Damn! Typepad was down all day — it just popped back up.
I had lots to go over — the market shellacking meant I was on Kudlow tonite; afterwards, I hit Wired’s Long Tail book party for Chris Anderson.
W a a a a y cool stuff happened. Too beat to discuss — more tomorrow.
From Stratfor today on the confrontation between Israel and the Hezbollah:
Israel will most likely sustain an aggressive military campaign in both its northern and western fronts. The idea is to wear down Hezbollah and Hamas in an extended military confrontation through calibrated attacks. These attacks are designed to destroy critical infrastructure and alienate Hamas and Hezbollah from the civilians affected by the airstrikes in Lebanon and the Palestinian territories. Olmert will show little restraint in these targeted attacks against Hamas, Hezbollah and other Palestinian militants dispersed in the region in a bid to avoid any repercussions on the domestic front. This sustained military action will aim to wear down both Hamas and Hezbollah to the point where they understand that keeping the soldiers hostage will eventually decrease the kidnappings’ marginal utility.
The Israelis were not kidding when soon after the abduction of the Israeli soldier by Hamas they said this crisis will be a long one.
So, the geopolitical concerns that provided at least part of the “tipping point” that Liz Rappaport talked about in her article today on TheStreet.com today look likely to last for a while.
And then we have this, from Liz’ same article:
“The bounce [from the June lows] has run out of steam,” says RealMoney.com contributor Barry Ritholtz, chief market strategist of Ritholtz Research and Analytics and president of Ritholtz Capital Partners, a New York-based hedge fund.
After losing 7.6% from its peak on May 9, the S&P 500 had bounced back 5% through the end of last week from its June 13 low of 1223.69. Ritholtz believes that bounce has run its course and a retest of the major indicies’ June 13 lows may now be in order. The S&P and the Dow are still up 2.8% from their respective June lows while the Nasdaq is only up 0.85% from its June lows.
(Feels like an echo chamber!)
http://www.thestreet.com/markets/marketfeatures/10296463.html
Now, where does that put us in the “bounce-test-bounce-crash scenario discussed a few weeks ago:
I can envision a bounce off of these lows, a reflex rally that runs on decreasing breadth and volume for a few days to a week or so, then a retest — and failure — to new lows in June.
That gets us oversold enough for a stronger bounce for a month or so (July? August?) and then the denouement into September and October.
http://bigpicture.typepad.com/comments/2006/05/bounce_test_bou.html
(You see, I really do pay attention to what is said here!)
You iz one hep cat Barry… I bet Chris Anderson just wanted to get the scoop on your long tail music collection.
I would love to see a future discussion on the emerging book-as-blog phenomenon, i.e. the approach Anderson took. Talk about the RIAA… the book publishing industry is severely jacked up too, and badly in need of change.
Not just outage; as I learn elsewhere, comments and article updates were lost.
Barry, where do you think we are in this stage ??
are we at the beginning of denouement ?? ” That gets us oversold enough for a stronger bounce for a month or so (July? August?) and then the denouement into September and October. ” ??
What do you do with the commodity stocks like oil
stocks that are acting poorly while oil futures make new highs??
I have thought that oil futures are a direct purchase of oil at one point in time but oil stocks are shares in a longer term revenue stream. Even if oil were to go to $100 in September, an oil company can’t pump all of its oil at once and will sell most of it at prices that hold farther into the future.
Therefore, oil stocks staying lower than oil futures implies somewhat lower prices longer term than short. It also suggests that the oil futures are reflecting a short term crisis premium.
Does this sound right?
sounds right but heck, oil stocks reflecting
45-50 oil, if you look at past 3 yrs, what you’ve stated
has been the case, the oil stocks lagged big time.
No different this time.
Assuming oil futures stay firm, say above 60…
how are the oil stocks going to hold up
if we have a bear market in the junk sectors like
TECHS and Housing, financials etc ??
From today’s Barrons Online:
On the latter score, Merrill Lynch chief domestic economist David Rosenberg notes that the entire Treasury yield curve is below the 5.25% federal-funds rate target — something that’s happened only four times in the past 25 years, March 2000, August 1998, January 1989 and January 1992. And those periods were followed by distinctly recessionary market action: a bond rally, a drop in commodity prices and underperformance by small-cap stocks, materials, tech and consumer discretionary sectors.
Rosenberg thinks that odds of an economic downturn next year are between 30% and 40%, which various sectors of the stock market appear to be signaling. “The homebuilding stocks are down more than 40%, which is what Nasdaq had already done at this stage in 2000; the SOX [semiconductor] index is down 22% from its nearby high; and the Korean Kospi is down 13% from its nearby peak,” he wrote in a research note.
“These are cyclically sensitive leading indicators that are telling that the best offense is going to be a good defense in the second half of year.”
http://online.barrons.com/article/SB115271641158904677.html?mod=9_0001_b_online_exclusives_weekday_r1