FYI | Jan 22 2008
By Rudi Filapek-Vandyck
Oversold and due for a bounce. While reading some of the messages and market commentaries by local experts in the Australian market, this appears to be the general premise: the market is overdue for a bounce with stockbrokers allegedly waiting for any pause in the panic selling to jump on all those value opportunities that have now opened up.
Don’t believe it, says Dennis Gartman in today’s edition of his daily The Gartman Letter, this panic selling can go on for several days still. His advice to investors is: “strength is to be sold, not weakness bought. Repeat that often to yourself when the urge go buy becomes overwhelming”.
He predicts it may require hundreds more points off the Dow before the panic has been sold out of this market. Early indications so far are the US share market is about to be hit by a similar wave of panic selling orders as has swept throughout share markets worldwide since trading resumed on Monday. The S&P Futures have traded to the limit down prior to the opening of the US market later today. Gartman rightfully remarks this can only mean the news that lies ahead is going to be bad, very bad.
On Friday, he predicted panic would take over in the markets this week. On Monday he warned investors there might be a rally after this wave of indiscriminate selling but it would be nothing but the traditional “sucker rally” – in other words; don’t be fooled, it will be temporarily and thus a potential trap for those who’d believe the worst was now and act accordingly.
Today, Tuesday, he confesses events have played out much worse than he thought on Friday. “How long this shall obtain is anyone’s guess, and the best we can say is that it will end when it ends. To say anything else is idiocy”.
One conclusion is clear, however, if there ever was an increased chance for the Federal Reserve to move ahead of its regular meeting next week, this is it.
One more wise advice from today’s Gartman Letter: “in the midst of panic, nothing is beyond the realm of the possible”.
