KaboomCo
Bill Gross was criticizing a lot of people yesterday, but maybe he needs to look in the mirror because now we know why he is so adamant that the government bail out Fannie and Freddia. From a Bloomberg story:
“About 61 percent of Gross’s holdings were mortgage-backed securities as of June 30, mostly debt guaranteed by Fannie, Freddie or Ginnie Mae, according to data on Pimco’s Web site.”
If Gross is so smart, why is he begging for the US taxpayers to bail him out? If I had any money in Pimco, it would be bailing the hell out.
We’re into the third year of the mortgage crisis, and this guy still owns hundreds of billions of mortgage-backed securities??? Pimco sponsors CNBC, and the Pimco guys are treated like gods there, but if these guys aren’t morons, who is?
Pimco? How about KaboomCo?
If we taxpayers bail out Gross, there should at least be some sort of hazing involved.
Shortly after I wrote the above, the Wall Street Journal reported that Pimco’s CEO had resigned:
“Bill Thompson, 63, a 15-year Pimco veteran, will retire from his co-CEO post at the end of this year. He says one reason is because he wanted to leave at the top.”
“At the top” indeed! Talk about a Freudian slip!
Doug “Kaboom” Kass
At 7:57am Thursday morning, Doug “Kaboom” Kass called the bottom in this bear market:
“This is what market bottoms look like.”
Then the Dow plunged 345 points.
Make sure to take a look at Danny’s study of “all sectors red” days like we had yesterday.
Watch the comments section for updates throughout the day.
http://stockcharts.com/h-sc/ui?s=$SPX&p=W&yr=3&mn=0&dy=0&id=p55572292115
http://stockcharts.com/def/servlet/SC.pnf?c=$SPX,P&listNum=
http://stockcharts.com/h-sc/ui?s=$CPC&p=D&yr=0&mn=6&dy=0&id=p94253726891
http://stockcharts.com/h-sc/ui?s=$CPCE&p=D&yr=0&mn=6&dy=0&id=p94253726891
http://stockcharts.com/h-sc/ui?s=$CPCI&p=D&yr=0&mn=6&dy=0&id=p94253726891
The emerging EW structure implies a cyclical wave 3 of a C has begun via the weekly SPX chart from the ~50% retracement at SPX 1313; a bounce from the low to upper 1100s is likely before a low in the 900s in 9-10 weeks (Nov.).
A seasonal low and rally to the next low would be typical, followed by a plunge in late summer to fall ‘09 or early ‘10 to the ‘02-’03 lows.
C waves in a bear market are breathtaking and highly destructive; however, short-covering rallies are equally stunning in their tendency to take back bears’ gains, as shorts are the only ones with money/gains buying under the market in such episodes.
Moreover, volatility rises in a bear market, and even more so in a secular bear market, thus the VIX should make new highs for the cycle, i.e., above 44-45, in the next 2-12 to 18 months.
Don’t try to be a hero shorting from here; wait for a bounce from below SPX 1200 to scale in shorts to cover below 1000 this fall (around the “selection”).
The global economy is tipping into, or already has entered, a recession; the point of recognition has arrived or will very shortly.
We face the worst debt- and asset-deflationary global financial crisis since the 1930s and 1890s; prepare yourself and your loved ones accordingly.
Good luck.
Question is, are we going to get a strong bounce tomorrow, or will it be the day after? We’re clearly headed lower, but not so fast. I may cover at tomorrow’s close if we don’t bounce (end-of-day trading only).
Haha, nice piece.
Asia down almost 3%.
Financials in Japan down 6%. Carry trade is unwinding according to Reuters. That is not good news for stocks or assets.
RBS analyst in Japan: ‘This is not a flight to safety. It’s a flight.’
Maybe Dept of Labor will save the weekend?
New ugly day in Europe. Real panic might kick in today unless jobs numbers……..
Another hedge fund looking suspect ???? (FT.com Fri 5th Sept)
———————————————————————————
Atticus denies liquidation rumors
Speculation sweeping the market that large hedge fund Atticus Capital is liquidating its positions and closing down is not accurate, according to executives of the firm, reports the WSJ. Tim Barakett, founder of Atticus, which has about $14bn under management, denied the rumours and said: “In fact we have a large net cash position and are looking for opportunities to invest capital”. One reason stocks tumbled Thursday was selling by hedge funds trying to get out of positions they fear fellow hedge funds, such as Atticus, will sell if they are under pressure to close shop or trim losses. Some are trying to make money shorting stocks held by struggling hedge funds, traders say. Some stocks that Atticus has held in recent months were clobbered Thursday, including Burlington Northern Santa Fe Corp, Union Pacific and MasterCard.
Yerk,
Thanks for your response. A base long-term position and a smaller short-term trading position seems like a good strategy.
Generally I tend to do better on my long-term positions compared to my short-term (few days) trades. I think it is actually the thought process, for me, is different. I tend to be more thorough on the long term positions (and patient) and a bit more gung-ho on the other. All a question of discipline and patience (many is the time that I wish I had waited rather than rushed in!!).
IMHO, Gross made his bets based on the fact that the worst possible scenario would be a bailout by the Fed and/or treasury. Probably had a pact with Hank and Ben. Don’t forget Greenspan works for Pimco. I hope he had a hand in all of this.
Now Gross appears to be hung out to dry. He is acting like a spoiled kid cuz he is losing. This guy is the definition of economic socialism.
“Sept. 5 (Bloomberg) — Dell Inc. is seeking to sell all of its manufacturing plants worldwide” — wow!
unemployment 6.1 how do like that Crash?
That unemployment number didn’t look too good. Unemployment now @ 6.1% courtesy of Marketwatch.
Q,s premarket are down .53 44.07 the July low 44.23
This action is very similar to June 6th after the first jobs-bomb. So maybe the action in the second week of June is a good model to use now: rally attempts on declining volume can be ignored and/or shorted until we get the big high-volume capitulation plunge. After that, we could expect the next bear-market rally perhaps six weeks from now.
Anyone have a real-time quote on the market? I have this from CNN
S&P 500 -15.20 1221.40 9/5 8:32am
NASDAQ -22.50 1753.25 9/5 8:31am
Dow Jones -112.00 11088.00 9/5 8:32am
Looking to be another ugly day out there. Hang Seng below 20,000 for the first time in a year. Global recession is here boys.
Pooch,
I show a real time quote of 43.17 on the bid and 43.18 on the ask for the Q’s.
Where are you getting your quote from?
Charlie, SDS indicated at 71.39 / 71.4; QID 48.08 / 48.10 (but they have been higher!)
Ameritrade they were down there
The futures plunged to 1220 after the jobs news and are now making a rather blatant bear-flag pattern.
In the pre-market, tech is leading the way down so far, followed closely by Jim Cramer’s “early cycle” plays: retail, homebuilders, and financials. Health care (XLV) is the only green sector.
Marty Chenard at StockTiming is turning short this morning. He likes the QQQQ and IWM best for shorts. His site is the first thing that I read each morning. He doesn’t like to anticipate bear legs, but will jump on as soon as he sees a conclusive crack in the market.
Oh Pooch, I like it. Just think, we aren’t anywhere CLOSE to a bottom in job loss. Then in 2009 and 2010 we will see the Birth/Death model making job loss look WORSE. I wonder what the Birth/Death added for August?
What will be the catalyst for future job growth? Haven’t received an answer on that question for over a year.
All that said, I expect a big bounce at some point today. If we get it I’m going for some PUTs, probably QQQQ and SPY.
Good Morning Pooch,
I left Ameritrade last August when their system went down on a similar volatile early morning. I’m with TradeKing now and I couldn’t be happier.
Well thanks to job losses at 6.1% applw should be down for me. and skf should skyrocket.
k from mobile over and out hehe
jcmri,not to impressed with them but can’t switch accounts now
Crash,futures came way off there lows so after the 1st hour we could rally
Pooch,
IMO, it will be sooner, which would be good. Then a slow steady drop later.
Nokia tumbling.
If your considering a bounce, take alook at the IWM, ETF for the RUT. It has held up the best.
The 50MA is at $70.94. I might take a quick trade there with a tight stop
if the market shows any divergence at that moment.
Also, keep an eye on the vol on the SPY. Yesterday it tok til about 12:20 to get to 100M shares. Today, last check we are already at 66M shares at 10:10
no bounce ?
If no bounce that would be a nasty sign for the bulls heading into the weekend. You could see some nasty, panic action early next week.
Dollar getting strong again, oil dropping. This is fun.
SPY has some support at $122.50, which was the cliff that it dove off of the morning of July 15th. If that doesn’t hold, then SPY should proceed directly to test the July low at $120.
While the selling pressure peaked yesterday afternoon and continued declining this morning, the TRIN has turned back up over the last 30 minutes and the TRINQ has flattened out. Not bullish.
The Q’s have fallen below their July 15th intra-day low of $43.30, and that is now resistance.
So much for the RUT.
The SPX in July initially stopped it’s descent at 1,214.75 +- after an intraday drop to 1200. So, I am looking at 1,214.7 as my next target for a possible bounce.
After posting an Institutional Warning yesterday, an Institutional Index down move took the Institutional “core holdings” down to its 60 minute, two month support level.
This has a good probability of giving us an up bounce at the open today, but a high risk of failing and moving back down to test this support. If this Institutional Index breaks through the bottom support and closes below it today, then Monday could be a real nasty day.
One more note: Our ordering system went down last night and we are now trying to fix it. Any new orders or renewals will NOT be able to go through until we fix it today. If you need personal assistance while we are fixing this problem, please call Cindy at 828-296-1200 as she can manually enter subscription requests.
Please click this link for today’s update and chart(s):
http://www.stocktiming.com/Friday-DailyMarketUpdate.htm
(If you are having trouble with the link, copy and paste it in your browser.)
Regards,
That was from Marty Chenard
Lots of lov from SKF, SDS and BBT (early this AM, $1.00 move in 35 minutes).
Counter-trend in the making.
Should be a (?) after counter-trend in the making. Not yet though.
George,
are you still holding your SKF from yesterday?
Charlie;
Yes, the “core” position. But swinging it also.
Could this be the bounce?maybe i can jinx it
XLF is still tough as nails.
XLE is the big stinker.
Charlie;
Here’s a neat little scalp trade setup. This works for the 1 minute well but I haven’t tried it for the 5 and 15 time frames.
Set the screen up with a MA of 3, 9, 36. Have a stochastic.
On the 1 minute (long trades) when the candle crosses the 9 MA and the 5 candle crosses the 3 MA, and, preferably the stochastic has bottomed at or near the 20, although you don’t have to wait on that, that’s an entry.
If price moves above the 36 MA, hang with the trade until the MACD trendlines cross. If it doesn’t, get out when the stochastic kisses.
I believe this is my own ditty; I don’t remember reading about it anywhere.
I use it every day just about. I just used it on SSO.
I hope I described this correctly. Again, it’s using two time frames for confirmation.
Of course, you can continue in the trade by observing the higher time frame MACD, MA’s, whatever you choose.
Here it is – can the main averages go positive?
Yeah.. I know what you mean about XLF. Seems to be very strong.
I’m using the 5 minute to track the SSO trade because the 1 minute crossed the 36 MA which means that time frame is trending up with confirmation of the 5 minute.
over the weekend?
Now the 5 minute will approach the 36 MA as resistance. If stochastic turns over, I’m out.
Thanks for the tip Geoge. Going to try it soon
When and IF price CLEARS (i.e., opens and closes with an up candle) the 5 minute 36 MA, I will shift to the 15 minute to continue watching the trade.
If not, I will let stochastic turn down to 80 or MACD histogram go negative ON THAT TIME FRAME.
It cleared but that bar has not finished closing on my screen. Still on the 5 minute.
5 minute MACD still strong. I’m being distracted from stuff here.
I’ll keep following as long as possible.
Stochastic is turning over will get out if it hits 80.
15 minute stochastic and MACD is positive. Doesn’t mean it will hold, but if it does, has a way to go to get to the 36 MA for resistance.
My stochastic hit 80. I’m out.
George,
Thanks for sharing your trading style. Can you tell me what Time Periods you are using for you MACD and Stoch? Mine are (8,17,9) for MACD and (10,10) for Stoch and I don’t change them when viewing different time periods.
Thanks
Nice scalp. I made .90 cents on that one.
Nice trading George and thanks for the commentary through it!!
Dink;
Those are fine. I’m using stock charts and askresearch charts and the settings affect them differently even though I use the same settings on both.
Just get used to them and ensure stochastic settings follow price.
I’ve noticed no difference in the MA’s among various charting programs.
Now, as an aggressive trade, I would have stuck with the 15 minute until it took me out.
A lot of that depends upon where I get in.
But, it’s better to get the .90 cents than to have it turn against me – after all, I am bucking the trend here.
When I buck the trend, I know the moves are not going to be big. They will almost always be short.
bye bye bounce
Another way I do aggressive trades is to follow the 5 minute MACD once I’m in and let it take me out. BUT, that’s based upon the number of time frames that are cycling at the same time. The more, the better/bigger the move…like yesterday with SKF. You could see it coming.
Now, the 1 minute on the SSO is cycling. I will wait for it to set up again. Since the 5 minute MACD is still going up – with the 15 and now the 30 minute showing some life, I could make another scalp if it lets me.
Every timeframe above the 1 minute are TRENDING down because they are beneath the 36 MA. If the 1 minute holds, it could change that.
If not, SDS here we come. Which I should be in right now – lol.
Mish’s monthly take on the unemp number is 2nd to none:
http://globaleconomicanalysis.blogspot.com/
Just teasing about being in SDS. There’s no setup yet.
Anybody know how/why the 10 Year Yield jumped from 3.57 to 3.64 in minutes?
http://finance.yahoo.com/echarts?s=%5ETNX#chart1:symbol=^tnx;range=1d;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
The aggressive trade would have been the better choice.
Stochastic on 3 time frames were positive. That’s all it takes sometimes.
This is what I meant about re-entering the trade on the one minute when the stochastic turned back up.
I didn’t do that, but I am in BBT. which is defying gravity right now.
XLF up 1% now. that is quite strong.
Hmm, the SSO time frames stochastic are all going positive but not all have cleared their trendlines.
Need to watch that.
SPX 1,234 was the last low we broke through, which is todays current high. I am in a SDS position just below that level with a stop at 1,235.
eli;
What number does that equate to on SDS?
I’m waiting on the SDS and SKF trends to resume too.
Looks like SDS is filling its intraday gap.
XLB, XLE, are those the targets? Barring a Fed rate cut, I think XLF will possibly hold its range. That sucker is a tank right now. You couldn’t break it if it were made of glass and you had a sledgehammer.
I see very little positive with SDS right now.
this is a big rebound for XLF.
I bet the SDS 15 minute is going down to the 36 MA to test.
Charlie;
Had we taken the more aggressive side, following the successive time frame MACDs, we’d have the 15 minute up against the 36 MA right now deciding where it wants to go.
One clue for us is that the 30 minute stochastic is up and cleared its trendline but that time frame is not trending upward yet.
So, again, the scalp would be to use the 15 minute stochastic. Or aggressive would be to use the 30 minute MACD to get out if it turns over.
George
Sorry for the delay, it passed it up (or down) at .29
eli;
No problem. Thanks.
During June I made a lot of money beating up on XLF – it was the weakest sector, so that’s where the easy money was. During this bear leg, that doesn’t look like it will be the case. Rather, the Q’s look to be the ideal whipping boy over the next few weeks. Any other ideas on weak sectors going forward?
matt,do think we get much of a bounce on the Q’s
Wow, can you believe this market?
I’m selling my BBT. Look at the 15 minute chart – looks like a vapor trail of the space shuttle.
SDS hit that 36 MA and got a bounce up.
Great call on SDS George!
Now it has to hold.
Ok Q’s are probably best bet going into earnings in mid-late Oct and pre- announcements late Sept…… so my take , will adhere to the short side on this next rally that WILL happen soon, tech too washed out now and Lowry’s 90% down day yesterday plus heavy selling this AM is setting it up, if not today then Mon/Tues.
Matt,
I agree with your call on the Q’s being a mess. But I think it is a matter of days before the next shoe drops on financials. Gross spooked it yesterday. At any point it can be bad earnings, writeoffs, etc. Lehman speaks next week.
XLF on Gross comments yesterday should have imploded they didn’t in fact up today….. think we have a couple of weeks of XLF upside sloppy but up …… then swoosh!
BTW Gross if Fre and FNM head south in a big way Treasury ain’t going to Goldman or Blackrock for help and solutions, they will go to him afterall he can manage those portfolios with one sheet of paper and an HP 42c ……. he is by far the smartest and most realistic person in the bond biz bar none!
I’d hope to get another hunk of SKF into the close. I looks to be setting up.
Folks, on the next leg up, take a longer term view. We’re going down.
SSO still showing some life.
Any thoughts on the current move?
I was looking at the Trin. Currently @ 0.73 per stockcharts.. Is that correct?
Anyone can provide a view?
http://stockcharts.com/h-sc/ui?s=$TRIN&p=D&b=5&g=0&id=p19732310555
SSO looks strong. Its 60 minute cleared the 9 MA and has 4 white candles. But the MACD has not gone positive, so tentative move until then.
Perfect opportunity to swing the 1 – 5 minute when the higher time frames are up like that. Until the last one, of course, that will fail if the trend reverses.
Charlie,
Yes, the TRIN and TRINQ are in buying territory, so the bias is to the upside for the moment.
Matt
I think the XLF has been acting strong simply because the stocks have been so beaten down. XLF may simply go sideways for a year.
A year?
This is a great opportunity to play both sides of the market with scalps.
Very low risk.
Matt,
do you think that financials are done going down hence your comment? I know they have been damaged badly, but they still seem overpriced at the moment.