aftermath

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Archive for July 3rd, 2008

Kitty Sandwich

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In order from top to bottom are Magellan, Baby, Blue, and Cuddles.

bumper sticker [www.internetbumperstickers.com] - monarda

Written by macheide

3 July 2008 at 7:22 pm

Posted in monarda

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Oversold

That’s a common word commonly popping up in financial news. Usually with about as devalued a meaning as many of the equity investments which the term supposedly characterizes.

If we place any faith in the relative strength index (RSI), then yes, the DJIA entered the rather arbitrarily delineated “oversold” zone during the final week of what was the worst June for the stock market since 1930. So the word would have been whispered around the watercoolers of technical analysis purists, then bounced like a fanciful rumor down Wall Street hallways, then bubbling up out of the mouths of pundits desperately hoping for something, anything at all, that might signal a turnaround in the anemic equity markets.

But are equities truly oversold yet? Maybe a smidge. We’re maybe six to eight weeks ahead of where I anticipated the market going, so there might be some buying opportunities for anyone with a short-term investment horizon, maybe a month or so. Even during any such brief recess, pension plans will continue permanently reducing their equity allocations, inexorably day after day, up market or down, “oversold” conditions or not.

Don’t expect the superficial proxy RSI to reflect any of that. RSI is little if anything beyond a pseudo-complex mirror of the arbitrary rule of thumb that says the 20% decline mark we just hit calls this a bear market. And the most predictive value RSI has amounts to little more than believing that what goes down must eventually go back up, and vice versa. Meanwhile, as long as pension funds continue their one-time major shift from equities – a move that will continue for at least the next 18 to 24 months, selling another $150-200 billion that will never return – RSI or any similarly simplistic formula that purports to register oversold conditions is pretty meaningless.

bumper sticker [www.internetbumperstickers.com] - calls & puts

Written by macheide

3 July 2008 at 1:13 pm

Posted in calls & puts

Spills Like Tomato Juice

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Fact: Kittens raised on a barge will eat or drink just about anything.

Fact: V-8 juice on a light tan carpet looks like someone has just been murdered.

Conclusion: Leaving a nearly full opened can of V-8 juice out on my nightstand makes me a noodlenoggin.

bumper sticker [www.internetbumperstickers.com] - noodlenoggin

Written by macheide

3 July 2008 at 12:03 pm

Posted in noodlenoggin