Stock Market
All comments and Stock Market Ananlysis are made by Guy Brumley. Guy has been trading the Stock Market daily since 1992.
Trading, evaluating stock prices and predictions
Stock Market Commentary 5-22-2009
The Dow closed lower 129 points, after being down over 200 at its worst levels. The DOW has yet to break out of its trading range.
The market sentiment (or the lemming ratio) is having trouble getting momentum. The balance scale is stuck in neutral. The right side pan is filled with reasons to go up, the left side is filled with reasons to go down, and we are waiting for something, anything to shift it. Two months ago, the left side was so full of negative news it could not hold any more, and the right side was empty. The first crumb of good news and we started up. (The news from one of the big banks saying they turned a profit the first two months of 2009), and that is when the market had to reverse. It was an easy call. This is when the VIX was over 50.
Now we have moved off that incredibly negative time to a market that has bounced back 2000 points on the DOW, and 264 points on the S&P. Neither of these retracements has reached a significant amount to declare an end to the run. The DOW needs to break 9000, and the S&P needs to approach 990. The negative news that is shaking the market is nothing new, (weak earnings, fear of the US credit being downgraded, unemployment, foreclosures, etc.). These fears are already in the left side of the balance. The problem is we need more time, and a little more happy horseshit stories to reach the above numbers.
When the VIX hit the low yesterday it did send up a flare, and the market should do its best to stimulate fear for a short time. The holiday weekend may send more people to cash, but I would not be surprised to see an up day on either Friday or Monday.
Meanwhile, I have bought some puts on the few stocks that have had a big run up in the last two months (ISRG, CEDC).
The market thinks the economic recovery is only months away. It does not need to be told it could be years. If the talking heads start promoting a five-year recovery instead of the 5 months they are talking now, the balance will turn back down.
Return to Previous Market Commentaries