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Teetering On The Edge

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Mark?s Market Commentary ? January 27, 2003


Thanks for keeping up the posts on Friday when I was in Mexico.


As usual,, the highly volatile ex-girlfriend left in the apartment had an unexpected nervous breakdown, and the Dow and S & P smoked the December lows on Friday.


And Da Boyz were busy at work this morning, pushing the futures down big on the open. Of course, the shorts all bring their stops down in the PreMarket, and when we opened, the usual hysteria spike occurs just high enough to take out everyone?s stops set at yesterday?s lows.


What will happen next? A bounce should have materialized today, but it didn?t happen. Maybe tomorrow? How low will the depression episode go?


Needless to say, there is mass hysteria and confusion among the Riverboaters. What happened to INTC? Dan ?The Greaseman? Niles recommended it at $21 in December, now it?s at $15? Only a month later?


What about Jimmy Jones Cramer recommending VZ, SBC, JPM, EK, and all the rest of the ?no-brainer? dividend stocks that made those high volume chart breakouts? Already down 15%?


Buddha has been on edge, waiting for the usual hysteria jam which appears out of nowhere.


?Amazing how this nonsense just happens over and over again. PigMen now discounting down into bomb dropping season after playing momentum up into 'no earnings' scam season. Tuesday actually could be a seriously infamous one. I will not underestimate the attempted intervention of Al Green at the critical neckline junctures. You don't think the Lizard King knows exactly where we are on the chart? He hits the refresh button 15 times an hour. This is a sick megalomaniac obsessed with attempts at control. Note how many other times he has juiced the indexes with drug at danger bottoms.?


?Wonder if all the neckline failures trigger program robotry soon enough. Massive desertion of hapless long positions. Eddie Bauer in Ford Expedition speeding thru cross walks to make it to Fidelity on time to close all equity positions forever. 90 year old ladies pancaked in traffic in front of brokerage palaces across nation.?


?The history of this bear predicts major intraday intervention by Bosses, Hoods, conmen, Giant PigMan and the grand daddy of them all, Al Green. No way he lets this thing continue dropping past the neckline. No way. Sorry. Countless times before at critical areas we have seen alarming rocket shots come out of no where. This time should be no different. This criminal fears most, a Black Monday scenario. An 87' type scenario. He remembers this all too well. With his scawny neck on the chopping block this time around, I think we see serious efforts at Market propping. The may even bring out the super sized, steel tipped, titanium reinforced 46 EEEs.?


?Due to the large amount of drug in the system and the sickness of patient, all these crap stocks are now Dover Sole and could bounce like mad on any perceived news nonsense or if Bush declares war in a fit of hysteria during an interview with Andrea Mitchell. These times are so chaotic, so extreme, it is only fitting that we have a crowd of debting, Texas flim flammers in charge who have a shared history amongst them of being terrible businessman. I just think Greenspan gets tired this year and kicks the bucket. This is my sense, nothing more. Impotent old man finally being exposed for what he is; ridiculous clown in fading, blotchy makeup and large red rubber feet. Pathetic 'leadership' all the way around, utterly pathetic, devious and dangerous.?


?I suspect there is a bounce into tomorrow?s speech and then gamers will sell the news and short the market heavily from there. A bounce into Wednesay morning would be ideal setup now, for this reason it probably won't materialize. But now that Dow Sow neckline has been pierced I would expect a bounce back up to retest, that?s the big short signal. This Market is so chock full of con artists, hucksters, Texas flim flam, bloodthirsty warmongerers and media shills that it makes the child slave trade in 'Oliver Twist' read like a night out in Disneyland. By the time this implosion finally flatlines the common sucker will hate Wall Street so much that I wouldn't rule out a 'wild in the streets' type run on banks, ATMs etc. like we are seeing daily in Argentina. By then Al Green should be long gone, either saved by a cardiac arrest or retired to the old age home for idiot economists.?


?Forget trying to trade on the news. You will always be getting in at the end of the move right where all the crooks and hoods want you. Thats why the heavily mammaried Bartiromo has a book out on trading the news. Because it can't be done but it keepers hopers and addicts hooked. Its an appalling play for their wallets, just one of many. Only news I would trade is stuff of great magnitude or longer term nature. Say if Al Green dies, that?s tradeable. If bombing starts. That?s tradeable. That kind of crap happens so fast that the Pigmen can't position to game it as well. The rest of it, well they want you to trade the news since its old news by the time you hear it and they need somebody to distribute stock to at the top. Your much better off buying a rug in an open bazaar in Istanbul than trading news with these filthy, conning hogs.?


Note how the HeatMappers who were chasing the Asian Exotica, dreaming that they could actually capture one, bring her home to the states, invest in some breast implants, and live happily ever after. What happened to that gameplan?


SINA was smoked for 15% today.


Despite the recent destruction, no money has really left the market. Not yet. Those who were caught looking up the dress of FRE and FNM simply bailed out and are now hiding in stocks like LEN, and KBH.


But now those stocks broke today. Where else to hide? EBAY? SYMC? More money flowing around in the Big Circle. We will have evidence of some wholesale fund liquidation when ALL the stocks start getting sold. Watch the big caps first, since they are the most liquid and the easiest to sell.


Today?s front page C1 article in The Wall Struck Journal sums it up:


?Over Optimisim on Growth Rates Is Rampant, and the Estimates Help to Bouy Market?s Valuation?


?Stock anal cysts are unchaken in their optimism, if delusional, belief that most of the companies they cover will have above average growth rates during the next several years. Overly optimistic growth estimates also show that a lot of things have not changed. Research remains rosy and many believe it always will.?


?Hope springs eternal. You would have thought that given what has happened the last three years, people would have given up the ghost?, says Mark Donovan of Boston Partners.


And what about gold? All I hear is the incessant harping of the impending collapse. Wasn?t that supposed to happen at $351? And at $362? And finally at $372? Yet the gold shares have already priced in the imminent collapse to the $325 zone. And the poor nervous short sellers have their finger on the ?Buy to Cover? button, ready to push if gold doesn?t correct soon.


And silver is an even bigger joke. The shares are languishing, and silver is being pushed down again. The big surprise this year will be the explosion in silver, not gold. Too many are shorting silver because of its weakness, yet the supply/demand equation is even more out of whack in favor of the bulls.


Europe needs to be watched carefully. Looks like a full blown crash happening in London. Fund managers are stunned, not knowing what to do. The Dow Jones Stoxx 600 is down a record 11 straight days, the third longest decline in history, and the FTSE has already taken out the October lows.


?I?ve never seen investors being so scared?, says Rolf Elgeti with Commerzbank. Yet the anal cysts with major brokerage firms are sticking to the generally upbeat calls they issued for 2003 issued less than a month ago, and many investors are not altering their portfolios much. Instead, they are are essentially tracking their benchmarks and avoiding any major bets.


Mark?s Translation:


?Investors are shocked at the recent declines, yet they continue to hang on to hope provided by the Experts. Fund managers are not selling. Instead, they have their finger on the ?Buy? button for stocks like Infineon, just in case a rally materializes. They will not be fired if the market goes down. But their jobs are in serious jeopardy if they fail to HeatMap the Supermodels in the event of a rally.


Insurance companies remain the core problem in Europe. Overbloated with equities, too much concentration in U.S. stocks, and the primary ?bagholders? of risk products offloaded by U.S. bankers. Note how the insurers are not revealing what is really happening inside their portfolios:


?For the most part, insurance companies have yet to disclose much about the state of their investments. U.K. regulators have suggested most insurers would be fine if the FTSE dropped to 3,500, and many if it were at 3,000.?


Oh really? Do you think that 3,000 will hold if the U.K. bagholders suddenly get some cash calls from MBI and ABK? And who is holding the wrong side of the U.S. Dollar trade? Where was that risk offloaded to? Kenya? Afghanistan? Cairo? Or London and Frankfurt?


Over on Wall Street, there are going to be some more firings soon. Not a single IPO has been pulled off yet this month, the first time since 1974.


As far as the market action goes, this is the weakest I?ve seen the market in two years. Definitely has the feel of something TEETERING on the brink. No other top has collapsed as miserably as this one has. Could be the start of a ?mini-crash??


Since I have been away and have been unable to watch the tape recently, have we had any 90% volume down days recently? Remember, we had several last February before the big March Madness Squeeze. So we need to see a few of them come in before covering in advance of a big bounce.


Position Summary:


No changes. Still looking for another bounce to short into.


We are 47% short, 32% long, 21% cash.


Half Short:


MBI at $50

KLAC at $41

CYMI at $39

NVLS at $35

INTC at $18

MSFT at $56

WHR at $56

INTU at $49

AMGN at $53


Quarter Short:


FRE at $68

LEN at $56

COCO at $40

NCEN at $28



Half Long:


GG at $11

HL at $4.55

BGO at $1.31

PAAS at $5

DROOY at $3.35

GLG at $9

GSS at $1.72

WHT at $1.05

KGC at $2.35

HMY at $16

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damn your good...


and I have been saying the same thing all along,ALL charts must be broken and broken hard before a bottom is possible.mmm should be at 35 bucks when this is really over...and ebay should implode far worse.many stocks refusing to break,even with msft's decline in the last few weeks you continue to see massive squeezes on that pos(it jumped 70 cents in the last hour today).


and still most people have not sold a share,wait till the forced selling occurs with monsterous volume for days on end..... and maybe we can put in a real bottom one day!

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Mark, fabulous writing as always. BTW, found a potential groupie for you at the prubear chat site. The first post is a well reasoned argument by "tradermike" who may have popped up here, and should be required reading for everybody.

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just a little snippet to add to my previous post(from crudlows site)still way too many believers....





Kudlow will be right about market gains this year


I read through some of the messages and it seems that most of you think that stocks are going to continue to fall. Go ahead and keep your money in cash then. I agree with Kudlow that the market will see a large gain this year. When I see him getting this kind of negative response to his predictions, I am all the more inclined to agree with him. When the average people are afraid of stocks it is the best time to invest.

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yes the insurers are a very big probelm espacially in germany.


Deutsche Bank, Allianz and MunichRe ARE germany. Look at the charts of Allianz and Munich Re and you see that they are in sell off mode since months!


Also good point about infineon, during october rally they jamed that one up like crazy.


A very nice short should be SAP (also listed in new york).



The key to everything is the dollar. Dollar collapse began in april/may last year, stock market lowws came much later.


Look at the monster style upmove in EUR/USD since december and you will know where the stcok marekt will go in comming months.



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Watching 836 for a breakdown or bounce. If we get a bounce, it should be a short lived affair, a few days. the target could be as high as a 50% retrace 860-880. From there, wave three of C or 3 will begin. In my opinion, we are in wave one of three of 5 or C.

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Got 60K in Fidelity Interbond (FTHRX). It's trading near all time highs.

Ain't gonna wait for the rush when bonds get sold with stocks.

Getting full out in the AM. They can have the last few pennies

of price before it goes down hard with everything else.


Market looks sick to me. B4 and Hyper have me scared enough.

Going full cash in 401k and buying gold this week at market.

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"Looks like a full-blown crash happening in London."


Indeed it does, with the FTSE down a record eleven (11) days in a row, returning it to late-1995 levels. You have to wonder, is this economic or political?


During August 1974 -- the month Nixon resigned -- the DJIA fell in 11 of 12 sessions:


1974 AUG 07 797.60

1974 AUG 08 784.90

1974 AUG 09 777.30

1974 AUG 12 767.30

1974 AUG 13 756.40

1974 AUG 14 740.50

1974 AUG 15 737.90

1974 AUG 16 731.50

1974 AUG 19 721.80

1974 AUG 20 726.90

1974 AUG 21 711.60

1974 AUG 22 704.60

1974 AUG 23 686.80


Is the FTSE telling us that Tony Blair -- Bush's transatlantic sock puppet -- is going to lose a no-confidence vote in Parliament?


Well if so, all I have to say is ... COOL!

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Great commentary as always, Mark.


MH nice to see ya again!


I'm starting to think we won't get the "big bounce" everyone's looking for, which means it's probably right around the corner. Almost pulled the trigger on some calls today to hedge, but decided against it. The market's going exactly as I'd expected (hoped?) right now. Makes me a little nervous.

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as a former DittoHead (Rush sorta makes me sick these days), there was an interesting guy subing his show this afternoon. Didn't catch it all because I was at the bank wiring more money to my metals broker (hiyo silver, away), but the guy was saying the reason the market was going down was because of the CHARTS!!!!! Can you believe this?? A TA GUY ON NETWORK RADIO!!!! All shorts, under normal circumstances, should be scared. He, however, painted a picture of more to come, scaring John Q now, perhaps, more than the shorts. The guyl doesn't seem to get the dollar situation though, making the market movements sound more like ouija-board market timing. Whew!! That was close. Once the public really understands this market, I'll need to figure out another way to make money.

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The problem with gold is that a very likely scenario is: a sudden, sharp spike straight up, followed very quickly by a sudden, sharp sell-off.


Let's say up, first, to 400, just because it's such a nice round number.


Then, straight back down to about 300, for similar reasons.


You wanna trade this? You think you're good enough?


I'm not. I'll wait.

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An equally troubling circumstance is the poor performance of the treasury market. Sure, the long bond isn't getting smoked, but it isn't moving up on equity weakness as you would expect. A frightened bond market would shut the door on the only parts of this disfunctional economy that are working, i.e., housing and autos.

It all smells of foreigners heading for the exits, both in their home countries and here.

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