When Ritholtz Talks . . .
Terribly amusing posting on the Freakonomics blog yesterday that made me check if it was April Fool’s Day:
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Thanks for the compliment — I think we both know this was correlation rather than causation.
We recorded that on Monday afternoon, and they posted it early Tuesday. But if you looked at the US Futures market, you can see they were very strong once Asia opened up big.
Chalk it up to fortuitous timing more than anything else . . .
Note: This was A bottom; whether its THE bottom has yet to be determined.
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Source:
When Barry Ritholtz Talks, People Listen
STEPHEN J. DUBNER
Freakonomics
NYT March 11, 2009, 1:13 PM
http://freakonomics.blogs.nytimes.com/2009/03/11/when-barry-ritholtz-talks-people-listen/
See also:
Thursday links: bullets dodged
Abnormal Returns, 12Mar09
http://abnormalreturns.com/2009/03/12/thursday-links-bullets-dodged/
March 12th, 2009 at 11:29 am
Seven and a half hours? BR, you need to get that under four hours.
March 12th, 2009 at 11:39 am
Freakonomics is probably not aware that this was the “Leftback Bottom”, called here in real time 3.45pm Friday.
BR and Doug Kass had been highlighting the likelihood of a major bear market rally for a week or so.
March 12th, 2009 at 11:52 am
It was not THE bottom.
March 12th, 2009 at 11:55 am
yes it was. : )
March 12th, 2009 at 11:59 am
Nice one Barry.
The leftback bottom….ha! Well done.
Ok. Quick update here….from leftback’s bottom, the cash and futures SP500 has taken on a distinct five wave type structure on the intraday charts. The 1=5 target for cash SP is 743. The same 1=5 target on futures is 739. So we should see one final rush here end of day but meet A LOT of resistance into low 740s. Not surprisingly, there will also be resistance there in terms of classical chart reading analysis.
Shorter term traders should be dumping any long equity positions very soon. We should see a good smack down as we “sniff” 740ish.
Longer term, the mere presence of a five wave pattern from the lows could be quite bullish. I need to do some more analysis to see how this new pattern might fit in to the mosaic.
March 12th, 2009 at 12:01 pm
Channeling old E.F. Hutton commercials…hmm
LSS: sell’em by the Box, BR ~
March 12th, 2009 at 12:04 pm
@karen: You said that the last time. Care to double up on that prior bet?
March 12th, 2009 at 12:07 pm
au contraire, jeff, then i was just calling for an oversold rally. anyway, when the spx broke to the downside on that triangle, i knew i lost that bet.
March 12th, 2009 at 12:07 pm
OK, someone correct me if I’m wrong but Bloomberg talkies crowing about “market responding well to bad news” as an indicator that a bear market rally is sustainable (read: The bottom is ine). Wasn’t this theme just a short few months ago as well? Like deja vu all over again.
March 12th, 2009 at 12:08 pm
Gotcha karen. Just busting chops a little. So NOW are you calling THE bottom then? Care to wager on that?
March 12th, 2009 at 12:09 pm
I find your realism refreshing, but I also find your pessimism repetitive. Nobody’s perfect. Not even me.
Comparing and contrasting your here with Cramer and all of the angst people express about him, I see two sides of the same coin. Cramer has a schtick but also repeatedly implores viewers to become educated. The easy money hot tip lazy assed never read a book set is livid with Cramer because they weren’t spoon fed 100% winners. The biggest problem is his job to fill up so much air time that he would have to be omniscient to do it well. Retards believe everything they hear on TV, uncritically.
This is the most recent bottom call given here and I notice you were just basically saying the markets appear oversold. This isn’t the first time you said it nor is it the first time I believed it on my own. I followed some bad advice to tiptoe back in the markets a few months ago (some of it given here … (example … stories such as the ones where you and others felt unusual because you were the biggest optimists in the room. ) and am now trying to figure out how to recoup without a lengthy holding period. My fault. Not yours. Oddly enough, the same Cramer bashers are silent about this bit of errant optimism.
Just an observation.
March 12th, 2009 at 12:11 pm
Jeff, no serious calls out of me… i want to be foot loose and fancy free for the rest of the year.
March 12th, 2009 at 12:12 pm
Lefty is selling 740 but would buy 690.
March 12th, 2009 at 12:13 pm
Probably smart, karen. You’re far more experienced at this than I am. Truthfully, I’m being very cautious both ways right now. I’m hoping THE bottom is in but I’m skeptical (but remain flexible to change course at any time!).
March 12th, 2009 at 12:15 pm
Jeff,
you know I want full Technicolor Candids of that Box of Grapes she sends you..
March 12th, 2009 at 12:17 pm
He he… more stupidity here: “Madoff case turning people off equities..”
Odd that, since he never actually traded any.
http://www.marketwatch.com/news/story/Analyst-says-Madoff-case-turning/story.aspx?guid=%7BD72E9897%2DB73C%2D4513%2D9591%2D3A8627C0BD30%7D&dist=hplatest
Crook Watch:
#1 Bernie is on the way to the slammer
#2 Stanford not far behind.
#3 Mozilo. Under investigation.
#4 Thain. The noose is tightening.
March 12th, 2009 at 12:27 pm
lefty: Old saying in trading circles: “Don’t be a d#@k for the tick.” I’m out of all length now at 735 and looking to short this thing for next few days….we ’should’ see 740 today but i’m not looking to soak every last drop of this move….
March 12th, 2009 at 12:29 pm
@AT, “the mere presence of a five wave pattern from the lows could be quite bullish”
A 5-wave A-wave isn’t a bad thing. It is safe to say that this is wave 4 of (5).
March 12th, 2009 at 12:32 pm
mlomker Said:
March 12th, 2009 at 12:29 pm
@AT, “the mere presence of a five wave pattern from the lows could be quite bullish”
A 5-wave A-wave isn’t a bad thing. It is safe to say that this is wave 4 of (5).
query:
In the configuration you mention, where are Aries, Libra, and the moon. Fortunately, the lunar retrograde has past so you can expect clear sailing.
March 12th, 2009 at 12:39 pm
LOL. thanks for sharing that Andy. especially fun at LB’s expense. i personally want to see if we can exceed exceed 742 in a hard way and unnerve a few shorts. i’ve haven’t put my tidal wave of money theory in the grave yet.
March 12th, 2009 at 12:40 pm
BR, need your NCAA picks… a little sooner than seven or so hours before
March 12th, 2009 at 12:42 pm
You’re the man now dog!
March 12th, 2009 at 12:46 pm
@AT: Ha ha, nice one. Already closed the trade for about a 10% gain.
I am back to my core positions for the time being.
March 12th, 2009 at 12:52 pm
mlomker. Most definitely agreed.
It must be pointed out though, if this is going to be a classic Wave 4, it should carve out a “triangle” pattern. A triangle means this first move will be the strongest leg of the whole correction and the highs of this move will not be bettered. We may not get a triangle. It’s also possible we could see a fast moving “zig-zag” type correction (5waves up-3waves down-5waves up).
Either way, there’s no way I could advise shorter term traders to be long into the low 740s….
March 12th, 2009 at 12:55 pm
It’s weird – I see 740 staring us right in the face – but for some reason I think 751-52 and 780 seem to be more the problem. Why am I discounting the broken Nov low so much?
March 12th, 2009 at 12:55 pm
@dead hobo Many of us were critical of Barry’s “toe in the water” call when he made it and have given him a hard time about it since. Difference between Barry & Cramer is, Barry said, “We’re going to go ahead and delicately put just the smallest toe in the water” whereas Cramer says, “BUY! BUY! BUY! Mortgage your house and sell your daughter to buy this stock because it is definitely going up!” See the difference?
March 12th, 2009 at 12:56 pm
If we close above 735.09 then the short term trend has broken upwards (based on my daily 3 line break chart). For the longer term trend to break upwards we would have to close above 873.29 (using a weekly 3 line break chart). I’m always looking for reversals in the trend. I’m looking to see when price action indicates the current trend has run out of steam. IMHO.
March 12th, 2009 at 12:58 pm
Looking at history, traditionally, what’s the bottom? There are a few different indicators. One of the things, for example, the yield on the Dow. Typically the market peaks when the yield hits about 3 per cent … Historically once the yield gets above 6 per cent it’s a good time to buy. We’re only at 4 per cent right now. But that’s a moving target because even venerable firms such as GE and Bank of America and Citigroup have been cutting their dividends. So even if all the dividends remained the same going forward basically you still need the market to fall 33 per cent until you hit that 6 per cent yield.
Plus look at the market capitalization to total GDP. … Right now, it’s between 70 and 80 per cent, but if you look at history usually it gets down to about 50 per cent before there’s a market bottom, so again that points to another 30 per cent or so decline. Another statistic is just the general P/E ratio. On the S&P 500 it’s around 11 right now or 10.5 … at market bottoms it usually has single-digit P/E ratios, which points to more downside.
So this is really looking like another dead cat bounce… the over US economy still… doesn’t look great for future earnings… and that’s what determines stock prices… future income.
March 12th, 2009 at 1:08 pm
The stimulous is in. Paychecks around the country are higher this week.
March 12th, 2009 at 1:20 pm
Let’s see, what shall I do with this sudden wealth of $8.71?
March 12th, 2009 at 1:26 pm
Well. For what it’s worth, I’ve just gone short at 739 the march futures. There’s so many various resistance factors right here I must do it.
@karen. If I see the tidal wave come in, I’ll boogie on out of these short pretty quickly. Any move over 745 to start to make nervous. I’m out on a break of 750. Short term nimble stuff here.
March 12th, 2009 at 1:27 pm
@batmando: Buy a couple of shares of C stock?
March 12th, 2009 at 1:36 pm
Thank you articpup…. been saying that all along. I read a funny comment on Yahoo yesterday, something to the effect of:
“If the markets go up based on something a bank CEO said, then truly you can not save investors from their own idiocy.”
March 12th, 2009 at 1:39 pm
@Mannwich
The Schwab trade commission is $8.95
March 12th, 2009 at 1:41 pm
@batmando: That’s right. I use Schwab as well. Buy yourself a decent six-pack of beer then.
March 12th, 2009 at 1:44 pm
@ bat. $8.79 = happy meal? Don’t knock it bro’, lotsa folks wanna upgrade from Ramen.
March 12th, 2009 at 1:50 pm
Added some QID. Despite a fondness for the Swedish model, leftback still believes in using protection.
March 12th, 2009 at 1:54 pm
AT @ 12:27
“Don’t be a d#@k for the tick.”
There’s just no end to the useful information that one can pick up here.
March 12th, 2009 at 1:57 pm
Barry! Barry! You’re so money and you don’t even know it!
March 12th, 2009 at 1:59 pm
Apparently, this is a be happy week. Like I said a couple of days ago, the timing is right and there is room to run. Lets see if it has legs. Breaking the 10 day is a good start.
March 12th, 2009 at 2:01 pm
speaking of Schwab, have any of y’all checked out IBRK, interactive brokers?
http://www.interactivebrokers.com/ibg/main.php
March 12th, 2009 at 2:10 pm
Keep it up and at this rate you’ll be taking Cramer’s place in a year and then daily showed in 16 months
March 12th, 2009 at 2:11 pm
@DL and AT,
I once had a tick on my d#@k.
However, I do not think that qualifies as useful information.
March 12th, 2009 at 2:13 pm
S&P tip-toeing along that 738-740 mark noted by AT and many others. What will happen by the close. I have no idea but my gut tells me it’s going to break out higher then we’ll get a little sell off tomorrow into the weekend.
March 12th, 2009 at 2:17 pm
Hate to jinx it but it kinda went through that “like buttah”
March 12th, 2009 at 2:30 pm
Not so fast. XLF looking at $8 and I don’t think it’s going to go there. FAZ and QID together, now.
March 12th, 2009 at 2:32 pm
> my gut tells me it’s going to break out higher then we’ll get a little sell off tomorrow into the weekend.
Am I the only one who thinks this volume is pathetic?
21.7M on S&P 500 two days ago, 17.4M yesterday, and y about 8.8M as of about 2PM or so. I guess we’ll see what happens the last 1.5 hours or so …
HCF
March 12th, 2009 at 2:37 pm
I picked up some more QID as well. Picked up FAZ yesterday and today (small amounts). Hasn’t worked out yet but I’ll probably grab some more soon.
March 12th, 2009 at 2:42 pm
Mann – why are you fighting the trend? You’re dealing with a 3x – everything is exacerbated. FAS is the game today – up 13% so far
March 12th, 2009 at 2:46 pm
@Ethel: Too late to jump on FAS now. I may be wrong but I didn’t get on that train soon enough. It left the station already. Gotta take the other side of this trade. We’ll be back to panic levels on the financials again. Keeping my trades small (and some powder dry) so I don’t get hurt too much.
March 12th, 2009 at 2:49 pm
> why are you fighting the trend?
Wouldn’t the trend still be strongly DOWN? Maybe on a day-level or a week-level time period, it’s up, but it has a hellavu way to go before it’s a real uptrend!
HCF
March 12th, 2009 at 2:55 pm
Nothing wrong with a small and defined hedge.
XLF at 8 and SPX 750 now.
If this thing is going to crap out today, we will see it in the banks first.
Profit taking in the XLF and the ultras will start looking good after 3pm.
March 12th, 2009 at 2:57 pm
Empire Said:
March 12th, 2009 at 12:55 pm
… whereas Cramer says, “BUY! BUY! BUY! Mortgage your house and sell your daughter to buy this stock because it is definitely going up!” See the difference?
comment:
If he really talks like this now and in the context you describe, then he is a sick man. I hardly watch CNBC anymore, but I never heard anything that except as schtick. BUY BUY BUY … that’s schtick. You’re supposed to be smart enough to tell the difference.
March 12th, 2009 at 3:04 pm
the ETFs are really only good for short-medium holdings – while the long-term trend is definitely down, the short-term trend is definitely up – there is big $$$ to be made by riding the ETFs with the trend change. I think this current S&P bump will go up to 780-800 – that should easily be good for a quick 20-25% scoop on FAS before switching when the S&P switches
March 12th, 2009 at 3:30 pm
The past few months have taught me the market is anticipating the anticipation. It has been moving faster and quicker that I thought it would. Early next week we should know if it’s a trend for 780-800. That would bump it against the 50 day. It would also be close to 25% up.
March 12th, 2009 at 3:48 pm
Todd,
To me, S&P 800 – 900 looked and still looks like a bottom range. the WSJ wrote some stories a few weeks ago about hedgies selling out again and the market dropped at about the same time. I’m wondering if this rally will return the market back to that range now that the hedgies are apparently spent. That being said, the proverbial double bottom may come calling later in May when everyone goes away. That’s really the big question … where’s the May – June bottom going to be?
Also, if FASB does a good amendment to the mark to market rule in three weeks, then to the moon, Alice. I know there must be a middle ground that makes perfect sense. Hopefully, FASB won’t throw a snit and contrive some bizarre conditions that nobody in their right mind would consider so they can avoid implementation or describe the new rule as an optional losers only rule or tell them to put their junk in SIVs (HA HA) so they are afraid to use it.
March 12th, 2009 at 3:53 pm
“That’s really the big question … where’s the May – June bottom going to be?”
Agreed. The Q1 earnings will be more ugliness. But how ugly and how deep the low?
I am pretty convinced that SPX 666 was the capitulation bottom for Q1.
March 12th, 2009 at 3:54 pm
Todd,
1 more thing … the pending return of the uptick rule in a few weeks. That should stop a few bear raids in their tracks. Fu*kers.
~~~
BR: Puh-leeze — the uptick rule is easily circumvented . . .
March 12th, 2009 at 4:32 pm
Nice move today for sure. I was long and right (from 680) and then went short and wrong at 739. I stopped myself at a 11pt loss. “If you can’t take a small loss early, you’ll take the mother of all losses later.”
That said, I’m pretty sure stopping out was a mistake. You can almost hear the CNBC talking heads explaining away tomorrow’s losses on “profit taking before the weekend.” We’re very overbought on many short term indicators, and 752.44 was the “closing low” from last November, so for some chartists that will be the key closing level that that must be taken out.
All in all though, a very impressive move up from the lows. Will be most interesting to see how this plays out.
March 12th, 2009 at 5:01 pm
BR noted
: Puh-leeze — the uptick rule is easily circumvented . . .
Question:
My trading techniques are very basic. I made this statement based on the claims of others and the certainty in which they made their statements. How about a link to an explanation of how it works, or doesn’t work in practice.
Re my FASB beliefs: Of those I am certain. Mark to market is a great idea with respect to normal assets in normal times. Assets with a cash flow but no market at this time must be worth more than bupkiss. Assets with no value because the market is paralyzed are very different from assets that have lost value in relation to each other or because there is no market, such as no market for 8086 chips any longer.
A lot of value will probably still be crapola. But there must be a way to allow judgment and circumstance into the picture without inviting fraud along with it. Once you get past basic bookkeeping, ALL accounting is basically rule based valuation for almost everything.
March 12th, 2009 at 5:29 pm
Here we go on the big bear market rollercoaster rally, riding back up to 900s, sell in may, go away, wait for low 500s to rebuy, target low 474. Then grab all I can in stable demand dividend paying producers with low debt that can control their own destiny to an extent. I wish I did my thinking, learning, and acting about a year earlier or happened upon this site a year or two earlier!
March 12th, 2009 at 6:05 pm
Great minds (or at least a couple of Long Island boys who did some time at Maxim Group) think alike:
Friday, March 6, 2009
Big Bottoms
This is it. I am calling the bottom of the move here at 675 SPX. For anyone in cash, this is the time to buy. Any shorts, please cover. You will see a 50% move up on this trade.
March 6 2009 10:05 am CST
Posted by Eric P. at 10:04 AM
http://southwestofwallstreet.blogspot.com/2009/03/big-bottoms.html
March 12th, 2009 at 9:15 pm
dh:
re: up-tick, you should read the post by King, in the “Cafe`”
Is This Really the Bottom ?
not only is that guy sharp, he’s, obviously, been there..
March 13th, 2009 at 7:11 am
Mark E Hoffer,
Thanks for the tip. I read it and two things came to mind:
1) Even if what he says is true to the extent he states (lots of people all of the time, as I read it), the markets were far less volatile before the uptick rule was abolished. Putting it back in can’t hurt. Plus, the new rule might deal with some of these shenanigans.
2) I taped Stewart last night and just watched it. As he said, this gentleman is one of the people we need to be protected from. He’s not a finance hero, he’s a crook who found a loophole to exploit.
March 13th, 2009 at 7:42 am
The new market moving Joe Granville has been found, the market moves according to the
unbalanced volume of the commentary, detecting the momentousness of The Big Picture.
Volume, as in loud and shrill, precedes price. Opposite of Granville, here a rising volume indicates the
presence of security flowing *out* of smart money.
March 13th, 2009 at 4:55 pm
dh,
re: 1.) “markets less volatile” may be difficult to prove..
and, “the new rule might deal with some of these shenanigans”–to me, if you’re looking to tamp that stuff down, people should stop funding, and/or playing games with, crooks..
2.) “As he said, this gentleman” not sure who’s being referred to.. Cramer?