Daily Investment Interpretations

October 14, 2008

2008-10-14: I hope day trader par excellence Todd Harrison is correct because I've bought a number of shares of the Proshares Ultra Emerging Markets Fund (UUPIX). Mr. Harrison is speculating that we'll see a new low in 2009, but for the rest of 2008, the markets may rally. UUPIX appears to me to be the ideal investment vehicle to ride to an intermediate market recovery. Of course, if the markets tank, I may have to sell at a loss to recover my cash. (The bulk of my cash is still safely on the sidelines.)
    Today, the markets closed lower, allegedly because of profit-taking after yesterday's bellwether run-up. The Nasdaq fell 65.24 points (3.54%) to 1,779, the Dow lost 78.62 points (0.82%) to 9,311, and the S&P 500 parted with 5.34 points (0.53%). The VIX rose 0.14 to 55.13
    There isn't much in the way of articles so far tonight except for this from Mark Hulbert: Corporate insiders still bullish: Todd Harrison has just published Have we seen the 2008 trading low?. Asian and European stocks are down a few percent after two days of record rallies.
    I guess we'll get up and pelt around the track again tomorrow.

2008-10-14 (11:30 a. m.): Day trader Todd Harrison has concluded that we've probably seen the trading low for 2008: Harrison: Low is in. (He also notes that the markets advanced 11%+ yesterday; merely holding their gains would be a show of staying power. On the strength of his assessment, it might make sense to consider nibbling at stocks and funds during this modest sell-off. The markets may go lower and retest their lows, so a gradual re-entry into the marketplace might be the astute gambit.)

2008-10-14 (10:30 a. m.): So why are the markets drifting lower? Ostensibly, at least, because of profit-taking after yesterdays' massive run-up. This may, in fact, be "Turnaround Tuesday", though the markets may be fated to trade higher in coming days and weeks. At the moment, with the indices flattening, it's time to sit and watch.

10-14 (8:45 a. m.): Bear in mind that stocks and exchange-traded funds (ETFs) already have the futures incorporated in their prices. Right now, the S&P 500 is at 32.72, and the prices of stocks and funds have dropped a bit from their opening highs. There will be backing and filling today, but Europe and Asia are up several percent (Japan's Nikkei Dow closed up 14%), and I imagine the U. S. markets may close up also. 
10-14 (8:00 a. m.): The market futures are sharply higher this morning, with the S&P 500 up 47.6 points and the Nasdaq up 51.5 points. Although I expect the market indices to retest their lows in the next few weeks, I plan to buy more equities this morning, primarily because everyone else is expecting the markets to retest their lows.