Es steigt, nun wird er wieder bullischer. Wenn's heute fällt, wird er wieder bärischer. Wenn's seitwärts geht, bleibt er neutral.
An Feiertagen hält er den Mund.
Date: 07.11.07
Time: 11:10pm
Calming Words Help Calm NervesGreetings Shark Investors:
Although at a few points during Wednesday’s trading session it was looking like we might see some follow-through to Tuesday’s ugly action, the
major indices were able to recoup a respectable chunk of the previous day’s losses and close near highs. At least part of Tuesday’s sell-off can be blamed on warnings from Standard and Poor’s and from Moody’s that they would be downgrading billions of dollars of collateralized mortgage obligations (CMOs) backed by sub-prime debt.
Recall that market players have been jittery lately regarding CMOs, especially after the near collapse of two hedge funds at Bear Sterns, since it is unknown how exposed other institutional investors may be to the same problems. It should come as no surprise, then, that
sentiment got a boost after comments from the SEC’s market regulation chief that the two Bear Sterns hedge funds will be able to “unwind in an orderly fashion,” and from Fed Governor Warsh who said that
the Fed does not see “any immediate systematic risk issues” in regards to the sub-prime debt issues.
While investors may not have been overly aggressive and showed a fair amount of restraint ahead of the deluge of earnings reports which are set to hit next Monday, the day’s bounce just goes to show that
there are still plenty of willing buyers out there despite the numerous worries and concerns that continue to plague this market.
Then again, when has there ever been a point where there weren’t at least a few really good reasons why the market should not act the way that it is? The problem is that, more often than not, all of those compelling issues turn out to be non-events. The big question then becomes: should we simply ignore those issues that could really lead to some big trouble? Certainly, that doesn’t make sense, but at the same time, many investors often find themselves on the sidelines long before those issues really start to matter.
The key here is that it is when prices begin to fall and stocks start acting poorly that we need to embrace those worries and concerns. Currently, even though there are a few minor technical issues to watch and there are some potential negative catalysts waiting in the wings, the market is fine from a technical perspective. Although it isn’t yet time to become raging bears without further proof in the form of poor price action, we don’t want to become so enamored with the bullish side of the argument that we are unable to adapt if things deteriorate.
Let’s go to the charts.
The Nasdaq finished Wednesday’s trade higher on lighter volume. After a brief dip on the open, the dip buyers surfaced, and took us higher as the day progressed. Technology was strong, with GOOG and RIMM leading the way. After the ugly action yesterday, the bulls put in an impressive performance today. With that being said, we are keeping tight leashes on our existing positions, and would like to see the index begin to build a base.
The S&P 500 popped higher today on decreasing volume. We opened flat, and saw a brief spike down from those levels during the first hour of trading. As the session progressed, the bulls found their footing, and edged us higher the remainder of the day. We continue to knock out shorter- term trades, with an emphasis of protecting out capital should the market weaken.
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