domingo, 27 de abril de 2008

There Is Plenty to Fear in This Market

The markets are being manipulated by hedge funds probably a little more than usual. Thursday’s move in the Cara 100 US-traded ADRs in India were given a huge boost, and Friday the BSE 30 (India’s main equity index) was up +2.42% to 17126. The same thing occurred with the main US-traded Japanese stocks, and Friday the Nikkei 225 of Japan was up +2.38% to 13863. Yet, the consumer and business confidence is tracking the economic and corporate profits lower.

Friday morning I watched with amazement as Bloomberg trotted out some old-timer money manager to say he thought that GE (GE) was in fine shape, headed to 50. I saw the same thing in 1999 at the market top.

I do not accept market leadership from Financials or Consumer Discretionary (many of the US retailers really popped Thursday) during an extreme credit market contraction, particularly when inflation is roaring, and the housing industry sinking. I suspect that these markets are being promoted while organized networks of bankers and their Friends and Family are selling and shorting.

I have said all along that the world’s other major G-7 economies of Japan, Europe and the UK are in dreadful shape and that when the news started to sink in, the Euro would sink against the US dollar, causing a massive sell-off of commodities. We have seen that last week in precious metals.

Gold stocks are the caboose in the market train and the last car over the roller-coaster peak. The Toronto Composite index took a hammering last week, down Thursday -103 (-0.74%) to 13966 and the Toronto Venture index was even worse, falling -38 -1.50% to 2479.

Some of the junior miners have been beaten up, and the picture is no different than the stock charts of 1981-2. I suspect it will get worse, and the high-cost, high-burn rate, weakly-financed juniors are in for more downside. This is the time in the market when even stock promoters for the juniors have to look themselves in the mirror and decide to stop drinking their lemonade. I wouldn’t want to be in many of these stocks without (i) confidence the picture was going to change, and (ii) my margin was cleared, and my outlook was long-term.

That’s how I see it anyway. I only point this out because I cannot stand to see another brain-dead or massively conflicted Wall Streeter tell the TV audience there is nothing to fear in this market. I think the NASDAQ has about -15% downside risk and the DJIA possibly double that.

That’s just one person’s view.     

Nenhum comentário:

Minha lista de blogs