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Just like that, ALL the excitement of 2006 has evaporated and most of the major indices have been slapped back to the starting gate. In an earlier missive I warned that the despair cycle had begun (I hope you wore those shades!). In fact, I could not have called this one better. The only thing that has surprised me is just how fast we wiped out the exuberance. Even Google has been crushed in the past two days back to 2005 levels. Heck, I was ready to "congratulate" the market on Thursday for its resilience but decided not to react to what looked like a rally without a cause. The only thing I have not seen yet (and I have not finished my review of my typical news feeds and sources) is a declaration from the bears of their final victory. I am sure that is coming, if it has not already!
I hope to write more later this weekend when I have a bit more time because I really want to spend some time breaking down where we find ourselves at this juncture (Click here for TraderMike's excellent technical review of the carnage). But I thought I would at least take this quick moment to acknowledge the pain the market has brought back to the bulls. I also want to remind you NOT to get caught up in the mood of the moment. We have gone through years of manic behavior in these markets, so I hope this cycle of hope and despair has become plain to you by now. Just as we overdid the celebration in the first two weeks of the year, expect us to overdo the despair. As I promised in an earlier missive, in dark times like these, I will remain focused on looking forward for opportunity (if any!) rather than getting mired in the muck. I hate to hazard a guess as to when some real respite may arrive, but the Fed meeting at the end of the month sure looks like a fat target. TraderMike reminded me that this milepost is still a whole week away. Anything can happen in that time as the negatives in the air try to build to a climax. And even after that, do not forget that we are getting a new Fed chair. It seems we are in the habit of testing out new Fed chairs right away with a big fat crisis (for example, think Greenspan in 1987). Again, you might want to bring your shades for this one!
As always, be careful out there!