The double voodoo spell I cast last week is working, producing a reasonable pullback from the extended stock prices of last week. The S&P 500 has a broad base of support in the 850-870 area so buyers on the sidelines might step up their IF news does not turn to the worse. If one glosses over the Obama V move down & up in a few weeks around March 1, the market is really in a huge, long term base since last fall. Small stocks & banks have led. Why ?
That's easy. Those companies were being priced for BK. We now now most of those BKs will not occur as the junk bond market is open again. Companies with cash flow can refinance.
Bears are being bolder now, making strident calls for more doom. Some of these calls are quite stupid. Roubini writes that the Chinese yuan will become a "reserve" currency sooner than expected. I guess he doesn't read this blog. I destroyed that prospect a couple weeks ago in my series on "World Reserve Currency".
I will spend some time today going over charts and news on my Obama Fund stocks. I plan to slowly add to some of those positions to raise the fund's leverage back to 150% long. My thinking is that by mid-summer, the recession will be obviously ending and investors will start pricing in much better 2010 earnings prospects. I might cull some non-performers, too.
No rush, though. This pullback might run a few more days. Option expiration is Friday and the traders like to play games then.
Word of the Day
"Salubrious" - adjective [$10]
Salubrious means favorable to or promoting health or well-being.
Sentence: Like a couple glasses of red wine for the adult physiology, intermittent modest pullbacks are quite salubrious for a bull market. And again similarly, both excessive wine consumption and large pullbacks are bad.
Le Mot du Jour
"Voilà" - an exclamation; and its complement, "Voici"
Voilà means this/that/those/there/here is/are. Voici means expressly this/these/here is/are. As you can see, one uses voici when one expressly wants to indicate something nearby or close in some way. Voilà can be used for both if no distinction is needed.
La Phrase: Voilà le repli des valeurs que j'attendais.
Sentence: This is the pullback of stock prices that I was waiting for.