Earlier this week, we discussed several anecdotal pieces of evidence that suggested we were closer to the bottom then the top.

Today, we look at specific data and charts that can provide some insight as to how extreme these present levels are. All these suggest to us that we are increasingly close to a bottom that can be purchased for an upside trade of 20-30% from these levels.

NOTE:  We scale in over time, in 10% increments, and recognize that the bottoming process can take several months to several quarters to complete. Hence, slowly buying in is the key.

~~~

1. Relative Strength Indicator, SPX, 1928-2008

Ever since the beginning of the S&P500, the RSI’s monthly indicator has only dropped below 30 on four occasions: 1929, 1973, 2002, and 2008.

All 3 prior instances were very close to lows.

Rsi_192808

~~~

2. SPX Losses

The S&P has given up nearly the entire gain from the 2002-03 period to the October ’07 highs.

Spx_retest

This is a major correction that, like the many trading rallies in the 1970s, should set the stage for the next leg up.

Note that these were not buy and hold rallies, but 6 – 18 month trades.

~~~

3. Dow Components and the 200 Day Moving Average

All 30 Dow stocks are below their 200 day moving average — a condition that has only occurred once before — and the last time was right after the 1987 crash.

~~~

4. Cash Allocation

Investors current allocation to Cash is well above its 21 year mean and are at the highest levels since ’02, ’98 and ’90 lows.

Cash_allocation

Chart courtesy FusionIQ

~~~

5. 90/10 days

This week has seen three 90% downside days, reflecting massive liquidations.They can only continue for so long.

As noted above, we believe in scaling into long positions. We would become more aggressive buyers after the first 90% upside day. This has historically created a good entry for a 1 to 3 to 6 month holding period.

~~~

6. Percentage NYSE over 200 Day MA

The percentage of stocks trading over their 200 day moving average is at multi year lows:200_day_moving_avg_spx

Yet another historically excellent entry point.

~~~

7.  Gold vs SPX

The cost of an ounce of Gold is now greater than the S&P500; This last occurred in the early phase of the 1982-2000 bull market — around 1984.

~~~

8. VIX Moving Average

The VIX (also known as the Fear Index) hit a multi-year high of 70.90, reflecting extreme levels of emotion in the markets. We like to look at this on a 50 day moving average

VIX Deviation From 50-Day Moving Average

Vix_50_day

Readings above 15 over the last 10 years have produced significant rallies.  The present reading on this indicator is 26!

1998 Reading Market Up + 27 % (3 Months Later) and + 36 % (6 Months Later)
2001 Reading Market Up + 22 % (3 Months Later) and + 22 % (6 Months Later)
2002 Reading Market Up + 14 % (3 Months Later) and + 19% (6 Months Later)

If History bears out this should be a good buying opportunity with a 3 to 6 month horizon.

~~~

9.  S&P500 is down 47% from its peak level one year ago. Transports are down 38%. These are relatively rare degrees of loss, and suggest a near term upside move.

Trannie_fall_38

~~~

10. The following two charts show the 2002 lows, and the current market. Can you tell them apart?

2002_2008

2008_2002

Highlight for answer:  The first chart is 2002, the second chart is current as of 10/10/08

Category: Contrary Indicators, Investing, Markets, Psychology, Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

141 Responses to “10 Bullish Charts, Signals, Indicators”

  1. DL says:

    Should get a very signficant rally from November 1st to January 15th.

  2. APB says:

    Barry: I flipped the one year BJIA chart yesterday. If the flipped chart represented a stock, I would have shorted it today.

  3. harold hecuba says:

    the s+p will have its countertrend rally at some point but it’s truly a guess as to where it commences. we are in liquidation deleveraging crash mode and all indicators might as well be tossed out the window. hope the discilpined one;s get their rally but i’m afraid it won’t be as great as most think.

  4. hr says:

    Once the credit crisis is fixed, maybe.

    If there are several hundred TRILLION in derivatives going broke, then I’ll wait.

  5. RDS says:

    %Stocks below 200 DMA & 50 DMA at 1987 crash levels….close to 0

  6. RDS says:

    %Stocks below 200 DMA & 50 DMA at 1987 crash levels….close to 0

  7. DL says:

    May or may not be relevant, but after the ’29 crash, the Dow rallied 35% (11/14/29 to 4/15/30).

    Surely the SPX can muster a 15% move in the next rally.

  8. I have the odd thought that we’re going to be looking back, and wondering if DJIA 10000+ was just a ‘dream’…

    One thing is for sure, this current Chapter will be entitled: “Mission Accomplished”

  9. CNBC Sucks says:

    Barry, please please don’t get pissed. You have done a fabulous job presenting a contrarian view for a long time and you capably represent those of us who are less optimistic to the rest of the world.

    But does anybody know of any other good blogs that represent a really pessimistic view of the world? I don’t mean an appeal-to-authority, ad hominem, immature sexist rant blog like mine, but something that consistently makes convincing analytically based arguments that we remain far, far from even thinking about bullish indicators.

  10. Steve Sposato says:

    Dear Barry

    I’ve been studying the “credit default swaps” market for some time. It is said that there are $58 trillion of these outstanding. Though some are off setting many may be built on leverage and unreserved.

    What will happen as a result of the Lehman auction today and similar events is that those solid institutions that underwrote CDS contracts which they than turned around and hedged with an off-setting CDO will still be obligated contractually for the CDO they underwrote while losing their protection to a bankrupt counter-party. They will than have unhedged exposure and may be taken down by the same bankruptcy or another depending on whom they underwrote. A few major bankruptcies will take down the whole $58 trillion edifice like a “house of cards.”

    The only way to resolve this is for the U.S. government to declare “force majeure” and annul these contracts. Parties will be relatively little scathed financially as they will lose only the premium flow and un-callable protection where they have underlying securities to protect.

    An Economist
    Steve Sposato

  11. aram says:

    good call barry..

    i am selling far out of the money puts at this levels.

    AAPL strike 45 puts are yielding nice premiums.

    msft strike 15, intc strike.

    choose any stock…and discount by 20-30% (crash scenario) and if you think it is cheap, you go ahead and sell the puts.

    but keep plenty of cash for margin(in case market crashes).

    i am starting with 20% of my cash, will add 20% after every 10% drop in my specific stocks.

    worst case scenario….we may get a 50% sell off. but if we have enough margin money, our puts wont hurt.

    volatility is at record high its time to sell it.

  12. Big J says:

    BR is correct, there are bullish indicators out there that suggest opportunity is nigh. Watch the price action as that will tell when it is true or not. Probably very close to a bottom/floor for price levels.

  13. Marcus Aurelius says:

    It’s contained!

    (sorry for the redundancy)

  14. Dan Duncan says:

    For the past 5 years, we were told to ignore the excessive leverage, the trade deficits and the “one way carry trade” because it’s “different this time”.

    The irony is that since it turned out that it wasn’t “different this time”, we’ve now reached a point where, indeed, it may actually be different this time.

    Nonetheless, you make a compelling argument, though…

  15. The liquidity crisis is on its way to be solved through our hard work (selling papers and derivatives) pushing liquidity in our coffers and scaring our piggy bags, and we are not ready to resume the up trend until we get full attention of our bail out governments .
    We have since two weeks discovered our predicaments and thank you for noticing!

  16. Brian says:

    Wow – Did CNBC just quote Greenspan as saying he sees a bottom in housing in the first half of 2009? He’s needs to stay quiet.

  17. Mr. Obvious says:

    Isn’t the sum of all these “indicators” really just the thought that “Hey, we are so far down that we have to go up from here.”

  18. leftback says:

    Wonderful stuff Barry, and rational as ever. It’s just a very, very long day for rational beings today, when we are surrounded by lizard brains who are determined to lock in their losses…

  19. dead hobo says:

    Can’t disagree, for the most part. The market is in a position to buy back in a big way as soon as it looks safe. It won’t stop falling until the bad new stops coming on a daily basis.

    On the good side, all this new government liquidity should propel the markets to a good place when the ballast is dumped.

    McCain finally had a good idea. He wants to temporarily stop mandatory withdrawals from IRAs for those over 70. It just goes to show, if you give a monkey a typewriter, eventually something that looks interesting will emerge.

  20. Greg0658 says:

    28-08 chart looks like Al Gores global warming and intense hurricane frequency stats

  21. wally says:

    Well, Mr. Obvious, I think you are ignoring the goat-bones evidence when you can see it quite clearly there before you.

  22. UpYourAssets says:

    Similar evidence from Faber’s quant model that is 100% in cash – has only happened 4 times before….

    http://worldbeta.blogspot.com/2008/10/100-cash-out-of-sample-returns-and.html

  23. johnnyvee says:

    Equities go up if cash flows into equities. I don’t see cash flowing into equities. Have you studied the charts around 1929? The sucker rallies were devastating.

  24. Dru Nelson says:

    Raise your hand if you want to hold
    over the weekend?

    Anybody??

    Seriously, the rally would have been good on Wed. or Thurs.

  25. Jay says:

    I’m flat. Made a killing this week long volatility. Staying in cash until we hit some kind of support.

  26. Donkei says:

    DL,

    The rally in 1930 was followed by even deeper declines until the Dow bottomed at 41 in 1932, an 89% “correction” from its highs in April of 1929. It muddled along for another decade until the war precipitated a lasting rally.

    Although I don’t doubt some smart people here have the capability to do so, I have very little confidence that I could time or know the bottom. IMO this is a secular bear market, from which recovery will take years.

    I’m staying long guns, butter and beer.

  27. Eclectic says:

    This will kill you, Barringo.

    While I’m emailing you privately, wife says:

    “Eclectic, where’s the market now?”

    I look and it’s down 417 and I say “Take a guess.”

    “Down 100″ says she.

    “No… 417″ says I.

    “Well, that’s the ‘New ”’Down 100”’ ‘ ” comes her retort.

  28. Brian says:

    Who is left to sell? Seriously, are people that stubborn, is their risk management really that bad that they decide to sell now? Think of all all the buy and hold investors who were scammed by Wall Street, it really is a shame.

  29. Economic Enema says:

    The reason the charts look the way they do is because there’s a reason.

    How many times have we been in this situation before? Is this a time to use “normal” analysis?

  30. good call barry..

    i am selling far out of the money puts at this levels.

    AAPL strike 45 puts are yielding nice premiums.

    msft strike 15, intc strike.

    choose any stock…and discount by 20-30% (crash scenario) and if you think it is cheap, you go ahead and sell the puts.

    but keep plenty of cash for margin(in case market crashes).

    i am starting with 20% of my cash, will add 20% after every 10% drop in my specific stocks.

    worst case scenario….we may get a 50% sell off. but if we have enough margin money, our puts wont hurt.

    volatility is at record high its time to sell it.

    Posted by: aram | Oct 10, 2008 12:54:27 PM

    aram, good for you, someone that understands fading volitity, and ‘getting paid to long(sythetically)’

    nice charts BR, way to keep on keepin’ on ~

  31. dafox says:

    Great Depression vs Today}g graph:
    http://spreadsheets.google.com/pub?key=pGy0BQU1PZ9AYrZgFwaFWHQ&oid=2&output=image

    I threw that together from Yahoo’s historical data. Basically, I took the data and did %change for each day. Then I found the high before the depression (381.17 on 9/3/29) and put in our high (14164.53 on 10/9/07).
    Blue & Red = Dow in Great Depression converted to our numbers today (starting with our high, and then loosing/gaining x% daily)
    Yellow = Actual true numbers as of yesterday.

    The good news is if we followed the track all the way down, DOW would get down to 1531! I dont see that really happening.

  32. nice spelling,

    make that ‘volitility’ and ‘synthetically’

    @Donkei, you want to 2xDown! IOW: I agree.

  33. DL says:

    There’s an article on the CNN website about the financial problems at GE. There’s nothing in here that would come as any big surprise to regular readers of TBP. But it may help shed some light on why the executives are so intent on trying to brainwash people through its CNBC subsidiary:

    http://money.cnn.com/2008/10/09/news/companies/colvin_ge.fortune/index2.htm

  34. aram says:

    brian..

    its forced selling.

    people pulling out of mutual funds in their retirement funds.

    hedge funds deleveraging due to redemptions.

    in other words market is not trading on fundamentals, hence its time to risk 20% of capital, with 30% downside protection.

    Donkei…i dont think we will se 1930 style depression any more….

    long recession yes……but central bankers will print their way out of this asset deflation.

    my only worry is at the incompetencies of central bankers or treasury chiefs…..since so far they were reluctant to plan for worst case scenario.

  35. Dr. Kenneth Noisewater says:

    The only way to resolve this is for the U.S. government to declare “force majeure” and annul these contracts. Parties will be relatively little scathed financially as they will lose only the premium flow and un-callable protection where they have underlying securities to protect.

    Glad I’m out of SKF/SEF then…

    (startin to look at SNHY, XNPT as the least scary things to pop up on my high-value/low-debt screener.. Apologies in advance if mentioning actual stocks is bad manners..)

  36. a different chris says:

    >rally in 1930 was followed by even deeper declines

    Yeah that whole “1929, 1973″ thing isn’t making me feel any better. Neither of the following decades are exactly fondly remembered.

    And ’02 was greeted with the second (and maybe fatal) implementation of “blow up a bubble, any bubble” thought process. Let’s hope that has been discredited.

    Yeah, of course the market will recover, but this looks like Shock doctrine at its most sophisticated – which means that the market will again be the provenance of the rich, as the masses will simply be told that they cannot be paid enough to buy sh*t.

    At least in ’73 there were pensions and health care wasn’t so good but it was cheap (pretty much any major medical event had a good chance of killing you off pretty efficiently).

  37. rootless cosmopolitan says:

    I only need a bear market rally and I will be settled. Until then I am going to continue to buy and increase my long positions in stocks.

    Why are so many almost fully in cash near the local price minima? I usually am mostly in cash around the local price maxima.

    I can understand, when people with a long term horizon are in cash in times likes these. I moved my retirement funds 100% to cash in spring last year. But traders with a short term horizon?

    rc

  38. Jonny says:

    Went long last couple days, down about 5% right now. You could say I’m a bit nervous. Any of you trader-folks have a good stop-loss level in mind? Don’t want to get shaken out before “the” pop if it happens, but don’t want to be left holding the bag either. S&P 830?

  39. rootless cosmopolitan says:

    OK, Barry is turning bullish. That’s a good sign.

    But have the permabulls turned bearish? Cramer just has. Who else?

    rc

  40. horrified spectator says:

    on the longterm monthly charts, only the RUT, the $BTK and the trannies haven’t decisively pierced their 200 month moving average. are you suggesting a bounce back up to that ma? even the ’02 lows only took most of the major indices down to or just under that line. ($spx just under 100 month ma). a rally which fizzled at that the 200 month sma would result in a most ominous looking chart, with dire longterm implications. scary days.

  41. larster says:

    did anyone think of Katrina, as Bush spoke this morning? Reminded me of his press op after Katrina when he listed the truckloads of ice, beds, etc That did not work either. If you are going to have a major hedge fund crash every few days, the unwinding of cds contracts every week, how do we get to a bottom? I hope you’re fight Barry, but fundamentals are shaky in this environment IMO.

  42. dead hobo:
    How is that going to stop anything? Are forced withdrawals that big an issue now? If most people in retirement age are still in stocks, they have more problems than forced withdrawals. Shouldn’t most people of retirement age have most of their money in safer investments?

  43. dead hobo:
    How is that going to stop anything? Are forced withdrawals that big an issue now? If most people in retirement age are still in stocks, they have more problems than forced withdrawals. Shouldn’t most people of retirement age have most of their money in safer investments?

  44. dead hobo:
    How is that going to stop anything? Are forced withdrawals that big an issue now? If most people in retirement age are still in stocks, they have more problems than forced withdrawals. Shouldn’t most people of retirement age have most of their money in safer investments?

  45. Is anyone betting on the Dow closing below 7,500 today? I’ll take $5 on the under.

  46. Is anyone betting on the Dow closing below 7,500 today? I’ll take $5 on the under.

  47. Is anyone betting on the Dow closing below 7,500 today? I’ll take $5 on the under.

  48. insaneclownposse says:

    dunno folks. When you have a G-8 leader (Berlusconi) talking about shuttering the exchanges – though he later denied it – then you are taking a big risk having your money in stocks. Plus, they are floating new anti-shorting rules.
    Notwithstanding the initial bounce, this market has gone straight down since the authorities started rigging things. I’m a trader and a gambler like the rest, but if you have a serious operation managing other people’s money, how can you conduct business when the government keeps blowing up your risk-management models and tools?

  49. rootless cosmopolitan says:

    I have a question regarding No. 4, Cash Allocation of Investors.

    How is cash allocation of investors being measured?

    I ask because there is always someone in cash, and the sum over all the cash in the system shouldn’t change, should it? Each trade has two sides, a buyer and a seller. When someone buys an asset, someone else realizes a cash amount. The cash doesn’t just vanish into subspace during bull markets and re-appears during bear markets. Thus, how come that the total cash allocation of investors changes between bull and bear markets? How is it measured?

    rc

  50. Dan Duncan says:

    I was tempted to go long until I read the posts of those…who are already going long.

    Waayyy too clever. This market’s all about punishing those who think they are smarter than everyone else….from the quants all the way down to the types who go long, because Cramer said to sell…or knock the “average investor” or the “MSM types”….

    This market’s all about pile driving The Too Clever Trader.

  51. fresno dan says:

    Predictions:
    9/14/08 DOW 6,000 in 2010
    10/1/08 DOW 6,000 in 2009
    10/10/08 1:23 EST DOW 6,000 in October
    10/10/2008 2:03 EST DOW 6,000 at closing today

  52. bk says:

    Joe Klein’s C.: many people were given stock as part of their retirement package. There are a LOT of hurting 55+ out there, the younger ones not having that much longer to save, the older ones seeing their retirements dwindle. And this time, unlike earlier this decade, there probably isn’t any bubble coming forth to save them (ALTHOUGH, we should never discount the conniving of those who would like to separate money from the masses, maybe they’ll come up with something, despite the fact that the masses have no money, and NO MORE CREDIT).
    I put everything in money markets when I was down about 8% from the October high(right before a bear-market rally, but nobody can time things perfectly). Yes, it hurts to make 0, but it hurts a lot less than tanking another 30%.

  53. Big J says:

    so, is the big, bad, Lehman event over with??? What happened?

  54. BK:
    I understand that, but is that what is causing these problems? Is stopping the automatic withdrawals going to stop all the cliff diving we’ve been seeing? Fundamental changes need to be made, not solutions that tinker at the edges.

  55. BK:
    I understand that, but is that what is causing these problems? Is stopping the automatic withdrawals going to stop all the cliff diving we’ve been seeing? Fundamental changes need to be made, not solutions that tinker at the edges.

  56. BK:
    I understand that, but is that what is causing these problems? Is stopping the automatic withdrawals going to stop all the cliff diving we’ve been seeing? Fundamental changes need to be made, not solutions that tinker at the edges.

  57. datacheck says:

    A nice set of charts. I tend to look more at simple long term fundamentals like PE ratios. The SP500 is just now down to it’s long term average. Psychology is the driver in the stock market, but perhaps we’re at a tipping point where we stop the “Lake Wobegone” thinking that “all our women are beautiful, all our kids are above average”, and even in these treacherous times, our PE ratios have to bounce back to well above average. See the post at http://economix.blogs.nytimes.com/2008/10/10/how-cheap-are-stocks/

  58. pawel-l says:

    Similarity of market charts are common
    if You know Elliott Wave.
    You can find similarities between diferent markets and diferent time frames.
    This crash was also obvious if you noticed series of 1′st waves.

    Greetings from Poland

  59. Adrian says:

    Check out the 1974 bottom. Marketwatch’s BigCharts will let you do that with its custom dates.

    The ’74 market looks almost identical. A long roll over followed by a waterfall collapse. It even bottomed in early October of that year.

    What happened next was a sharp rally into November, a secondary test in mid December and then the beginning of the new 75-76 bull market.

    So maybe the ’74 is good blue print for today’s market

    Hope so! :-) Adrian

  60. adam says:

    But where is the next bubble? Er I mean economic productive boom.

  61. The Real Mr. Obvious says:

    Datacheck,

    A P/E ratio isn’t a fundamental indicator, much to the chagrin of CFA types. They’re technical indicators because they measure sentiment.

  62. Blackhalo says:

    I have my straddles set up for the weekend action. However I am still looking forward to another “WTF just happened?” post from Barry.

    Volitility should be through the roof over the next few months with the election, transition and first 100 day events. I expect this to be a long and deep recession as it will take some time for the hits to the Banks and Wall St. to work their way through the rest of the economy, unless the US Gov raises rates and starts up the presses.

  63. Bruce in Tennessee says:

    GM may announce production cuts, closings.

    http://www.msnbc.msn.com/id/27101859/

    Now they have a market capitalization of 2.7 billion with long term debt of 35.5 billion, but they say declaring bankruptcy is not on the horizon…

    As I read it then, the production cuts mean your GM car will now come without tires, which will have to be purchased locally to drive it off the lot…

    Makes about as much sense…

    Bullish signals when in two weeks we may have all 3 of the big three out of business…

    Buggy whips, anyone?

  64. Ben says:

    SELL SELL SELL!!! CASH is KING as Jim said.

    Forget Gold! Forget Oil! Forget equities! But CASH! CASH is the only place to hide!

  65. BoooyahhDead says:

    It is interesting how some financials are actually doing quite well right now (COF, JPM). I’ve had a feeling all day that we would see a big rally into the close based on this glimmer of hope. Who the heck knows…

  66. leftback says:

    Bruce: I think Alain Ducasse had a $100 burger at one of his restaurants at one point. Pretty sure they don’t have a market for that any more, but it is on its way to you.

    Cheers, lb

  67. rootless cosmopolitan says:

    @Dan Duncan:

    If you refer to me, since I mentioned Cramer. I have never said to buy, because Cramer said to sell. What I wrote is just an expression of my hope and fears, but I don’t make trading decisions based on that sentiment. I neither listen to bulls (in an affirmative or contrarian way), nor to bears, nor do I bottom guessing, or any guessing for my stock buying. I use a mathematical-statistical approach analyzing price and volume movements based on a large sample of stocks.

    I don’t know when the rout will be finished. I only know that we are getting closer to a local bottom day by day. I very much doubt that will be The Bottom, though. The general economic environment just looks too bad.

    I always have thought a crash test for my algorithm would be nice. The retrospective simulations, which included the bear market of 2000-2003, worked fine. But real live trading is still another thing. Now, for the last few days, I have been thinking, be careful what you wish for you just might get it. :)

    rc

  68. Suze Orman says:

    Don’t pay any attention to the little ups and downs in the market.

  69. Bruce in Tennessee says:

    @Leftback:

    Thanks. Once I have a chance to digest it and this week’s market action, perhaps we can put another wager together for next week.

    I notice the Lehmen dreck went for less than expected….or should I say, less than hoped.

  70. Kelja says:

    Seriously. With prices down on gold/silver today, I want to buy physical gold coin. I’ve checked with all local and many national deals – Monex, Kitco, etc.

    Does anyone here have a contact to buy from?

  71. Kelja says:

    Oh, forgot to add – all dealers are out with no idea when they can’t get resupplied.

    Doesn’t make sense that the price is where it is. Demand is very high, supply about non-existent

  72. Bruce in Tennessee says:

    TED spread 4.62.

    Perhaps if Hank would just get down on one knee…

  73. Blackhalo says:

    @Bruce in Tennessee

    “I notice the Lehmen dreck went for less than expected….or should I say, less than hoped.”

    What impact will that have on the other parties of the contracts? More BK?

  74. DL says:

    From nakedcapitalism.com:

    “U.S. stock exchanges may seek to impose a temporary ban on short sales for individual stocks that plunge as regulators seek to rein in short-selling. … … Under the plan, a stock that closes down more than 20 percent would be protected from short sellers for the following three days, the people said”.

    More screwy micromanaging.

  75. gritsnbeer says:

    Stock market = Das Boot

  76. karen says:

    kelja, you can try tulving.com. of course, they are sold out, too. i noticed they had bars coming in next week…

  77. AbeSklaroff says:

    barry, I agree with you!

    its 2:59 pm and i am buying near term in the money oex calls hand over fist here.

    lets bounce…

  78. DL says:

    Bruce in Tennessee @ 2:38:29 PM

    With Obama in charge, and 60 Dems in the Senate next year, you can bet that there’s a BIG bailout for GM and F.

  79. Bruce in Tennessee says:

    Well, it means those who guaranteed the debt will have to pay more out than they’d hoped…Leftback or Karen or Steve could probably answer the bk part…

  80. Mysticdog says:

    “Isn’t the sum of all these “indicators” really just the thought that “Hey, we are so far down that we have to go up from here.”"

    Yeah, I thought the same thing. Are you really buying into this post, Barry, or just seeing what others think? I mean, there will come a point where that is true… sort of. I’m wondering if there will be a rally with this, just a lot of daily +- 400 point days stretching out for a year because there isn’t any real value in the market, just speculation.

  81. leftback says:

    “The horror… the horror…”

    horrified spectator – that just about describes my state of mind right now….. still, I have a whole bunch of dry powder and we live to fight another day, that’s the main thing. Mish has a whole post on Elliott wave stuff today. I always thought that stuff was screwy but perhaps it is a valid model of mass hysteria, and that is pretty much where we are this week.

  82. Suze Orman says:

    5 steps to apocalypse-proof your family:

    1. Pick a “sacrifice child”. This is the child you will leave behind to distract the cannibals hot on your tail.

    2. Stop bathing IMMEDIATELY. Humans are attracted to positive fragrance. Foul-smelling meat will be the last to be eaten.

    3. Set attainable economic goals for yourself. Select a number of abandoned homes to loot each day and STICK TO THAT NUMBER!

    4. STAY POSITIVE!

    5. Practice fire-building NOW.

  83. Dan Duncan says:

    Lehman came in at 91.375. From Bloomberg, check out the following:

    “Based on the results, sellers of protection may need to make cash payments of more than $270 billion, BNP Paribas SA strategist Andrea Cicione in London said. The potential payout is higher than the 90.25 cents indicated by initial results from the auction earlier today. Lehman bonds traded yesterday at 13 cents on the dollar, suggesting a payout of about 87 cents was expected.”

    Damn.

    And BTW: Morgan Stanley’s down 40%.

  84. scorpio says:

    agree w earlier comment by Sposato, someone needs to nullify all derivatives, CDS etc, just zero them out, zero out the bankers traders associated w the effort, zero out the investment banks, put a firewall around commercial banks and deposits, start spending money from the bottom up. somehow i dont believe a 35-yr old kid w limited experience, all of that at GS sucking up to CEOs, is going to figure this out. time for major hitters Buffett etc to be given fiat control of banking system

  85. Adam Coleman says:

    Technicals and Fundies both dont mean dick when there are no buyers.

    And thats where we are.

    No buyers.

  86. Dr. Kenneth Noisewater says:

    Perhaps if Hank would just get down on one knee…

    Methinks he’ll be needing kneepads and mouthwash at this point…

  87. Ali Saygin says:

    What do you expect MS to be in a few weeks? Another bailout?

  88. Bruce in Tennessee says:

    But to me it means that the other collaterized debt by other companies than Lehman are worth less than hoped. I mean the reduced hope for Lehman was that it would bring 9.75 cents and it brought what 8.6? So it means the other debt obligations are worth less by association, which can’t be good news for the guarantors of that debt….

    ..just my opinion. I would see this auction as slightly negative in the big picture of things…

  89. Bruce in Tennessee says:

    collateralized..sheeesh….

  90. Abe Sklaroff says:

    up 55 s&P (17 min) points from 2:59 I m peeling them off here.

    barry, you missed one. Bradley model says small rally here for another three days or so then decline resumes heavy into december 14th.

    sweet…

  91. Jeff M. says:

    Coming well off the lows here……

    How will this nightmare finish this week?

    And begin next week?

  92. Frank Jewett says:

    If a stock is undervalued, the business will buy it back. If GM was undervalued, they would be buying back shares today. If GM has no capital to buy back shares, perhaps the valuation isn’t low after all?

    My econ professor said it best: “Keep in mind that every time you buy a share of stock with the belief that it will go up, the person selling it to you has an equal and opposite belief that it will go down.”

    Charts and graphs are why we are seeing so many sucker’s rallies. The unthinkable is happening. If you are smart, you will wait for the typically long bottom rather than becoming one of the “dead money” suckers.

  93. rww says:

    wow, great call BR. Looks like we’re heading into a constructive finish.

  94. Does anyone here have a contact to buy from?

    Posted by: Kelja | Oct 10, 2008 2:49:59 PM

    Kelja,

    what kind of qty. are you talking about? and, what kind of premium to Spot are you willing to pay?

    to most decent dealers, that what it breaks down to. the only shortage, in this market, that I’ve found, is in the willingness to pay the Premium it takes to pry it loose.

    past that, tread carefully, retail coin/metals dealers are notorious viper dens..the Good ones are few, and Far, between.

  95. david says:

    Made 5% on SDS, DXD, SKF, QID buying this morning and closing a few minutes ago.

    I think this might actually be it for a while, and we’ll see some upside from here.

  96. leftback says:

    Is the PPT alive and well? Jumped on some SSO and UYG, tight stops.

  97. Mike in NOLa says:

    So, opinions on the bases for the “rally” at 3:15 ET?

    My 2 cents is short covering because conventional wisdom is that shorts have more to fear over the weekend from G8 actions. They are trying to get out early in case of a runup.

  98. mostmodernist says:

    So either the market is about to re-stabilize, based on historical precedent and data, or we’re looking a meltdown worse than historical precedent and data can determine…

    Does one of those statements seems less plausible than the other?

    45 trillion dollars is a lot of money.

    Q: What percentage of the CDS $45tr amrket is considered to have been, or be, bad risk?

    And what will a worsening economy do to the CDSs that are on the cusp, when formerly solvent american homeowners find themselves too much indebted, based on simple income/monthly bill ratios, after they lose their job, which was a product of an overinflated market in the first place?

  99. Big J says:

    It’s the “don’t you feel stupid for selling” rally….

  100. CNBC Sucks says:

    Dow just turned positive and a parade of optimists on CNBC. Maria Barforomo is smiling. Nothing has changed, status quo mentality prevails, plenty of selling opportunities remain.

    This wasn’t a panic, it was a brief jolt of reality. I concede the possibility of a sucka’s rally.

    By the way, the winner is:

    Bullish signals when in two weeks we may have all 3 of the big three out of business…

    Buggy whips, anyone?

    Posted by: Bruce in Tennessee | Oct 10, 2008 2:38:29 PM