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The Intelligent Trader's - Long and Short of It
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From: Robert A. Christy Editor/Publisher, ‘The Intelligent Trader’ http://www.intelligent-trader.com http://www.christyinvestments.com
Date: November 16, 2008
The Numbers
The market’s gyrations last week sent the DEFENSE back onto the field. The week ended on a really lousy note with the bottom falling out of the market in the final 30 minutes on Friday. I’ve said that this is getting old but the excesses that have built up over the past years have to be flushed out. Just remember that forming a bottom is a process not an event.
BP NYSE Os @ 26% DEFENSE BP OTC Os @ 22% DEFENSE BO S&P500 Os @ 28% DEFENSE
Sector Bullish Percent
Consumer Discretionary Os @ 22% Consumer Staples Os @ 36% Energy Xs @ 24% Finance Os @ 20% Heathcare Xs @ 44% Info Tech Os @ 22% Industrials Os @ 28% Materials Os @ 24% Telecom Os @ 54% Utilities Xs @ 62%
The Market
Once upon a time, triple digit moves were a reason to get excited. It didn’t matter if it was up or down. Just the fact that we had the move was reason to get tongues wagging. Not any more – out of the last 45 sessions, the Dow Jones Industrial Average has posted gains or losses in three digits 38 times.
This kind of volatility is the result of a market environment that we have not faced before. The market is off almost 40% year to date and these numbers are reflected in virtually every index. This isn’t the end of the world, but it feels like it is.
The commodity markets have not faired much better. The first half of the year was one story and since June 1st is a completely different story. The grains, oil, and gold all tell the same story – panic to the upside and unrelenting prices drops to the downside.
With all the crap flying around, there is a silver lining. Fear is a great motivator and those who understand that the best time to buy is when blood is running in the streets are finding bargains galore.
As to what comes next is anyone’s guess. We have an option expiration week coming this week and the churning action will bring a few more Maalox moments. I’m not panicking and neither should you.
As the opportunities present themselves, we’ll act on both the long and short side.
Even though my short term performance has been kicked around, I know intuitively that oil and gold are mis-priced at current levels. We moved last week into the rigs, transport and some technology.
This week, I am going after a couple of refiners and maybe some more gold.
Economy
The consensus is that we are in a recession and have been since the end of last year. If we use that scenario, then this slowdown will be longer and deeper than the past couple of economic slowdowns.
The Dollar
There is an old saying on Wall Street - you eat your losses or your losses eat you. The bailout crap now traipsing about is a sign that Barney, Nancy, Harry and the rest refuse to eat their losses. So far the list includes - the Paulson Plan, the AIG rescue, and the Fannie/Freddie bailout.
“HOPE AND PRAY” is not an investment strategy.
When the government’s solution to a problem that they created is more government it is time to hang onto to your wallet as if you’re life depended on it – because it does.
What we saw last week was complete and total ineptitude on the part of Congress and the Treasury officials. The bailout that was isn’t and now we’re going to take a hard look at credit card, student loans and a bunch of other nonsense. All I can say is this – the people that are having trouble with mortgages (the bottom 3% of all homeowners), having trouble making credit card and student loan payments are in trouble because of their own actions and no one else’s.
The majority of the investing public is being punished because of a few bad apples. Not all mortgages are in default. Not all people who have credit cards have exorbitant rates and are late on their payments. Not all people with student loans are delinquent. These people are not savers or investors – they are spenders – and irresponsible ones at that. Enough said.
Operational Note
Due to some recent law changes in the way email is processed and delivered, I am moving my email capabilities to a new set of servers. As such, you are set to receive an email from me in the next few days. Please take a minute to confirm your interest in the “Long and Short of It”. This is necessary for you to continue receiving this free e-letter.
That’s about it for now. Let me here from you if you have any questions.
Robert Christy
P.S. In the next few weeks, I am rolling out a new stock trading coaching program that will expand what I currently offering though The Intelligent Trader. This program will be a form of mentorship and is geared to investors looking to become more proficient in trading and technical analysis. Look for it soon!
P.S.S. Please fee free to forward this to your peers, friends and associates you think would benefit from its contents. They will thank you for it - and so will I!
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Robert Christy is a professional stock/currency trader, money manager, author and speaker. Mr. Christy is the President CEO of Christy Investment Group, Ltd., a fee-only registered investment advisory firm. He is also the Managing Partner and Portfolio Manager of Crabapple Capital Group, LLC and the editor/publisher of The Intelligent Trader, a subscription based long/short trading service. At the time of publication, Mr. Christy may from time to time write about stocks in which he, Christy Investment Group Ltd, Crabapple Capital Group, LLC or The Intelligent Trader has a position. In such cases, appropriate disclosure is made. Under no circumstances does the information in this column represent a specific recommendation to buy or sell stocks. Mr. Christy appreciates your feedback and invites you to send it to rac@intelligent-trader.com .
Robert Christy The Intelligent Trader c/o The Christy Investment Group P.O. Box 625 Alpharetta, GA 30009-0625
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© Copyright 2008 Robert A. Christy, The Intelligent Trader
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