Monday, March 05, 2007

Monday Looking Bleak

Yen is down, Asia is down, Europe is down, and gold, the safe haven, lost 21 dollars since the open. Oil is down and U.S. futures are way down.

Preserve your capital and watch the inverse ETFs for entry. They will probably gap up strong at the open and continue up all day (if the market continues down).

A reader asked my opinion of BOOM. I seldom give opinions on request stocks but it looks to me like BOOM put in a max top on the Friday before last. Of course after the fireworks today it might be a good buy again. But I think after today there might be a lot of good buys or goodbye's - your choice.

Update - I've been reading yet more nonsense this morning about last weeks crash. No one comes right out and says "all of this crap was so severely overpriced that everyone was looking for an exit but didn't want to be perceived as leaving the party early." By that I mean most fund managers would rather kill their first born than miss a quarter profit that another manager achieved. So what was needed was a lightening strike to stampede the herd and in a stampede it is often difficult to tell which steer started running first. The lightening strike in my opinion was Japan raising their core interest rate to .50 basis points which may not seem a lot to you and me but it doesn't take much to bring a house of cards tumbling down.


Tom said...

Great analogy on the beef!

Bullish Jim said...

I think you're right. Everybody and his brother was on the edge of his seat waiting for a correction so there was a major piling on as soon as we saw the "whites of his eyes". I really think it's as simple as that.

I was just over at and I would appreciate your take on something. I pulled up the put/call ratios on index funds and it was an astronomical 3.87 on 2/23. This was the second highest reading in 3 years. The highest ratio was 9/22/05 which was just a few days before the beginning of a quick 4% haircut on the SPY. Was that 2/23 ratio a canary in the coal mine? And, is there causation between a high ratio or did somebody know something was coming? My apologies if you already commented on this.

Marlyn Trades said...

The Japanese Central Bank raised the rates on the 21st which started the avalanche on the 22nd. Seeing this the best thing for the funds to do would be to buy a bunch of puts on the index funds as cheap insurance. I don't know if anyone knew anything and I suspect this was just a defensive reaction by people who understand the "global" part of "global economy". Something you won't see in any US media.


Things look bleak alright.