Heyer Capital, LLC

investment management and timely advice from a local CPA (Fox Valley, Wisc.)

Investors Business Daily Meetup notes

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Here are a couple of nuggets from last night’s Meetup:    

These two graphs (link 1    link 2)  are visually persuasive that the stock market doesn’t like recessions. The odd thing about recessions is that it takes the National Economic Bureau several months to look back and affirm that “yep, we were in a recession back then.”  Of course the surest way to figure out you’re out of a recession is to note when the Congress passes their “recovery” legislation.  It always seems to come out after the recession. (But just in time for the election.) 

The NYSE Bullish Percent is below 20% and at its lowest level since Aug 1998. It’s not a timing device, per se, but it provides some context of sentiment. Historically rebounds off these levels offer extremely favorable risk-reward profiles. 
Check out the free Ticker Rain chart that shows which stocks are being charted on Stock Charts.com. What does it mean that Gold and VIX are the most charted at this hour?

Is this an analog to the five year rally from 1932 leading into the 50% crash in 1937? Chart here

If there was a good point to yesterday, it was the action in the big financials.  Perhaps the interest spread is enough (post rate cut) that the big pigs (piggy banks) can earn their way out of their mess.  Plus a decent spread encourages them to lend, which they have been reluctant to do.  
The hammer yesterday (spike downward but closing near the high) parallels the July bottom as well.   Remember that 19 of the 25 biggest single day returns in the S&P500 have occurred between 2001-2003.  IF we get a snap-back rally, expect a doozy.  Personally, I will be selling to that strength. (see 1937, above.) 

Bear markets are for watching, reviewing, learning, and introspection.  Watch lists here should be built up on earnings growth, relative group strength, and stocks that have held up well near their 52 week highs.  Nice tight charts in the face this carnage are golden. 


Written by heyercapital

January 23, 2008 at 7:53 am

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