PRICING IN...

The stock market is PRICING IN a recession, if you may. That was todays price action in a nutshell, like it or not, got to trade. Started above 13000 and ended 12740 or somethin... could not dare to see the exact level as it dove below the AUGUST closing low of 12840 or so.

I was away for thanksgiving. Took a week off from my blog. Nothing new to write about? No, just too much cliched... trading was getting boring.
Buy on a dip and sell into a rally and buy again and sell again. Our trade for last week was TGT- in at 53 and out at 57. Buying Citigroup on a downdgrade was not wise. We got in at 31 and change... and it ended the day at a sub-$30 level, $29.75 to be precise. Averaging down may be a good idea- wish it went to $25 once and for all- this deterioration is killing the sentiment. By the time it goes to $25 everyone and their uncle and grandma will be out of the stock... and it will be flat forever until bargain hunters (are there any left I wonder) start buying.

If theres anything more pessimistic than anything... its the stock market. The same woes cause more bloodshed. The wounds are open and analysts and politicians dare to open their mouths wide about the same issues pouring salt over the wounds -OUCH!

One would think the black friday shopping numbers that were quite okay compared to the dismal projections... would bode well for the market as the consumer is still out there.

But, no! They paid attention to CITI again- its cutting 45K jobs- thats good news to me- it implies a massive cost-cutting exercise. Good start to clearing a lousy mess? No, Citi fell 2 bucks or so and dragged all financials... !

Housing stocks were downgraded due to uncertainty... well, the timing of downgradin the sectors that are down 70 to 80 % already, is unbelievable. The investor is puzzled... and misguided. If they did not sell KB Homes at 30- or 25, they sell today at 21. Ridiculous. Unless they know these are going bankrupt. Who knows?

The market has reached a double bottom technically - from August...but I would not put more money into the market. Its too late to sell the losers and a bit early to buy and average down... so lets watch whether we hold 14000 on the S&P and 12500 on the DOW.... Technology is correcting- I think it comes back strong into year end. SO BRCM (in at 28.75)- its about 26.5 today... and NTAP (in at 25) -its about 24... will hold on to them. Adding EBAY tomorrow- if it goes sub-$30 will put in an order to buy around 28.75... for a longer haul. P.E ratios on these stocks are in the teens... - market is pricing in too much gloom- !

The good part about pricing in- is that its all in the prices. IF a recession is priced in the stock market these days... then if we do (the question remains in some minds) get a recession, we are already priced for that- so we can start going higher.

To my mind we are in a recession in some sectors-for instance, housing and finance sectors and many retailers as well. The prices are down enough- between 70 -85 %- to suggest a recession is on.

As the stock market digests the fact that we are in a recession and then by the time a public announcement is made- that US is in a recession... it will be time to rally. As recessions are accompanied by remedies (is the FeD paying heed... ) there should be less to fear. Just go out and shop and have a good christmas, all! The prices take care of themselves but sometimes they make ya sweat.

About the year end, well, once the Fed meeting is done, second week of December, we will know if we get another rate cut- we then rally fearlessly... on and into the year end. Until then we drift up and down, triple digits at a time.

Hang in there. Things can get mighty worse- one day collapses are not ruled out- lets make the most of those moves. The bear is all over the place. Got to find the bull and its might... a stampede is needed ... at this point. An oversold market cant rule that out either. Ha... tis quite amusing... if you are a trader- opportunities have come in knockin on the doors, windows, trap-doors, ceilings... every day... !