Weekend 9-24-11

1. Some technicians are talking about a  short-term  S&P 500 bottom around 900-950. This roughly corresponds to the level before the final puke-out in 2009 that I mentioned the other day in the context of individual stocks.  That is more scary than it sounds, that level of panic cut prices by half from already trashed levels!  Selected bank, steel and coal stocks are already there although the rest of the market is not. Before this happens, there are many more technical levels, 1200, 1100 and 1050 and 1020 where there will be pauses and bounces. However, if and when this happens, it will really hurt.

There is also more Black Monday chatter motivated by Friday’s market action- Market sages remember a big Thursday plunge and an uneasy but flat Friday, but markets are supposed to be memory-less.  This is complicated  by more US government shut down brinksmanship.  Longs (shorts) are too scared to buy (short) after the big drop. Easy trades don’t last too long. I suspect that most traders are in cash waiting for a tell from the Sunday night futures action.

2. Remember the S&P 2011-12 earnings discussion we had. Watch estimates continue to get taken down over time. As earnings season approaches,  it is a good bet that honestly reporting companies will give fairly conservative outlooks. Some firms will truthfully remain relatively unaffected, whi;le others will put a positive spin on things. Knowing who is credible and who is not is important here.  As always, the game is to figure out how much of that is expected (and therefore discounted by) market prices.

3. Grouponzi does not know how to recognize revenue (WSJ, here).

4. Jim Chanos was still short China last week (here).

More later through the weekend…..