Thursday, September 11, 2008

Another gap down tomorrow?

I posted the following in somewhere else. This is what I think about today's.

Late day action was bearish. In my opinion, these are discrete buying climaxes building for a cause to sell off harder ... Stick with the overall waterfall pattern on dailies. Remember one had happened yesterday afternoon too. These are emotional and deceiving. Sucks in an army of bulls in it to bury them later. I know it is very hard to stay short in these especially if your entry point is near or below the market but that is why it is happening at this juncture, where it is eating through July lows. Tomorrow will be Bear's turn and it may come stronger. (for Lower lows)

I think many though there wont be any bad news in near term, at least worse than LEH, just like Bear Stearns bottom.
Well, this time is different imo. I think it will not take more than a few hours tonight to realize that the list is not so small to get rid of anymore. The market will not repeat the same pattern. Recognition of the others should take hours this time.

Here is the other soon-to-disappear candidates from XBD and BKX...

Merill
Morgan S
Washington M
Fifth Third Bancorp
Keycorp
Marshal and IIsley
Regions Financial
Wachovia

These are the index components, there are 10s of other large banks and financials not included in BKX and XBD that are in the same or worse situation.

Tomorrows gap down will not fill in my opinion. Folks should get ready for the bumpier ride ahead.

I think we will finally fill that gap at 1035 by opex. I have been calling this for 2 years

7 comments by xTrenders :

illiac64 said...

The BSC bottom was driven by extreme bearish sentiment, which was a gimme to spot.

Note that we haven't had that much negativity since - not even at the July bottom, where internals were worse than in March.

IMO we have to get that kind of sentiment before putting in another IT/LT bottom. Until then every rally is to be treated as a suckers rally.

Atilla Demiray said...

Many junk bonds I observe as a liquidity measure closed down today.

PHK looks like it may gap down below 50DMA tomorrow

IC said...

Amen

PCP said...

The markets are very jittery here. It is palpable how short the stick saves are becoming. I was/am still shocked that the Fannie/Freddie bailout euphoria only last a few trading hours. Each shot is having less and less of an effect before this market becomes immune to these intervention and violently oppositely than intended. I don't know where or when that will happen but I am unwilling to hold any position overnight here.

Sol, good luck to you on those shorts. I may join you in the morning but I would rather sleep well tonight.

Dcengr said...

Atilla,

Problem is that any 2 bit idiot knows about the credit crisis now. Its blasted on the airwaves every day.

Every sucker is trying to get a piece of the housing and banking crash. How can they all become rich on something so obvious?

Can they just come home, short a bunch of financials and all become millionaires? Remember how long it took for the market to realize how stupid all of it was even AFTER the subprime mortgages blew up. And it went to new highs.

Never underestimate the stupidity of the masses to buy and take the fed for their word. This will be a sucker rally.. not participated by institutions, IMO.

Atilla Demiray said...

Well we are entering in a climax part of this cyclical move so it is not a secret that things are not going well.

You saw today that the market is doing everything to shake people out.

Resolution will be to the downside in a surprising way.

Tomorrow is very suitable for this to happen. Gap and run.

Dcengr said...

If they mark up tonight, my fractal says up to SPX 1270ish.. beware the magically delicious fractal.