Go to Jeff Salisbury LWGate Home Page.From: "Lin Wells" <linwells1@charter.net>
Subject: RE: [CANSLIM] Low Number... a bit OT
Date: Wed, 25 Sep 2002 17:05:25 -0500
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Thanks for this response. I don't want to belabor something you
probably don't want to labor - but if you will, what does the following
mean in the context of your analysis
And its the end of the month (think markups).
Thanks,
Lin
- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Eric Jaenike
Sent: Wednesday, September 25, 2002 4:46 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Low Number... a bit OT
This rally has all the makings of rapid failure. Look at what happened
here. The markets got oversold right into the natural reversal area of
the July lows, which many are looking for as the area for the formation
of a double bottom. The market bounces, on poor volume, with the SOX,
the ultimate speculator's tool with the worst fundamentals, leading the
way. And its the end of the month (think markups).
The double bottom has been highly anticipated. The smart play was to get
long at close yesterday (or play the ETFs immediately after hours on the
lack of blowup announcements after the close. They trade in some volume
until 4:15, although afterhours trading is oh-so dangerous). Risk reward
is very high for that play. Then, when the secondary players get long
today (and possibly a bit for the next couple of days, aided by end of
month markup) and drive up the market, close longs and get short again
into the rally failure. IMHO.
We have just transitioned from the up momentum market off the July
oversold low to the current down momentum market. IMHO, this downside
momentum has not run its course, and, in fact, has just gotten started.
This short/medium term momentum needs to be completed before one should
even think of taking the long side.
We are still in the middle of warnings season, and things have looked
ugly to this point. There are a lot of threats facing this market,
beyond Iraq. Anyone notice the Brazilian real? It is now trading BELOW
where it was before the IMF bailout, as the leftist Lulu looks likely to
win the election. We will probably lose South America shortly thereafter
(having dropped $30 billion in the process, but I digress). I don't
think that event is priced into the markets yet.
There is one other event that has not yet received the press it
deserves, but probably will shortly. There is significant liquidity risk
right now. There is $1.5 trillion (yes, with a "t") of enery/telco debt
floating around right now. That debt is getting floated right now
through "life support" (ie Japan style) capitalism. The time is drawing
nigh, however, when that debt will have to be crunched. If the banks
freeze credit because they have to write down this debt (think JPM, the
worst offender of them all), good customers will get frozen out of the
liquidity they need to operate. And that would be very bad for everyone.
What happens if that debt gets crunched right when we lose South
America? Bad things, IMO. I have very serious concerns about this
market, and am not sanguine. I am of the opinion that this market will
bottom at a level much lower than most people think (although, as a
canslimmer at heart, I recognize that my opinion means nothing. The only
opinion that matters is that of the market).
There are, of course, as myriad of other problems facing the market that
I won't bore people with.
In the interest of disclosure, I am talking my book. I am still net
short, but took down a lot of SPY to hedge my shorts this a.m. (I should
have done in last night, but thought I could poach the open, which was
stupid. Regardless, I will start closing that long over the next few
days).
Sorry for taking up so much space.
Eric
Spencer48@aol.com wrote:
Kelly:
When the market makes a new low, the first day in a rally will show few
"new highs" because stocks have been following the market down.
I imagine that's why WON says it takes a few weeks to see if leading
stocks (which at the market beginning is at their nadir) will break out.
jans
In a message dated 9/25/2002 4:27:18 PM Eastern Daylight Time,
kelly.short@fw.us.neoris.com writes:
<< Interesting that on this high volume up day the number of new 52 week
highs (price>$12, Amex, NSDQ, NYSE) was 10, which is the average daily
number
for the past week.
>>
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<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Thanks for this response. I =
don’t
want to belabor something you probably don’t want to labor – =
but if
you will, what does the following mean in the context of your =
analysis</span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'> </span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span =
style=3D'font-size:
12.0pt'>And its the end of the month (think markups).</span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span =
style=3D'font-size:
12.0pt'> </span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span =
style=3D'font-size:
12.0pt'>Thanks,</span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span =
style=3D'font-size:
12.0pt'>Lin</span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span =
style=3D'font-size:
10.0pt;font-family:Arial;color:navy'> </span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
face=3DTahoma><span
style=3D'font-size:10.0pt;font-family:Tahoma'>-----Original =
Message-----<br>
<b><span style=3D'font-weight:bold'>From:</span></b>
owner-canslim@lists.xmission.com =
[mailto:owner-canslim@lists.xmission.com] <b><span
style=3D'font-weight:bold'>On Behalf Of </span></b>Eric Jaenike<br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> Wednesday, =
September 25,
2002 4:46 PM<br>
<b><span style=3D'font-weight:bold'>To:</span></b> =
canslim@lists.xmission.com<br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> Re: [CANSLIM] =
Low
Number... a bit OT</span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt'>This rally has all the makings of =
rapid failure.
Look at what happened here. The markets got oversold right into the =
natural
reversal area of the July lows, which many are looking for as the area =
for the
formation of a double bottom. The market bounces, on poor volume, with =
the SOX,
the ultimate speculator's tool with the worst fundamentals, leading the =
way.
And its the end of the month (think markups). </span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt'>The double bottom has been highly =
anticipated. The
smart play was to get long at close yesterday (or play the ETFs =
immediately
after hours on the lack of blowup announcements after the close. They =
trade in
some volume until 4:15, although afterhours trading is oh-so dangerous). =
Risk
reward is very high for that play. Then, when the secondary players get =
long
today (and possibly a bit for the next couple of days, aided by end of =
month
markup) and drive up the market, close longs and get short again into =
the rally
failure. IMHO. </span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt'>We have just transitioned from the up =
momentum market
off the July oversold low to the current down momentum market. =
IMHO, this
downside momentum has not run its course, and, in fact, has just gotten
started. This short/medium term momentum needs to be completed before =
one
should even think of taking the long side. </span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt'>We are still in the middle of warnings =
season, and
things have looked ugly to this point. There are a lot of threats facing =
this
market, beyond Iraq. Anyone notice the Brazilian real? It is now trading =
BELOW
where it was before the IMF bailout, as the leftist Lulu looks likely to =
win
the election. We will probably lose South America shortly thereafter =
(having
dropped $30 billion in the process, but I digress). I don't think that =
event is
priced into the markets yet. </span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt'>There is one other event that has not yet =
received the
press it deserves, but probably will shortly. There is significant =
liquidity
risk right now. There is $1.5 trillion (yes, with a "t") of
enery/telco debt floating around right now. That debt is getting floated =
right
now through "life support" (ie Japan style) capitalism. The =
time is
drawing nigh, however, when that debt will have to be crunched. If the =
banks
freeze credit because they have to write down this debt (think JPM, the =
worst
offender of them all), good customers will get frozen out of the =
liquidity they
need to operate. And that would be very bad for everyone. =
</span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt'>What happens if that debt gets crunched right =
when we
lose South America? Bad things, IMO. I have very serious concerns =
about
this market, and am not sanguine. I am of the opinion that this
market will bottom at a level much lower than most people think =
(although,
as a canslimmer at heart, I recognize that my opinion means =
nothing. The
only opinion that matters is that of the market). </span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt'>There are, of course, as myriad of other =
problems
facing the market that I won't bore people with. </span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt'>In the interest of disclosure, I am talking =
my book. I
am still net short, but took down a lot of SPY to hedge my shorts this =
a.m. (I
should have done in last night, but thought I could poach the open, =
which was
stupid. Regardless, I will start closing that long over the next =
few
days). </span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt'>Sorry for taking up so much space. =
</span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt'>Eric </span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt'> <b><i><span =
style=3D'font-weight:bold;font-style:
italic'>Spencer48@aol.com</span></i></b> wrote: </span></font></p>
<blockquote style=3D'border:none;border-left:solid #1010FF =
1.5pt;padding:0in 0in 0in 4.0pt;
margin-left:3.75pt;margin-top:5.0pt;margin-bottom:5.0pt'>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'>Kelly:<br>
<br>
When the market makes a new low, the first day in a rally will show few =
<br>
"new highs" because stocks have been following the market =
down. <br>
<br>
I imagine that's why WON says it takes a few weeks to see if leading =
<br>
stocks (which at the market beginning is at their nadir) will break out. =
<br>
<br>
jans<br>
<br>
In a message dated 9/25/2002 4:27:18 PM Eastern Daylight Time, <br>
kelly.short@fw.us.neoris.com writes:<br>
<br>
<< Interesting that on this high volume up day the number of new =
52 week <br>
highs (price>$12, Amex, NSDQ, NYSE) was 10, which is the average =
daily
number <br>
for the past week.<br>
>><br>
<br>
- -<br>
- -To subscribe/unsubscribe, email "majordomo@xmission.com"<br>
- -In the email body, write "subscribe canslim" or<br>
- -"unsubscribe canslim". Do not use quotes in your =
email.</span></font></p>
</blockquote>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New =
Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
<div class=3DMsoNormal align=3Dcenter =
style=3D'margin-left:.5in;text-align:center'><font
size=3D3 face=3D"Times New Roman"><span style=3D'font-size:12.0pt'>
<hr size=3D1 width=3D"100%" align=3Dcenter>
</span></font></div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'>Do you Yahoo!?<br>
New <a href=3D"http://rd.yahoo.com/evt=3D1207/*http:/sbc.yahoo.com/">DSL =
Internet
Access</a> from SBC & Yahoo!</span></font></p>
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