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After stocks closed out their worst January ever analysts immediately tried to make sense of the decline. Remember, January performance traditionally serves as a harbinger for stocks for the rest of the year.
Most say what bothers them most is the sharp slide in companies traditionally considered well positioned to ride out an economic downturn (firms as Procter & Gamble [PG
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] or Unilever [UL
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]). That, they say, underscores the severity of investor pessimism.
"We're in for another tough year," muses Dean Barber, president of investment firm Barber Financial Group. And he doesn’t see investor optimism returning in a meaningful way, anytime soon.
"You have consumer sentiment at an all-time low, job losses that have exceeded the total number of job losses in the '81-'82 recession; we're 13 months into the latest recession, so people feel bad."
Does that mean more declines lie ahead?
According to Dover Management CIO Doug Cliggott, the short answer is yes.
“The fundamental indictors seem to be deteriorating, he says, not bottoming. (He’s talking about things such as orders for non-defense capital goods, orders for consumer goods, hours worked in manufacturing etc.)
And don't don't hold your breath waiting for that to change. Cliggot says any turn in the market will take time. “The average downturn after the average financial crisis plays out over 3 or 4 years, and this is worse than average.”
So how should you trade?
“Long biotech and long healthcare,” Cliggott says. And stay away from everything cyclical.
- Your First Move For Monday November 16th
- Web Extra: Where Will The Next Bull Come From?
- Burned by Yahoo!, Disney and More
- The Latest Picks That Paid – Friday November 13th
- Pops & Drops: Dow Chemical, Macy's...
- Chartology – Can Stocks Break Above 1100?
- Fast Action: Using Options To Play Housing Bottom
- Bold Call Of The Day – Microsoft
- Hold 'Em Or Fold 'Em
- Off The Record w/ Charlie Gasparino: Bank of America
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Trader disclosure: On Feb. 2nd, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (BAC), (EEM), (FXI); Macke Owns (DIS), (MS), (SDS), (MCD); Finerman's Firm Owns (DNA) & (DNA) Call Spread; Finerman's Firm Owns (MSFT), (XBI), (IBB); Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO); Najarian Owns (AMGN) Call Spread; Najarian Owns (BMY) Calls; Najarian Owns (DRYS) Stock & (DRYS) Puts; Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Short Calls; Najarian Owns (GDX) Call Spread; Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls/Put Spread; Najarian Owns (V) Call Spread
CNBC.com with wires
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