Anyone feeling awefully anxious yet?

[john77]

Usually that feeling of anxiety marks a bottom - but the way the general markets are playing out, I think it might get a whole lot worse. Especially if a rate cut of 50 points is already priced in.

[megadeth]

Not feeling anxious at all.  Feeling rather good after taking my double dose of anti-anxiety pills this morning.

Actually bought a few thousand shares of MGA this afternoon, at $2.43, which is very near the 52 week low.  This is what, 3 or so down days for the TSX in a row, so hopefully tomorrow may bring some green into the sea of red.

I notice that PNP and MGA are nearly double their average volume.  Hopefully that is a good sign for tomorrow.

[davidslane]

Lately, my short term predictions have been crap (I guess I did say gold would rally big at the beginning of the year).


So, here's some thoughts.


For the ETF Digest:
http://www.etfdigest.com/davesDaily.php

Well, there’s always more to do but there are three things to be watchful for now; options expiration on Friday, a Monday holiday and a surprise [not so much now] interest rate cut. You can rest assured Friday could be very volatile with a holiday on Monday. There is little question the Fed is working the phones in frenetic fashion trying to fashion a strategy to pump markets and confidence higher.

It’s often been the case historically that if a Friday close prior to a long weekend is higher or lower the following Tuesday will follow-through in the same direction. If the Fed does something aggressive on Friday, for example, expect that condition to become exaggerated Tuesday.

With the awful day again today, we’re ready for a US Fed induced bounce which will last a few weeks.  Will they cut tomorrow by 50 points before the market opens?  That would allow them to cut another 25 points at the Jan 30 meeting.

But how long would such a rally last and will it lead to the big correction that Steve Saville and Robert McHugh are predicting would occur after a short few week rally?

McHugh is predicting a big Eliott wave 3 down correction after a few week oversold rally while Saville thinks the current lows will not be far off from what might be the final lows after a short term rally.


Fed cuts will cause gold to spike during the next few weeks only to see gold stocks tank as Saville said happened in the summer of 1974 when the overall market tanked after a big gold rally?
 

That would mean that after a big correction in a few weeks, would gold stocks stay stagnant for another 18 months while people move money to equities instead of gold during the stock equity “rebound”?


I hate to make short term decisions (because I SUCK AT THAT), but, if there is a nice rally the next two to three weeks and gold approaches $1000, I may sell most of my gold and silver and reduce some other stocks in anticipation of a Elliot wave 3 "crash" coming in a few weeks.

 

Uranium should recover with energy stocks after a correction.
But they may go down farther (is there a farther?) if the market goes down another 10%.


But I keep hearing 11500 on the Dow for a correction low.
Maybe as low as 11000.

If we rally to, 12800 will we see a 10% drop to 11500?


Would be nice to raise some cash in the next few weeks before such a drop.
(But what if it you raised cash and no drop happened? --- Or we just crash now?)


Here's some good reading from Steve Saville from his latest issue:
http://www.speculative-investor.com/new/index.html

Gold Stocks

Using history as a guide...

The gold sector has spent so much time moving in the same direction as the broad stock market over the past four years that most people have probably forgotten that gold stocks are, first and foremost, counter-cyclical investments (by "counter-cyclical" we mean that they tend to do best during periods when real economic growth is weakest). However, there are signs that the gold sector's traditional counter-cyclical nature is returning to the fore.

As noted in the latest Weekly Update, the gold sector's performance during the 1973-1974 equity bear market -- the most severe bear market in the Dow Industrials Index since the 1930s -- provides us with a good example of the gold sector's counter-cyclical nature. The example is illustrated by the following chart-based comparison of the Dow and the Barrons Gold Mining Index (BGMI). With reference to this chart, notice that the BGMI trended relentlessly upward until the final month of the bear market in general equities, at which point gold-related equities joined the broad market's collapse. Notice, also, that the BGMI commenced a 2-year BEAR market just prior to the start of a 2-year BULL market in the Dow.

If the gold sector is beginning to behave in a more traditional way than it has over the past few years (the past few years have been an aberration) then the biggest intermediate-term risk faced by investors in gold stocks isn't the potential for a large decline in the broad stock market; rather, it's that the crisis spawned by the large-scale mispricing of credit will soon either come to a conclusion or reach the point where its ramifications have been fully discounted by the financial markets.

The long-term risk is that governments and central banks will stop debasing their currencies, but this is not really a risk at all.

Current Market Situation

The AMEX Gold BUGS Index (HUI) reversed downward on Monday and then fell sharply over the next two days. Tuesday's quick decline coincided with considerable weakness in the broad stock market, while Wednesday's decline was prompted by a pullback in the bullion price. The main problem, though, was that the HUI began Tuesday's session at an overbought extreme. The overbought extreme is evidenced by the Relative Strength Index (RSI) shown at the bottom of the following chart, as well as by the steepness of the preceding multi-week advance and the fact that the HUI rose for 5 days in a row prior to Tuesday.

The HUI's decline over the past two trading days has been sharper than we'd normally expect from a downward correction to an on-going short-term upward trend, but this really just continues the pattern of the past several months. The gold-stock indices have become much more volatile since July of last year, falling further and faster than normal during the corrections and rising further and faster than normal during the advances.

The market's high volatility is making short-term outcomes even less predictable than usual, but our guess is that in price terms the bulk of the HUI's correction is already behind us. More time will probably have to transpire before the next advance gets underway, but the ultimate low for the current pullback will probably be within a few percent of Wednesday's low.

[Dr George]

As I said, GE's earnings will be imperitive to the market. It along with management discussion will be used as a target for the strength of global growth. Check out the GE video on CNBC, which highlights part of the reason why the DOW is down.
The biggest company in the index has taken a kicking the past month (but what hasn't).

Some predict a surprise rate cut tomorrow. Will it matter? Watch Cramer's take on financials on CNBC Video. Big Lyers. RY hit lows unseen since summer '06 today going into 47's... CM hit lows unseen since Feb. '05 - at the moment financials suck, in the long haul?

From what I gathered from Bernanke today, he and Bush have nothing yet for the package...
 
Down 300 on DOW and TSX... Could be a product of big institutional shorting, or holders liquidating whatever they have.

Soon there will be a great time for more cash to be infused into the market...
 
Pdn under 5.00, Rus.to around 21, Bwr.to @ 1.28, Dml.to @ 7.73, U.to @ 10, Tim.to @ 13.25, pd.un.to UP, Mre.to ooo, Agu.to???
Littles: Brd.v up on news, Fco.to @ .75, SRI.v hit .2, Jnn new lows, One of my fav's STG.V @ .3!!!
Deals, Deals, Deals!!!!!  ?

There is one reason why these may not be deals. One and only one, which impacts everything. The financial system. The financial system acts as the intermediary between a company and that company doing business. Without money, a company can't do anything.
Also, if liquidity is drained and funds are losing, debts aren't being payed, bankruptcies, foreclosures, etc, who will support share prices?

So, we are once again back to the doom or gloom scenerio. Is this the end of financial days? The end of business & commerce?

I think not, which is why I think in the long term these will all be winners. This is where the sane come in and pick up after the panic.

Is there still more? Probably, with everyone having the ability to short; no real impact felt from gas; relatively low unemployment still; no fix in sight for the financial markets; new lows hitting every day (technicals); no real reason to buy except speculation (fundamentals); political reasons; wars; global warming (new cold records established this week); COLD WEATHER USUALLY MEANS OIL GOES UP. It will be interesting to see if it makes a charge back up into the high $90's because the reason it is down is the slowing economy (low demand); Bernanke seems to be incapable of aid (even though a rate cut is expected, markets may still selloff).

Some panic, other's assume the ostrich position, the smart will buy solid stuff.
Look for high dividend yields so if stuff keeps tanking for months, years, you still get paid.

[rapid1]

You guys keep me from going further insane.   Thanks!  rapid1

[Croaker]

Yes I do feel anxious.

To sell everything and wait until the dust settles. My plan is still the same. As soon as my Speculative U stocks get back in the black, they will be sold. I am hoping this happens by April. I am not selling all my U's, just my little ones. I will still keep 5 to 10 (Producer and Near Producers) of them and sit on them and add or sell when needed. 

I sold KGC at $21 for a little profit and letting the proceeds go in the attack stash.  I will be buying more Gold, alot more.

Even with a 50 point cut know and another 25 maybe at the end of Jan, I still don't get a warm and fuzzy.  The housing bubble pop is just the top of the iceberg as the Banks are stating their loses for the 4th quarter. NOW the Credit card bubble is starting to shows its ugly head on the news a little at a time.

Housing problems + Credit Card debt = Consumers can't buy and Consumers are the engine of the economy.

I just see more trouble on the horizon. 

Hopefully its John Wayne and the calvery coming to the rescue..... But he is dead.

Sorry for the gloom and doom. Just how I see it. Hopefully I am wrong and the Fedheads come and save us.

[richmanch]

Well like I said in another post, if anxiety marks a bottom, than you could have marked it over the last few weeks or even months. Last year's paradigm isn't really working.

These markets can go lower, of course they can. Look at the S & P--looks like it wants to go down another 100. The question is how deep this market dives, and for how long. Will the US democrats bend over backwards to save the stock market? The cynic in me says that they might not mind some carnage leading into the election. As soon as Hillary Clinton becomes president, they'll get serious.

But I think we might have hit a short term bottom. After hours trading indicates that the momentum was carried away today, that tomorrow should give us a little rebound.

And I think some of these banks have to be nearing a permanent bottom--I mean, Washington Mutual is down about 75% in a year--that's insane.

Maybe the market stabilizes and just sucks a little for a few months (and not drop 4% every week), and uranium "decouples" and performs like the good old days.

But, the chances for Uranium hitting new highs this winter/spring seems very unlikely, imo. I thought in November, we had a good chance. Still, I have some skins in the game, never want to be out, never know what's going to happen.

[gadge78]

WOW.

at least when my portfolio goes down 6% each day... it represents less and less each day!!!

never thought i would have wished to have cashed out on aug 16th... but right now that day is looking pretty good.

[davidslane]

Between the pessimism here, and the pessimism from newsletter writers: Robert McHugh (https://www.technicalindicatorindex.com/Default.asp), Dave Fry (http://www.etfdigest.com/davesDaily.php) and Jim Sinclair (http://www.jsmineset.com/), one would think the world is about to end.

Those are true signs of a bottom.


Here's McHugh:

Fed Chair Bernanke said about the worst thing he could Thursday, that he wanted a Fiscal Policy solution to the current economic mess because Fed policy alone wouldn't work fast enough. Can you believe he essentially said that? All eyes have been upon him, looking to him for a solution, ergo, a surprise 50 or even 75 basis point rate cut. Instead what we got from him today is a request that Congress do something. That's a real confidence builder. Wall Street didn't miss the message. Stocks tanked. It may soon be time to call a spade a spade, that the Fed Chairman is in over his head. This is a no brainer situation, the Fed should give a nice surprise cut in interest rates. The Princeton textbook says you can't cut interest rates with the largest inflation in years going on, so the Fed Chair hesitates. Time to think outside the box, Ben. We may be headed for a depression if this keeps up. That is one way to kill inflation. Amazing.

The suggestion is that a tax rebate of $300 to $600 ought to do the trick. Try adding three zeros at the end of those figures, Ben. He expressed concern that this fiscal stimulus not exacerbate inflation. Is he kidding? Now he is going to get concerned about inflation? Little late, Ben. Phew.

The Dow Industrials plunged 306.95 points Thursday, closing at 12,159.21. NYSE volume was 118 percent of its 10 day average, with downside volume leading at 91 percent, with declining issues at 85 percent, with downside points at 98 percent, another 90 percent down day - panic. We either are at a multi-week bottom, or at the threshold of Hades. We took a small Traders Corner position on a bottom, but cannot rule out Hades. We are only 100 points from an official stock market crash from October 11th, 2007, a 15 percent decline over a few months. The small cap Russell 200 index is down 20 percent over the past few months, already a crash. If prices do not immediately rally, it means stocks are hitting the sweet spot of the ongoing crash.

Here's more from Steve Saville:
http://www.speculative-investor.com/new/index.html

Our experience has been that the most reliable bullish signals relating to put/call ratios are generated when the 10-day moving average of the equity put/call ratio moves up to near a multi-year high at the same time as the 10-day moving average of the OEX put/call ratio moves down to near a multi-year low. Such occurrences indicate that the 'dumb money' is far more worried than the 'smart money' about the market's short-term downside risk, since the trading of equity options is dominated by the public (the 'dumb money') while the trading of OEX options is dominated by professional money managers (the 'smart money').

The following chart shows that a bullish signal as described above has just been generated, meaning that the put/call ratio has joined a number of other indicators in suggesting that the US stock market is close to a bottom of at least short-term significance.

Our expectation is that a multi-week rebound will soon begin. This rebound will probably be followed by a drop to new lows, but bearish sentiment has become so pervasive that we are seriously considering the possibility that the ultimate low for the 'choppy' stock market downturn that got underway last July won't be far below the current level.

The general consensus is that if the Fed doesn't have an emergency rate cut Friday morning of at least 50 basis points (after Thursday's horrific, blundering speech by US Fed Chairman Ben Bernanke to the US Congress), we may see the start of a crash on Friday going into Tuesday (Monday is a US holiday).

Bernanke must make an emergency cut before Tuesday's open.
If so, stocks, gold and silver will run up for a couple of weeks, maybe stalling at the next Fed meeting on Jan. 30.  And then watch out below.

The US Fed is so behind the curve, it will take months to catch up.  In the meantime, I think this market has a long way to drop after a small oversold bounce.


Good luck everyone!

[davidslane]

Wow!!!

I didn't think the uranium stocks could get much lower.
I'm sure some have more cash on hand than their market values now.

Pinetree: $3.22
Mega: $2.24
URRE: $8.44
URZ: $2.52
Laramide: $4.22
UEX: $5.60

Really amazing!

[gadge78]

amazing but scary.... i do love good sales though. perhaps monday will be even cheaper!

i feel like hurling.

i broke the cardinal rule of using margin... but left myself a ton of room... all that eaten away as stocks plunge... with each U stock that drops below $5... the noose tightens.

as anyone seen a plunge like this?

ie. where the market is screwed as a whole... and the sector is taking a dive. i wasn't invested when the internet stocks bombed... but wasn't that just an isolated crash in that sector... as opposed to an economy that is thoroughly messed up?

if no one has money to buy these U stocks on sale... then what happens next!?

good times... i love learning life lessons. time to go figure out how to be a slumlord and make money in real estate (in CANADA).

argh.

[Depleted]

My TA still shows major weakness to the downside in the uraniums, as the volume is high, or active, which means capitulation time, I think. Many of the U's have had 6-11 down volume days in succession in the Nov bottom, so I suspect we are still in freefall for at least another 5 sessions (a week) or so....not good if you are long, but great if you are waiting to go long, but with this fast a drop, the smart money (and I'm sure there is A LOT OF IT) will be with the cat waiting outside the mouse hole to pounce.... As I expect when the U's settle down, they could rebound to the upside exremely fast. I am looking for a "Whipsaw" effect, as people finally figure out how all the uraniums are extremely undervalued, and will provide many years of solid growth potential....Be patient, Good Luck, and Good Trading....D

[Croaker]

WOW is right.  Just when we thought it couldn't get worse.  

On the bright side, maybe if shares are bought at these levels, you would hope and guess by fall 2008 / spring 2009 you could make a nice dime.

Did anyone see President Bush and his clan pushing for a Stim-u-less package to be put together quickly by both sides of Congress. Both sides are going to jump on this, they don't want to lose anymore face.

Between them and Fedhead, hopefully the push starts to work for us and we will see better days ahead.

My finger, toes and eyes are crossed.

[langman57]

I don't know guys...It just seems like a really bad dream. So many screw-ups, so many bad decisions by our leaders. So much debt. So little foresight. Seems to me it's time to pay the piper. I don't see any way out of this, and I think '08 is going to be a tough year. But I hope I'm wrong. And I'm in this for the long term.

Here's another big problem - we're paying Iraq 3 ways - we're buying their oil, plus bailing them out financially, and paying with our lives.  And to top it off, they don't even understand democracy, and might not ever. All at the cost of our own economy. What is up with that!!!

[richmanch]

I just think the short term fate of these stocks are tied to the broader markets. Where is the S & P going to be in 30 or 60 days? If it's 10% lower, and it well could be, I don't see how any of these stocks are going to buck the trend. Maybe this will be a short, steep downturn, and the markets will recover, but that might be may by the earliest, and who is going bottom fishing in may?