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Will Banks be First to Test the Oct 2002 Bottom?

That is not a typo. Since the banks will probably plunge through the March low soon, we have to ask: What is the next support area? And that would be the fabled October 2002 bottom that ended the historic bear market back in “ought 2″, as we old-timers say.

Make sure that you are sitting down, and take a look at this weekly chart of the BKX banking index:

Jim Cramer said again today that he thinks the market can rally without the financials. Cramer has been playing a crazy lunatic on TV for a little too long…or maybe he is just doing his part to keep the system from collapsing…

Let me be the first to predict that not only will the banks be the first sector to test the October 2002 low, but that they will also take it out. Why? Where there was a solid real-estate market in 2002, there is now a smoking crater. Banks and home-builders, at least, should go lower, right?

If you are a Sovereign Wealth Fool Fund, don’t despair, there will be plenty more financial shares for you to buy. Many, many more. If you think you can pump out oil or toasters faster than Wall Street can pump out stock, you are sadly mistaken… How do you say “dilution” in Chinese, Arabic, Russian, and Portugese?

Note: You guessed it, I am short the financials via SKF.

This entry was posted on Wednesday, May 28th, 2008 at 9:45 pm and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

6 Responses to “Will Banks be First to Test the Oct 2002 Bottom?”

  1. Robo Says:
    May 29th, 2008 at 5:35 pm

    Matt,

    I added SKF again for a trade with a stop @ 106.50. Do you have a stop order on your position.

  2. admin Says:
    May 29th, 2008 at 6:39 pm

    Hi Robo,

    No, I don’t have a stop. I will either hold it until the very bottom of the recession in January 2010, or I will take profits during the next panic and re-mount at the top of the next bear-market rally.

    Matt

  3. Robo Says:
    May 29th, 2008 at 6:57 pm

    I thought it was a longer-term position. Thanks!

  4. Mechie Says:
    May 30th, 2008 at 12:20 am

    Matt,

    I’ve been riding UYG (Mar-early Apr) and SKF (since late Apr) too. Think it’s the place to be right now.

    What’s the basis for your Jan 2010 bottom call?

  5. admin Says:
    May 30th, 2008 at 12:12 pm

    Hi Mechie,

    I posted about my bottom call here.

    Matt

  6. Matt Trivisonno’s Blog » Blog Archive » Cramer Confused, Kass Crushed, Meisler Mauled! Says:
    June 4th, 2008 at 3:39 pm

    [...] Both Kass and Meisler have violated a basic rule of investing: they have failed to take into consideration the sector in which their stock resides. Citigroup is in the banking sector, and that sector (the BKX) has now taken out the November 2002 low, and is rapidly closing in on the October 2002 low, just as I predicted. [...]

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