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The Grind Lower Continues


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Nice "kerching" day overall. Here's my alternative girlfriend of the week.

 

I woke up one morning with her in portfolio after running with the bulls - Her name is FannyMay.

 

PS: Acknowledgements to uglypeople.com who probably stole it from someone else..

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Interesting comments on volume from "Rev SharK' at Realmoney.com:

 

"Once again, volume looks like it is going to come in on the light side. I'm not sure why that has been the case lately, but it doesn't strike me as a sign that a quick turn is on the way. Is it a result of apathy, indifference, a move to other asset classes or just a lack of conviction?"

 

"In my mind, volume is the easiest way to measure passion. When we move, up or down, on big volume, it is a sign that feelings are intensifying. The lighter the volume, the more random the action and the less momentum we see."

 

"It's interesting to note that NYSE volume has recently been surpassing Nasdaq volume. According to IBD, the ratio of Nasdaq volume to NYSE volume is at 85.2%, which is not far from the five-year low of 79.2%. This is generally viewed as a bullish indication."

 

"The logic is that the Nasdaq tends to attract a greater level of speculation than the NYSE. The Nasdaq is heavily weighted with technology and biotechnology stocks that tend to attract investors who are comfortable taking more risk in hopes of bigger gains. When traders give up on these stocks, volume on the Nasdaq will fall relative to the NYSE and indicate that the hot momentum money is out of the market and waiting for the opportunity to buy again. When the speculative money is on the sidelines, a bottom should be near. Or so the argument goes."

With LU, AOL & NT and a host of cheap stocks on the NYSE comprising the most active lists, I thought the speculation rule only occuring in the Nazgap was thrown out the window. Who would argue those stocks aren't speculative proxies?

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More classic Cramer

 

The Winners of the New World

 

How did this bizarro world where nine-tenths of the companies I have followed as a stock picker for the last 20 years are losers and one-tenth are winners? To answer that question, you have to throw out all of the matrices and formulas and texts that existed before the Web. You have to throw them away because they can't make money for you anymore, and that is all that matters. We don't use price-to-earnings multiples anymore at Cramer Berkowitz. If we talk about price-to-book, we have already gone astray. If we use any of what Graham and Dodd teach us, we wouldn't have a dime under management.

 

So how do we sort through which stocks get bought and which stocks get assigned to the waste bin?

 

We have a phrase on Wall Street. It's called raising the bar. If you can raise the bar, or brighten the outlook for your company, if you can see your growth accelerating, your stock will go higher and you will be given the currency to expand, acquire and do whatever you want. That's the secret of the quintessential New Economy stock

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More classic Cramer

 

If we use any of what Graham and Dodd teach us, we wouldn't have a dime under management.

Let's see.

 

The most well known disciple of Graham and Dodd, Warren Buffet, is the world's 2nd richest man.

 

On the other hand. . .

 

Cramer, the "useful idiot", is shilling stocks on The Stock Shopping Network,

a.k.a. CNBS.

 

Btw, the original "Security Analysis" (1934) by Graham and Dodd (not the recent watered down versions post-Graham) is the best book on the market ever written. As judged by the number of disciples whose performance record have never been matched by any other approach. It's essentially a course in forensic accounting.

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I'll let you guys in on a little secret.

 

Two weekends ago, Jimmy Jones Cramer was interviewed live on an obscure AM radio station here in Los Angeles on a Saturday morning.

 

When nobody is listening, of course.

 

He told the radio host that he SOLD OUT OF THE STOCK MARKET IN SEPTEMBER 2000 and has been in BONDS and GINNIE MAES ever since.

 

He said he still played around with some stocks, but they were less than 10% of his portfolio.

 

He also admitted that he amassed such a fortune in the bull market, he could really care less about stock market investing for the rest of his life.

 

Hence, his new foray as a television star.

 

Cramer's stock market days are over. His TheStreet.com site runs without him, and he could really care less about the market. He's still trying to sell it to CBS MarketWatch.

 

His primary goal is to become a Hollywood/New York entertainment celebrity and eventually run for political office.

 

So there you have it......

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Understanding volume is so simple, yet so many analcysts overanalyze it to death. Light and declining volume is bearish. Heavy volume is bullish until it reaches climactic levels. Volume always declines on bear market declines, and increses as intermediate and final bottoms are approached. I's common sense. Light volume is bearish because it does not create commensurate liquidity. HEavy volume builds commensurately greater liquidity, eventually enough to turn the market.

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Doc:

 

Is the volume in you S&P chart in 1970's the volume for S&P index? It seems that the number (200K) is too low for the total NYSE volume. I noticed that the volume in DJIA chart in mid of 1960s was around 15M, which must be the total NYSE volume.

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Simple Guy again tips his hat to Mark to Market commentary, my God are you a brilliant writer my friend, absolutely brilliant.

 

And yes, my doomsday scenario is slowly unfolding is it not? Which is why for the first time in over 5 months, SG has kept his 200% Shorts on for now 2 weeks and 1 day straight... without so much as a THOUGHT of covering.

 

I'll let y'all know when...heh heh

 

Thanks again Wndysrf, you are truly.. THE MAN

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