Take on the ticker

David J. Klein, senior vice president/financial consultant, RBC Dain Rauscher Inc., Vernon HillsHow did the markets do last week?"The action of the last week, really, #8230; was quite ugly. But I would also say that now is not the time to preach doom and gloom about the economy. Granted the dollar is weak. Granted there have been problems with the financial securities and the homebuilders economy #8230; but there are positives to talk about on the economy."Why are most bond insurers down 60 percent on the markets since mid-October?"It's not just the bond insurers. It's Fannie Mae. It's Freddie Mac. It's the mortgage lenders. The question really is, 'Do they have the backing?' Because we still don't know the extent of the troubles in the mortgage lending area. So because we still don't have a handle on it, a lot of what is going on is what I call the psychology of fear."What is the psychology of fear?"The psychology of fear takes hold when there are too many unanswered questions. As a side note, Freddie Mac, for example, which funds loans, is reporting they may record a $2 billion loss. And they are considering cutting their dividend by 50 percent. And one of the questions is, for example, Fannie Mae and Freddie Mac, did they artificially inflate appraisals to produce larger mortgages #8230; So the market is still looking for answers and that's why I say it is the psychology of fear."How are financial stocks doing?"Financial stocks in general -- that includes the banks, the brokers, the mortgage lenders -- have been the weakest sector of the broad market, along with the housing sector. Yes, Goldman Sachs put a sell signal on the Citigroup's stock, but after it had already fallen from a (52-week high) of $57 a share. But as recently as a few weeks ago, Citigroup was selling at $47 to $48 a share. To give a sell signal on a stock that is trading at about $32 a share is a little late in coming #8230; Technical analysis gave me sell signals long before Goldman Sachs put out a sell signal on Citigroup."How bad is it in the markets these days?"Now is not the time to be preaching doom and gloom in the market because there are a lot of positives out there. And also, while we don't have all the answers, a lot of the negatives have been revealed #8230; It's a question of what is remaining to be revealed."What about this week?"Technically, the market is oversold #8230; What I'm hoping to see is a selling climax, like we had in August. A selling climax is one where the market trades down sharply at the opening, and then we see a recovery, with heavy volume and then it closes the day higher in an upside reversal."