Morning Comments

Yesterday's market activity continued to look more like a bounce and short covering after the previous days near 700 point sell-off. When investors keep looking for a lasting low they typically don't materialize. Market bottoms form when even after a significant decline investors are continue calling for Armageddon. At the 2002 lows I distinctly remember even at the lows investors where calling for another 20% not saying we are down x percent therefore we have to rally.

This time around anecdotal sentiment seems to be more complacent as investors mantra is we are down 45 %. Additionally we see continue to more activity in the new 3 to 1 leveraged long financial ETF as opposed to the 3 to 1 leveraged short financial ELF vehicle. I have also recently heard of stories from financial planners that their customers are not looking at their statements. Again at lows statements by investors typically sound more like, " I am getting out of stocks before they go to zero" or " I am not investing in stocks anymore they are too risky." At this point we don't hear those statements which suggest to us the market needs to get more scary for investors. So this happens or the skew of up to down volume and advancers to decliners are more positively skewed (such as 5:1 or greater ratios on the same day for both metrics) the bounces are to be viewed as fleeting and not durable.

Posted by Peter Greene