| Was last week a gift from the heavens? Is the | | | | Wednesday except to get out of the way. But, |
| worst over? These are the questions that everyone | | | | they’ll be back. |
| is asking himself/herself as we head into a new week | | | | The best gift that investors could receive now a day |
| with a head of steam and a northerly directional bias. | | | | is the gift of confidence. They need confidence that |
| Have the rains cleared, has the lava cooled? Or was | | | | the system is working for, not against them. A flash |
| last week a sick joke of nature, sort of like the | | | | in the pan isn't going to make that confidence a |
| duck-billed platypus? Was it only natural that the | | | | reality. It's great to see that the market still has the |
| markets finally rebounded? | | | | ability to post a solid week, but it isn't enough. |
| I know I’m supposed to be answering these | | | | Obviously the Bush administration realizes this as |
| questions, not asking them, but I have to throw the | | | | members parachuted over the airwaves this |
| questions and topics out there before tackling them. | | | | weekend working like Santa's elves on the eve of |
| The short answer is I’m not sure to any of | | | | Christmas. It is unlikely that their talkfest did much to |
| the questions above, but let’s view them | | | | soothe nerves, but it does plant seeds. So perhaps |
| from all sides and see what we come up with. | | | | the real gift of the week in general is something akin |
| First, I don’t think there was divine | | | | to the works of John Chapman - also known as |
| intervention involved in last week’s action. I do | | | | Johnny Appleseed. |
| believe that there were certain events in America | | | | The gift of last week could wind up being a seedling, |
| that probably answered a few prayers. (By the way, | | | | a small piece of life that could germinate and grow, if |
| if those trapped miners in Pennsylvania had been | | | | watered and protected properly. It wasn't an ark, but |
| rescued during the week, it would have provided a | | | | instead could grow into a lifeboat for investors. I |
| spark to the action. Though the comparisons are | | | | brought up the question of whether last week was |
| unfair I couldn’t help but think of how decisive | | | | just a natural occurrence. If so its continuation isn't |
| the response to the emergency was compared to | | | | preordained or certain. Most seeds in nature don't |
| the Russian attempt to save the Kursk a few years | | | | grow to be giant trees. They have many natural |
| ago.) | | | | enemies and impediments. The least of which is a |
| The biggest prayer was one seeped in anger and | | | | bear sharpening its claws or searching for fulfillment. |
| even hatred, and that was for the open arrest of a | | | | I enjoyed last week's action and saw it as a gift |
| big-time CEO. When the Regas family was led away | | | | because it helped to establish parameters that will |
| in cuffs, the market was already climbing off the | | | | allow us to analyze and plot the week ahead. |
| mat, but the news supercharged the rebound effort | | | | Ironically, the best gift investors could receive in the |
| and many speculators that had been waiting patiently | | | | days ahead is for the market to test last week's |
| found themselves in a position where they had to | | | | lows and rebound. As it stands now I'd say that the |
| jump first and ask questions later. | | | | majority of investors shunned last week's gift. |
| It almost makes Americans come across as Huns, | | | | Return to sender was the rubberstamp most |
| but the blood lust was at the top of many | | | | employed as the market was rallying. But everyone |
| disgruntled investors wish lists. Still, that wasn't the | | | | likes to be wooed, so if the gifts keep coming then |
| type of gift that has a very long shelf life. It was a | | | | sentiment could improve. The risky part for the |
| momentary situation that only whets our appetites | | | | market is that sentiment improves too fast. That is |
| for more. However, investors cannot live on revenge | | | | because with improving sentiment comes higher |
| alone. They need the shelter of a strong economy, | | | | expectations. It is too early for investors to expect |
| the warmth of growing earnings, and of course | | | | anything except the worst. When they look at that |
| safety from a system of checks and balances that | | | | Shetland pony, they have to see a Trojan horse. |
| work. | | | | This doesn't have to go on and on forever, but just |
| So that takes us to question number two, is the | | | | a little while longer. The majority of talking heads on |
| worst over? I’d say the worst isn’t | | | | television these days are telling investors "we are at |
| over, if consumers stop spending, if there are more | | | | or close to the bottom". I've felt that way for a few |
| high profile scandals (I can’t believe how many | | | | months, but feel stupid saying it. "Close" to the |
| of Wall Streets top pros are saying that companies | | | | bottom could be days or months from here (I'm still |
| like Citibank are buys on weakness because | | | | calling for a substantial fourth quarter rally) and I wish |
| they’re too big for the government to topple | | | | I could be more precise. I don't want to be on the |
| or expose) or if corporate profits don’t return | | | | tube a year from now bragging like the bears that |
| (deflation is still a greater probability than a double dip | | | | got it wrong for a decade, and are now acting like |
| recession). | | | | superior market players. |
| Yes the rains cleared for a few days but the clouds | | | | Folks, the best gift you can give yourself now is to |
| of doubt still hover above. I'd say either stay in the | | | | view the market with open eyes, know that it will |
| Ark or near the gangplank. The lava has cooled, but it | | | | shift, and stay upbeat about future possibilities and is |
| is still too hot to relax or drop one's guard. Yes, this | | | | hedged for current risk. |
| market is like an animal that doesn't know if it is fowl | | | | FINAL THOUGHTS AND OBSERVATIONS |
| or fish. So far this year, those that have felt that the | | | | I think the time to really consider the market as a |
| worst was over have suffered cruelty from the | | | | long-term investment may come after a few more |
| stock market. It would be absurd not to still show | | | | public arrests occur and the Dow doesn't rally for 500 |
| vigilance to such possibilities again. | | | | points. |
| That brings me to even more sinister thoughts and | | | | We're close folks. |
| questions. Was last week’s gift a Trojan | | | | The two biggest dates on the calendar will be |
| horse? The shorts are always going to short. It | | | | August 14th when the largest of public companies will |
| becomes a lot more difficult for them to spread their | | | | began the new procedure of CEO's personally signing |
| message and manipulate the market if the forward | | | | off on financials. And the biggest day of the year in |
| PE for the S&P is below 20, as opposed to above | | | | terms of anticipation may be September 11th, the |
| 30. | | | | one- year anniversary. |
| Sometimes they pick certain points to cover and lure | | | | I feel a little like Laocoon, warning the citizens of |
| in anxious watchers that have had cash burning a | | | | Troy not to bring that horse into city. Telling them |
| hole in their pockets. The ensuing rally provides them | | | | not to lower their guards and not to rip down the |
| with another chance to re-short the market and | | | | walls that have protected them. |
| spread their message of doom with better conviction. | | | | The market has to be tested before the worst is |
| I think the shorts last week had little choice on | | | | over, and that test wasn't last week. |