Don’t fight the tape

A very old Wall Street expression and one of the most valid is "don’t fight the tape". Although I have been solidly bearish in recent weeks I now think that the market is poised for a ride on the upside.  During the past week the market had lots of reasons to sell-off big time but for the most part, stocks held up well and the averages finished the week on the upside.  I have pointed out that stocks are on average are modestly valued and some bargains were available.  The shopping started last week and will likely resume with renewed vigor this week. 

A Typical Week

This is shaping up as a typical week in a bear market.  Yes, we had a little rally that didn’t last in the face of less than exciting economic news.  The depressing performance of the Fed Chairman alone would be enough to send an investor running for the hills.  Consumers are spending less, which is no surprise given the excessive chatter in the media about how the financial world as we know it is coming to an end.  Housing remains in the pits and banks are still very questionable.  If this isn’t a recession, it sure feels like one.  Still, hope springs eternal and what we find interesting is that the market has not acted worse in view of recent developments.  Is it trying to tell us something?  Next week could be interesting.

Bear Market Rally Fizzles

Yesterday’s trading was very indicative of a bear market rally.  After heading significantly higher on the Buffet news and some good earnings reports the market started the day sharply higher.  However, later in the session stocks pulled back and while ending modestly higher the tape was showing lots of weakness and selling at the end of the day.  This type of activity is very common in a bear market.  The inability of the market to maintain highs was very disturbing and signals an inherent weakness that should result in more selling today.

Sceptical of Bounce

Some bargain hunting lifted the major averages higher yesterday, but I see very little reason to alter my bearish reading on the market.  To be sure, as I have mentioned there are some values now available as long as one has a long-term view.  But for the short-term there are still way too many negatives to warrant any wholessale buying binge.  I don’t think there will be any appreciable postive follow through today and I suspect the market will finish on the downside for the day.  The time for aggressive buying may be closer, but not quite yet.

Chill Winds

As this is being written the cold winds of winter are blowing here in New York and I can’t help but think that the stock market is also in the deep freeze.  Harsh economic cross currents are blowing on Wall Street and investors are being chilled to the bone as they look at their shrinking portfolios.  Bears love cold weather and they now seem to be roaming the canyons of the financial district, and they are very likely to stay put for the time being.  Recession fears still are the most prominent worry and the deepening credit crisis is also giving reason for grave concern.  To be sure there are some attractive valuations to be found in some big name stocks but I still hesitate to recommend any wholesale buying binge.  I look for another rough day today for the stock market.

A Chinese Snow Job

It seems that most everyone is counting on China being the next global economic super power.  Indeed, some folks believe that within the next 20 years China will have the world’s most vibrant economy.  Last year China’s GDP grew by more than 11% and many so-called economic experts believe this magnitude of growth can continue for the foreseeable future. While I admit that Chinese economic growth has been impressive I can’t help but bring attention to the fact that if China is such a great global power why is it that the country can’t deal with a little snow.  Specifically, a recent snow storm that is a light dusting by Chicago standards brought this mighty economic power to its knees, closing roads, stranding thousands in rail stations, cutting off electricity and in short bring the country to a grinding halt.  Maybe all this talk about China being such a great economic power is just a snow job?

Bargain hunting

Relatively low share valuations lured investors back into the U.S. stock market on Thursday after a prolonged losing streak pushed the Nasdaq into an official bear market. I think you will probably get some additional bargain hunting today in a session that will be devoid of any major economic news.