Is Fear Enough?

We all know that fear leads to bottoms but it sometimes it just doesn’t seem that fear is enough.  It certainly doesn’t look that way right now.  Fear has been highly elevated now for about a month as far as how I measure it.  But, why isn’t the rally happening?  First of all, I’ve mentioned before that an oversold market can stay oversold for some time.  That’s how you know this is a really really bad market.  When technically  it’s supposed to rally, but it doesn’t.  This feels like 1998 and the early 2000s.  Do you remember those times.  Every day it would just fall a little further.  But, I was looking back in 2002 and it looked like now where it was falling fast and fear was really high.  Then, we had a 25% rally only to fail.  So, we’re going to get a rally but will it be a rally we participate in or an opportunity to short into?  I think the latter.  I still don’t believe the market has fully digested how bad the economy is or is going to be.  Corporate profits are going to keep getting worse and more and more people are going to get tossed out of work.  So, yes, we’re in a recession and it hasn’t peaked yet.  Stocks are now discounting this.

Even though my exposure to stocks is low, it’s still not where I want it.  I’d like it to be 0.  I’m fortunate to have a lot of cash and a lot of bonds.  But, I still own a few stocks.  I’m using time stops which basically means I’m selling every few days.  I’m giving it a chance to rally but when it doesn’t, I reduce my exposure even more.

Today was another 90% down day.  At one point this morning, the downside volume was 99.5% of the total volume.  Amazing.  It’s panic but it’s not a crash.  This one is more methodical like the 2000s.  A crash would be down 2500 points on the Dow in one day which may come.  Who knows?

TV& Radio

A couple pieces of info on my media.  Starting tomorrow morning at 7:00 a.m. CST, I’ll be starting “Through A Trader’s Eyes with Karl Eggerss”, the radio show on Biz Radio.  It’ll be Monday – Friday from 7-8 a.m. CST.  For those in Houston & Dallas, it’s on 1110 AM and for those not in those markets, you can hear it streaming on

Have a good evening.  By the way, if you still can’t sleep, you still own too many stocks.


1 Response to “Is Fear Enough?”

  1. 1 James October 6, 2008 at 7:18 pm

    Congratulations on your new show. BizRadio really was lacking someone who can analyze the market on the basis of it’s technicals, sentiment readings, money flows, and price patterns of current versus historical prices. I hope you can fill that void.

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