DJIM #47, 2007

How time has gone by so quickly these days!    We are near the end of November in one of the most turbulent year for as long as we can remember.    First of all, we'd like to hope everyone just had a really relaxing and joyful thanksgiving holiday.    For now, we need to rest as much as we can to prepare for the coming events.    This week is marked by a pretty strong finish from all  indices.    Unfortunately, to most of us, the week really finished on Wednesday, where a barrage of selling that took our indices below the August's lowest closing point.      So does this Friday's half day trading mean anything to us?    Yes and No!    It means something because we know now that there's at least bargain hunters out there willing to take their chance and put some capital into work.    It also doesn't mean much because if coming Monday this market resumes intense selling, the action on Friday would look rather like a joke.

The big question here is that if we are going to see more severe selling next week, when the majority of the market participants come back to their trading desk.    As oversold as the market is, it can still go lower before we see a meaningful bounce.     Yes, a meaningful bounce, and that is something we have not seen from this particular sell off.    On Friday we had some encouraging retail data(Black Friday) which gives us some assurance that at least the consumers are spending.    All we are hoping for is that the market participants would take it into their trading consideration and that would likely give a boost to retail sector(another battered one) and consumer electronics including gadget makers etc.   Hopefully, we just need to take some attention away from the current financial woe.    This may be a lot to ask for but we think the timing of the retail data coupled with the severe oversold condition, it's not unrealistic to see a bounce out of this.

Our game plan is simple...  if coming Monday this market continued where it left off on Wednesday, then we'd obviously sit patiently for something to develop.    If we get a good follow through from Friday, we'd likely be start looking at some plays including everybody else' favourite like RIMM AAPL, solars and anything that's relatively close to their year high.

Bottom line here is that this is a very tough market we are dealing with and we have to fully appreciate the magnitude of it.   Right now, it's not about making more money than others, but rather not to lose as much as others.    Whether a bounce comes in days or weeks, it will come and that's that.    If a bounce somehow turns into a rally and all the bad news get absorbed on the way, then we'd be fully committed capital wise.   Until that day comes, we'd be in a total survival mode now.    As long as we all understand what's going on, we have a pretty good feeling that we are all going to get through this.