Notice anything similar? Look at the volume coming in as we break the summer of 06' lows. This is extremely bad. New lows are being made and as oversold as we look to be we can remain that way for quite some time. The market can also go sideways relieving the oversold issue. Just make sure you are making the oversold argument based on logic and analysis and not your biased position, unless of course you made the same argument about Chipotle, Crox, Baidu, Apple, Rimm et al when they were egregiously overbought!
So what do you get when we have a day where we open higher and run up about 180 points only to reverse and drop to a low off 130 points recovering slightly at the end to close the day down 60 points....A day traders wet dream quite frankly. The damage of the last few days have thrown cold water on the plans of the bulls for a rally. The damage inflicted by the last 3 days is ominous and now opens the gates to further downside. This action is not good if you are a bull or are looking to get long. I would suggest you shelve those ideas for some time as we are in a bear market and the only discussion should be of magnitude and duration. Rallies are to be sold into not weakness bought. A generation of hedge and mutual fund valets are going to lose a lot of money learning this fact.
I would love to tell you that this decline is in the 8th inning or so but unfortunately it has barely begun. Listen housing is barely of 10-15% and the markets are doing this. Imagine what happens when we get to the 2-30% area. Now I hear you saying already, 'no way, not here, can't happen'. It is this type of thinking that is going to bury you, guaranteed! I am not being mean or condescending, just candid. Housing prices dropped 70% in Japan after their real estate bubble. Now I am not calling for us to drop that far but I sure as hell wouldn't take the other side of that bet. I can only laugh now when I hear people say 'can't happen here, no way, the fed won't let it, the economy is to, that, blah, blah, blah. when what I really want to do is cry for them.
