Just Another Bright, Sunshiney Day on Wall Street
No Tears, Now. Smiles, Everyone, Smiles
SAN FRANCISCO -- Another rough day for those who are long. Most troubling, a rally in the bond market failed to inspire equities, which ended at session lows as the
Dow
fumbled early gains. (For more, see today's
Market Roundup.)
Grim and Grimmer
There's a growing sense (hope?) stocks are "oversold" (you almost never hear people say "overbought," do you?) and will bounce if tomorrow's productivity numbers and/or Friday's employment data are at all friendly. Other than that, I'm afraid I can't offer anything to make it all better.
In that light (the oversold bounce vs. the "I want my Mommy!" light, that is) William Erman, founder of
Ermanometry Research
, an ultratechnical quant shop in Nashville, Tenn., emailed clients today to say he'd upped the key support level for the
S&P 500
(cash) to 1305 from 1300.
"Penetration of this price level indicates a 10-to-1 probability that the market would EVENTUALLY decline significantly (below the May lows) within the next few weeks," he wrote. "'Eventually' is emphasized because shorter-term indicators show STRONG SUPPORT at this same level."
The S&P 500 closed at 1305.33 today after trading as low as 1304.50 intraday, on which Erman focuses exclusively.
"The die is cast," he said in a postclose phone interview. "Long-term indicators are telling us we're going to have a significant deterioration and take out the May 27 low
of 1277.30 on the S&P 500. Exit on any kind of strength or, if you can stand a little heat, get short now."
Meanwhile, a source on the frontline reports: "It is getting ugly out there. I saw a person in a daytrading chat room talking about selling his car to make his margin calls."
Ouch. (However, I am looking for a good deal on a used car...)
TheStreet Recommends
Even a Monkey Can Do It
The last few weeks have (hopefully) reminded some investors it's
not
easy to make money on Wall Street. (Despite what some online brokerage ads and daytrading firms imply. Not to mention folks like "The Profit Club.")
"The only thing this market has created is a lot of geniuses in their own minds," said the CEO of
Gotham Capital Management
, Ronny Kraft, who's accused by some of belonging to that group. "Well, there's only a limited percentage per capita and the monitor went too high. What
Warren Buffett
does is not easy."
Back on
July 20 -- to something
less
than critical acclaim -- I quoted Kraft as being short
Amazon.com
(AMZN)
at around 134. At the time, Amazon.com was trading around 120. Today, it fell 6.8% to 88 7/16.
"I didn't think Net stocks would get to these targets so quickly," he said today. "That leads me to believe these stocks will crack worse than I thought."
Still, Kraft believes the "downward movement is tiring," and he has begun covering some shorts.
The hedge fund manager said in one breath that he "feels for people." In the next he expressed no sympathy for "someone that bought
eBay
(EBAY)
at 14,000 times earnings or Amazon, a company that's increasing revenues three times but losses by four times."
Meanwhile, Kraft defended short-selling as a "legal, necessary function of our market. All shorting is a choice, it's a box on the ballot sheet." (Cue whistling of
You're a Grand Old Flag.)
Wait, this segment was supposed to make you feel
better
. (I swear.)
The head trader of one New York trading desk reports setting out to buy some
Gillette
(G)
not long ago, believing it was due for a bounce after its latest warning-inspired downturn.
After returning from some meetings later in the day, the trader thought he'd forgotten to make the trade and wrote "G-I-L" on a note. Just following orders (
Papers? You have no papers?
), an assistant bought
Gildan Activewear
(GIL)
at around 18.
"The next day I was out and forgot about it," the source recalled. "A week later I realized it. I still own every share. It's been the best trade of the month. That's how we make money on this desk."
The stock dipped 3/4 to 21 today after going on a tear from 16 1/4 on July 6 to as high as 22 on July 28.
Even funnier (are you laughing yet?), our source still has little idea what Gildan does (check out its
site if you're curious) and plans to ride it until it hits 30.
"It looks great on the chart," he said. "If it comes in, it wasn't supposed to be mine anyway. It's amazing."
Indeed.
TSC Special
Staff reporter
Spencer Ante
and larger-than-life, err ... Editor-at-Large
Cory Johnson
(both of the fabu San Francisco bureau) get the nod today with
At Robbie Tech Conference, Net Investors Smell Smoke.
Wither Renay? Was He Ever Here?
With Net stocks melting down,
CNBC
yesterday provided the ultra-annoying Steve Frank using old interviews (shame, shame) to explain why a
Yahoo!
(YHOO)
-
Excite@Home
(ATHM)
merger might make sense, and why it wouldn't. Then Carl Quintanilla, a
Wall Street Journal
reporter with seemingly all the goods, discussed the bloodshed among online brokers.
And Renay San Miguel? You might have thought
CNBC's
technology reporter was on vacation. He wasn't, but would viewers have known the difference? Renay chimed in with a
followup
on the "hot" story about
EarthLink Network
(ELNK)
suing
Microworkz
.
I'm sure Renay is a decent guy, but is this really the best
CNBC
can offer us on the all-anybody-thinks-about tech beat? With Frank, the network has proven looks aren't the main issue (ain't I a stinker?). So why not get somebody on the tech beat who can add some value? Renay has always struck me as somewhat milquetoast -- a local TV news anchor type. A quick look at his
bio only added to my apprehension.
Recently I saw Bruce Francis on
CNNfn
and was reminded of his past contributions to everybody's we-hate-it-but-gotta-watch network. (Remember
Steve Jobs
storming out of that interview?)
Be like ET and phone home, won't you, Bruce?
Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at
taskmaster@thestreet.com.
