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Stocks Bear Market Generates Inane Mainstream Commentary

Stock-Markets / Stocks Bear Market Jul 10, 2008 - 12:16 AM GMT

By: Anthony_Cherniawski

Stock-Markets Best Financial Markets Analysis ArticleI am amazed at the absolutely inane commentary from the media about how great it is that we're having a bear market, as if they saw it coming ahead of time.  Now they're talking gibberish about all the buying opportunities out there and how after we've reached the 20% decline level it's  time to back up the truck and load up on stocks. 


The one day rally on Tuesday brought out Larry Kudlow talking about how the Fed is backstopping the backstop  by extending the loans to banks and brokerages into 2009.  The Fed knows how desperate the situation is for the banks and brokerages with all their losses and apparently more to come and that is good news?  Give me a break! 

Here's an example of what we are seeing. http://money.cnn.com/2008/07/ 08/markets/markets_bear/index. htm?postversion=2008070814

So what is the market really saying? 

Let's take a look at the chart of the Dow Jones Industrials and see what it is telling us. 

Two weeks ago at our last show I drew a trend channel to help us keep track of the Dow and to help us to find when the Dow is ready to rally.  The trend channel would usually signal a rally by having the top line broken to the upside.  Take another look.  I removed the top channel line and only left the bottom.  Now that is a bearish story!  On the day of our last broadcast, the Dow broke below our trend channel and has stayed below ever since.  This is the first time I can ever recall seeing something like this!  Not only did it stay below, but Tuesday's rally only took it back up to meet the underside of the channel and sold off on Wednesday.  Folks, this is not recovery time, by any reckoning. 

Now the market may prove me wrong and rally back into the channel.  But what I see so far is a weakness that is so pronounced that it says that there are simply no buyers here, despite the oversold conditions.   So we get one or two days of short covering, then down she goes again.   Even the financial and real estate stocks are betting hammered.  In normal markets, they should be due for a huge rebound.   

Note the same pattern appears in the banking index. 

Look at the huge 11% rally in the Real Estate ETF that was completely retraced the next day.  This folks is the hallmark of a vicious bear market.  Even the best of traders are getting mauled.  Frankly, I would welcome a rally just to relieve some of the oversold pressure in the market.  However, I have no illusions that we are in for the ride of our life.  My brother the engineer who trades for his own account suffered losses.  Several friends I know who have made money in the decline have withdrawn to the sidelines. 

My advice for most of our viewers out there is “go to cash,” especially if you are not experienced.  But if you have the stomach for a declining market and a lot of patience, you may want to find someone who can help you profit from this experience.

See you at 3:00 CST.

Which will it be? Stay tuned! on www.yorba.tv every Thursday at 4:00 pm EDT . You can find the archives of my latest programs by clicking here .

Please make an appointment to discuss our investment strategies by calling Claire or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at tpi@thepracticalinvestor.com .

Anthony M. Cherniawski,
President and CIO
http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski Archive

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