Thursday, September 4, 2008

very bad mkt today

About Shark Watch

Thursday, September 4 - 4:39 PM

Afternoon Comments

Well, we said it earlier today, and we’ll say it again. It doesn’t get much uglier than that. Breadth finished at a very bearish 4.2:1 to the negative, volume picked up into the close as the market continued to lose steam, and each of the indices broke key lateral support levels – with gusto. At this point, the averages are barely above the first higher low they put in after the July lows, but many investors are looking for an eventual test of those levels.

About the best we can hope for is some sort of oversold bounce, and tomorrow’s employment report, if it isn’t terrible, may be used as an excuse for some reflexive action to the upside. However, even if the media is, as we speak, questioning the “validity” of today’s selling, we need to remember the current character of this market. We’ve consistently been reminded that market players have short time-frames and any action to the upside cannot be trusted to last. Bottom line: strength should be sold.

All in all, our view of this market has not changed. No matter how vociferously so-called market experts may argue that we are facing a grand buying opportunity, there is simply no reason to be risking your capital right now. While the media can’t stop asking their guests what they are buying, very few have the stones to say that the best place to be at this point is cash. There will be incredible opportunities that arise from this carnage, but that’s no argument for buying a market that is going down.

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