How Low Can We Go?

When I wrote yesterday's entry, I didn't expect it to be that bad. Looks like we have a new range. If October S&P action was mostly between 900 and 1000 (or for SPY between 90 and 100), now it moves to between 750 and 900 (maybe between 800 and 900, if we have upside action today). I'm probably a (very cautious) buyer at this level. Just for a trade. Probably SPY, it's hard to guess individual stocks in this market.

Bad thing if we break below 750. Looks like it's the level where most traders have their stops. If they are stopped out, we can easily go to 680 in couple of days.

I used to look at any action from a fundamental point of view, usually. But this is not the usual market. Fundamentals don't matter. They will, eventually. Problem is, nobody knows how low we can go...

Bernanke astonished me yesterday. He acted like we are in Great Depression 2.0. But he absolutely denied that we are having one. Is it PR or conviction?

Full disclosure: at the time of publication author had no positions in SPY. Positions can change any time.

Comments

[axelrod608:]

If you believe the many voices that agree that bottom will not be reached until the housing markt stabilizes, then the bottom is waaaay down there, not even within sight yet. Liar's loans were still being made in large numbers in 2007. The last of them will reset in 2012. Look for foreclosures to remain high well into 2012, perhaps beyond. And that's where the housing market gets its first chance at stabilizing.

2008 Dec 02 11:06 AM

[Urbane Gori...:]

Not really too sure why you bothered writing this article, unless you were just penning your own musings to try to get a handle on what you think would/might/could/ might not/probably would/shouldn't happen.....

jegan

2008 Dec 02 01:24 PM

[Alex Filonov:]

On Dec 02 01:24 PM jegan ;-) wrote:

> Not really too sure why you bothered writing this article, unless
> you were just penning your own musings to try to get a handle on
> what you think would/might/could/ might not/probably would/shouldn't
> happen.....
>

Well, that's what I do. Musing, I mean.

> jegan

2008 Dec 02 05:25 PM

[vaughn:]

Bernanke said he would buy treasury directly, meaning fed would have resorted to printing money to flood the market.

In the meantime, consumers are unable to spend due to loss of jobs and loss of credit lines from credit card issuers. That the loss of spending power by consumers (2/3 of economy?) spells doom......

How low can we go? lower than you can possibly imagine... think the unthinkable.

2008 Dec 02 08:51 PM

[jepittman:]

I see nothing - absolutely nothing of value in this piece. Surely you can do better - if only because you can't do much worse.

2008 Dec 02 09:21 PM

[neutrino23:]

Regarding housing, I don't have the link handy but there was a chart I saw showing a large number of loans resetting in 2010 then fewer in 2011 and fewer in 2012. I guess that gives us a year to put together a plan to push that pig through the python.

2008 Dec 03 05:37 PM