Cody Willard:
What a long, grinding autumn it has been that has followed a long, grinding summer. The market always seems to do its best to frustrate as many market participants as possible, and it sure has been frustrating a lot of people this year. The bulls have placed their bets, and the bears have placed their bets, and with only the occasional exception -- such as Research In Motion (RIMM:Nasdaq) for the bulls and Netflix (NFLX:Nasdaq) for the bears -- most have missed the big moves in either direction.
Rev Shark and I both write often about the need for patience in one's investing/trading approach, and with good reason. We just can't force things upon the market, but we just have to let things come to us. Sometimes it's tiresome, sometimes it's fun, sometimes it's painful. But it is what it is, and there's just no getting around that.
Oil continues to run, run, run higher like the bubble it probably is. Given that moves like this always last longer and go further than anyone thinks possible, couldn't we expect to see the price at $65 before it pops? I don't know, but I sure do think the high oil prices are weighing on equities.
We saw some cracks in the oil/steel/commodities contingent earlier this week, when the metals like nickel and copper collapsed nearly 10% in a day and a plethora of related stocks did so too. I often cite what my hedge fund friends are doing, and I have to say that just as most are aggressively short tech, most are long commodities in one way or another. That will last until it won't, and there's no guarantee that it will reverse anytime soon, but it would provide some real fireworks if it turns out that commodities of 2004 are the tech/Internet/telecoms of the late 1998-2000. Of course, please note that 1998-2000 is three years worth of action and 2004 is simply ... well, one. Gulp.
Probably the new biggest worry for the market, at least in my mind, is the deluge of corporate scandals and ethics concerns coming to market once again. Yesterday Eliot Spitzer, who for all his probable political aspirations is simply doing a remarkable job of cleaning up this Street, announced he's going after the insurers again. Meanwhile, Fannie Mae (FNM:NYSE) and its stunning (stunning because it's taken so long, not because the news is any type of revelation to readers of Detox on RealMoney and of Haefele on Street Insight) problems of financial chicanery is another worry. Just how far will the impact of a restructured Fannie Mae go in the real estate and thus consumer world?
And of course, there's the whole "sudden" revelation of problems with Merck's (MRK:NYSE) Vioxx causing heart attacks. I wrote at the time that the cynic in me wondered how much of that "new" study was simply a result of Wall Street forcing more disclosure on these studies and their data. Well, today's "news" that Pfizer (PFE:NYSE) has found that its COX-2 inhibitor causes a skin reaction sure doesn't make the cynic in me quiet down, now does it?
These all could provide some great bricks in the Street's "wall of worry," but they also are things that simply keep me up at night, as I have put on a lot of long exposure especially during the late summer collapse. I'll be back with some less bearish rants next.
Gary B. Smith:
