OT the market may be more important

OT

Since this is not directly applicable to picking stocks I will label it OT

All this study of individual stocks may do little good if the stock market is headed into a general bear market.Almost everything will go down. And I have a hunch (unverified by any research) that Saul type stocks will go down as much as any, probably more.

The majority of my indicators of the general market have been saying for a while that a bear market is more likely than not, i.e. the odds are somewhat in the bear camp. But unlike bear market bottoms indicators, these are almost all momentum based, and thus miss most other market forces…

Daily systems are the most sensitive but have lots of false readings, weekly ones less sensitive and monthly ones even less sensitive . The monthly ones are the most reliable but slow to register and I don’t have the end of January readings yet.

This is not a matter of predictions but of keeping the odds in your favor, being the Blackjack “house” not the player whenever possible.

As I posted previously I am more I’m in the “keep what I have” mode than “make more” mode, and over the last month or two that has worked out well.

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All this study of individual stocks may do little good if the stock market is headed into a general bear market.Almost everything will go down. And I have a hunch (unverified by any research) that Saul type stocks will go down as much as any, probably more.

The majority of my indicators of the general market have been saying for a while that a bear market is more likely than not, i.e. the odds are somewhat in the bear camp. But unlike bear market bottoms indicators, these are almost all momentum based, and thus miss most other market forces…

I semi-agree. A few months ago, I was 100% in cash, waiting for such an opportunity.

But you know what, for many stocks, the market crash has already happened. Skyworks, for one, is down roughly 50% from its recent highs. That’s about how much the average stock got chopped during the Great Panic. Then there are stocks like Potash (POT) that have lost about 2/3 of their price. Or you can get something like IBM at about 9X earnings; that’s a bear-market P/E (now you can rightly argue about it’s business prospects, but that’s what’s going to determine that outcome, not “the market”).

I am now 70% long. But I am trying to resist the urge to buy simply-good bargains, and try to be patient for outrageously cheap one. I have to keep on reminding myself of how frustrating it was to have no dry powder at the lows of the Great Panic.

I actually think that the ones with the more extended (i.e. better) runs over the past 3-5 years are at the greatest risk for big drops if we do end up in a bear market.

Unfortunately these are some of the companies that have been performing the best. People tend to sell first and ask questions later, particularly when their nice profit gets back to break even or turns red on them, erasing previous months or years of gains.

Yes that creates opportunities and all, but you need enough dry powder to take advantage of them.

Interestingly, in spite of the worst start to a year ever in the stock market, we are still in a range on most indices (though just barely), and we still have a higher low (at least on SPY, QQQ, & DJI… IWM broke lows already).

But the market certainly feels like it is at a precarious place. There have been cracks under the surface and it seems like it’s waiting on the ledge deciding if its going to jump or not. I just hope one of those cracks doesn’t break the ledge off.

It is certainly possibly that earnings season is a catalyst to renew some confidence, or it could be a reason for some blowups to happen.

No way to know, but it feels like too many people are sure of a bear market for it to actually happen now. Currently very cautious here and pondering if the market is really trying to get everyone to sell so it can resume an uptrend without them or if it really is time to raise some cash for better opportunities down the road…

commoncents, you mention SWKS and I agree, but looking at charts I could easiy make arguments for bear market targets in the 35-40 range, even with the decline from highs.

Look at AMBA, down 65% from highs and another 11% after hours. Yes it got extended, but it’s trading like its going out of business now. Granted it’s largest customer almost looks like it might, but thats another story.

Even SKX, could see teens easily when you look at where it came form and how fast.

Now I like all these companies, but the good bargains out there may become even better bargains if things get worse. I like all the companies and those valuations are almost ridiculous, but price is what pays, which is the concerning part here.
Not saying I think everything crashes but just to be aware that there is risk here even on the good bargains

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a pro’s take on the market
. Generally money manager’s public statements can not be trusted. If they are talking up a stock it usually means they are selling and are trying to create buyers…
There are exceptions. Especially when discussing the general market.
.

BlackRock (BLK) Chairman and CEO Larry Fink said Friday the stock market could fall another 10 percent and oil prices could test $25 per barrel.
“We’re in the midst of a real market decline, bordering on a bear market,” he told " Squawk Box " on CNBC. “But the speed at which this is happening is just a reassessment of the risk, reassessment of where we’re going.”

Despite Thursday’s gains, the Dow Jones industrial average (Dow Jones Global Indexes: .DJI) and the Nasdaq composite (^IXIC) remained in correction, a threshold of 10 percent or more to the downside from all-time highs. But the S&P 500 (^GSPC) was able to narrowly escape correction territory ahead of Friday’s trading.
If the market were to fall another 10 percent, as predicted by Fink, that would put stocks in a bear market, as defined by a decline of 20 percent from new highs.

“I believe there’s not enough blood in the street. We’ll probably going to have to test the markets lower,” he said. “When we test the markets lower, it’s going to be a pretty good buying opportunity.”
Fink does not believe stocks will enter what he calls a classic bear market. "I always look at a bear market … [as] persistent water torture, day after day after day after day. I’m not sure this is what we call a classic bear market.

http://finance.yahoo.com/news/prepare-stocks-fall-another-10…

I don’t depend on forecasts, by pros or anybody else. I do make some “forecasts” myself (look at the head and shoulders forming now with indices) but use them only as background data.

I do think that oil price in the $25 range are unsustainable just as $100 oil was unsustainable . Stocks like NOV are attractive at this [point
But the NOV price correlates with oil And the general market. So it might or might not be years before NOV bought at today’s prices becomes profitable. But history is on your side. Note also that commodity prices usually eventually come down to test lows, so there is a second chance at buying. NOV and d some driller stocks may well behave more like a commodities than a stock

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