Saturday, September 08, 2007

Hiccup or Fart?

(Click any chart to enlarge)

We've experienced extreme market volatility over the last 6-8 weeks. The markets have recovered some, but here are my rough calculations of peak-trough decline.

The NASDAQ fell from 2,712 to 2,386 (-12%)

The Dow Jones Industrials fell from 14,000 to 12,455 (-11%)

The S&P 500 fell from 1,552 to 1,370 (-11.7%)

So there you have it, pretty much an 11-12% broad market decline. Most of the sheep blame the weakness on "subprime mortgage credit issues". Of course as the markets were ascending over the last seven years, not a soul ever said it was due to "subprime mortgage" prosperity. One will be perpetually amazed at the reasons opinion-heads attach to unquantifiable security price fluctuations.

I was short the entire way down, covered right at the bottom, and went long. One problem was, I was just making back money that I lost on the rally in July. Another problem for me was that I lost patience and dumped my long WAY too early. Then I re-established my short far too soon - as this violent retrace in the NASDAQ hammered me good.

Enough about me and my trading travails.

The important question of the day is, was this just a hiccup in the financial markets or was it a fart?

Hiccups can, and often do terminate very quickly.

Whereas a fart is mostly a premonition to a dump...

(Please pardon my imagery but literary excellence demands precise and provocative metaphors!)


Anonymous said...

The fiscal indigestion displayed by increased market volatility is a symptom of a much more serious condition, something akin to colon cancer. The jump on the dump will come soon, and may likely take the colon with it.

CaptiousNut said...

Colon cancer, huh? So August was the colonoscopy, I guess.

I knew I was opening a can of worms with my scatologic metaphor.

Anonymous said...

Yeah. It was a crappy month...

Taylor Conant said...

The coming action will leave many a market man to make an acute, but accurate, vocal diagnosis:

"Ah, shit!"

Some might be so awed by the magnitude of the deuce that they have no other recourse but to marvel at the animal origin of it all, ironically realizing the source to be an animal they once hailed a mighty and ferocious money-making beast:

"This is BULLshit!"

(sorry, couldn't help but play along)

CaptiousNut said...

I may have to pull a Perry Eidelbus and close comments.