Mr. Market The Manic Depressive.
Apologies to anyone who suffers from psychological disorders, but today we got a post where one of the newsletter authors called Mr. Market a manic depressive, as they know the price of everything and the value of nothing. I or we or us or all of us here or that guy typing continues to deal with our multiple personalities as we write this blog so we have empathy for Mr. Market.
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| Benjamin Graham |
We did call another drop today due to a disappointing production report and a stinky housing report. We came down another half a point today because of all of the above and a soft retail report and a scary earnings report from HPQ Hewlett Packard. The commodities continued their slip as the dollar beefed up a bit. By the way that is supposed to be how it works. When the dollar goes down commodities should increase. That has not been the case in the topsy turvey market.
Now the Dow closed at 12,479 down 7.79% for the year. The S & P closed at 1,328 down 5.67% for the year. Is this correction over?
We thinkest not. Do you like when I do Shakespearean Speak. Show of hands. Ok guess you don't. The Dow is getting way too close to its 50 day moving average of 12,335. (Actually fell through it today without a meltdown.) That is a huge psychological support level that freaks even the strongest of hedge fund managers. The reason is that it can and will trigger some automatic selling. The S&P is even closer to the edge of the world as its 50 day average is 1,325.
Unfortunately much of the bad economic news will reach Joe trader right now after they have gone home and had their taste of scotch or PBR, but I don't think PBR drinkers actually invest in stock, I think they herd it, but I digress. So Joe is just now finding out that not only the housing numbers were bad, but new permits numbers we ka ka, another financial term for disappointing. Joe will also find out that factory utilization readings we ugly. Now Wally World and Home depot made some money last quarter but their C Suite folk had nothing happy to add to the report. The real bad news was that Mr. Market was caving on larger volume. (Ok Lance this is for you. Not only were the numbers down, but the number of shares traded were way up. Not a good thing. Lance was indicating that some of the stock speak was hard to follow, but I happen to know he is a very bright business man with enough energy to power all of Japan if we could just harness it. Thanks for the kind note today. He might send us a pitcure of his view in Norway. If he does I'll ask permission to share. Be thinking of your favorite view and send it to me with permission to post it in the news letter.)
The prevailing wisdom, stop! Prevailing wisdom. If it were prevailing wisdom wouldn't we all have it meaning we would all show the same return and the same gains? But I digress. The prevailing wisdom is to pick up more stock at these levels if you are going to keep them a while. (Usually defined as several weeks or until you die.) Personally we think(est-sorry couldn't resist.) that taking some profit OR if your account is set up for it selling some slightly out of the money calls against your core positions or buying some slightly in the money PUTS against your core positions. WARNING DANGER Options are scary, dangerous, can cause blindness, internal bleeding, and if your need to trade options last for more than 4 hours, please contact your doctor.
