Anybody Buying Yet? Where’s the Bottom?
- Thread starter NEWHunter
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SAJ-99
Well-known member
Market optimistic about a rate cut coming from a coordinated G7 meeting tomorrow. If it doesn’t happen or is less than expected, look for more selling. I’m not sure what good a rate cut will do for the global economy. There is talk of adding “liquidity” but it doesn’t seem needed. While last week was horrible, the sell off was orderly and markets functioned as they should. I’m mostly concerned that the Fed thinks it’s job is to prop up stock prices.
Southern Elk
Well-known member
I’m far from an expert on the stock market, but I always find it amusing that the experts can’t even predict it.
I don’t think anyone predicted the huge bounce today. Who knows what tomorrow will bring?
I don’t think anyone predicted the huge bounce today. Who knows what tomorrow will bring?
The magnitude might have been unexpected but the market was massively oversold and a big rip higher was not a surprise. Definitely some buyers stepping in and a deadcat bounce type of day. But yes, it's very hard to know what the next few days or weeks will bring. Most times the market will bounce higher for awhile and then go back and at least get close to/retest the previous lows. In December 2018 though it did not. Nearly impossible to say. If Bernie is a big winner tomorrow though, I'd expect Wednesday to be ugly.
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Pucky Freak
Well-known member
So true. I guessed and was right, but there was still a 50% chance that of me being wrong. Watch the market swing down 8% by the end of the week and someone else who held out longer will look like the genius. Spent all my extra cash at 10 AM today so it’s just sit back and enjoy the show now.
bobbydean
Well-known member
Did not sell. Did not buy. Feel pretty good.
grizzly_
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The problem with buying the dips and selling the bumps is you have to guess it right. Twice!
Just ride it out and you'll be better off in the long run. Especially when the selling is based on fear and panic and not substantive market analysis.
Just ride it out and you'll be better off in the long run. Especially when the selling is based on fear and panic and not substantive market analysis.
SAJ-99
Well-known member
You make a very good point. My only caveat is all big moves, up and down, are based on fear and panic. Monday's move was just as abnormal as the previous week, but because we make money we like to think of it as some "return to normal". This is unusual event that can't be modeled, so no one really knows. A financial advisor's job is to calm you and keep you from doing anything stupid.
The President has been pushing for a rate cut since the market started its drain circle. The hope would be to hold on to market gains because unfortunately its incorrectly perceived as an indicator of a strong economy. The Fed hasn’t made an emergency rate change since 2008, and rightly so. They should be setting rates based on longer term economic and monetary indicators not short term market fluxes. Speaking only for myself, although I think the others agree with me based on the looses today and the increase in the VIX, we are taking the rate cut as sign of sandbags getting put in front on the bunker while they say everything is ok.
In the end, the Feds can’t do a lot to combat the virus. No amount of rate drop is going to make people go to work during a quarantine. If an serious outbreak occurs with quarantine, people stay home and the economy slows way down. There are already US companies talking about missing inventory problems to occur in the next few months because China has been shut down.
SAJ-99
Well-known member
This made me laugh a bit. The President has been pushing for rate cuts since he took office. Even today he simultaneously expressed that the Fed should do more cuts while saying the economy was in great shape. The market can't square the two - which is a nice way of saying WTF?. As others have pointed out, the market knows the rate cut doesn't do anything immediate and the Chairman said as much today. What the worry is "why the emergency cut?" The FOMC meets in two weeks. Why the rush? There are long-term implications for this, but that is for a different discussion.
If you show symptoms the CDC and HHS have criteria for who gets tested for CV19, 1) you have been in contact with someone who is confirmed to have the disease or 2) you have a history of travel to the global areas confirms to have outbreaks. It doesn't take a genius to determine that this is pretty weak and there are going to be more cases. Containment in a free society is a pipedream when you set up rules to basically not test unless you have to. So the market has to figure out what the economic impact will be. That is difficult. There are numerous new blurbs about companies cutting travel for employees, and in a service-based economy that is going to be impactful.
To summarize the market's view - When you don't have any good data to build a forecast and you can't trust the message from the people in charge, you sell.
NEWHunter
Well-known member
This is going to get real bad. I’m not going to buy anything for a while.
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NEWHunter
Well-known member
Randy needs a
emojiThe VIX toped 60, this shit is insane. There is already calls for fiscal policy. If that happens off the cuff , and this administration is impulsive enough to do it, the bottom may fall out as confidence circles the drain
Both the virus and the Saudi/Russia issue have taken its toll. The virus fear will, at some point pass, and I for one am not upset with the oil prices being down and the Saudi/Russian issue will be interesting to watch but doubt it will create a long term effect.
Have not bought or sold any blue chip stocks but did first thing this morning request that my son sell some puts. Provides a bit of income now and if the stock gets put to us, they are stocks we are willing to own, bought at a price below todays opening.
But who knows, I could be wrong and it will not be the first time.
All the best to each of you, regardless of your "trading" strategy
SAJ-99
Well-known member
The market is trying to figure out a few things here.
1) The virus will run its course, but how long will that take and what will it look like? No clue, but with the huge increase in available tests this week and next we will get a better idea.
2) companies have loaded up on debt over the last 10years. Low rates and a steady economy allowed them to do so. What happens now that earnings are going to get hit for a few quarters (don't think Microsoft, Costco, Facebook, etc. Think companies you never heard of. About a third of the companies in the Russell 2000 small cap index don't make any money)
3) Oil companies are going to get crushed. Even the "strong" ones are going to have trouble because their cost of production is too high. Energy independence is a facade when you deal in a commodity and are not the low cost producer.
4) Are we becoming Japan? A mature developed economy with 1% real growth in a good year, almost zero inflation, an aging, thrifty population that prefers to save. Bond market thinks so.
5) Does any of this lead to layoffs which leads to more layoffs, which equals recession?
I'm sure I missed something. At the very least we are getting close to more reasonable valuations.
1) The virus will run its course, but how long will that take and what will it look like? No clue, but with the huge increase in available tests this week and next we will get a better idea.
2) companies have loaded up on debt over the last 10years. Low rates and a steady economy allowed them to do so. What happens now that earnings are going to get hit for a few quarters (don't think Microsoft, Costco, Facebook, etc. Think companies you never heard of. About a third of the companies in the Russell 2000 small cap index don't make any money)
3) Oil companies are going to get crushed. Even the "strong" ones are going to have trouble because their cost of production is too high. Energy independence is a facade when you deal in a commodity and are not the low cost producer.
4) Are we becoming Japan? A mature developed economy with 1% real growth in a good year, almost zero inflation, an aging, thrifty population that prefers to save. Bond market thinks so.
5) Does any of this lead to layoffs which leads to more layoffs, which equals recession?
I'm sure I missed something. At the very least we are getting close to more reasonable valuations.
