Is that a gut instinct or are you using technical indicators? If it's a technical indicator, can you explain? I just want to learn more.
I'd say it's a gut instinct, but it's based on what the market has done, historically. I've never been a fan of technical indicators. Regardless, the market is on the cheap, and if you have the stomach to "set it and forget it" by buying several aggresive growth mutual funds diversified amongst several industries, you'll come out smell like a rose in 10-20 years.
Ahahahahaha, my secret long from Friday, CCE is up 15%! Talk about a sale price ... $9.99. I was like, OVERSOLD! Even in a bear market that stock isn't worth less than $17.
I don't THINK this is a dead cat bounce, though you certainly could be right. I think the market was undervalued from fear....and people knew there would be buys out there after Friday. If the credit markets even hint at being repaired, the market will find its way back up.
I am long utilities via UPW. I see tremendous upside here, and utilities were showing signs of bottoming/reversal even before last week's bloodbath. I think this will be an excellent 1-2 month play.
There will be a letdown sometime this week, count on it. What will be important is that the letdown doesn't balloon and erase all of our gains. It's also important that things don't rise too quickly or else there will be a hard fall...what we're looking for is a steady rally that keeps going for a week or two or more. It's still highly possible that there is one more shoe to drop here though, and if that happens, look for the Dow to test those 8000 lows again before we can assume that the bear market has finally ended.
Dead cat bounce...as i understand it...means it drops lower than it was before it bounced back. Right?? I don't think that's going to happen. I certainly don't question the idea that the market will have downs along the way back up.
MadMax says, "They're A-OK!!!" What's interesting is the antecdotal stuff here in Houston. Talking to clients in all kinds of industries who aren't even sniffing a credit crunch here. One is telling me Sept and Oct were best months ever in terms of booking...and his group is in huge new construction efforts. My firm's banker called to assure me that there were no issues with them and that our line of credit was okie-dokie. All antecdotal...not more than about 10 contacts that i've gauged that through...but still interesting.
From Wikipedia: A dead cat bounce is a term used by traders in the finance industry to describe a pattern wherein a spectacular decline in the price of a stock is immediately followed by a moderate and temporary rise before resuming its downward movement, with the connotation that the rise was not an indication of improving circumstances in the fundamentals of the stock. It is derived from the notion that "even a dead cat will bounce if it falls from a great height".
Ok..then I definitely don't think it's a dead cat bounce. I don't think it's going to back to falling as it was last week. I think it's undervalued now. But what the hell do I know?? As you say, that's my gut.
By definition it isn't a dead cat bounce anymore. Last week's downtrend was broken earlier this morning when the Dow broke past resistance at 8,800. That downtrend is definitely over now. We still have a ways to go before we test the overall bear market downtrend that was in place before things fell off a cliff the past couple of weeks, though.
Count me in on the "drops lower before higher" group. Talk with some people in finances or people at a high enough position that are more aware of difficulty in attaining funding and capital at the moment to make business move. The average joe won't realize how deep this impact is. Stocks were overvalued for years and are now are down to fairer values. Congrats if you made some quick flips and congrats if you are holding 5+ years down the road. But don't respond in shock if a touch at 7k is closer to a real bottom and don't wonder what's going on if America enters a long stage of stagnant economy/market like Japan.
Also, you guys need to know how these markets work. There is a fund that sometimes accounts for 10% of all activity on the Nasdaq. http://en.wikipedia.org/wiki/Renaissance_Technologies There are lots that often account for 2-5%. Think about how much volume and money that is and how much they can affect the direction of the markets. These funds run primarily through automated algorithms and a computer. There's no stooge evaluating fundamentals and making a trip to the factory like private equities. What there are are smart math guys in these companies and their algorithms often chain with each other which leads to huge spirals up or down like we saw last week. They don't want their algorithms to compete - that kind of battle could prove to quickly wipe them out. What they do want is volatility and to get cash from somewhere else... Guess what, that's where you come in! At 11k, we saw a period of sideways movement. This is the period where I'd guess they put their money on market down. Last week was the spiral. Think how long it would take to unravel this money. It seems contradictory to the above but the idea that almost every company has less capital and liquidity to work with actually supports that it's harder to unwind severe movement in one direction. There's surely not enough activity today for me to believe that that momentum is already reversed. Hedge fund managers often make over ONE BILLION per year. I just don't agree with placing bets up right now because that's all they are. Wait until there's more consolidation and support and evidence of momentum upwards.
trying to gauge on whether i should hold Goldman or sell now... i really think the market's gonna take a downward trend again, but that's just my really, really, really uneducated opinion.
