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IBDvalueinvestin (99.64)

We are going to Re-test July 1st Low

Recs

8

August 20, 2010 – Comments (5)

You can bank on that happening especially since we could not even come close to reaching April Highs before breaking down.

Thats called lower highs and now lower lows is in store.

Already DJIA is at  10,156 , path to least resistance is now down to 9,596.04 which was the intraday low on July 1st, 2010.

5 Comments – Post Your Own

#1) On August 20, 2010 at 12:47 PM, fransgeraedts (99.94) wrote:

Dear Value,

 

i suspect that you are right. I would appreciate if very much if you would comment on my post Double dip; state of play 10. I am curious wether or not you agree on the fundamental and the technical arguments. Look especially at the discussion with portefeuille.Thanks in advance,

fransgeraedts

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#2) On August 20, 2010 at 6:37 PM, Mstinterestinman (27.21) wrote:

I'm up over the last three months so if my portfolio keeps this up I dont care what the market does :P Well except recrash kinda doubt anything would go up then..lol

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#3) On August 20, 2010 at 6:45 PM, Mstinterestinman (27.21) wrote:

I was origionally confident we would see a modest gain for the year and maybe even dow 12k however with the economic weakness that seems unlikely as well the level of fear in the economy. I would not be shocked if we trade flat to slightly down the rest of the year unless next quarters GDP and economic numbers wow us.

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#4) On August 21, 2010 at 1:11 AM, IBDvalueinvestin (99.64) wrote:

fransgeraedts you wrote:

"I am still trying to reason out what the sector rotation will be within this downturn. I would very much appreciate any suggestions about that."

Based on what worked during 2007-2009  crash, The only sector that stayed relatively well was Discount stores, example dollar stores, and discount warehouse chains like BJ's, Costco.

Otherwise other than that the rotating into any other sector was like jumping from the frying pan into the fire. 

Everything went down regardless what sector it was. You would see one sector look stable for a while and jump in then days later it too came crashing down.

If you see a major downtrend start, the only place you can profit is thru Bear ETF's.

Puts usually do not work because they expire and usually are well over-priced to be able to make any money unless your the writer of the PUTS. Also if you write calls you can make a nice sum as all the out of the money calls expire worthless.

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#5) On August 21, 2010 at 5:01 AM, fransgeraedts (99.94) wrote:

Dear Value,

what i am wondering about is not where to hide from the downturn. My question is the other way around: which sector will lead the downturn? And will that leadership down change hands? And if so in what order?

In the 2008 downturn financials had the lead -in a sense all the way down. But retailers and commodities overtook them here and there. Housing stocks of course were bad but the big losses in those were already in before the rest of the market began to slide.

This downturn will be different from the last. It is not the combination of a possible meltdown in the financial system and a credit crunch that causes the downturn in the economy. It will be the ongoing consumer strike in the US in combination with the government austerity in Europe that does it.

(So for the second time in a row we will not have a "normal" inventory-business-cycle recession; therefore the sectorrotation into a recession could also for the second time play out in an abnormal way.)

any suggestions?

fransgeraedts 

 

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