Bearish Headlines equal opportunity

  • Posted on: January 30, 2010

I awoke to the headline “stocks have worst month since feb 09”. Is that enough to get the sentiment bearish enough for a rally? I am not sure.
Let’s wait for next Friday’s Unemployment figure. Why not…? Everyone else is…
I still think we are on the precipice of either 1) a bounce back with a continuation in the 1-year rally we started ‘enjoying’ in March of 09. I put that in quotes b/c that rally was met with more pessimism than ants at a pic nick. As a whole, investors were 1) suspicious of the rally b/c it was relatively light volume, 2) supported by no visible bullish news other than the fact that we avoided a collapse of our financial institutions. That second one is a pretty major one. I for one agree that the banks had to be supported, along with AIG, because it insured so many products which, if it had failed would have created an avalanche of financial despair and destruction.
I am not so sure about bailing out GM and Chrysler and the Unions, but that was a quid pro quo from a Liberal Democrat delivering to his power base, pure and simple.
I think in the long run, we would have been better served by allowing Ford, which seems to know how to run a car business, and toyota, and VW/ Mercedes swallowing up the inefficient and failed GM and Chrysler. But that’s just my opinion.
I would have rather seen a very strong auto industry over all, rather than one dependent on ‘cash for clunkers’ to turn the corner.
Why not have a program ‘cash for shacks’ where the government gives you back the equity in your home which disappeared over the past 3 years? If it worked for the cars, won’t it work for the housing industry? (ATTN: THAT IS SARCASM). I really don’t want hostile emails from readers who can’t get sarcasm. OK?

I am using it as an example of what I think was wrong with the TARP bill. Also, I don’t think that the billions spent on public works had a very meaningful return. Overall I believe the jobs created by the government were less than 600K. Considering the cost, they would have been better off sending everyone 5k and telling them to pay down their debt and spend a little.

In any event, I think for better or worse the banks had to be saved. The alternative was a potential breakdown which would have had us living in Mel Gibson’s ‘beyond thunder dome’ reality, with a potential breakdown in society, leaving Tina Turner and her pig farm in charge of your local community. 🙂
If it all breaks down, people will need, 1) water, 2)food and 3) energy. Imaging the repercussions if our system of food distribution stopped for a month or two? Do you have 3 months of food and water stored? Not very likely.
I know for a fact that the local super market was delaying purchases and deliveries back in the first part of 2009. They were as unsure as the rest of us what was going to happen in the economy.

It wouldn’t take society very long to break down without food in the grocery stores.
So I, for one, am glad they did the Bail out of the financial industry. That doesn’t make me a fan of the financial industry. But that industry is the lifeblood of our economy.

Ok, enough of my rant.

Back to the stocks. If 10000 fails to hold, then I would look for the 1/2 way pullback of the rally from 6440 up to 10700. Its 8600 if you didn’t read that blog. Its in the archives.

Good Trading