Before the Open (Aug 8)

Posted on by Jason Leavitt

Good morning. Happy Monday.
It’s not a very happy morning for the world markets. The Asian/Pacific markets are down across-the-board. Most indexes have lost 2-4%. Europe is currently down across-the-board. Losses are not as bad as Asian, but they’re still very steep. Futures here in the States point towards a large gap down open for the cash market.
The dollar is flat. Gold and silver are up nicely. Oil is down another $3.26.
As you know, on Friday night, Standard & Poor’s lowered its rating on US debt from AAA to AA+. This means the confidence S&P has the US will pay its debt is just very very good instead of excellent (or something like that). This is meaningless because the rating is still very high, and the US can always print money to pay its debt. But psychologically it has spooked the world markets. (and let’s not talk about whether S&P even has any credibility)
As I said over the weekend, I’m glad this happened. 1) Politically it had to happen because maybe now Congress would get off its ass and take our debt more seriously rather than spending irresponsibly and pushing our financial problems to later generations. 2) So much bad stuff has hit the market recently, why not throw this in the mix too and get it over with? Economic numbers have taken a turn for the worse. Earnings season started well but has gotten much worse. The charts are in horrible shape. Other than saying “the market is oversold” there is nothing encouraging about the current state of things. So why not throw this extra piece of news on the pile and get it over with? It has the ability to cause the capitulation sell-off needed to form a local bottom.
A bounce is coming. It could happen today or tomorrow or maybe not ’til the end of the week, but it is coming. And when it comes it’ll be fast and furious and full of volume and energy. But if you’ve been guessing when it’ll happen, you’ve gotten crushed.
If you’re short, great. Manage what you have, but I’m not sure initiating new positions is a good idea right now. If you’re long, well, I have nothing to say to you. You’re crazy (unless you’re a long term investor who is more concerned with collecting dividends). If you’re on the sidelines, start building your list for when the market bounces. And watch what happens closely. Experience is the best teacher. More after the open.
headlines at Yahoo Finance
today’s upgrades/downgrades
yesterday’s sector performance
this week’s Earnings
this week’s Economic Numbers

0 thoughts on “Before the Open (Aug 8)”

  1. Lucky for me I went into 100% cash last week when the Dow closed
    up (yes, that’s not a typo), up 29 points. I could have rolled
    the dice and gone short, but I’m getting a little bit older now
    and I am not working (and not drinking, either), so I don’t have
    the nerve about the markets like I used to have around 10 yrs ago.

  8. Neal ,we will be getting a multi week push up so as u can add to ur longs
    but it is not just yet
    we could have a small bounce soon but go lower
    when the final low is hit u will know it and can then go long

  9. us debt gets downgraded, but bonds are up big today. why? because the downgrade of us bonds throws the global financial system in turmoil and that causes a rush to the very bonds that were downgraded. crazy eh? lol when do we see 1% yield on 10y treasuries? japanese bonds are trading around 1% with a lower credit rating 🙂
    i must say i trimmed a bit more from my bond positions. down to less than half now. holding onto every gold and silver contract still. when does gold see 2K? probably the same time as silver trades back to this year’s highs.

    1. Don’t worry Rich, just as soon as Neal gets done spanking
      me he’ll do you too. Flash crash! Obummer speaking
      today at 1pm eastern. Aussie you don’t want to miss
      this one even though it will be around 3am your time.

  14. I am sick of hearing the excuse that American can always print money to pay their debts. That excuse is just what an arrogant American will say. Yes America can and will print money to pay for its debt but at some point nobody will accept the currency. That is 2 years away. I expect the 2016 election to bring in a military leadership. Maybe Patreus? The world has entered a new recession. Dont wait for the NBER to tell you.

  21. a bounce doesnt have to occure–see dax well below its h/s bottom
    but if it does this will not be the low and will be retested for a solid low below this low

  25. any bounce should only do a third retracement–if that ,then continue down for the real low for this move—-but a bounce is not guaranteed here –still can go lower

  29. Neal –why didnt ur friends -the hedgies tell u what was going on
    or are ur freinds the alpha mutuals that are getting killed
    this has all been planned for the past 3 months

  30. just took another small scalp as i was typing
    i have 4 computers –one with 2×24 inch moitors and 12 side by side charts
    another with charts –yet another computer with order pads ready to go at the press of buy/sell button and this my typing and email computer
    and all from my king size bed overlooking the beach/tropical sea
    and my wife brings my meals and snakes into me on request
    and i can watch pay t.v movies or stero system at will
    what more do i want

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