Stumble it!Thank you Lisa for taking care of tonight’s wrap up as I had a fire department function to attend tonight. For those that don’t know I am involved with volunteer activities and I am a volunteer at the local fire department and the Coordinator of a ‘Community Emergency Response Team’ (CERT). Support your local volunteer fire and EMS organizations, when it is the middle of winter and snowing, and the pager goes off at 3 am, the volunteers (and me) have to get up and respond. Volunteers don’t get any pay so always help out your local volunteers with donations. Ok, enough of my public service announcement.
Some late news tonight. Sallie Mae (SLM) is being reported by the Wall Street Journal tonight that the company needs to raise $30 Billion Dollars in order to refinance an existing loan. Keep in mind that the market cap of SLM is only $9.5 Billion at present !
A question was raised in a comment earlier regarding new highs and new lows today. Lisa provided the statistics for today. It may seem difficult to believe that the amount of new lows would be so high given that the market had an end of day rally.
But you must remember that the number of stocks that are below their 200 day moving averages continues to grow. And it does not take much of a drop for more and more new 52 week lows to be recorded. At this time the amount of stocks that are under their 200 day moving averages is staggering.
DOW: 60%
S&P 500: 66%
Nasdaq: 68%
As you can see from those numbers numerous stocks have broken down.
Today’s rally which started in the afternoon has not changed the outlook of the market. It is easy to get excited and think the bottom is in after so much selling this week. But nothing goes up or down in a straight line. Over the past 6 months every time we have had a rally it has ended up failing and the down ward momentum picks up steam once again. Today’s rally was a well placed technical bounce right from the lows from August 16th. Before the bounce, our trades were very much in the green, at one point BIDU was a gain of 10% in our portfolio. That is how much people were unloading large amounts of shares. But the rally in the afternoon was indeed numerous shorts covering and day traders playing on the bounce. If Lisa and I could replay the tape of today we could show you almost step by step how it unfolded. As the markets were selling down and getting close to the 12500 mark on the DOW we could see some buys coming in as they were playing a bounce that was based on the technical parameters. And for about 20 minutes it was a tug of war as the DOW was teetering around the 12500 area. And once the market started making some upward moves we could see the large trades of what is obvious to us as day traders and short covering on the bounce. The rally was not so much of a bull market rally as it was a technical up ward move in a down trending market.
The overall technical indicators of the market remains in a bearish condition. We still expect to see lower lows in the coming weeks.
A chart request on Altria (MO) is shown below:
On a final note. Adding to my comments from last night regarding some of the advertising gimmicks that some web sites use. I want to add the email scams that are also used to entice people into buying stocks. Surely you have received an email from time to time with some recommendation to buy some hot stock. The email goes on to say something about what the price might be in a matter of days or weeks. These are all scams and are usually paid for by the company whose stock symbol is being mentioned on the email. They are usually for microcap or pink sheet stocks and the company needs to sell shares to raise money so they try to make themselves sound good with email messages (SPAM) that make unsuspecting people think they have something hot and will buy some of the stock. But what happens is the money you put into that stock is nothing more than a means of putting money right into the bank account of the company, perhaps to save them from bankruptcy.
So, in short… never buy any stock that comes to you in some unsolicited email. It is not isolated to email, these ‘hot stock’ reports even go out in the mail to your house. Being so involved with the stock market I receive many of these SPAM emails a day and even have had them come to my home in the US mail. The only use they have is to clean up your dogs business.
Some late breaking analyst actions worth of mention as they are somewhat significant:
Deutsche Bank has downgraded Alcoa (AA) by lowering their stock price expectations.
MBIA (MBI) has been downgraded by Goldman Sachs with lower price expectations as well.
Good night Rebels…
