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Dec. 4, 2008

A Retraction: I DON'T think stocks are bottoming...and neither are Cattle and Soybeans
We are still short Cattle and Soybeans
Let's just say, "NOT!", to last night's newsletter in which I hurriedly spit out my opinion that stocks could be turning up here, and commodities with them (the Dow, Soybean and Cattle charts are almost identical). Where I do KNOW that the drop in Interest Rates and the collapse in Energy prices both represent MONSTER positives for consumers and the economy, I don't have a clue as to when the markets will actually decide to reverse back up as a result...
Like every other market jerk, I have been wondering "when stocks will bottom", and have always come back to one conclusion: There will be no bottom until NO ONE is looking for it...So when I read the following quote in the Atlanta paper this morning, I knew the nervousness I felt last night (as to seeing our winning short positions in Soybeans and Cattle turn against us) was most likely in error:
"Analysts largely believe that much of the bad news is already priced into the market, and they again said stocks remained in a bottoming process after the huge declines of the past two months. The market is beginning to look forward, and a lot of the selling appears to be abating."
When I read, "analysts largely believe that much of the bad news is already priced into the market", alarm bells go off. I mean, as I've pointed out before, none of those same guys said sell stocks a year ago, or that Crude was a sale at $150, or about any prediction in whatever market related subject you want to bring up...So if they "largely believe" stocks are a buy, I don't want any part of it...I would also add I have been thinking equities won't bottom until I hear from all my stock broker buddies that their average investor really, truly, unequivocally has unloaded in a big way. Instead, what I still hear is, everybody is just sitting, thinking they've lost too much to sell now...and haven't yet reached the point where they're calling their broker and saying, "Sell it all before I lose everything!", which is usually the way the story ends up.
So we basically did nothing today, except try to "unworry" myself, and are still short Cattle (down 1 cent or $400 today) and Soybeans (down 19 cents or $950)...However, as I cannot get past the idea we must be getting close to the end of the general decline in commodity prices, I am tightening up our defense in both of these markets...knowing that while major exhaustion type, end-of-the-move collapses may be coming, either of these markets could just as easily make an upturn any day now.
Here are some charts and few more comments...
If you'd like to talk about any of these ideas, do give me a call.
Bill Rhyne
Stocks may be a "dead" investment for a while...going nowhere really?
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