Mar

15

 In retrospect, the breakthrough of the Dow below 12,000 at 12:12pm, and the subsequent move down to 11,940, was a classic signal for cane. The momentum players were waiting for the lowest low of the year. Others were waiting for a pivot at Dow 12,000 to sell. Others from the public held onto their positions until worries about the subprimes finally made them capitulate. Those who were frustrated with the Dow's not dipping below 12,000 got their release. It was perfect for a close above the round number of 1400 in S&P futures, up from 1376. That was a nice range of points in the S&P.

There was much excitement among the permabears, finally able to crow about the Dow's breaking 12,000, if not about a 10% decline in S&P. There was much kibitzing from significant others. "The market will always be there another day."

Not to be forgotten is that the indexes were within half a percent of their 90-day lows, so that when they went below, they gained from the ephemerals who sell the breakouts and extremes in the S&P. Nor should it be forgotten that the Fed Model was at its most bullish, with earnings yields having risen yet another 1/2% above bond yields.

All this reminds me of a song Laurel and I once wrote:

Just in Time

(Music by Jules Styne; original lyrics by Betty Comden and Adolph Green)

Intro: I was resting comfortably face down in the gutter
Life was serene, I knew where I was at
“There’s no hope for him,” my brokers all would mutter
I looked like something dragged in by the cat

A. Just in time,
Stocks rallied just in time
Before they rose my funds
Were running low.
I was lost
The losing dice were tossed
My brokers all were cross
Nowhere to go

B. Bulls in debt
The stocks looked like they could be heading
Down still lower yet
But something changed
Stocks rallied just in time
They rallied just in time
And put me in the black that happy day.

C. Just in time,
Stocks rallied just in time
To save me from
That margin call
Five down days
My mojo went away
It looked like fund flambé
I tried to stall

D. Clearing said,
You’d better lighten up or
Else we’ll all be in the red
Then something changed
Stocks rallied just in time
They rallied just in time
I had a nice bounce back that happy day.

B. Bulls in debt
The stocks looked like they could be heading
Down still lower yet
But something changed
Stocks rallied just in time
They rallied just in time
And put me in the black that happy day.

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