Friday, September 5, 2008

mkt today

About Shark Watch

Friday, September 5 - 4:21 PM

Afternoon Comments

Given the magnitude of the losses we saw yesterday and the pervasive negativity we has this morning following the dismal jobs report, the fact that we saw a decent intraday bounce shouldn’t be all that surprising. However, like we said earlier, there is a distinct possibility that the popular press will have a field-day over the weekend with the unemployment number, and that may finally be enough to shake out some retail investors who have been holding on to the hope that the market will bail them out.

Of course, at the same time, we are bound to hear from the serial bottom-callers who will say that the rebound after the poor open means that the jobs numbers were already priced into the market and will be quick to call what we saw today a successful test of the July lows. We have a tough time buying that argument as volume today was wholly unconvincing and slowed considerably as the indices inched their way back towards to flat-line. Moreover, the charts out there don’t engender a whole lot of confidence either. As is the case with most oversold bounces, most of it was driven by the stocks with the worst looking charts. Buying beaten up charts is what works in a bear market, not charts that are trending higher, and that has certainly been the case.

The most important thing, as we mentioned, is to remember that a defensive posture has helped to stave off a great deal of pain over the past year or so, and there is no reason to think that a lasting bottom is in. Keep that capital safe and don’t try to force any trades in this challenging environment.

Have a great weekend and we will see you on Monday.

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