It becoming very clear, that no one want their money in this market at all and that buyers are running for the exits in mass. As much problems that has already occurred with all of the failed federal interventions and so forth, the last thing the Fed would want to do is talk down the economy even further. Well, Mr. Bernanke decided to open his mouth once again as he stated the “crisis could prolong the economic pain” – just the thing that people want to hear who are looking for an end to all this mess.
We are primarily sitting in cash right now except for short position in MYGN. Trying to take a position long in this market is futile, and to try calling a bottom is moronic. If you look at the monthly charts below, you’ll see that the market is in a free fall, and could possibly test the lows from 2002. What is even crazier is that if you look at a monthly chart of the Dow, we are more oversold then we were during the Tech Bubble of the late 90’s and even more than the 1987 market crash.
In fact you would have to go all the way back to 1981 to find a period in which we were this oversold. So to keep piling on the short positions is somewhat risky at this point. I would wait for some kind of relief rally before initiating new positions.
Click Here for the Monthly Nasdaq and S&P charts…