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Financial news I consider important, with my opinion, which is worth as much as you paid for it.
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Thursday, July 23, 2009

Was Thursday a top

Why a market top was today or is close.

1) Too far, too fast
The market has risen from SPX 666 on 3/6/09 to to SPX 959 on 7/23/09, about 44% up over 20 weeks. Think about that kind of move. If you bought a stock that was up 44% over 20 weeks, would you sell some (if not all) to CAPTURE those gains? I would hope so. From the looong term view, it took the market from 1996 to TODAY to be up 44%, over 13 years! And the market just ran it up in 20 weeks!. OK, lets just look at from after the 2001 bust, just recent history, from the bottom in March in 2003 up 44% took 10 months, and to reach a sustained level 19 months!

The stock market Thursday had a parabolic blow-off today. Friday may open up big, but I expect it to fail into Friday EOD. Whatever the market is at Friday, it is time to sell longs, across the board. Gold Miners I am on the fence on, I suggest stops to push you out as needed.
From WebSurfinMurf's Financial Blog

2) Government must ensure interest rates remain low
Also, the US Government has announced for the next week selling 250 BILLION dollars of US Treasury notes! Yes, the government is planning to sell what used to be the typical annual budget debt for the US in one week. The US interest rates could rise to sell these notes......unless the market falls creating fear, driving people into US bonds to keep interest rates low. Interest rates are rising rather quickly during this rally. adding 250 billion dollar in debt sales in such a short period of time will make rates rise significantly.....unless the market has a downturn.
From WebSurfinMurf's Financial Blog

3) Earnings reports problems.
Specifically MSFT, AMZN, AXP should cause damage in the general market place.

These companies reported, after hours change in stock price
MSFT - DOWN over 6%
AMZN - DOWN about 6%
AXP - DOWN about 5%
DECK - DOWN about 10% (not a market mover, but one of my short plays)
CAKE - DOWN about 3.5%

4) The basic problems HAVE NOT BEEN FIXED
Has banks and other financial companies been forced to have proper valuations? NO
Are mortgages defaults and unemployment been improving significantly? NO
Has consumer spending been improving, since 70% of the US economy is consumer? NO

5) Today was a parabolic blow-off
The move Thursday was a significant rally for one day, following a 10+ day rally.
From WebSurfinMurf's Financial Blog
6) Market tops are characterized by the opposite side panicking.
In this case, I am investing for market to go lower, and yesterday I finally cracked and started to panic.

Timing the market is near impossible, as I have proven since 5/10/09. :) I was a victim of my own 2009 prediction, caught in a bear market trap. If you own stocks long here, you are really gambling by keeping positions. My original flip from BULL market cheerleader to BEAR market was back on 5/10/09 when SPX hit 930, today SPX hit 976, basically within 5% of the 930 call (assuming Thursday was the top), but MONTHS later. :)

My opinion is the same since 5/10/09, this level of the market is high, and will retrace significantly.

UPDATE 7/27/09, same sentiment, but the market did go higher, see chart below food for thought.
From WebSurfinMurf's Financial Blog

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