opportunity -- Sept to Nov Market Plummet
The first day of the 2009 started with a bang. S&P500 went up 3.16%; Nasdaq Composite went up 3.5%; Dow Jones went up 2.94%; S&P 600 Small Cap went up 1.32% and IBD100 went up 0.64%. The leading stocks continue to lag the big board. All Major indexes held above 50MA and cleared the trading range to the up side. This is no doubt a short term bullish development.
The troubling factor of the whole move up from the Nov low continues to be the low volume rally. The entire move is characterized by the buying from the retail crowd and the MMs raising the bids.
The best performing groups on the first day of the trading of 2009 were all from beaten down commodities.
No Expansion of New Highs. In a healthy market, with major indexes breaking above a trading range and going up 3%, you would expect a major expansion of new highs. We don't get it. New highs in NYSE and Nasdaq are lingering around 20s.
In the landscape of the leadership stocks, the quality of the leadership remains to be a big concern. Other than a few stocks in medical/defense/education, the rest are all thinly traded, LPHI, AIPC, CSKI, LOPE for example. These are not the landmark showing the strength of a strong bull market.
The market is off the oversold condition from the Nov sell off. The market is no longer oversold. As a matter of act, it is getting very overbought in both short and intermediate term. In short term, the upside limit should be limited.
Could this market go higher? Absolutely, the enthusiasm of the bottom callers and retail crowd certainly could push the market higher as big institutions continue to sit on the sidelines with no buying, but no selling as well. This is not the kind of the market I am interested in playing, at least based on the market condition as of now. Without institutions on my backing, I won't make big bets. Majority of all my money will be continuing to park in the safe, locked waiting for a better opportunity. In stock market, the best advice I have ever acquired is that you don't need to play the market all time. This is the time I won't play heavy.
Today I was reading the market message from John Murphy (I find he is very good in discussing inter-market relationships as well as some historical repeating market patterns). He talked about the January effect as well as the first-five-trading-day-effect. Here is an excerpt,
"As January goes, so goes the market ... What the market does over the next week is important. As I explained the previous Friday, what the market does during the first week of the new year often gives a clue about direction for the remainder of the year. According to the Stock Traders Almanac, "S&P gains during January's first five trading days preceded full-year gains 86% of the time". The predictive ability of the month of January is nearly as impressive. "The January Barometer predicts the year's course with a .741 batting average. 12 of the last 14 post-election years followed January's direction" (Almanac)."
Next week is going to be important after business gets back to normal. The big boys will show their cards. If we can build on further gains on higher volume and then drop back to test the break out on lower volume, I will deploy some capital to work.
At this moment of time, all I am doing is to wait and see how things unfold.
- My Agenda for 2009
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