Bonds held their bid, but lower oil prices, M&A activity and mortgage bailout talk was too much for equity bears to press on and we ended up negating yesterday's dangerous chart formation. QQQQ is right in that January gap. With the amount of calls residing above 49, it's not hard to surmise that May call sellers were forced to cover, exacerbating the move. The Nasdaq has trendline resistance a little higher at 2550 and above that, its January gap (2571/2602). That we are stretched is an understatement. The VIX is at levels not seen since October and it's only a matter time before we re-visit 20+. I would love to be able to say that a new dawn has arrived and that folks can go out and buy stocks and sleep at night, but that would borderline criminal. I was signing some loan documents this afternoon on a property in Los Angeles and the horror stories I heard from the escrow company was enough to make me cringe. Piles upon piles of foreclosures, some moving into the Westside, and every agent I talked to told me they had never seen anything like this. These are veterans of many booms and busts (an LA specialty), and they were freaked out. I'm glad congress is doing something, but anyone telling you that those rebate checks are going to blu-ray players and flat screen TV's is lying. They are going towards credit card debts.
I am not one to preach Armageddon scenarios, I was pounding the table to buy the March lows, but being bullish at this stage is playing roulette against a house that has three sets of double zeros. As bear market rallies go, two to three months is about it. Once we get through option games, we will only be one news story away from a few nasty days or weeks of selling.
This entry was posted
on Thursday, May 15, 2008 at 5/15/2008 10:12:00 PM.
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