to go long, time to go short, and time to go fishing. "Jesse Livermore"
March 1, 2003
MARKET OVERVIEW:
I see no need to waste your time or mine by rehashing the things I talked
about in my daily updates all last week. Nothing much has changed, in my
analysis or in the charts.
The only fresh developments have been on the geopolitical front. Today Turkey
first greenlighted the deployment of American troops on its soil, then took
it back, leaving the situation there muddled. And one of the Al Queda
masterminds of the 9/11 atrocity was captured in Pakistan. The first
development, assuming Ankara ultimately grants the U.S. permission to launch
a second front from Turkish soil, takes us another step closer to war. The
second takes one more bad guy off the board. As for market impact, they
probably cancel out each other.
The market continues to trade in a very narrow range and on extremely light
volume, with mostly daytraders and other cowboys accounting for most of the
action. With the market trading up one day, down the next, only excitement
junkies are having any fun. Unless you're interested in scalping nickels and
dimes, there's no reason to play along.
As for trying to preposition yourself for a major break out of the trading
range, I figure you have at best a 50-50 chance of getting the direction
right, and it would be pure luck if you did. There is really no telling what
the market will do if and when the bombs start to fall. Supposedly, the
conventional wisdom is that the market will enjoy a monster rally when the
shooting starts. But so many pundits have pointed this out, with a superior
air, that they themselves may actually represent the conventional wisdom,
thereby making the original conventional wisdom the contrarian, correct,
position. Confusing, isn't it? But no more than all the other analysis out
there, both fundamental and technical.
I freely confess that I have no idea what will happen when the balloon goes
up. I'm content to wait and see. What I do know, or think I do, is that even
a highly successful military campaign in Iraq won't change the domestic
economic picture (except perhaps for the worse, as we are then committed to
rebuild the country). If we do get a war rally, it almost certainly won't be
the start of a new bull market. Rather, it will be a cyclical bull move
within a secular bear market, and should probably be used to sell stocks.
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