Before the Open (Aug 9)

Posted on by Jason Leavitt

Good morning. Happy Tuesday. Happy Fed Day.
The Asian/Pacific markets closed mostly down. Hong Kong last more than 5%; South Korea dropped more than 3%; Indonesia and New Zealand dropped close to 3%. Europe is currently mixed and with a bearish bias. Austria, Germany, Amsterdam and Switzerland are down more than 1%. Futures here in the States point towards a gap up for the cash market (S&P futures are 50 off their overnight low).
The dollar is down 0.5%. Gold is up; silver is down. Oil is down slightly and trading just under $81.
I’m not sure what the Fed can do or say today that will help the market. Rates are already near 0.0%, and while QE1 helped boost the market, QE2 had a diminishing effect. Does Wall St. want QE3? If the pattern continues, QE3 would be a waste of money because it’ll have very little, if any, positive effect (except for an initial psychological boost).
There are lots of lessons to learn from the last two weeks. The main one being the concept that an oversold market can remain oversold for much longer than you think. The S&P was oversold 100 points ago. Anyone who tried to pick a bottom got run over. A bounce is coming, but too many people have been looking for a bounce – hence the delay. When it happens, it’ll either be very short lived with new lows to follow soon after, or it’ll last longer and go further than makes sense. It’s not going to be a perfect retracement back to a certain Fib number or back to previous support. That’s what everyone wants, so it’s not going to happen.
Most of the time I don’t care about a Fed meeting. Today will be interesting purely from a spectator standpoint. There’s not much in the Fed’s tool box. What will they say to try and calm the selling? What do they think they’re role is here? We’ll have to wait to find out.
Be nimble. Be flexible. Be open minded. 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 9)”

      1. Neal got his ass kicked because he stayed long and was too blind to
        see the forest through the trees. Maybe now he is waking up to
        the mighty strength of the Mississipi River! HW

  2. Inspiring confidence that they know what they are doing, can and will do it would be the path to recovery. If the team lacks confidence how can the coach inspire them? If no one has confidence in the US why would anyone go long?

  4. I was telling AussieJS yesterday that according to Albert Einstein who
    once remarked, “there is no shortage of human stupidity!” The meaning
    here is that the average American might bleep all of this out of their
    minds and start buying with two fists again. Don’t forget, the sales
    and marketing strategies are overpowering and can convince the average
    investor very easily that as long as you diversify your portfolio
    there is no problem. When we reach the neckline at.382 retrace=1260
    let’s see what happens. HW

  6. From my mobile phone hanging out with the homeless people
    underneath the Brooklyn Bridge here in New York City.
    Do not trade this market at least for another day or so until
    the mechanics of the market get back into some sort of
    equilibrium (i.e., the bid and the ask get back into
    a normal pattern), thus avoiding anybody getting whipsawed.
    (Still in cash since around the middle of last week). HW

  8. Neal – I’m sure everyone here wishes you every success in your new ski product venture. Also, I’ve decided to “put” (no pun intended) my purchase of your DOW 13,000 T-Shirt on hold for a decade or so – but please keep us all informed when your new ski product is available for purchase.
    While I was away last week, the bull market that began in MAR ’09 seemed to end. From a long term perspective, I was stopped out on my long positions at 1295 and I’ll now look for a rally to start establishing short positions longer term, ideally above SPX 1200 – if that’s OK with you, Sensei Neal.

  9. I thought perhaps we might rally into the .328=1260
    retrace area. However, watching CNBC Fast Money
    (which is normally in the ultra bull camp), they are
    looking at 1200 to 1220 as strong o/h resistance.

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