Monday, February 23, 2009

What Can Turn This Market?

Much of my trading day is spent intermittently chating with trading friends.
One friend in particular draws me into lengthy conversations so we jump over to a private chat room. In one of those conversations, she asked "What can turn this market around?"

Well, it seems to me that the market, on average, grows at a rate of about 8% per year. It really wants to go up!

That in mind, one has to ask "What turned the market so sour?"

The S&P (broad market index) and the Dow Jones Industrial index have not been at these levels since 1997. Many parts of the market were in a confirmed rally just a week ago.

" ...but no, its curious that every time the government says 'we're stepping in because otherwise the market will collapse' they step in and the market collapses?" - Ann Coulter quoted earlier today

- FAS/FAZ, Financial Sector: FAZ, up 9.67% today
- ERX/ERY Energy Sector: ERY, up 12.24% today
- TNA/TZA Small Cap Sector: TZA, up 11.7% today
- BGU/BGZ Large Cap Sector: BGZ, up 9.39% today

All these bear funds are in huge up-trends. All would be good to buy and maybe even hold for a while. Compare those gains to alternative investments: Savings Accounts, CD's, Real Estate. We are sitting on a huge pile of gold. Well, gold was down today -- this is better than gold!

Have fun!

1 comment:

  1. mike,
    You gotta watch those 'confirmed rally' calls. The DJ & SP #s are so far off now, it's essentially casino night Wall St. style. What turned the broad markets sour was 3 fold.
    1. Financial crisis/Paulson bailout.
    2. Auto bailout.
    3. 700-3T spending package.
    The third, most damaging in the minds of the average citizen.
    I'm wondering if this economic direction is actually desired by government in order to prolong the idea of dire need.
    ETF are the way to go at this point, but one should have a thorough understanding of what they are and how they move.
    Personally, I think temporary bear ETF ban along with across the board short ban should be put in place in order to quell this overwhelming plunge.