That's some kind of volatility, ain't it? And it all started with that crash in the Chinese stock market last Monday night. Tuesday morning, one week ago, we walked into a market that had undergone a Hyde-like personality change, and there's simply been no fighting that.
Sure, the bulls got a bounce and a breather today. Indeed, this tech rally has enough bounce to enable the Nasdaq to be the first major index to counter the rolling dislocations to the downside.
I think we have a little bit more to go on the very near-term upside here, but not enough for me to try to trade it. I do think, as I noted earlier, that there's probably a short-side schnitzel to be made if this market does extend the rally in the immediate term.
We keep hearing that this pullback is an obvious reflection of a cooling economy. Indeed, I do believe that housing will force the broader economy to cool in 2007. But I also think there's every reason to believe that the Fed, with its 5.25% of symbolic rate cut bullets to shoot and to further liquefy our economy, will do so as the housing problem persists and worsens. I doubt the Fed's ability to counter the housing collapse, but that doesn't mean it won't accidentally blow up more bubbles as it tries to.
The upshot is that my echo-techo bubble is still something to ponder. And I expect to get back to positioning for that within the next few weeks on more weakness.
P.S. Will you be there when Cramer makes his next move?
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Cody Willard Blog Shorting Time May Be Soon 3/6/2007 3:19 PM EST This bounce may still have a little oomph left, though.
Cody Willard Blog The Slow Death of Broadcasting 3/6/2007 1:13 PM EST New distribution outlets will put it out of its misery.
Cody Willard Blog Good Rumblings from the Semis 3/6/2007 11:38 AM EST Recent indications seem to be that the sector may be coming around.
Cody Willard is the manager of CL Willard Capital Management, LLC. He is a regular guest on Fox News, CNBC and other networks, and he writes a monthly column for the Financial Times. He is also an adjunct professor at Seton Hall University and the author of TheCodyReport.net, a monthly stock market newsletter. Willard appreciates your feedback -- click here to send him an email.
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