Weekend Stock Market Discussion
New Fed Programs
I don’t think the Fed’s new mortgage and consumer-credit lending programs will cure the recession. During the last recession in 2001-2002, we had a normal credit environment with a healthy banking system. And yet, we still had a nasty recession and one of the most fierce bear markets in history. The primary reason was that corporations had overbuilt their technology infrastructure and ceased further investments.
While we have an historic credit crisis on our hands, that isn’t the real cause of the recession. Just like last time, we are overbuilt. We have too many houses, cars, malls, hotels, etc. Thanks to Alan Greenspan’s easy money policy, we went berserk and built way too much of everything.
Even if a normal credit environment could be magically restored on Monday, it would not halt, and reverse, the direction of the business cycle.
Obama’s Economic Team
Cramer says that we shouldn’t be so negative on the economy any more because of the wonderful team Obama has put together. Whether or not this team is as fantastic as it is being billed, there is no man who can reverse the business cycle.
The cycle will cycle. Get used to it.
Depression Era Bear-Market Rallies
Yerk brought up the topic of the gigantic bear-market rallies of the 1930s, but I am thinking that we won’t see such rallies this time. Back then, they didn’t have good unemployment statistics. In 1928:
“Baltimore, which had started the practice of sending police knocking on a door-to-door journey, reported 42.5% unemployed, the highest in the nation.”
(That quote can be found on page 159 of the 1928 chapter of this book. The links to all of the book can be found on CyclePro. Thanks to Sherry for the CyclePro link.)
So, as much as we like to criticize our government statistics, we don’t need to send police officers door-to-door to count heads. And we are not likely to be caught by surprise by anything as were the traders of the 1930s. I’m thinking that we might see very large trading ranges like we have experienced since October 10th, but not the unrealistically hopeful rallies of the 1930s.
CNBC Copycats
Today, Fast Money showed a chart of how the market has plunged at the beginning of each month recently. But you heard it here first months ago. I posted my New Month Massacre chart here and here.
November 28th, 2008 at 8:34 pm
The cycle will cycle. Get used to it.
Matt, I have to disagree on this point. Larry Summers is such a nice guy he makes me feel like buying the new Dodge Ram 1500.
I’m thinking that we might see very large trading ranges
I’m counting on you.
November 28th, 2008 at 9:37 pm
damn them CNBC people ruined our surprise. now PPT will work hard to keep things up in beginning of month.
November 28th, 2008 at 10:41 pm
I like Fast Money in general, much better than Mad Money for the diversity of ideas etc.
A plea: For those who think we will not visit six handle ville, can you help me see the good news that I am missing? This is a serious question not poke at anyone’s viewpoint.
I don’t pretend to know where the market will go, but I made a bet that it will go down a lot. Sure, the over bought indicators point down, but that is not why I am short. I am short because of the silence, the deafening silence from CEOs. If you think what they are saying in public is not so bad please ask yourself what they are saying behind closed doors.
Again, I don’t want to be blinded by a negative bias so if credible source in business is publicly saying things are not so bad I would love to see a link.
I can’t believe I am this short overnight
Or how short I will be if we climb to 1000 on the SPX 
November 28th, 2008 at 10:55 pm
The recipients of all the new money are putting the reserves at FED and in Treasury Bonds. Some of them are buying up smaller banks to secure deposits. BofA is using TARP money to invest in a Chinese Bank. The M1 mulitplier is contracting rapidly. Whitney tells us the banks need the money to meet capital requirements in an environment of rapidly falling asset prices to match with their insane leverage. World economy has hit brick wall. We’re going down, even if 90% of the bears has covered and EW tells them otherwise.
To scare you, read this 18 month old piece: http://mises.org/story/2532
We are not there before Obama, Brown, Sarkozy, et.al. issue a 0% Credit Card to every citizen of their nations. Or before the major banks are solvent.
70 cash/gold
30 short
November 28th, 2008 at 11:02 pm
Newbie, as Yerk points out, companies, especially multinationals are way behind the curve. I have plenty of first-hand information of that. The U.S. companies are ahead of the rest, but will now be shocked by the global downturn (and the strengthening dollar).
As Yerk points out, companies (U.S. and others) are waking up now. Actually this week. Not 100%, but 75% wake-up. Believe me or not, the CEO’s and management were in growth mode 3 weeks ago.
Don’t worry about your shorts. Think about it as your pension fund. Think opposite of the Wall Street mantra. Sell and hold.
November 28th, 2008 at 11:04 pm
then perhaps you will appreciate this little month end markup chart I made?
http://tinyurl.com/5nqfoa
November 28th, 2008 at 11:36 pm
Nice one Danny.
November 29th, 2008 at 12:25 am
BTW, Matt, good summary
November 29th, 2008 at 1:17 am
40% short
60% cash.
if we do go higher am averaging down for the crash.
err i mean correction
November 29th, 2008 at 3:31 am
Kailash,
I think the fed WANTS to create some dollar weakness and some inflation. They have to increase the velocity of money or the printed money will just sit around. If people get frightened of inflation, perhaps they buy houses and stocks.
Bernanke hasn’t given up on asset bubbles as the preferred means of increasing GDP.
November 29th, 2008 at 4:01 am
Gigi, the banks are not lending out. They are parking it at FED or in Treasury bonds.
See M1 multiplier after FED started to pay interest on reserves. Inflation will only start when Obama starts infrastructure projects and when banks starts lending again. That’s a scenario for some time in 2009. For now we are in deleveraging and deflationary mode.
http://research.stlouisfed.org/fred2/series/MULT
November 29th, 2008 at 4:54 am
Gigi — no doubt, but as Larry points out, they’re not succeeding. Because the economy is full of malinvestments, and it’s hard to know which is justified, the attempt to reflate fails in the face of fear. The Fed and the Treasury are effectively trying to avoid or at least postpone the purge, but people will remain fearful until the bad investments are purged from the system. It’s quite a spectacle seeing them trying to pump money into the system and failing — it’s a new regime. The most people will do if you give them more money is pay down their debts.
It may be that slowing down the purge is beneficial overall, but it has the side effect of prolonging the crisis. If you go too far, it will deepen it.
These are historic times.
November 29th, 2008 at 7:46 am
Great discussion folks - thanks, I do learn a lot.
Larry, they are waking up… Waking up to what? One of the few sensible things I’ve heard during the last weeks was Nassim Taleb who wants to close business schools (Lahde made the same point, he put it a bit more drastic). They are looking at their models - in as Kailash says: historic times - and the time series have left the realm of confidence. Now they are lost or they force the models. No way this will work, flocks of black swans coming in from the tail end. The response is keep calm, button down, install confidence eg ignore the tail end. This is not forward-looking - as dblwyo asked yesterday are we going back to the caves? No, we are not, but we have too much debt that cannot be repaid and Wall Street has created a lunatic betting system on top of it. The most sensible thing I see so far is to cancel all derivatives, eg call them now and do not care wo goes bankrupt or not. As long as derivatives make counterparty risk insurmountable the banking system cannot unfreeze. The current approach to nationalise these risks is unacceptable as it leads to socialism for the better offs and to Iceland for the worse offs. As soon as too many Icelands are around, Iceland goes global. After calling the derivatives we would still be left with way too much bad credit but the ratios should be fathomable. [This seems to be a major point as I spoke with a partner in a law firms specialising in M/LBOs does not get it that derivatives have let risks decouple from the underlying credit. We cannot expect a prevention of a systemic meltdown as long as even key players in the system are ignorant of the working of the system]
The crunch accelerates as smart shoppers understand things will get cheaper. A friend who wanted to buy a new car got a tip from the dealer to wait 3-4 more months to get a better deal. Deflation kills the economy - refusal to finance or better to inflate oversupply should not be blamed on the banks. We are going to see amazing effects along supply chains - with tighter coupling the base suppliers get hit faster than ever before. [BASF reported, I heard a similar story from another company]. China is toast.
November 29th, 2008 at 8:49 am
China is toast.
China is in pure panic mode as you can see by all their actions last weeks. First huge stimulus package then enormous rate cut after having already cut a lot. But the stock market liked it so far. Despite the warning messages from different economists.
November 29th, 2008 at 10:21 am
Matt, re bear market rallies. I have been involved some time ago in the development of a forecasting system for prices in a commodity market. We managed to forecast short squeezes well in advance. The squeezes were triggered but not caused by external events. They were caused by the actions of market participants who knew that prices were heading lower as they understood key drivers of the market price, positioned themselves, made good profits for some time and then got burnt as the short squeeze happened. We could thereby estimate the magnitude of the hickup. Fair market price is irrelevant during the spike but is relevant with regard to the build up of shorting potential. Your observation some days ago that you need some time to build up shorts to get the next rally up fits well with this. Today we do have a better understanding of the economy than in the 30ies. The underlying theme of overshooting due to correct anticipation of market movements by too many participants although is not affected by the amount and correctness of the information available. Only better information about the actions of market participants would help but is not in the interest of Wall Street (and don’t even think about what is going on in crude).
My take is volatility will be higher as the system is more complex today and tighter coupled. Loose systems last longer and work better - the whole effort to save the world so far will therefore make things worse. We need different thinking to get out of the mess.
November 29th, 2008 at 12:31 pm
Yerk, with no uptick rule, I would think that price declines would encourage even more shorts to build up than usual. Sell-offs now are so violent that they give the impression that the market will go to zero.
Larry, Dennis Gartman was talking about the tankers being used for oil storage on Fast Money yesterday. Maybe we have found a growth industry: surplus oil storage facilities!
Matt
November 29th, 2008 at 1:05 pm
matt your rising wedge pattern if you draw it now looks like it closed up on itself. perfect setup for a breakdown.
November 29th, 2008 at 1:10 pm
Yerk, great posts, both.
Iceland IS going global. I feel the reverbations. Britain is on fire; the govt, economists and media are screaming for reflation. The rouble is under attack and Russia was never as stable as it apeared the last few years. China’s is in a panic and nobody is factoring in the bad debt and corruption that must exist in the closed Chinese society. The structural imbalances in the global economy built up over decades are collapsing. The incorrect actions (and inactions in the past) of the worlds govts are transforming this event from a worldwide banking crisis to a worldwide currency crisis.
I am just a stupid schmuck (I am engineer by profession, I wouldn’t be surprised if you are using one of my “products” frequently and no I don’t work for Microsoft) trying to survive. I started poking around last year when the market went down big in July. I was horrified; it looked like a classical Minsky Moment in a global credit bubble of epic proportions. Treasuries were a safe place over the last year. Now, to my untrained eye, it looks like a worldwide currency crisis is coming. I am not rich enough to take Marc Faber’s advice and stuff physical gold in switzerland. Houses remain too expensive. Thanks to Greenspan, Ben, Hank, and stupid keynisian policies, there is no safe place to hide. If I did my job as well as these people, I would be fired yesterday.
Anyway, I think it remains imperative to make whatever preparations we all can for Global Economic Turmoil which is coming soon. We have to remain flexible, not be tied to any thesis. I continue to think that at some point we will have to convert whatever money we have into tangible assets of some sort (houses, gold in switzerland if you can afford it, and perhaps shares of commodity companies with low debt) and hope for the best.
Thanks Matt for creating one of the best boards on the net.
November 29th, 2008 at 1:13 pm
Does anyone know if any companies (vs countries) are storing oil on tankers? I want to buy some puts on them
November 29th, 2008 at 1:18 pm
Royal Dutch Shell is one. Looking for more.
This does not bode well for oil prices. This reminds me of home builders shuttering houses until prices “improve”, financial firms refusing to take their marks because the assets are selling below “value”.
Will the Fed now step in and buy oil?
November 29th, 2008 at 2:08 pm
CNBC: Shoppers interviewed on Saturday said they were disappointed by the deals this Thanksgiving weekend and bet stores will offer even steeper discounts closer to Christmas — a worrisome sign for already struggling retailers.
http://www.cnbc.com/id/27968805
Consumers already in deflationary mode. Me too. Want to buy a car. But not now because I know I can get better deals in months to come.
November 29th, 2008 at 2:35 pm
I have a friend working at a retail store. it is small store he works at. but name brand (Hint: electronic store) since this is kinda confidential info i wont disclose the name of the store but i will say they had a target of 25k to sell they only reached 10k. talk about disappointing and struggling retailers.
November 29th, 2008 at 2:38 pm
I want to buy a car but i lost that much money in the market (used car lol)
I want to buy a house but i got no money haha.
I want to buy an e-book reader but they cost $300-400 and I know i will get a better deal if i wait a few more months.
haha
November 29th, 2008 at 3:45 pm
Oil was being stored on tankers throughout the height of the bubble in prices. It appears that OPEC is perfectly willing to continue withholding supply in that way. However, at the height of the bubble, the U.S. government was buying huge amounts for the strategic petroleum reserves, at the highest possible prices. Several analysts are saying that the cessation of U.S. buying helped the prices drop so dramatically.
November 29th, 2008 at 4:07 pm
[http://biz.yahoo.com/ap/081129/holiday_shopping.html]
I don’t think shoppers track was a good predictor last year. But still surprising. If even close to true, people have become unhinged from reality.
November 29th, 2008 at 4:51 pm
Trying my hand at some charts. Here is what I see:
XLB: In a descending trend although the trend seems to be flattening. Upper part of the channel appears to be around 24. Latest decline was actually on lower volume than the mid-october decline. The last rally on pathetic volume.
XLE: Could be forming a rectangle in the 40-53 area. Volume pathetic on the last rally
SPY: Hitting the top of a declining trendline from mid august.
QQQQ: Near the top of decling august trendline around 30.
November 29th, 2008 at 5:10 pm
Leadership in the curent rally is coming from financials and oil. Both very heavily shorted and in the case of financials manipulated by the govt.
BTW, don’t know what to make of XLF as there is so much manipulation.
Its hard to believe that we break out to the upside with the absurd amount of bad news hanging out there.
Could some people see a reverse head and shoulders forming with the head at 750 and shoulder at 840 and nect at 1000? Seems utter madness to me but who knows….
November 29th, 2008 at 5:21 pm
dressgaurd, I agree about China. Isn’t this the country that claimed 7% GDP growth just a short time ago? Now why would they need to cut rates and give a massive stimulus package? I was rather annoyed with the media’s handling of China’s stimulus package. They kept quoting the raw number of $586 Billion but not pointing out that this is nearly 18% of China’s GDP! China is screwed, they know it, and they have no idea what to do about it.
K, that’s a pretty sad retail number. I wouldn’t underestimate the media’s ability to (at least temporarily) swing the retail sales as positive. Then when the actual data comes out, down we go.
I have SPX 940 on my Christmas List so I can short it into oblivion. I don’t even know what I would do if it went up to SPX 1000. A Christmas Miracle!
November 29th, 2008 at 6:51 pm
Towelie, Santa may be generous to you (and us) this year. Though given the recent insanity we may have to sell and hold as Larry noted.
On the sane side - A Barrons piece on the ‘big’ three in Detroit needing to file bankruptcy:
http://online.barrons.com/article/SB122792686803266225.html?mod=9_0031_b_this_weeks_magazine_main
November 29th, 2008 at 7:12 pm
914-931
November 29th, 2008 at 7:31 pm
some very interesting charts.
http://www.stocktock.com/2008/11/29/weekly-charts-monely-flow-vs-spx-eom-rallies-xlf/
November 29th, 2008 at 9:13 pm
-320k
Bloomberg released the estimate for Friday’s jobs report early. Normally, they release the survey results on Sunday, but you can see the number in the last paragraph of this article. Last month, the number was -240k, so this estimate is much worse.
November 29th, 2008 at 9:16 pm
We’re all expecting a Christmas rally, including me, although at this point it’s starting to feel like believing in Santa Claus. So a rally to where? What do people think — how high are we going?
One reason I think we’ll make new lows in the coming couple of weeks is that we need new lows to create a worthwhile Christmas rally — low enough so that going back to 1000 will seem something worth celebrating. A further downward adjustment of expectations will make us easier to please, happier with less, and we need this to bring our psychologies closer into alignment with the reality of the economy in 2009. There is still too much hope to rally, as if we were headed back up to 1200 before the pain set in in earnest.
November 29th, 2008 at 9:27 pm
Thanks, Matt — those are awful figures.
“Non-farm payrolls shed 320,000 jobs in November, compared with a drop of 240,000 jobs the previous month, according to the median forecast in a Bloomberg News survey of economists.”
In the last few months, the revisions to the initial official number have been dramatic, and the trend clear:
November -320,000 (Bloomberg est)
October -240,000 (may be revised)
September -284,000 (revised down from 159,000)
August -127,000 (revised down from -84,000)
November 29th, 2008 at 10:25 pm
well well well. seems like i spent half a K today and yesterday
$130 digicam
$180 ebook reader
$80 digital picture frame
some other things
damn haha talk about online shopping. didn’t help retailers tho only online places so still bad retail sales to be expected?
November 29th, 2008 at 10:55 pm
weekend video time
http://www.ritholtz.com/blog/2008/11/shiller-crisis-may-run-for-years-and-years/
November 29th, 2008 at 11:02 pm
@ Kailash it didn’t seem like Matt was expecting a further rally.
I am still very cautious so I plan to scale in if we climb to 1000 SPX. I am 20% short and will be 40% if we get to 1000 SPX.
November 29th, 2008 at 11:23 pm
If David is correct (914-931) I won’t pick up any more shorts.
I should have said it did not seem like Matt was betting on a further rally, I am sure he is open to the possibility of a further rally.
November 29th, 2008 at 11:23 pm
The market should be correcting the recent advance very soon. Wednesday onward should see a downside move that shoul intensify into Dec 10-15, but my best guess is this will be a short term decline before one final bear market rally into early in the new year before the next stage of the secular bear market which I expect to occur in Q1 March and take the SP500 within 50 points of 600. While the blatant attempts to maniplulate the credit/money markets continue and now that printing is in full force, the awesome amount of debt destruction is clearly overwhelming the amount of printing and so deflation is winning for now. The Fed will fail in its attempt to reflate in the near term. Velocity is dropping and the public is saving more money and being frugal - hardly conditions for hyper inflation. These guys are, in almost all cases, educated and experienced in flawed economic theory (neo-Kynesian and Monetarist) and students of an anomaly in monetary history (a debt based, fiat money US dollar reserve currency where massive twin deficits have continued for years on end). That is why they really do not understand the core problem and therefore cannot come up with the proper solution. The assumptions about human behaviour inherent in their models are incorrect. So for now, any savers (or debt free people) should enjoy the deflation while you can. It may last 2 years or 10 and no one can predict when this will change to hyper inflation. I would still recommend most investors hold a healthy amount in bullion (actual gold investment not gold shares) because anything can happen at any time. I am expecting any deflationary period in the US to be relatively short and no where near a Japan scenario - but not because of any “solutions” the Fed or Gov’t implement. I am watching several signs for this change into hyper inflation which I think will be relatively sudden. Signs incldue 1) Velocity - if it starts rising, 2) USD index - look out if/when the previous low just under 70 is taken out, 3) Amount of printing exceeds best guess of credit marked to market, 4) A blowout on the CDS spread on the 10 year US Bond, 5) an explosive close in gold above its previous high of just over 1K. I do think all taxpayers in Western nations need to focus intense efforts at a grassroots level to support a campaign to abolish the Fed, end fractional reserve banking and to stop the endless stream of bailout applicants appearing before us. Nothing will change in the long run if any re-structuring attempts are mere band aids on the existing architecture of the global financial system - a true Ponzi scheme as it stands now.
Cheers
JO
November 29th, 2008 at 11:56 pm
Copper, the leading economic indicator of commodities, is heading deep south. Check the 15 year perspective and the triple-top.
http://www.findata.com/Markets/StockQuote/INDEX/CPR.htm
November 30th, 2008 at 12:49 am
Well, I’ve spent some time dissecting EWT and the charts. Seems like most EWers feel we are on wave 4. I appreciate the time and effort they have put into their charts, and they may be right. That said, I have an unsettled feeling in my gut when I need to put the one-minute chart under an electron microscope to see what wave we’re on. (Just a joke, not intended to be disrespectful of anyone or their work–as I appreciate that work and the labels may very well be right. Just saying when I feel lost, I zoom out rather than zoom in.)
Hence, I decided to take a big-picture view and look at the daily charts. After examining those charts along with numerous indicators and their harmonics, vectors, etc., I have concluded a legitimate case *can* be made that we are now completing wave 2 of 5 of 3, and the “intermediate rally” everyone is seeking (Wave 4) is yet to come. If true, we would be seeing new lows in the next 1-4 weeks. I’m not asserting this is the correct count. Rather, I bring it up to encourage all of us to keep open minds and watch things unfold without predetermination. It’s good to try to see all the possibilities of what may be coming and trade what we see, not what we expect to see.
Time will tell. No matter which wave we’re on, shorting right now looks to be the proper call.
November 30th, 2008 at 1:15 am
looks like sales are done the $180 ebook reader is now back to $350 now let’s see those retail numbers start trickling or is tomorrow another shopping day? LOL
November 30th, 2008 at 2:47 am
let me explain my target range. this is for this particular rally. after it tops I expect it to give back half to 62.% of it.
then I would not be surprised to see another rally to SPX 1000 area and DOW 9600-9670 and maybe 10,000.
but after this wave (4) is over, however the structure turns out, new lows.
November 30th, 2008 at 3:30 am
newbie, I didn’t mean to suggest that we will rally from here, but that we will have a Xmas rally. I expect us to go down first, and argue that we we see a new low, that is to say below 750, before the Xmas rally. I don’t know if Matt thinks we’ll have a Xmas rally or not.
November 30th, 2008 at 3:53 am
K, thanks for posting the link at 7:31pm — the money flow chart, using the data from WSJ, is very striking.
There’s been selling on strength on a series of consecutive days, adding up to -$1,022 + -$117.41 on Friday. It suggests we’re on the edge of the cliff, and is consistent with an end-of-month tape-painting and a new low ahead.
I don’t think we need bad news to go down — the bad news will come at the bottom. The media will grasp onto anything they see and claim that’s the reason the market goes up or down; there’s often no genuine causal relation.
November 30th, 2008 at 3:57 am
Let’s see who gets to claim he or she is an economist a week from now!
“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.” —Laurence J. Peter (1919 - 1988)
November 30th, 2008 at 8:49 am
One bearish factor that most seem to have overlooked is the fact that junk bonds hardly budged last week despite the big stock market rally.
This is a major negative divergence IMHO.
November 30th, 2008 at 10:02 am
Kailash, like i said on an earlier thread.
am reading trend following by michael covel
saw a quote by Donald Rumsfeld…
“Everyone’s entitled to their own opinion, but they’re not entitled to their own facts”
I think it is very true and might really relate to this upcoming week hopefully
November 30th, 2008 at 10:03 am
and this is a post i made which shows a trendline yet to be broken on the s&p
http://investingfreak.com/2008/11/29/5-days-up5-days-down/
November 30th, 2008 at 10:07 am
looks like gold broke out of it’s rectangle
http://www.investmentpostcards.com/wp-content/uploads/2008/11/30-nov-v13.jpg
darn i need to get a stockcharts account again so i can quickly see breakouts and such
November 30th, 2008 at 10:55 am
Pretty good article on reasons for aberrant behavior of the German govt:
http://www.ft.com/cms/s/0/0c618e00-bd62-11dd-bba1-0000779fd18c.html
Article is too positive though as these windbags don’t walk the talk.
November 30th, 2008 at 11:08 am
Matt-
If you have a place to charge it, Dad
and I will give you a Telsa instead of
a Buick. It will take you from 0 to 60
MPH in 4 sec. and gives you around
220 miles per charge…takes 3.5 hours
to charge.
Am looking for the SPX to top Monday/
Tuesday and then move sideways (dome top)
before starting the move to new lows.
As always tape action can make me a fool
again.
Sherry
November 30th, 2008 at 3:59 pm
Here’s an interesting article on retail sales for those interested in reading.
http://www.reuters.com/article/marketsNews/idUSN3047405120081130
November 30th, 2008 at 4:07 pm
Marvelous post and comments - big picture and small. Be interesting. On Matt’s core points about a) cycles being cycles and b) the downturn being a separate fact from the breakdown of the credit and financial markets seem very true IMHO.
FWIW you might find these interesting on the current situation, outlook (worldwide) and why a rational short-term and strategic fiscal policies are so vital:
Cycle and Fiscal Policy:
http://llinlithgow.com/PtW/2008/11/first_things_financial_crisis.html
State of US Economy:
http://llinlithgow.com/bizzX/2008/11/storm_flags_flying_state_of_th.html
State of the World:
http://llinlithgow.com/bizzX/2008/11/fragilities_exposed_downturn_w.html
And Neill Fergurson on C-Span discussing his recent book on world financial history and the role and importance of credit to progress as well as the recurrent problem of bubbles and busts.
http://www.booktv.org/program.aspx?ProgramId=9954&SectionName=History&PlayMedia=Yes
This sounds very…very good.
November 30th, 2008 at 7:00 pm
a lot more bad data/reports out there on weekend sales. This one is a bit more closer to reality if any of you are interested in reading it:
http://www.nytimes.com/2005/11/28/business/28retail.html?ex=1290834000&en=372ee37814e4df19&ei=5090&partner=rssuserland&emc=rss
November 30th, 2008 at 7:17 pm
TIPS vs TLT — divergence??
TIPS has gone down significantly while TLT is up sharply. The divergence started in July and has gotten much worse lately. They tracked pretty well in the past 5 years. I don’t see any other period where they move opposite to each other.
The only thing I can think of is some kind of arbitrage where TIPS are sold and TLT bought to bring their yield to parity as expected CPI is 0 or negative. Nothing else makes sense.
Any ideas?
November 30th, 2008 at 7:18 pm
Charlie, that is from 2005
November 30th, 2008 at 7:51 pm
Asia down. Marc Faber on CNBC: ‘Global Economy in 09 will be total disaster. ‘I know factories in Suisse that hasn’t seen order for 2 mths.’ Buy and hold dead for past 10 yrs and next 10 yrs. Volatility and traders market.’
Then he was cut off. Welcome to the real world cnbc listeners.
November 30th, 2008 at 7:58 pm
Gigi — Interesting.
Part of that story is a shorter-term divergence this week, as the long bond anomalously rose along with stocks.
Asian markets are opening, down so far. Futures mildly down,
S&P 500 DEC08 885.70 -960
November 30th, 2008 at 8:00 pm
that talking box in my room said retail sales were up 7% from last year. I fail to agree with it.
November 30th, 2008 at 8:12 pm
look at this trend line of the s&p 500 that i drew..
http://i36.tinypic.com/hvuk4z.jpg
November 30th, 2008 at 8:27 pm
what some of you guys are missing is the fact that during bear rallies, the market sometimes tends to ignore bad news for a while because the rallies are technical.
November 30th, 2008 at 8:46 pm
That’s funny.. it was linked on by the Big Picture. Thanks for the catch
November 30th, 2008 at 8:51 pm
and here we get another person thinking alike.
http://tradermike.net/images/SP500_11282008.png
November 30th, 2008 at 8:55 pm
Hi David,
True. Part of the argument now is that we’ve had a strong technical rally that doesn’t have good underpinnings — the long bond is rising, money flow is sharply negative.
This is not a matter of winning arguments — the stock market does what it does whatever we do. And it’s not a deterministic science; there’s no “right” knowledge here. We’re in competition with very sophisticated players — but we’re small, and thus more flexible than them.
November 30th, 2008 at 8:57 pm
who is trying to win an argument? not me. I just see alot of people posting fundamental reasons why the market should go down. If this is how it worked, we would have never seen the present rally at all.
November 30th, 2008 at 9:06 pm
David, I was heavy in short etf’s during march to may. We know it can go on bad news. Let’s see this week.
November 30th, 2008 at 9:07 pm
David,
Agreed. The market does what it does, and then news is reported accordingly (market liked the data, market didn’t like the data, market disregarded the data…).
I like fundamentals for a broad picture, but technicals to trade by.
LOVED the Loch Ness monster and its diet! You still get my vote.
November 30th, 2008 at 10:55 pm
K, yes, we seem to be sitting right around the trend. Would the MMs try to run the stops on the other side?
In general, I think the fundamental argument is not that stocks must go down now. The fundamental argument is that things are bad and getting worse. So stocks should go down over the next 2-4 months. Short term, who know? I still think this rally was sparked by the MMs for options expiry and that triggered waves of short covering.
Larry, others,
it seems likely that prices will push significantly lower which will lead to even more bickering amongst the OPEC members, etc. The bottom may be where enough marginal production goes off line to stabilize supply/demand.
Do you have any thoughts on how low oil can/may go? With the recent OPEC non-agreement