Cold Hard Crash

Thank you Texas, for your donation of 30.00 to the cause. I am dedicating it to stopping child labor around the world. And you wanted to know what I am going to do with the stock market, so I will tell you.

Cover my short position. I covered last Friday. I now have long positions on NYSE:PEP - which is the only stock that I play.

PEP rebounded with a 3% jump in less than a single day. Before the big 2008 crash, NYSE:PEP was tracking 80 - at 66.00 a share its a damn good buy. Although PEP is trading at or near its 52 week high, the 2 year and 3 year charts show that this trading range was crossed several times and again - with the stock trading over 80.00 a share before the big crash of 2008.

You asked about the broad market and what would we do if we were playing a spider.

The overall broad market is going to be running a deflationary scenario - the indices will wall up behind 10k, 11k, 12k and bounce back down. Until everyone is certain that financial instability is out of the market. This of course means commercial real estate.

What I didn't write in my last post regarding the chart analysis of the Nikkei was that the Nikkei suffered from Japan playing their market almost as a national sport. The American markets are a bit more receptive to broad economic indicators such as unemployment we are, for the most part - fairly apolitical, tolerant, independent minded and easygoing - there is no strong national drive to participate in something like what precipitated the Nikkei crash and the tight government/industry collusion. Japan went with the whole lobbyist thing. America is showing signs of democratic revolution. Japanese trading games pushed the stock value of firms - to levels that were way out of line with P/E ratio - by way of example - A single golf course in Japan, booked a value higher than the entire Australian stock exchange. The Dow is a different beast. The charts only come into play if you have a serious stressor - like a financial markets crash - and you're trading on the greater fool theory.

So, Texas, the bear can return. But I just don't see it happening. I see a fairly low volume market for most of the year - sort of sideways to moderately high jobs growth, and an election year cycle ahead of us that will keep everyone working as hard as they can to keep everything stable. - PEP will likely perform at 74.00 per share by close of year. That plus dividend makes it about 12% ROI.

And that's what you get for your 30.00. Thank you Texas. And since it was more than I thought it would be I'm going to unlock the blog for a while...


Anonymous said…
Thanks Tb.