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Another Step Down

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[F]rankly, I don’t yet see that floor [of 12k for the Dow] holding past Labor Day. By Election Day, I think we’ll be happy if 12k would serve as reasonable target to climb back up to.

aftermath May 20

[I’m] still expecting that we’ll be calling it pure luck if we can reach as high as a ceiling of 12k by Labor Day.

aftermath June 10

Every now and then, I should read my own stuff a little more closely, maybe. Doesn’t really matter, since I don’t do this for a living, right? Whatever, all summer long I’ve been watching the market with Labor Day as my horizon and the anticipation that by then, we’d be happy to be able to claim 12k as a ceiling for the Dow. That is, that by the end of August, we’d be used to having upticks in the market reach ceilings below 12k. Looking back now, I realize that the first time I expressed that expectation, back in late May, I was giving the market until Election Day for such doldrums to be commonplace, and that I only contracted my original Labor Day floor and my Labor Day too-high-for-a-celing projections sometime over the Memorial Day stretch.

Either way, we’re there. So where to from here? I still don’t see anything in the economy, in sentiment, in the Fed or the Administration or in either campaign, or anywhere else that might promise to pony up enough sustained new money day after day after day to balance out the daily average $400 million committed toward coming out of the market via pension fund asset allocation shifts. Yes, perhaps many stocks are “undervalued” by conventional benchmarks, although I do think that conditions remain ripe for further devaluations. Whatever, stocks could be priced at half the current value or even less, and it wouldn’t matter as long as we have sellers lined up to dump stocks regardless of values, while nothing is pulling buyers into the market for more than a day or two between extended stretches of selling.

So I’m setting my new sights on 4-digit numbers: before we reach the end of 2008, I expect the Dow to dip below 10k.

bumper sticker [] - calls & puts

Written by macheide

4 September 2008 at 6:18 pm

Posted in calls & puts


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