January 23, 2010
– Comments (6) |
RELATED TICKERS: A
My thoughts on the rally's impact on the market.
On another note, for those who are interested in following/ commenting on my analysis on a different platform, I can now be found on Twitter.
Alex Dumortier, CFA
What rally? Rally is over.... it ended not this past week but the week prior. I felt the market shift bearish middle of last week. And entering this past week after that...VIX spikes 30% confirming my suspicions.We are back to a commodity deflationary environment exactly where we were in 2008..... And back to accelerated job layoffs where we were in beginning of 2008.I started my investing into stocks March 2008. I'll still stick with it.... I guess.... but now it is about personal survival and no longer about ? ? "Earn Fat Returns Beyond the Rally."
If I didn't already own a lot of FCX I would be buying more now, but I bought it back in Dec 08, when it was really cheep so I really don't need any more. FCX started paying a dividend again, its profits are up but it warned that profits might not be as good in the future. Over the last week it dropped about 12%. Will it rebound back up? It has in the past.
As for the rest of the market, its anyone guess.
I also felt a disturbence in the Force last Month.
Kudos to me for gathering some dry powder.
Thanks for your comment.
I share much of your bearish sentiment; in fact, I have written numerous articles over the past few months suggesting that the market's exuberance is unwarranted.
Nevertheless, I think stockpickers can still find opportunity in this market, despite the fact that the U.S. stock market (as a whole) has gotten ahead of itself
Or we could be experiencing a needed correction.
This recent market decline has turned into a late after Christmas sale for those of us who have been waiting for a correction since September. Now that the China/Obama market correction for 2010 has begun, what remains is choosing wisely what and when to buy. The Dollar index remains up but for how long? My bets have been on the miners since I suspect that China's comment to the banks may have just given them another opportunity to divest from US dollars into more commodity holdings. The President's comments were likely calculated to gain back some popularity following the Tuesday MA election. With the Rolling Stones article exposing his financial mistakes in his first year, he needed to bring back Volker to convince people that he was serious this time, since Volker has done it before.
So the market sells off and we are left to wonder if this is the beginning of the transition from a V recovery to a W recovery or were these some coincidental comments from two major players in world finance, which happened to push the markets in the same direction. I suspect that both China and Mr. Obama will come up with clarifications during this next week which will be aimed at repairing some of the damage that has been done to the markets, which will also reinflate commodity prices.
I have set up a lot of buy Limit orders to kick in if the selling continues, but since I still believe that a W is still in our future as sure as it was in our past, I have placed a low price on all of these Limiit orders, with a 60 day time frame.