Monday, August 20, 2007

Wipe Out !!!

Here is the cover of the most recent issue of The Economist magazine. Here is a link to the story (but a subscription may be required).

The cover story is entitled "Surviving the Markets" and the cover depicts a surfer about to be wiped out by a huge wave and, if he is really unlucky, eaten by sharks. The story itself opines that the panic has further to go before normalcy can return.

This is the first clearly bearish magazine cover since the July 16 top. I think it has the same significance as this Economist cover which appeared in May of 2006, two weeks before the June low of that year.

The bull market in stocks is not over and I think we shall see new bull market highs by the end of this year.


Anonymous said...

The investor ``Angst`` is going around. We are still very close to eclipsing the peak in bearish sentiment during the 2000-2003 market meltdown, which I still find astonishing, notwithstanding the recent correction. Here are a few other gauges showing extreme bearishness:
The VIX hit the highest level since 2002 . According to Hays Advisory, the NYSE overbought/Oversold Ratio is the second-highest in 42 years.The 10-day total put/call recently hit the second-highest reading in history.The 10-day ISE Sentiment Index reading recently hit the second lowest on record.The 21-day Arms Index is at the highest level since around the March lows.The Rydex Nova/Ursa Ratio Sentiment Indicator is at levels last seen in 2002.Domestic stock mutual funds continue to see significant outflows.Money market fund assets soared last week and are at record levels. Both public and professional short interest readings are at record levels.Index futures traders are positioned at historically net short levels.Finally, insider buying is at levels last seen right before the bull market took off in 2003.

Anonymous said...

Barrons also has an interesting contrarian cover.

Cover is anti superbull Jim Cramer and article is called "Shorting Jim Cramer"

Anonymous said...

Has anyone looked at the VIX chart longer term and found that it broke its 5 year downtrend (in Feb 2007)?

Doesn't this signal a bear market is in play?

Anonymous said...

Who exactly are you fading?
The journalist or the public?

I doubt you are trading this market in any big way. You've been trying to call a bottom on 10 different occasions.

Carl Futia said...

And yet you still pay attention !

Anonymous said...

Hi Carl,
Could you elaborate on why you think gold/silver are headed much lower? They continue to trade in sync with the general mkt.

Mike said...

does it ever occer to you that the public (being killed from everything from historically high food prices, gas prices, mortgage defaults, ACTUALLY HAVE A VALID REASON TO BE BEARISH!?????

and the market can actually go down?!

dd said...

The Fed demonstrated Friday that it will protect this market and even blatantly take out the shorts. The Fed will continue to support the market as right now it's the only functional market and if it seizes in a selling frenzy then the game is over. 1929 taught Ben that much and what is interesting is that Carl's analysis captured that forward probability w/o reference to the event noise; just as it's capturing an eventual rate cut and the continuation of helicopter drops until the hedgies unwind their positions and pay down their credit lines and margin calls (thus saving the IBs from meltdown).
Then the bear market starts.
Thanks Carl for the sanity in the storm.