Friday's Outlook: Stick a Fork in Mr. Market

Panic?

Yes, in some most sectors we featured just yesterday, heavy selling continues in “get me out” mode. The combination of poor economic news, Bernanke’s assessment and continuing fallout from financial sectors was too much for the market Thursday.

Market internals were very weak and I’m not sure all the data is in or if we had a 10/90 day by these measures.

Go to part 2 »

Disclosure: Among other issues the ETF Digest maintains long or short positions in SH, SDS, MYY, RWM, TWM, PSQ, IEF, GLD, GDX, DBA, DBC, DBB, EFA, EFZ, XLI, XLB, XLU, RSX and IFN.

Comments

[ballsschweaty:]

Fed will lower rates today and the shorts will be scrambling for cover.

LOL!!!

2008 Jan 18 07:31 AM

[David Fry:]

I don't write the headlines here. A rally wouldn't be a surprise but how long lasting it would be is another thing. Bear market rallies can be powerful.

2008 Jan 18 07:58 AM

[jr7107:]

There were tons of pundits saying surprise rate cut. Not much of a surprise if you ask me. 1280? 1250? Not enough panic yet, and the shorts are carrying the ball here with lots of powder.

2008 Jan 18 09:19 PM

[jr7107:]

Great analysis David, I do also think a rally of some sort is inevitable. But still not enough panic.

2008 Jan 18 09:54 PM

[globalview99:]

As usual, Mr Market is irrational (read overdone), and the more irrational the more myopic the street gets. This too shall pass and as the fog lifts, the market will slowly climb out of this morass and I'ld like to see all those analysts eat their recessionary and bear market hats. Its crisis like this in which fortunes are made and lost.

2008 Jan 19 07:26 AM

[David Fry:]

The last thing Mr. Market is is irrational. Now as to investors that's a different story.

Let's put it this way Global View; the bullish bias is alive and well on the street. Those predicting recession, etc are a distinct minority since most analysts work for food as in "conflicted".

2008 Jan 19 10:35 AM

[NoFate:]

There is going to be $2-3 trillion in housing value that will go *poof!* in the next few years. Peoples LTV will be underwater and many will walk away? Do you have a clue what this will do to mortgage backed securities and bank margins?

Do you realize that an increase of >0.5% unemployment from the low has signaled a recession with 100% accuracy since WWII? The last report came in at 0.6%.

These are 2 of many indications that things are going to get rough. The signals are all around you, but you have to be willing to look and listen.

What will you do when you realize the analysts telling you recession is on the way are actually the smart guys in the room? How do you plan to get your principle back?

2008 Jan 20 03:50 AM

[jr7107:]

Mr Market is always right. And tomorrow, rational or irrational he will be right again. Maybe there will be panic tomorrow, with Europe and Asia torching Monday/early Tuesday.

2008 Jan 21 11:05 PM