Weak.
Remember last week when I said I expected the market to come off a little bit from the recent buying spree, and that it was healthy for the market to behave in such a way? Well, it did, and it was. I expected the market to (hopefully) bounce up again afterwards. It did.
But until Thursday, it has done so with about as much conviction as a handshake from a crying three-year-old.
The market’s behavior in the past month or so has closely resembled that of the “bouncing ball” experiment that most of us did in science class. Each time the ball bounces, it reaches a lower and lower high point as it loses energy. The market doesn’t succumb to gravity the way the ball does, but it does surrender to time. Time breeds impatience, especially for investors holding stocks and being inundated with bad news.
In this day and age, instant gratification is demanded. We cannot wait for weather or news, so instead of turning to the morning newspaper, we scour the internet. We cannot wait to receive messages or e-mail at home, so our fingers are constantly attacking our iPhones and Blackberry devices. As the markets have become faster-paced, our mentality has become one of growing impatience. Which, in turn, translates to investors’ collective need to be shown returns quickly or sell out. It’s this very phenomenon that exacerbated the extreme volatility we saw in the fourth quarter of last year.
How much endurance do we have?
Patience is a virtue. How virtuous is America?
To restate my position last week, this market needs a serious bounce… I’d say a string of a few days that lead us about 500-700 points higher in the Dow before I believe the buying is more than a mood swing.
Today looked like a good indication that this is possible. There needs to be some buying to light the herd mentality fuse, and hence providing investors with a reason to stock up (no pun intended) once again. However, today’s move was just enough to leave me hopeful, yet unconvinced. As we bounced hard near the 7800 level in the Dow, it looked as though we could be bucking the downtrend a little bit – however, a few purchases do not a bull market make.
We need another few days of this… or one huge day would work as well.
Individual Stocks? That’s right, I said it.
Finally, after months of uncertainty (coupled with frustration, exasperation, and finally apathy), I am once again beginning to analyze individual stocks.
