Thursday, December 27, 2007

Markets are Janet Reno Ugly

Janet RenoThe market was down significantly today. The Dow was down almost 200 points and the Nasdaq was even worse than the Dow. There was a host of bad news that came down today from the assassination in Pakistan to Goldman coming out and downgrading a bunch of the financial stocks.

I'm not going to buy any stocks for the rest of the year. There is just no compelling reason to do it. Here is the problem. Everyone thinks that 2008 won't be a good year for stocks. And if you know anything about the market you know that expectations play a very big role in the short term. While sentiment is this way, people have not thrown their hands up and given up. The S&P is still up about 4% of the year. So you know that there is still a lot of people out there who are still bullish on the market.

But we are definitely trending down. To make matters worse, Christmas and New Years fall on Tuesdays meaning most are taking long weekends. This means few people making trades. Volume is very light right now. What that means is that there is not much liquidity in the market. Less liquidity means more volatility and more volatility means more risk. Best to not go long any new positions unless you are really sure about it for the rest of the year. I have to clear some losses out, so I hope the market doesn't tank before I can get out, but we will see.

Note:  Smart people can make lots of money when the market looks like this.  You can always make money whether the market is going up or down.  I'm just not that smart :)


  1. By the way. I don't mean that the markets are ugly because of a 200 point drop. I mean that there just doesn't seem to be good ways to play this action. It's hard to get on either side at this point.

  2. It took me a while to realize that picture is of a woman.

  3. [...] chart moves in almost a straight line down to the right?  This is a VERY UGLY chart.  Yes, it is Janet Reno ugly.  But I think the trend is over.  There is no technical reason that it should be, at least not [...]