It's a summer Friday, we've had a big bounce and it looks like market players are content to call it a week and hit the exits early. Other than a little bounce in energy, which is fading fast, and some continued momentum in financials, which is slowing, there isn't much going on at all. In this sort of environment, it is very easy to take a lot of little nicks and cuts that eventually add up.
What we really have to watch for at this juncture is taking for granted the market's embrace of the idea that the worst is over for financials and that oil has topped out. That is what the action of the last three days has been all about. What usually happens when we get reversals of this type is that we get way too much hope and people refuse to even consider that maybe this is just a temporary respite from the bigger trends that have been in place for many months.
Frankly I don't really have any strong opinion about whether this is the big turning point for financials and oils, but I'm maintaining some skepticism. Things certainly got too gloomy for banks and brokers and too euphoric for crude oil prices, but the things that caused those trends in the first place have not really changed.
While the market isn't easy to trade at the moment, it certainly is at an interesting junction. Shakeups like we've had this week eventually give way to better trading, but I'm not so sure it's going to be in the directions that many seem to be hoping for.
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Rev Shark Blog Wait for Your Pitch 7/18/2008 11:36 AM EDT The best gains tend to come in a short time frame, when you're well positioned.
Rev Shark Blog Looking for Clarity 7/18/2008 10:12 AM EDT This market is a jumbled mess, and I see no reason to jump into the maelstrom.
Rev Shark Blog Skeptical Traders Wait for Proof 7/18/2008 9:02 AM EDT This has been a good bounce, but a test of the recent low will separate truth from fiction.
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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