Monday, March 26, 2007

Unwary Investors

That's the headline of a New York Times editorial that appeared in Saturday's paper. In this editorial the NYT tells us that in last week's rally ".. investors have been especially heedless of dangers lurking in the economy. Last weeks rally ".. mask[s] a lot of reasons to worry". And finally, "Investors who fail to take a hard look at the vulnerablity of the American economy are courting tremendous risk."

It is unusual for the New York Times to editorialize on the behavior of markets. I commented on its last editorial on the US stock market here. And I noted its last front page story on the stock market here.

Apparently the NYT wants to fight the rally from the March 14 low. I take this as a bullish sign and think it reinforces the case for expecting new bull market highs in the next couple of months.

6 comments:

Anonymous said...

I guess some professionals agree with the NYT this morning with a long candle down on heavy volume.

Anonymous said...

we have a 9 month cycle low due first. that may be the one that washes out the 80% of stocks on the nya still trading over their 200DMA

Anonymous said...

Carl:
I've noticed the 10day SMA of the NYSE advance issues minus decline issues vs the price pattern shows the same pattern as in March-April 2004.
Your use of the advance issues only failed to reveal such pattern. In other words, I think you have a false signal in the 10 day SMA of the advance issues.

Anonymous said...

The ones who are *unwary* (to put it mildly) are the lemmings buying into PRIVATE equity IPOs (THERE's an oxymoron for morons if there ever was one!) like Blackstone and hedge fund IPOs like Fortress, and generally with the buy-the-dip head-in-the-sand mentality that characterized important market tops in the past such as 2000/01. Smart money is selling out. Stupid money is buying, hoping that if the Fed say something isn't bad, well.. it "must be true" then (yep!), thus providing adequate opportunity for the smart money to lock in their profits at elevated prices. Wake up and smell the roses.

Anonymous said...

i think the most inconceivable outcome right now is that the lows made Mar 14th prove to be the low for all of year 2007. A sideways market for the rest of the year will be interest income lost but may set the stage for great bull years 2008 and 2009. The semiconductor sector has been consolidating since Jan 2004.. try the Point and Figure projection higher on that one... will be a long ways up.

Anonymous said...

The Q's just tested succesfully the support at 43.7.
The Q's are now forming a high tight flag - which is the typical pattern of scooping up the remaining sellers and preparing for the next breakout.
You can see that the bars of the flag are very narrow and the selling volume is low. This is a typical pattern where the buyers are testing if there are any sellers left at this level before re-starting the buying. The very low selling volume of these last 3 days tells you there aren't too many sellers left so the next buying will be on increasingly higher bids. All in all, bullish and confirming Carl's hypothesis.
Also, a good sign that many are bearish, NYT included. The contrarian magazine cover indicator is still working :-).