Monday, May 10, 2010

More evidence...

... that an important low was established at 1056 last week.

On Saturday, May 8, the New York Times again had a stock market headline. That made it two consecutive days, the first time this has happened since the March 6, 2009 low when two consecutive stock market headlines occurred just a day before that low. Then on Sunday the Times' headline was about the Greek contagion spreading to the U.S. and the rest of the world. The story inside the paper quoted several people, notably Bill Gross of Pimco, who remarked how the fear that had overcome investors had changed the bullish situation into a bearish one.

Finally, Friday night's Tonight Show with Jay Leno had Jay doing a long riff of jokes on Black Thursday's stock market crash.

This is yet more evidence that Black Thursday was a big buying opportunity for the contrarian investor. I think the cash S&P is now headed for 1300.


  1. Im pretty sure if Europe ends up falling apart....its not going to matter what headlines or any charts say. If survive and the socialism is pulled off succesfully, then markets up. If the scheme fails, then markets go down. Just that simple

  2. Overnight 3 month LIBOR less OIS rates still remain very high which indicates there is a lot of risk. In March this risk indicator was 7. It has now tripled to 21. A decline in this rate will confirm the move up.

  3. Carl... it is nice to see some of your objective analysis... however, off late it seems you are getting attached to one view... i am not sure if markets will fall from here... though i feel today's action will give a clear indication. If the markets are not able to close near today's highs... we will face trouble in the near term. I am also not sure the indicators of scepticism work after the first rebound in a crash. I think equal proportion of people would have been sceptical after the 1930 bounce in the stock markets. In an economic environment where media is omnipresent, we will have exaggerated views on both sides. As a trader i think one should be objective and just let the price show what it wants to do rather than make subjective assessments about market optimism or scepticism...

  4. Carl, what do you say of the latest Newsweek International Edition's cover? (the title shouts "The End of Euro" - without a question mark -and is accompanied by a pretty scary photo of street fighting in Greece). Should we go long euro?