Worst Since '33

by Larry Levin

Try as it might to rally, the market recorded another loss on Friday marking a fresh 12-year low. With the S&P down 10.9% and down 18.6% for the year, the market has had its worst two months of a year in recorded history, and the worst February since 1933.

But wait, how could that be? This must be a mistake. After all, the so-called experts told us to buy last year, and several quarters ago, and last quarter, and last month, and last week…etc, etc, etc. Each time one of these one-way street signs (buy only) makes it in the media they regurgitate the same noxious bile: keep buying, average-cost down they call it. It’s plain to see to whoever is looking, however, that this misguided strategy should be renamed - adding to a loser. How these men and women still hold a job anywhere near a financial product is testament to the shortsighted American public.

Despite the market grinding lower, buyers at every new low remain and some are growing tired of it. “The path to least resistance remains down,” said Alec Young, market strategist at Standard & Poor’s. “We need some real capitulation, and for people to stop buying the dips and let it crash. Then, we could get a new low.” He went on to say “Everyone knows it’s going to be bad,” Young said. “But we need even the most bullish people to give up and [the jobs report] might be the catalyst.”

The Dow has now fallen for six straight months, for a loss of 38%, its biggest six-month decline since the six months through June 1932, when it fell 41%. The Dow’s longest streak of consecutive monthly losses was the nine months through April 1942.

“It’s going to take at least several years to recover,” said Doug Roberts, chief investment strategist for Channel Capital Research. “And that’s what people are starting to get, now that they’re looking past the original euphoria that the new administration was going to arrive and fix everything quickly.”


Previous Day's Trading Room Results:

Trade Date: 2/27/09

E-Mini S&P Trades*
(before fees and commissions):


1) FT buy @ 9:30am at 743.25 = b/e (1-lot)

2) Engf buy @ 9:45am at 742.50 = -.50 (1-lot)

3) OTF buy @ 10:00am at 740.75 = +1.50 & -.25 (2-lot)

4) FT sell @ 2:25pm at 739.50 = +1.00 & b/e (2-lot)

5) FT sell @ 2:35pm at 740.00 = +3.00 (1-lot)

6) IDVA sell @ 2:55pm at 739.00 = +5.00 (1-lot)

7) Algorithm positions (9)…combined SofT and Algo total…+23.75


Electronic (YM) Mini-Dow:


1) No trades today



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