Tuesday, July 21, 2009

Summer Stalemate

Back From Vacation (but not for long) Special Post

Despite popular belief, summer is always an interesting time in markets. Professionals go on vacation, volumes shrink and therefore prices tend to be more volatile. Take last week: when shares dipped towards the 8000 mark on the Dow, a sharp 10% rally ensued - but with very low volume. It looked like a bearish technical pattern had formed and seemingly confirmed (a head and shoulders, for those into reading such tea leaves), but there was a catch: volume was half to one-third what it was a couple of months ago. It was a perfect "gotcha" opportunity for those looking to throw the innocent into a bear trap ("innocent" being used with tons of salt).


What now? It looks to me like a battle between Mr. Bernanke's Green Shoot Platoon and the real economy's Can't Shoot Straight Brigade. The result is a dynamic stalemate, a bit like trench warfare in WWI.

Until and unless General Volume gets going I think the whole action is pretty pointless.


  1. Let me be the first one to say: "Welcome back, H." Even if it is, by your admission, short in duration.

    I have been expecting the market to go back down due to the lack of "green shoots" bearing any real fruit. I was one of those that noticed the "Head and Shoulders" pattern, but have not gotten back into the market as I am still unemployed (and the thought of going back into the law practice leaves bad taste in my mouth). Capital preservation (and thinking about how long this will possibly last) is the name of the game for me.

    I, like you, would go back out on vacation but for that same problem of "capital preservation."

  2. Thee Earl of ObviousJuly 21, 2009 at 11:46 PM


    What advice would you give to a new law school graduate today?

  3. Thee Earl of Obvious:

    Abandon all hope ye who enter here?

  4. HA! I understand that sentiment. Would you offer any more hope for someone who specializes in intellectual property?

  5. Earl:

    It depends on what you mean by "intellectual property." If you mean Patent Law, then you are probably OK -- as in order to practice Patent Law you have to pass a separate bar exam and have a degree in engineering. For that reason, Patent attorneys are almost always in high demand.

  6. Thanks. I suppose the non-patent intellectual property lawyers are in for a tough road like all other specializations.

  7. That's an appealing comparison - the Bears have larger numbers by far, but little concerted organization and limited funding... the Green Shoots are a well funded and well trained army...

    Gee, rather than WWII, that quote reminded me of another very important period in American History... the Revolutionary War that lead to our Independence...!!!