Saturday, November 29, 2008

Did We Miss the Bottom, Again?

You would think so judging by the giddiness of our market reporters, who assure us this time, we've reached a bottom. Reasons such as Obama has picked his cabinet, the government has taken on 8 trillion in debt, the Citi bailout, the automotive bailout......have all been given. And we've just seen the biggest one week rally since 1932! Does that fill you with optimism? It sure does with me. I'm very optimistic that this fally will die shortly and give us ample opportunity to short and possibly re-short retailers and companies relying on consumer dollars to stay afloat through the dismal holiday season.

In case you missed a few figures from the last week while mesmerized by the triple-digit daily Dow gains, let me refresh for you. New housing starts were 430K, even lower than the NAR projected total of 450K, which is impossible by the way. These are the lowest figures since 1991. Durable goods orders fell by over 6% in one month. That's unbelievable and surely no sign of a bottom. The markets still finished down 5%-8% for the month, despite last week's unbelievable run. Gold had it's best month since 1999.

Our Citi theory managed to play itself out over a single week. I bought, it crashed, government steps in to bailout, and voila, right back where we started plus a gold run. I'm going to hang on for now as I think the bailout has placed a bottom on the stock. We'll still be watching for an oil collapse through hedge fund redemption season and almost root for another 1K point gain prior to the real hedge fund dumping. I mean, some of the homebuilders doubled in price this week. Doubled. Does anybody really think KB Homes is twice as valuable as it was a week ago? I don't, and I'll root for it to triple this week and enjoy the ride down.

So happy Thanksgiving everyone, and enjoy the show the next couple of weeks!


Anonymous said...

Ax... We missed "a" bottom... the question is did we miss "the" bottom... Wall Street Consfidence Men will spout their thoughts... Actually Steve Lieb is offering a conference how we can take advantage of teh "bottom"... and I for one am not buying it!!!!

Let's get another list together... that 1k addition would suit us well!!!

DCNorth said...

Hello Ax,

Alright. So sales on Friday are up year-over-year but the surveys are saying that people are mostly done their shopping!

MDC might be another worth looking at. Financial Services and Home bulding? In my favourite places, California, Nevada and Florida.

I'm hoping for the pop with Anon!

Tiger Coach said...

DC... Everyone...everyone is cutting back on holiday shopping. The chief consumer of the Davis house is done for the season!!!

Anecdotal ideas... I wonder which gift cards seem to be the least popular... could also give insight to the retailers who will be taking on water this Holiday season... SHLD deserves another look... Footlocker may be another... Ax is right with ETH...

I expect us to break through the "old" bottom!!!