Thursday, December 13, 2007

Crossroads




At the end of November I wrote about the BPFINA as a contrarian indicator and it responded with a 12% gain in the financials until recently. I was hoping the FED would cut aggressively but they did not. Right now the market has to solve this on its own. The indicator is in no mans land at the time being. I was hoping for a positive reaction to Lehman Brothers Holdings Inc. (LEH) whose executives said they are optimistic they won't have to write down another $830 million on floundering fixed-income assets in upcoming quarters, despite a slowing economy. The financials are down by an average of 2.5%, this is a bad sign.

Next week Goldman and Bear report, we need some good reports to get the financials going again.

Posted by prudentstockinvestor M.D. at 1:57 PM

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$BPCOMP

$BPCOMP
Extremely Oversold

Regarding Chart: BPCOMQ

This is the lowest close seen in years, usually a sharp and violent rally follows these moves enhanced by short covering, this is no time to short and start making a shopping list.

Bear-ly Hangin" In dustrials

Bear-ly Hangin" In dustrials
Dow Graph: 11/20/07
The Dow looks like its fighting for its life here at the level. It's no surprise there was a vicious bounce off the trend line as shown in the chart. Unfortunately, the last time we had that five hundred point reversal day was caused by the Fed stepping in, there has to be a similar event that helps the market or there is more pain ahead. The Fed minutes said nothing the market really liked, we sold off hard and bounced back hard as we hit support. This was just a reflex rally we may have to get one more really painful selloff to get around 12500.