Just when we thought things were going so nicely, all of a sudden there's a terrible sound and we bump into something.
Let's not worry until we contact the captain and see what's going on... Captain, Captain Buffett, hello? Uh folks -- remember when I told you to keep an eye on Berkshire Hathaway Inc. (BRK.A)? Well, they... uh... jumped! While we are flying around way up at Dow 12,400, BRK.A dropped 4% since Monday's open! It is never a good thing when the captain is 4,000 feet below the plane!
That's OK folks, he's an old man, perhaps he just went out for some fresh air -- let's just take a look at our canary and —- uh oh! That is one sick looking canary!
We did A LOT of selling today as we didn't like the looks of this market from the open and, now that I've had a chance to step back, I'm still not so excited about it. But I'm not really worried yet either, despite losing our captain and maybe an engine or two...
Sure, you may say, it's easy not to worry when you just cashed out, but why should we, who still have open position not be worried? Oh I'm sorry, when I said I'm not really worried I meant me -- not you. If you are still in the market you should be very worried, but not panicked. It isn't time to panic yet. Maybe soon but not yet.
The last time I wrote an article about a thump was also a Thursday, December 7th (Pearl Harbor Day). We had pulled off a nice run at 12,400 but we failed it 3 days in a row and dropped all the way down to 12,233 before closing at 12,278. The next day we opened even lower (but still above 12,250) but broke 12,300 at the day's end, on the way to a pretty good week (last week).
On that day we got off to a pretty good start but (and I am now reprinting that day):
By 11:45, we had pretty much crossed to the opposite side of the open on most indices and it got worse, and worse, and worse and worse until they rang the closing bell!
- The Dow finished the day at 12,278, 82 points off the high but 83 points over Monday's open!
- S&P 1,407, 9 points off highs, 9 points over Monday!
- NYSE 9,041, 51 points highs, 52 points over Monday!
- Nasdaq 2,427, 27 points off the high, 7 points over Monday.
So today (2 weeks later) I will say:
- The Dow finished the day at 12,421, 25 points below Monday's open and just 50 points below the all-time high!
- S&P 1,418, 9 points off highs, 9 points below Monday!
- NYSE 9,103, 29 points off highs, 22 points below Monday!
- Nasdaq 2,415, 50 points off the high, 20 points below Monday.
Oh wah wah, we are slightly below our all-time highs, boo-hoo! Come on guys -- it's the stock market -- it goes up AND down!
But, just because we found a little gold doesn't mean we should ignore our canaries. As we know, greed kills and there is nothing worse than leaving our profits on the table until they turn into losses or leaving our small losses on the table as they turn into bigger losses. The plan for the week was to lighten up and this morning we decided to cash it in, despite the all-time high, despite the fact that oil was going our way.
Wise choice or lost opportunity? Well we left a few plays open but I think we'll have a very nice relaxing holiday not having to worry about the markets. There are 254 trading days ahead of us in 2007, I'm sure we'll be able to find something worth trading before March!
It is very possible that we are simply consolidating for a move up and, if we begin to break our topside levels, I will be thrilled to jump back on board this rocket for the long haul. Meanwhile, we can step outside and stretch our legs.
Oil fell hard today, dropping .10 below our resistance level of $62.30 before bouncing back to a very unimpressive $62.66, down $1.06 for the day. Of course Nigerian rebels did something or other (who even bothers to check on this farce anymore?).
Gold was flat against a flat dollar -- if you went shopping you really didn't miss too much.
What you may have missed though is that they suddenly revised consumer holiday spending up $230 (32%), higher than the highest estimates for the season as of just a week ago. Will that be a game changer? We should watch retail closely tomorrow but so far, nothing much.
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