Monthly Archives: October 2008

New Buys for a New Market

30
Oct 08
Last week I warned you that a market crash was probably in the cards. Despite Tuesday’s move higher, this scenario is still not completely off the table, but so far the bears have not been able to take advantage of the window that opened for them, and the window is now rapidly closing. The old saying is that markets that won’t go down, go up. It could be that the week of October 6 through October 10, which was the worst drop in the history of our stock market, marked the bottom for now. The very volatile daily moves we’ve...

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Market Volatility and Earnings Season

23
Oct 08
Did you enjoy the bull market? The S&P 500 bottomed at 839.80 intraday on October 10 and hit 1,044.31 intraday on October 14, a 24% increase that exceeded the typical “up 20%” rule to identify a new bull market. Of course, it didn’t happen on a closing basis, and even if it counted I’m afraid it will go into the record books as the shortest bull market ever. It looks more and more like we are on the edge of a 2,000 point crash in the Dow Jones Industrial Average following last Friday’s intraday high at 9305 on the Dow...

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Both Crash & Rally Scenarios Still On The Table

22
Oct 08
Tuesday’s mid-day rally was starting to look like a move that could break out into the next upleg in the market, when it suddenly collapsed into the close. As I said in Monday’s Flash Alert: “If we see volatile, down days today and Tuesday, there is a major danger of the 2,000 point Dow crash by Friday. The bulls would have to show some spine today and tomorrow to change this pattern. It could happen, but we’ll have to see it to believe it.” The last hour of trading on Tuesday showed the bulls are spineless right now. The decline...

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Crash Imminent to End This Downturn

20
Oct 08
In early October of 1987, I published a prediction that a 1,000 point crash in the Dow Jones Industrial Average was imminent. I do not make an extreme prediction like that lightly, as I got lots of cancellations to this service even though I was right, and would have gotten many more if I’d been wrong. Some people thought I had caused the Crash of ’87, which happened 21 years ago yesterday, by being so vocal about it in advance. That was silly, and I will always tell you exactly what I am thinking whatever the effect on subscriptions, because...

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A Bottom?

16
Oct 08
We are going to have bad economic news for some time, as even Fed Chairman Ben Bernanke admitted yesterday. Right now, bad news or the fear of bad news pushes stock prices down. Yesterday’s report that September retail sales fell 1.2% caused the worst drop in three years. Today’s weak read from the Philadelphia Fed quickly aborted what started as a recovery rally, but then was overwhelmed by buyers. At some point — perhaps today — a deep, long recession will be completely discounted by the market, and bad news will no longer have any impact. That’s the way it...

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Huge Slingshot Rally Underway

14
Oct 08
We are watching extraordinary financial history being made in real time. The Fear & Greed Indices, the VIX and the VXO (the old VIX) went off the charts on Friday. eSignal had a quote of 103 for the VXO at one point, which is theoretically impossible since it is a scale of of 0 to 100., The VIX hit 76.94, a level of panic and fear that will not be topped in our lifetimes. Then the S&P 500 bounced almost 100 points in the last 45 minutes on Friday, and another 104.13 points yesterday–an 11.6% gain. My target for this...

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The Rubber Ball is Still Falling

09
Oct 08
With four straight record closes on the VIX Fear & Greed Index this week to over 60 today it’s obvious that fear is totally in control. This is a scary, difficult market. Yesterday’s negative reaction to the worldwide coordinated interest rate cut, led by the Fed’s emergency half-point cut in the Fed funds rate, is just the latest evidence that fear rules.  If the stock market was a rubber ball, it was dropped from what looked like stepladder height, but the stepladder was on the edge of the Grand Canyon and the ball is still falling. But like that rubber...

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Big Move Coming –- Slingshot Rally or Crash

06
Oct 08
After Friday’s very disappointing drop in the S&P 500 to close below 1112 following the House vote to approve the bailout, the Index is in a precarious position for bulls and bears. The next move, whether it is up or down, is likely to be a lulu. At one point on Friday the SPX was all the way back up to 1154, and looked good to finish off the week and maybe even trigger a daily buy signal. But the collapse after the House vote left a very nasty-looking breakdown pattern. We will almost certainly see some further damage early...

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CombinatoRx Phase IIb Trial Fails — Dendreon’s Numbers Almost Good Enough

06
Oct 08
Of all the days to announce bad news, it would be hard to find a worse day than today. But CombinatoRx (CRXX) has the top-line results from their Phase IIb study of Synavive (CRx-102), their leading drug candidate, for knee osteoarthritis. They studied 279 patients at 57 sites. The good news is that the drug worked. There was a dose-dependent response, which means the more drug a patient got, the better it worked–an important sign of real efficacy. It also worked better in combination with prednisolone than either prednisolone alone or the placebo. The bad news is that the improvement...

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Continue to Sit Tight

01
Oct 08
The sharp market recovery yesterday put the S&P 500 back above the important 1152 level, suggesting that Monday’s sell-off probably was a flush-out bottom rather than the start of a new downleg. This morning the market will open weak, but it looks like the S&P will stay above, or at least close above, 1152. Tonight, the Senate will vote to pass the bailout bill. It was smart tactics to have the Senate vote first, as two-thirds of them don’t have to face the electorate in five weeks and they will pass the bill. That will put the House on the...

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