Wow! Wow! We have been the bears since the high and we are startled as to how this is playing out. We will have a gargantuan report over the weekend but just some words to the wise as futures are up today over 1%…of course after another 1,000 point drop.
Pay no attention to Wall street and most pundits. You will hear: DON’T WORRY…MARKET IS CHEAP…AN OPPORTUNITY…A VALUE…OVERDONE…IF YOU LIKED THE MARKET LAST WEEK, YOU LOVE IT NOW…THE ECONOMY SUPPORTS HIGHER PRICES….THE TAX CUTS WILL SUPPORT THE MARKET….THIS IS JUST THE ALGOS…THIS IS JUST THE COMPUTERS…THIS IS JUST THE BUTTON PUSHERS…THINK LONG TERM.
We have news for all this chatter…THE MARKET IS GOING TO DO WHAT IT WANTS TO DO IN SPITE AND DESPITE ALL THAT NOISE. And we can assure you, markets do go down when the economy is in good shape. We can assure you bearish markets do happen (though we were starting to think differently). PAY ATTENTION TO PRICE! Right now, notwithstanding wild swings and gaps to the upside and strong bounces, price has not acted very well.
Pay no attention to the permabears. Many missed the last 10,000-15,000 Dow points but are already coming out to tell you…TOLD YOU SO!
So what is the edge here? Don’t overdo it. Look at the close yesterday and look at the open today. Look at the intraday action of the past few days. Just a bunch of random, nonsensical moves. 200 points in less than a minute. 500 points in 15 minutes. 500 point swings in 30 minutes. We do not think there is a manual for this. We have no clue if we go back up 1,000 today or reverse the gap to the upside.
Eventually, this will slow down and become less volatile but eventually is not here yet as we gap up nicely this morning. Just keep in mind that THE NEW CENTRAL BANK FED HEAD ONCE SAID IT WAS THE FED’S JOB TO SAVE MARKETS WHEN THEY ARE IN TURMOIL. (NOT KIDDING!) We would not be surprised if they are in there today buying up the markets. Again…NOT KIDDING.
And lastly, to all those blaming computers for the drop. Do the computers get any credit for the 9 year bull market that took the Dow from the lows of 6500 to the highs of 26,000 recently? Saw a few too many whiners yesterday. Yes those triple futures volatility index products are crap with many sent to the scrap heap but overall, there is nothing wrong with computers.