Stock Market Crash - Year One Review III - March Madness!
by Phil - September 10th, 2009 5:51 pm
We left off in Part II with our Feb 23rd Big Chart Review.
Even though I said: "Once again we are in a market that environment that reminds me of the Simpsons episode where Homer jumps over a gorge, crashes, is taken up by a helicopter (Ben) smashing against the wall along the way only to fall all the way from the top again. Pain, pain and more pain every time we try to get long" - we still weren’t fully prepared for the devastation that was to follow as the Dow fell from 7,500 to 6,500 in the next 10 days. My commentary on the environment the next day was:
According to Cap, someone on the YHOO message board was counting the number of times CNBC talking heads said "nationalization" this morning and, as of 8:15, they were up to 300 times. Sadly, this is the fear-mongering that is driving the markets to new lows while Cramer continues to keep his sheeple out of protective ETFs like SKF. So you have the man’s network telling you financials are going to zero while dog and pony boy tells his minions to sell ALL the financials, causing them to go to zero - even though they could hold on and protect themselves with conta-funds, if Cramer didn’t spend 3 days a week convincing his viewers contra-funds are poison. I’ve never seen anything like this outside of a racketerring investigation. Speaking of racketeering - Dennis Kucinich nailed it when he pinned that charge on Paulson and company back in November.
Our wall of worry continues to be a steep one. After yesterday’s failure we do not expect too much out of today, we’ll be happy to just see a bottom at this point but it’s looking a little more likely that we’re heading into a capitulation event that can take us down to frightening levels. The 60% line is a line the markets dare not cross but, as I pointed out yesterday, we already lost the SOX and the Nikkei, with the Hang Seng and the BSE hanging on by a thread. Let’s take these levels very seriously, if the administration can’t turn it around this week - the downward momentum can easily pick up steam.
I’ll spare you the details other than to say we DIDN’T turn it around that week and the downward momentum DID pick up steam. I was at war with Cramer at the time as he was blatantly ripping off my ideas and trying…
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Will We Break Out Wednesday? No.
by Phil - August 5th, 2009 8:23 am
So close but yet so far!
As you can see from David Fry’s chart of the QQQQ’s, the Nasdaq is looking to boldly go where no index has gone since last October, back through the September highs! If you look at the chart pattern, we have a nice "W" bottom already in and a breakout here at 40 on the Qs could mean we’re heading back to where the drop began - way up at 47.5. That’s a neat 20% gain from here and that would give us Dow 11,160, S&P 1,200, Nas 2,400, NYSE 7,800 and Russell 700.
What? Do you think that sounds like a bit much? Well, if you question the resulting trend of a breakout then perhaps you should get ahead of the curve and question the breakout in the first place…
Does it strike you as strange that a breakout here and a move up to the top of that "W" would put stocks back to where they were valued last June, when the average company earned twice as much on 35% more revenues? Do you really consider MRO a value because they beat expectations of .53 by earning .58, "just" 39% below last Q2. MGM is down 21%, TAP down 54%, RRI down 61%, APC down 37%, CTX down 49%, FST - 64%, LF -27%, PHM - 57%, VMC -29%, ADM - 24%…. Well you can look them up yourself here and I’m not saying there aren’t winners in this market, but they are few and far between yet the rally is indiscriminate - as if the whole market is spectacularly undervalued.
While I have long been in the camp of those saying "The economy is not that bad," I do have to, at this juncture, point out that the economy is not THAT good either. Keep this in mind when you are buying stocks. How far away are we from your company earning what it earned last year? What is your expected growth rate. Keep in mind that last June, your company had positive guidance and was projecting revenues and earnings 10-20% higher than that by 2010 and all we are saying here is how long will it take your company to get back to what it was earning in 2008? If you say 2 years - then look at the price of your stock in 2006 - THAT is probably a fair value for your stock!
XOM, for example, made $8.47 per share last year but made just $1…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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