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| 2010-01-28 01:42 |
TOO EARLY TO PANIC
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I'm not sure how much of this selloff is attributed to the State of the Union address, but it hasn't helped. The word "jobs" was used many
times, but "me", "mine", and "I" were used three times as much as the President insists all his policies are the way to go. That isn't what the market
wanted to hear. Then, there is the economic data out this week which hasn't been great. Initial jobless claims should be lower at this stage of the
recovery and the durable goods news reflects embedded worry. What the heck is everyone so worried about? I would think that investors could handle a
rocky recovery so a few disappointments here and there shouldn't rattle the market to the degree it has over the last couple of weeks. Fewer people
are talking about it, but I think that there is growing fear of a double-dip recession. I think that big businesses are sitting on cash waiting for a
cue that the coast is clear, banks are hoarding cash waiting for the same cue, and stocks are retreating over concerns that the coast may not be
clear.
I'm told there would be homebuyers out there, but they can't get loans. I'm told there are would be entrepreneurs out there looking for
loans. The whole thing creates a cloud of confusion that is sending everyone back to their foxholes. Just think about the market since Alcoa (AA)
reported. Most earnings results have been good and have beaten the Street, but there is a feeling of a lack of commitment to the future. Who makes the
first move? What banks will begin to lend while their heads are in the guillotine? There are more questions than answers. We really needed more
answers last night and fewer challenges. Having said this, everyone is questioning how to play this first test of 2010. My underlying beliefs in the
business cycle and in American determination are the main reasons I don't throw in the towel. On the contrary, it's why I'm always on the prowl for
opportunities.
I think that earnings have been good enough to justify the 2009 rally, but maybe not strong enough to warrant a massive bump
higher ... at least not yet. We knew that the market was due for a pullback and the more it moves lower the more likely it is to move even lower as
one investor's sell ticket triggers another investor's stop-loss, which in turn triggers another investor's stop-loss ... you get the point. There
were three times last year when we witnessed investors bailing out because the market was under pressure. Those folks must have drank the champagne
straight from the bottle on New Years because they left a ton of money on the table, or in some cases lost much money on positions that finished the
year higher. It's easy to talk about being cool, but it's harder when we are in the eye of the storm. But, this is the time that separates winners
from those that will second guess their actions upon further review.
Of course there are real problems and threats to the market, but it's too
early to panic.
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Disclaimer: Securities Operations Forum is providing this research to assist investors in determining when to buy and when to sell. All investment decisions are yours and as a result you could make or lose money. Securities Operations Forum, its employees and/or its affiliates and family members may from time to time take positions in the open market or otherwise with respect to the securities discussed, but not have stock ownership equal to or greater than 1% of the outstanding stock of the covered company nor does any employee of Securities Operations Forum sit on the Board of Directors of any covered company. The statements made herein include information obtained from sources believed to be reliable, but no independent verification has been made and we do not guarantee its accuracy or completeness. The statements made herein contain general information and do not constitute an offer to buy or sell any security. |
