Thursday, November 13, 2008

Nothing to See Here, Just Another 10% Swing Today....

Well, in fairly short order the market retested the old lows and all the technicians bought stock on command because that is what their models tell them to do. The computer models also forced more buying as stocks ground higher all day. If you'd bought the bottom today you could have made a tidy 10% in a day.

I think people shouldn't underestimate the power of bloggers (real bloggers w/followings measured in hundreds of thousands, not my loyal but sparse readership) that spread the word that they were buying the markets when we tested the bottoms. Many of these bloggers are becoming what CNBC was during the dotcom era - their calls can move markets when they are well telegraphed.

I'll reiterate that healthy markets do not act this, swinging wildly up or down 5-10% a day. If you have access to good charts - check out the NASDAQ in March/April of 2000 when the NASDAW first started its historic breakdown. There were a number of violent swings that mirror the current action on Wall Street.

I think the perfect analogy for the markets right now is that of a fish. Watch a 35" pike sitting calmly in a weed bed and you have a sense for what the markets have been like for the last 80 years. Catch that same pike and pull him up on your dock - that same fish will flail violently as it fights for its life - that's the picture of our markets today.

We'll see if this can continue tomorrow.

On the flip side - the economy seems to be really falling apart at the seems. A quick summary of today's trouble signs.

Layoff’s coming to MTV.COM
Revver.com Has Some Trouble Meeting Payments
Confirmed: Helium.com HUGE Layoff (See CEO Comment)
Confirmed: AdReady.com Laid Off 25% Of Staff
Layoffs Coming To Wired.com (Oh No!)
Confirmed: SixApart.com Laid Off 8% Of Staff
Nordstrom's Sales Fall

I talked with a top-notch software sales guy today that heard a prospect tell him "I'd love to consider your product but buying anything right now is a job-killer". People are in complete lockdown and that's going to eventually be reflected in the valuations on Wall Street. Today's market seems to be pricing in a little 1-3% recessionary contraction, but I'm sensing a huge contraction in 2009 and that is not on any radar.

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