Wednesday, February 18, 2009

Abandon All Hope, Ye Who Enter Here !

Well, the White House has released its homeowner rescue plan. The announcement has been on the schedule for a few days and details were pretty much known before hand. The interesting thing is that the market put in only a weak rally late last Thursday when the plan was leaked to the media. Since then we have seen a drop of about 60 points (7%) in the e-minis.

My sense is that people are getting tired of rescue plans. They don't expect them to work. We have entered the "no hope" zone - a psychological state in which bad news doesn't surprise or frighten people very much. I think the groundwork is in place for a very big rally which will accompany the realization that the world isn't ending and that the economy is not headed for a second Great Depression.

21 comments:

Anonymous said...

You forgot that Berni'es on TEEVEE now. all bets are off.

Anonymous said...

actually i think people are tired of trying to catch the bottom or maybe they have been taken out--the smart money is else where--probably it knows earnings will be worse or nationalisation could cause another 100 point drop..anyway despite all the contrarian stuff--this is really on its way to 678.
Now dow 6000 who would have thunk it

Anonymous said...

isnt the economy already in the second great depression..its all a point of view.

Anonymous said...

Its buy the rumor sell the fact. But when that stops working , then maybe we will get a trend change.

Anonymous said...

My trading technique is to vaporize some "bud" during market hours which in turn heightens my senses to the maximum level allowing the charts to speak to me. Best to time to "vaporize" is when the pinhead government officials are bloviating. Cheers~ thanks for the blog.

KK said...

As long as the market is driven by rumors or announcements from the government, there is no hope for the market. So, let us be prepared for the following:

1] Market starts ignoring the government. This should rightly be the choice. The market will finally come to the realization that the government can't possibly affect the economy to any great extent.

2] The government stops meddling.

As the government heads are driven by ego, 2] is unlikely to happen.

Well, if 1] happens, maybe the politicians will quit meddling. The market has been giving them a lot more attention than they deserve.

Anonymous said...

Oh Carl!

You eternal bull, you! When you finally turn bearish is when this will be over. The trend is still down, we have not turned yet, despite your futile calls for "imminent" rallies.

Rick B.

Di said...

I think after we hit 600, all the rescue plans will work all together and we will go to 1000

Anonymous said...

Interesting conclusion you have.I would say people gave up hope and will not try to keep the index above 800 and let it slide.Best.

Anonymous said...

here comes the Fed minutes- As Gomer Pyle would say "

Golly- Golly- Surprise- Surprise

Alessio said...
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Alessio said...
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Anonymous said...

You've been "predicting" this for a number of months. I guess next big rally over 1000 prediction will be based on the despair on the newspapers when/if we break the lows of last year. Have we not been here before? So what is the point of repeating these every month or so? Granted you will be right one day.

I do not doubt you are successful in your trading but certainly it has nothing to do with mid term predictions and all to do with quick in-exits and well placed stop-losses. However I'd resist posting these mid term "predictions" as they do not influence your trading (you'd be very unsuccessful if they did) and they hardly ever seem to be right.

[with sincere apologies for the deleted posts above]

in the mountains said...

Well, this blog entry sure got its share of comments, and lots of comments often correlate to a bottom, no? But the comments at the bottom have been scathing and nasty, and these today were relatively civil. So by that indicator, we have a little further to drop.

I do hope you are right, though, about avoiding GD II. It would be an absolute delight to see how the doom and gloomers respond to a huge multi-month, or multi-year, rally!

curt said...

carl...are you using reverse psychology?

Anonymous said...

carl, regardless of the volume, i think this market is headed higher.
If the bears have seize control of this market they should have driven it further down.The bears own this market at this levels yet the selling seems somewhat controlled...
Just watch it reclaim the 850s

CJ said...

Carl:
Where can I see real time 5yr and 10yr tsy futures that you use in your morning best guess?

Anonymous said...

Keep in mind that the stock market going up and continuing deterioration of the economy are not mutually exclusive. We can get a rally into mid-year and still be sliding into a substantial depression.

The market went up for five, six years or so not to long ago, and the 'doom and gloomers' pointed out the poor job creation, credit excesses and other symptoms that showed the underlying economy was not actually in good health.

Not arguing one way or the other, but it may be best to decouple the concepts.

John M

Anonymous said...

I expect cyclical low in ES to be around 500. Don't think we'll see 1000 this year or next.
Banks are buggered, knock on effect will be huge, only crazy bulls think we have seen the worst. Just follow bank of america for a few days to sober yourself up.

Anonymous said...

Carl is right!
Up up and AWAY!!!

I'm about 190% long.
Sold my house and cash out of family trust to go all in.

Keep up the good work.
See you at S&P 1100.

Anonymous said...

I'm looking for 4000 on the Dow by November.