Key indicators predict more trouble ahead. The stock market began its strongest downturn as soon as the polls predicted that Obama would win.
There are two old Wall Street adages that are rather accurate. “Sell in May and Go Away,” and “As goes January, so goes the Year.”
Sell in May worked once again last year. January 2009 is a down month, so . . .
Important indicators normally not reported include:
Stock buybcks are down 90 percent from last year. Democrats would think when stocks are down by half, that companies would be eager to increase stock buybacks. Wrong.
Indisder stock purchases are also way down. Corporate executives are putting their money where their brains are, and are not buying stock in their own companies. Who better should know the future of their companies?
In fact, corporate insiders are characteristically over optimistic, so when they are pessimistic we should pay attention.
As an example of over optimisim by insiders, recall that a year ago the new incoming President of Wachovia bought $16 or was it $19 million of Wachovia stock? He lost all his money!
Oops! Perhaps I am wrong. Perhaps corporate insiders are not pessimistic. Can it be that they lost all their money and no longer are able to buy stock?
I remember in 1986 Houston when oil dropped to $8 a barrel, the joke was the only one in Texas who could make a deposit on a Rolls Roycs was a pigeon.
Maybe we should call this the OPM market. No, not Other People’s Money but rather the “Obama Pigeon Market?”