Thursday, June 18, 2009

“Phenomenally accurate forecasts” 

We waited in vain yesterday for the mood change that would have made the day even remotely interesting. Instead, the broad averages spent the day scratching little sores, so to speak, creating in the process a six-hour stretch of airless tedium for bulls and bears alike. Although we found relatively few trading opportunities worth sharing with subscribers, there were reasons to think it will be bears who come out ahead on the next move. Way ahead. Why so? Besides the obvious reason – that all bear rallies must end eventually – there is the psychological one that we discern in our own desire, of late, to get ourselves good and short on some giddy spike. Haven’t you been feeling the same way? 

Tsunami Scenario

For what it’s worth, we can recall several instances in the past, during otherwise quiet summers, when a slow, steady erosion of prices gave way to a precipitous collapse that caught Wall Street with its pants down.  And that is why we are telling subscribers to remain alert to the possibility of moderate selling that gathers tsunami-like power as the day wears on. We have a hunch the day will begin, not with a well-accustomed flurry of uninspired buying at the opening, but with a gap lower that draws in the those who have been accumulating shares on dips. One of these days, we suspect, they are going to experience the kind of dip that will recall what secular bear markets are all about. The Dow will shed a thousand points in just a few days, and all of those green shoots will turn into tumbleweed.