BEARs are HUNGRY

The bear is hungry. He has gobbled more than his share in the last couple of weeks than he did all year -!

We are in a bear market, they say on wall street. Naming it a bear market does not make it easy. It changes my trading strategy when the market breaks key technical levels like it did this week. Not much, just got to be out sooner at lower highs and get in at lower lows.

What happened? The markets were too resilient in the face of the gloom.
The Philadelphia Fed index slumped to minus 20.9 in January - the lowest reading since October 2001 - from minus 1.6 in December.
The Philly Fed data is significant because this is historically the most reliable signal for the national economy of all the regional surveys. Whenever we have breached the minus 20 level, we have fallen into recession.

So? We all knew we are in a recession. This just confirms it. A plethora of data will follow that confirms recession. Are we going to be down every time data shows up? Then lets expect a full fledged 20 per cent down from highs- that puts DOW at 11500 or so- not to worry - in the environment of volatility we are in- this can take 2 days. And then it gets better.

Well, stay tuned... and lets watch for stocks going up on bad news- those are the safe ones to pick. I do like the DRY bulk sector. DRYS is one (low $50s) and PRGN -($14) a lower priced stock in the same industry. These are pricing in a recession all over the world. Maybe they underestimate the un-stoppable growth in emerging economies- like India and China that account for a good part of the trade. Nibbling today for a quick trade if they turn around. And then we wait for DOW to go below 12000 and see how these stocks perform.

I will not let a rally today misguide me- if I am in the money I take some cash out -so we are ready to buy on weakness (collapses) next week.

"Mamma" my son is nudging me while I divert my attention from him to my blog. "What is it, dear?"
"Look... at this picture... isnt it adorable?"
"Wha...? OH!" It was a page from the JAN 2008 AAA Car and Travel issue- a picture of a bear in ALASKA waters where one can see "mother bears carry flopping fish to hungry cubs, while the bald eagles perched in surrounding trees."
"I like bears..."said my son looking to me for approval.
They are hungry I shall say this much for now. "Go find a picture of a bull..." I ushered him to read something different.

Hang in there. Opportunity for cash -put it to work. I am bull-bear neutral as you know. More like an elephant- the new animal on wall street who waits and watches and runs faster than bulls and bears when the time is ripe. Lets be stable and patient and above all lets never panic.