Arkady's Thoughts

As I wrote a few days ago , the market found itself at a very critical level and had to hold in terms of supply and demand. Down 7,000 is both a psychological and technical level that if breached would usher in a new wave of selling and it did so with 4-5% across the board drops. The MSM will certainly try to explain this as a response to AIG's 60+ billion loss, but of course that is not true and has little to do with today's action. In fact AIG's cash losses are a mere 2 billion, but the assets that they insure dropped 60B in value. Oops? If anything, our mindless torpid government pledging ANOTHER 30 Billion to this company would be a catalyst for a sell-off. So right now, one would wonder what the correct course of action is for those who have been holding on desperately to their 401Ks and watching their accounts wither away. At about these levels, we are looking for capitulation, a mental white flag where the pain becomes too great and people sell in droves. We shoul...

I have not done a stock market post in a while, but this one is important considering the latest developments. The latest time I spoke about Dow 7000 and why a hold of that support line is extremely crucial. Unfortunately it seems like the break will happen inevitably and doing so will essentially open the flood gates. I have provided a chart for you that someone else made and it illustrates a very obvious long term pattern, a chart of the S&P 500. Don't mind the wave count, but do realize that flirting with 2001 lows really illustrates the weakness of this market. If in the next few weeks Dow 7000 or in this case S&P 750~ is broken then expect the market to shave off another 50% of it's value! There is good news in all of this though, once a breach of that vital support occurs, a reflexive bounce will occur via a powerful bear rally. Thi rally could be a 30-50% move and will provide an opportunity to exit all long-term positions, however for the most part it will o...

Two quick points. 1) Democrats asked the auto industry to formulate a plan and get back to congress by December 2 nd . You know my position on the matter and I find it sickening to see this kind of government involvement. Let the free market work! If people are not buying American cars, then it is a clear signal that these American cars are over priced. The price information being telegraphed from the auto industry is being rejected by the population, the answer is to adjust the price - not grovel to Congress. Absolutely appalling. Is there anyone out there that thinks we should bail out the auto industry? Let me know and if so, explain to me why we should violate free market principles. Do not use the financial bailout as a benchmark, because according to Wall St. the financial bailout did nothing to stem our declines. 2) Stock market is extremely weak. Today's bounce attempt should be shorted for short term traders, because they underlying weakness is glaring. Energy shares are l...

As of today the market has lost 22% since Obama won the election. Can we attribute this decline to Obama? Not completely. There are several factors that must be taken into account. 1) We are in a bear market (this is the prevalent direction) 2) There has been a disruption in natural market activity via the bailout. 3) Least important, some economic news is worse than expected. However, under normal circumstances there are these considerations 1) We are in the seasonally best time to be in the market (November to January) 2) We only had one appreciable bear market rally (week before election) 3) Commodities have been falling at a tremendous rate (oil especially) and this alleviates inflation. The fact that this market has been unable to mount any kind of serious move despite the substantial drop in commodities and considering that government intervention has been largely priced in, there remains only one major wild card . President-elect Obama. As discussed in a previous article, the ...