ADP? Really?
By Barry Ritholtz - May 6th, 2009, 9:48AM
Markets leap up from the open on a better than expected ADP Payroll report.
Given the history of the ADP report’s failure to correlate very well with its bogey (BLS’ Non-Farm Payroll), the reaction is revealing of sentiment, not actual recovery prospects. (Challenger job layoff announcements rose 47% from year-ago levels in April, signaling ongoing deterioration in labor markets). Less bad is the new good.
Any excuse will do to take ‘em higher, but after the huge run from March, and as Doug Kass noted yesterday, greed has now replaced fear.
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Previously:
ADP Goes Back to the Drawing Board (January 7th, 2009)
http://www.ritholtz.com/blog/2009/01/adp-goes-back-to-the-drawing-board/
May 6th, 2009 at 9:55 am
Also, BAC having a $34B shortfall… GREAT NEWS!!!
WTF???!!! The rally has clearly changed from bounceback from oversold conditions to high in sky, tripping on LSD territory.
Less bad != good
(at least not where I come from)
HCF
May 6th, 2009 at 9:59 am
@HCF: lol that’s what I thought, how the fuck do you go up 7% on news that you need $35bil in additional capital?
May 6th, 2009 at 9:59 am
Looks like my prediction last night about the market today was right. Anecdotally, we had five windows replaced on our house yesterday. Talked to the guy who did the work and he said they are still not very busy. Bad sign to be this far into spring and not be very busy, especially with the $1,500 energy star tax credit out there as an incentive for people to replace windows and doors.
It seems that complacency, euphoria and certainty even, is setting in that a new bull market is upon us. All bad news is blatantly ignored and any snippet of less bad news is spun like crazy as a sign that we’re out of the woods. It’s like ‘06/’07 all over again. Crazy.
May 6th, 2009 at 10:01 am
@adavydov:
It proves if you have an injury, let it be a huge, freaking, gaping wound! Seriously, if BAC were an animal, it would have long since been put down and fed to the wolves.
HCF
May 6th, 2009 at 10:01 am
@HCF: BAC and other crap financial/REIT stocks keep going up in the face of horrible news – sure, they need all this capital but they KNOW one way or another they’re going to get it from Uncle Ben. That’s a certainty in the market.
May 6th, 2009 at 10:03 am
Mannwich:
The $1,500 credit doesn’t mean much when people are afraid of losing their jobs, especially when they know that if they do, they won’t find a new one any time soon.
May 6th, 2009 at 10:08 am
@HCF
BAC doesn’t have a shortfall. It has insufficient reserves for a certain scenario that the ADP report shows might never happen. Take a look at Barry’s chart. I have also thought of the ADP report as essentially worthless due to its inaccuracy, but it looks like it has actually tracked the real number fairly well over the last 6-8 months. If employment recovers sooner than expected, BAC won’t need all that reserve capital.
But I realize that calm, collected logic is not en vogue on this board, so in deference to the pessimist spirits I offer this comment: “Everything good is bad, jobs are gone and never coming back, the sun won’t rise tomorrow, and someone peed in my cheerios.”
May 6th, 2009 at 10:09 am
@HCF/Mannwich: The justification is that BAS holds 45bil in TARP funds already so they can just convert 35bil of preferred into common and not have to ask for more. i.e. accounting trickery=capital not really needed.
May 6th, 2009 at 10:09 am
Mannwich,
Be patient, the trend is up, but that’s just for now. Soon enough we’ll have all the ideal conditions for the bear to resume.
May 6th, 2009 at 10:10 am
Mannwich,
My belief is that the market rise of late is being manufactured. Plus, a fair number of people in regulatory positions probably know about it. Plus, they will allow it to continue because a rationalization about ‘good’ bubbles vs ‘bad’ bubbles exists. Obama misguidedly thinks that any stock market rise is a good stock market rise if it helps bail out the economy via a wealth effect some time in the future. He’s betting that the trillions of stimulus will catch on and, someday, the real economy will eventually match the goals of the bailout economy. Another collapse in the stock market will hurt his programs. Thus, the Obama Put.
So, the real question is “will the real economy actually recover to the point that falsely inflated stock prices are reflective of actual valuation?” or “will Obama spend the country into bankruptcy by trying to prop up the world, and failing … causing any new savings put into the market to vanish due to fraud?”
May 6th, 2009 at 10:10 am
“greed has replaced fear” ???
I think the shorts are still too greedy. The longs are still scared.
May 6th, 2009 at 10:11 am
But I realize that calm, collected logic is not en vogue on this board, so in deference to the pessimist spirits I offer this comment: “Everything good is bad, jobs are gone and never coming back, the sun won’t rise tomorrow, and someone peed in my cheerios.”
LOL. People are still making these claims here. Brian Wesbury is now posting at TBP. It’s official.
May 6th, 2009 at 10:11 am
@franklin: Who is going to employ the people that have been fired exactly (BK, KFC, McDonald’s maybe)? The last two recoveries we have had have been jobless ones.
May 6th, 2009 at 10:14 am
RE: BAC, you don’t go up. Getting the acknowledgement out of the way that not for a second would any sane individual believe they are personally wiser than the collective sentiment of the market, still, unless you are willing to also fully discount all that you know that has made one successful, whether acquired formally or through experience , chalking it all up to BS luck – something I’m not willing to do, BAC rallying from down 11% pre-market to up 11% on a bank reporting showing a pending 50% dilution is in my book a smoking gun of intervention. If one holds out an apple in front of you several feet off the floor and lets it go, through all the knowledge I have acquired over the years, I know it should fall. If it does not, clearly something else is at play. I do not need to specifically identify what it is to know it is present. BAC does not rally like this on a probable dilution of this scale, especially over a few hours.
May 6th, 2009 at 10:17 am
If there is gov’t intervention in the stock market, it is not to help the little guy. It is for pension funds, and banks.
May 6th, 2009 at 10:18 am
@Calvin: I agree but was just pointing out that this company (one of the more reputable window/door companies in the TC) doesn’t seem to see business ticking up all that much. He said they were busy right through most of last year but things just fall off a cliff around fall/early winter.
May 6th, 2009 at 10:20 am
@ Stuart. BAC could be manipulating their shares for a secondary or the conversion of the preferred. After all, they have bailout money to play with.
May 6th, 2009 at 10:23 am
@Mannwich:
>they KNOW one way or another they’re going to get it from Uncle Ben.
This has been my essential problem as an investor in recent months, the great underestimation of how much taxpayer money the Feds are willing to pump in to get the dead to walk again. Apparently, free enterprise is dead and no large company will ever be allowed to fail EVER again. Did they codify this by passing Amendment #28 of the Constitution while I wasn’t paying attention?
Contrary to criticisms from franklin411 about the collective bearishness of many members of this board, I don’t think most people here are perpetual doom and gloomers. It’s just that I question the legality and morality of many economic and financial decisions that have been made by the federal authorities during this crisis. I have seen no FUNDAMENTAL change in the positive direction, and hence my intermediate term bearishness. Clearly, some things were not working in our economic system (though I would also add that the great majority of it was good). We are trying to rebuild our system for a more prosperous, stable, and sustainable future. That takes TIME and legitimate policy debate… What is being done right now is akin to building a new skyscraper on a concrete foundation before it’s 100% dry. It might not collapse tomorrow, or even for many years after it’s complete. But don’t be surprised if it just ups and topples over someday.
HCF
May 6th, 2009 at 10:27 am
Mannwich,
We are getting that same news from huge biz here, people are just ignoring it. Take a look at the huge profit declines in multinationals like GE, MSFT and 3M.
35%, 32%, and 48% down respectively.
May 6th, 2009 at 10:28 am
Barry, I cannot believe for a moment you are doubting the accuracy of the splendid outfit in St Louis that generates this eminently disposable statistic. Shocking, and might I add, unpatriotic.*
* Please engage snark detector.
ben22: I agree. Those of a grizzly disposition have to chill here. Think of it like this: the higher this market goes, the more money there is to be made when, as Stuart points out, the laws of gravity are reinstated. XLF can go to 20 for all I care. I know it is coming back down.
May 6th, 2009 at 10:29 am
@franklin: I can’t speak for others but I don’t see myself as a “doom & gloomer”. I just want the problems to be truly fixed and am tired of the oligarchy kicking the can down the road for their own benefit. Why is that a problem with you?
May 6th, 2009 at 10:29 am
@HCF
A reasonable person simply cannot ignore the flood of better than expected data. Well he can, but the margin clerks probably won’t do him the favor of ignoring the corresponding loss as he doubles and triples-down on bad short bets!
I don’t think you’re a perma-bear, but you have to admit that there’s quite a bit of crankiness and grumpiness about the last few months’ good news. I find that to be perverse, to be honest. Look at Hobo’s post–he claims that the market is being manipulated by the administration. What proof does he offer for such an assertion?
May 6th, 2009 at 10:31 am
@Mannwich
It’s the foot stomping, hysterical, emotional, womanly refusal to concede that the data does not support extreme bearishness that I oppose. If the data proves people’s nuclear winter scenarios wrong, why then it MUST be bad data!
May 6th, 2009 at 10:34 am
@franklin: I’ll grant you that SOME data has improved lately but horrible data and news like this continues to be ignored. This is an epic event that will play out over years, not months. Years.
http://www.calculatedriskblog.com/2009/05/foreclosures-more-movin-on-up.html
May 6th, 2009 at 10:35 am
@HCF: “We are trying to rebuild our system for a more prosperous, stable, and sustainable future.” This future would require CHANGE, oh wait that’s exactly what Obama promised us, so why is he continuing the W policies? I have been walking around with a pit in my stomach for the last 3 weeks thinking about how badly the few/the powerful are screwing over this country and future generations.
May 6th, 2009 at 10:37 am
Yo f41l, where is this good news? Mostly it’s been a few months of bad news followed by stocks rising, with a few green buds inbetween…
May 6th, 2009 at 10:41 am
franklin411 Says:
May 6th, 2009 at 10:29 am
A reasonable person simply cannot ignore the flood of better than expected data.
comment:
—————
Please explain why falling at 100 mph is good news, comparing to falling at 125 mph. (with no parachute)
Also, please explain why lame expectations being exceed is good news. Honest expectations being exceeded by better news used to be the definition of ‘exceeded expectations’. Today, an announcement of ‘black mass not gangrene, just cancer’ is considered exceeding expectation.
While you always have to expect that self interest will rig the stock market to some degree, and unjustifiable euphoria will always happen, today the fix seems institutionalized and has the character of a soap opera. This is, to me, the fraud and what will ultimately cost far more to fix than anything else when it eventually explodes and ALL credibility has vanished, along with a lot more of the savings of honest people .
May 6th, 2009 at 10:44 am
“The U.S. unemployment rate should peak early next year below 10% and then slowly recede, Federal Reserve Chairman Ben Bernanke said Tuesday. ”
http://online.wsj.com/article/BT-CO-20090505-712638.html
Peak below 10%! Bernanke has been so wrong and/or mendacious for so long that one shouldn’t be surprised that this is just another one of his bullsh1t statements. However, I can’t believe that he would make a statement like this unless he has some ‘positive’ info on the upcoming employment report. The close timing would make him look rather foolish.
May 6th, 2009 at 10:45 am
Franklin:
Bud, you tipped your hand several weeks ago about the extra 40 dollars/month from Obama…most days now you seem more and more silly. And for an ivory tower type, your use of adjectives like womanly is pretty strange….pretty non-standard…
May 6th, 2009 at 10:48 am
Bruce N Tennessee,
Even if Franklin is a shill, his lack of cogent analysis is striking. If this is the best they have to offer, things are even worse than I thought.
May 6th, 2009 at 10:51 am
Zero Hedge reports on the coming decline in professional sports. This was discussed in the open thread last night, but this is probably the first of many problems in the professional sports leagues in the coming years unless Uncle Ben can save the day.
http://zerohedge.blogspot.com/2009/05/swift-transportation-owner-gets-donkey.html
May 6th, 2009 at 10:51 am
Franklin: Womanly? What a disrespectful pig!
May 6th, 2009 at 10:52 am
I think there’s something to this:
http://zerohedge.blogspot.com/2009/05/more-observations-on-supplemental.html
@Bruce: Did otto’s moustache just slip?
May 6th, 2009 at 10:54 am
@ Franklin:
Someone peed in your cheerios? Really? Bummer dude!
That ought to knock the UofM consumer sentiment numbers down about 10 basis points!
Which means the ’shorts’ are about 2b paid…Yay!
May 6th, 2009 at 10:55 am
I am thinking along the Otto, Bourchers line myself Transor…Bicycles, 40 bucks a month, menstrual flow, womanly…hmmmm…
Perhaps he’s about to go postal…
May 6th, 2009 at 10:55 am
Looks like Tyler Durden has gotten under the skin of BOTH GS and MS. Pretty amazing they would respond to blogs but that tells me they feel threatened.
http://zerohedge.blogspot.com/2009/05/working-hard-for-your-10.html#disqus_thread
May 6th, 2009 at 10:56 am
@ franklin
Check out this post @Zero Hedge
http://zerohedge.blogspot.com/2009/05/post-recovery-us-economy-will-still-be.html
“The post-recovery US economy will still be weak and will get clobbered by commodities prices”
which includes Bernanke’s views on the recovery and the positioning of the US economy, followed by David Rosenberg’s take on those views:
“Bernanke knows any recovery will be fragile, at best
The whole recovery story boils down to government stimulus, the arithmetic from lesser inventory withdrawal, a reduced drag from housing and hopes that overseas demand will underpin exports. While Bernanke did try and sound optimistic, something tells us that he knows that any recovery, when it occurs, is going to be fragile at best, unsustainable at worst. Invest accordingly.”
The poster, Cornelius, then comments:
“The bottom line is, there are a number of factors coming into play that we simply do not see accounted for in the current recovery story.”
Franklin – how does your smattering of recent good data over-ride the reasoning of the above “any recovery will be fragile, at best”?
May 6th, 2009 at 10:57 am
@ franklin411:
>A reasonable person simply cannot ignore the flood of better than expected data.
I absolutely agree with you on this point. However, back to my previous argument,
Better than bad != good
At some point in time, a rally must have actual good news underpinning it to sustain itself for the long-term. Yes, it is better than terrible that ADP came in at -450k instead of -620k, but tell that to the people that did lose their jobs.
I’m not arguing for a conspiracy theory, but it does seem like a propaganda job by government and media to get everyone to look on the bright side of life. Did you see this NYTimes article:
“Bright Spot in Downturn: New Hiring Is Robust”
http://www.nytimes.com/2009/05/06/business/economy/06hire.html
It talks about all the laid off construction workers (formerly making $15/hour) and how all these new jobs are getting created at Culver’s hamburger and frozen custard restaurant (for $7.50/hour).
In terms of stats, the lost construction work is -1 job and the restaurant job is +1. Added together, that’s 0 net jobs, but it is also -50% in income for that individual.
Seriously, the time to be more bullish is when we see job creation in higher skilled, higher paying positions. Just my two cents…
HCF
May 6th, 2009 at 10:59 am
‘Higher skilled higher paying positions’….ha ha ha ha..
STAY THIRSTY MY FRIEND
May 6th, 2009 at 11:00 am
Foot’s out the door to the gym, but it says something that the bears have shifted their whining rhetoric from “the world is ending, and there won’t be a recovery…ever!” to “the recovery ain’t gonna be so hot!”
May 6th, 2009 at 11:00 am
@ adavydov:
> This future would require CHANGE, oh wait that’s exactly what Obama promised us, so why is he continuing the W policies?
This is what I always wonder: Obama was given a mandate for change, but yet he’s doing the same damn thing on the financial crisis! At this point, I don’t think W was a conservative, and I don’t think Obama is a liberal. I think both are just channeling their inner Mussolini.
HCF
May 6th, 2009 at 11:01 am
can please somebody help me understanding how a 74bn$ capitalization stock can raise 7% on announcement of needing 34bn$?!?!? Is’t this supposed to diluite the stock? Talking BofA clearly… When will the market stop smoking its own dope and start looking at reality?
May 6th, 2009 at 11:03 am
@ Chubby Davis:
> ‘Higher skilled higher paying positions’….ha ha ha ha..
High skilled, higher paying JOB positions! Not Eliot Spitzer, Client #9-type, kama sutra “high skilled positions”!
=)
HCF
May 6th, 2009 at 11:05 am
@Franklin,
I’m with Mannwich, I don’t consider myself doom and gloom, I’m merely stating what I’m seeing by doing my own research and reading the research of people that actually got this right. I wouldn’t really describe anyone here is doom and gloom, not even Steve Barry, we all seem to form our own general thesis and try to stay objective, we aren’t all mutual funders who stay to one thing and refuse to change strategy, you on the other hand seem to refuse to accept any opinion that you do not agree with, you instead dismiss it.
like Bruce, I thought you revelation that you were going to run out and right away spend your extra $40 was pretty telling about you.
All due respect but I don’t think much of what you say has any value at all.
May 6th, 2009 at 11:09 am
@ Franklin:
I think you mistake the terms “pessimistic” & “realistic”…
I’m sure most of the people here on this site know the following site:
http://www.multpl.com/
As of this moment, the multiple on the S&P is almost 16 (and that’s based on $57 per share earnings)…Let’s say this market rally stretches to a Brian Westbury 1050 and ALSO assumes a historic FAIR VALUE multiple of 14x on the S&P…
Does that mean that Brian Westbury (or Kudlow), or anybody is ready to concede RIGHT NOW that there will be $75 earnings projected for the S&P come ‘10?
Are we seriously going to rocket straight back to ‘06 – ‘07 earnings estimates on the back of 4 million jobs lost? I’d jump on board this rally if I saw 150,000+ jobs per month CREATION for at least 3 straight months (and anecdotes that determined all the jobs weren’t Wal Mart greeters)…
Actually, by that time, the S&P would have already discounted the plus figure in jobs so I’d simply be buying Brian Westbury’s portfolio…BAD IDEA!
May 6th, 2009 at 11:10 am
@Mannwich Says:
@franklin: I can’t speak for others but I don’t see myself as a “doom & gloomer”. I just want the problems to be truly fixed and am tired of the oligarchy kicking the can down the road for their own benefit. Why is that a problem with you?
I agree with you, Mannwich. Most ‘bears’ want to see real recovery where people’s lives are improving.
@HCF: “A reasonable person simply cannot ignore the flood of better than expected data. ”
There hasn’t been a ‘flood’ of better than expected data at all!!! It’s all the terrible data being ignored – the GDP contraction -6% for two quarters in a row! Worse than expectations, but the market just shrugged it off. There was a big brou-ha-ha when the dry ships index creeped up, then all quiet when it went back down again.
All the ‘better than expected data’ has either been spun to be positive (real estate ‘pending’ sales up over previous month but no y/y) or they’ve set the expectations so low that of course they’ll then ‘beat’ them. It’s like saying that higher temperatures in March over February in the North and 2008 cooling at a slower rate than in 2007 is proof of global warming. See the logical fail?
May 6th, 2009 at 11:10 am
OK, I just had to finally sell the last of my WFC (8.55 cost) as it seems that this bank rally has got to end at some point. I also picked up 5K of FAZ at $6.00, so I’m now ready for the official – bad news is bad to start up again.
Also sold 1/3 of my SSO position that I picked up in the teens. Time for a couple of weeks of down draft (I’m hoping), but I guess you never know.
Steve Barry, when is this thing going to turn back into the bears favor?
May 6th, 2009 at 11:11 am
You know there’s clearly something wrong with our economy and country when buffoons like Brian Wesbury are still in positions of power and authority, much less even have jobs. Tyranny of the Incompetent indeed.
May 6th, 2009 at 11:12 am
Congratulations, jdamon33. Nice work. Now go take a couple of showers to wipe off that bailout grime.
Seriously, congrats.
May 6th, 2009 at 11:15 am
@Jessica6:
>There hasn’t been a ‘flood’ of better than expected data at all!!! It’s all the terrible data being ignored
Just to clarify, it was not my quote about “A reasonable person simply cannot ignore the flood of better than expected data.” When I put a > in front of a line, I’m directly quoting someone; in this case, franklin411.
Incidentally, I agree with franklin about not ignoring the “better than expected” data, but I also agree with you that the data ain’t really so good!
HCF
May 6th, 2009 at 11:15 am
Here’s the thing about the news spin – - it IS working with the rank and file. I have been out with a few friends lately and they looked at me incredulously when I told them I thought things would get worse before they got better. One said, “but I thought we’ve bottomed out and things are improving?” He looked a little confused when I politely hedged a bit before saying, “I don’t think so, not quite yet”. And I didn’t even give my real, unvarnished view either.
May 6th, 2009 at 11:17 am
Mannwich, thanks for the kind words. I agree the bailout really helped the banks + they had been oversold big time based on the fact that all would be Nationalized which I didn’t think was a possibility. Selling my WFC May 20 calls early was my biggest screw up, but don’t want to get too greedy.
I am stepping into the shower momentarily
.
May 6th, 2009 at 11:22 am
jdamon,
Nice trade.
XTO is on fire today, or like lots in that space, has been since November.
May 6th, 2009 at 11:28 am
Did SRS just do a “double bottom”?
$20.85 print on Monday…$20.85 print this morning?…Small rally off 2nd print…
Brian Westbury & GS are probably on top of the matter and will ASSURE that it gets taken out to the downside, but hey, GS took SGP off it’s conviction buy after it reached $46 so maybe there’s something to this.
Franklin…Why don’t you come down out of your Ivory Tower and put some capital on the table…How’s this for a start? Go “short” on SRS and compel yourself to hold that position for the entire Obama Administration…
May 6th, 2009 at 11:30 am
@ franklin
“bears have shifted their whining rhetoric from ‘the world is ending, and there won’t be a recovery…ever!’”
Never said that. Who did?
Increasingly of the opinion along with ben22 @ 11:05 a.m., “All due respect but I don’t think much of what you say has any value at all.”
Little analysis, not much big picture. Mustard seeds & green shoots.
May 6th, 2009 at 11:30 am
jdamon: Respect. Nice work.
Those who labeled Tyler Durden paranoid for calling attention to GS and MS trading volume, read this:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7HGVAn8w73Y&refer=home
What a surprise to readers of TBP. GS has been moving the market down and up. Well, I never…!
Mannwich: B&H’ers only see what is directly behind or in front of them, typically about a week or two. The hardest part of trading is guessing what the average herd member would do (IQ=125 or less). I was telling people to buy energy stocks in late February/early March and got a lot of odd looks.
Anyone else worried by franklin’s misogyny? (”womanly” “menstrual flow”). The boy has some issues.
May 6th, 2009 at 11:31 am
why isn’t anyone talking about GM?!?! I haven’t been so confused about something in many years; if they are going to dilute current holders such that they (current equity holders) will own 1% of the eventual equity – then how is the stock not down?!?!?! GM’s current market cap of over $1B implies that the post-debt conversion / post-bankruptcy company will be worth over $100B ?!?!?!?!
anyone? barry? beuller? bueller?
May 6th, 2009 at 11:32 am
“Here’s the thing about the news spin – - it IS working with the rank and file.”
I’ve experienced the same thing. Those that do not focus on political-economic issues for business, civic responsibility, or pleasure (they exist!) just parrot the MSM. And the MSM now sez that things are only up from here. It’s sad and unhealthy that there is so much trust in the MSMs economic reporting.
May 6th, 2009 at 11:33 am
@franklin:
Way to get everyone all fired up! Now go buy an ultrashort…
May 6th, 2009 at 11:38 am
FYI all…
In addition, for my friends out there who would like a little ‘anecdotal’ information on the status of CRE, consider the following:
My ex-girlfriend has spent quite a lot of time in shopping malls…She was a BEBE store manager, as well as managing stores like Origins, and also high end retail at Nordstroms…
One thing she would always relate is that about 20% of the mall traffic you see at any given time are shoplifters…That was their burn rate across the board on stolen merchandise…So anyone who does a quick trip to the malls looking for shoppers with bags to assess the ’spending” economy, look closer…A great deal of those bags are people who lifted merchandise and now are there to RETURN it and get a cash refund…It’s a cycle which never wears out…
Imagine the ‘ratio’ change in a bad economy.
May 6th, 2009 at 11:43 am
adavydov Says:
May 6th, 2009 at 10:11 am
@franklin: Who is going to employ the people that have been fired exactly (BK, KFC, McDonald’s maybe)? The last two recoveries we have had have been jobless ones.<<<<<<<<<<
Yep, that’s exactly it. The NYT has a story about how hiring is “robust.”
http://www.nytimes.com/2009/05/06/business/economy/06hire.html?ref=business
Yep, those jobs at discount stores and restaurants are gonna sustain one heck of a recovery.
May 6th, 2009 at 11:44 am
@leftback: Tyler Durden’s take on GS’ trading profits. All over this.
http://zerohedge.blogspot.com/2009/05/goldman-sachs-now-hiring-replacement.html
May 6th, 2009 at 11:48 am
HCF @ 10:23
Exactly! What the bull cheerleaders don’t want to acknowledge is that nothing has been fixed so this is all a bunch of denial based, short sighted enthusiasm.
Nothing will get fixed if we don’t face up to the real fundamental problems. And as long as the market’s rising nobody will care and anybody who tries to point out the problems is dismissed. We’ve seen this movie before. It played from ‘03-’08.
May 6th, 2009 at 11:51 am
Check this out…Obama “short list” for Supreme Court nominees…
http://a-list.msn.com/default.aspx?cp-searchtext=Supreme%20Court%20Obama%27s%20short%20list
I didn’t realize that the Supreme Court was required to fill Equal Opportunity Employment quotas…
Granholm is also on the list…Granholm? Granholm!
“Refund! Refund!” (1979, Breaking Away)
May 6th, 2009 at 11:52 am
Manny: It’s unnaturally easy to guess the market direction – when you are the market.
May 6th, 2009 at 11:55 am
Caught an interesting (interesting for me b/c I’m a coffee addict) discussion on a local show “Greater Boston” last night with a “coffee connoisseur” and a marketing guy re: Starbucks, Mickey D’s coffee.
Starbucks reported a 77% drop in profits for 1Q while Mickey D’s profits were up 4%. As most know, local MD franchises have been contracting with Green Mountain or Newman’s Own for coffee and have successfully grown market share.
Interesting critique of Starbucks strategy and branding. The “coffee connoisseur” pointed out that Starbucks is the only coffee shop that doesn’t smell like a coffee shop. Also, apparently their marketing now tends to contradict aspects of the brand previously emphasized — e.g., skilled baristas are now replaced by machines and earlier emphasis on exotic coffees has been downplayed/abandoned.
Howard Schultz’s five-year plan ain’t doing so hot:
http://www.businessweek.com/magazine/content/07_15/b4029070.htm
So gotta wonder how many of the Starbucks retail jobs will be coming back…
May 6th, 2009 at 11:55 am
GS hitting strong resistance here at the September level of just below $138.
Someone just broke even. The breaking even theme is going to manifest in the next month or so…..
May 6th, 2009 at 11:58 am
Mannwich,
Re the ZH post: Yup. The program trading graph is the most compelling circumstantial evidence yet about the fix. Part of the Obama Put. Nobody will do a damn thing about it because complaints such this used to be part of rants of the tin foil hat set. To the vast majority, who would rather be educated by headlines than by reading and thinking that takes actual effort, it will still seem like tin foil hat ranting.
Another 6 months of GS based SLP trading should bring the S&P past 1000. Then what? Another extension or Obama styles “Hope” that the stimulus will be converted somehow into a real economy and S&P 1000 becomes ‘real’.
May 6th, 2009 at 11:58 am
@Transor: I’ve been regularly brewing my own coffee at home now for nearly 3 years. Once in a while I go out and buy an Americano or something but it adds up to make your own at home. I wonder how many others are now doing this?
May 6th, 2009 at 11:59 am
I’m noticing that the 50 day MA on GS is just about the point where it going to cross above the 200 day MA…
The last time it was in this position was when the Bear Market started in October 2007…
‘Where do we go from here?’
ALAN PARSONS PROJECT
May 6th, 2009 at 12:01 pm
@Mannwich: That was a topic discussed. Joking that “Fourbucks” coffee is way more expensive than brewing at home. Just anecdotal discussion, though, no figures.
May 6th, 2009 at 12:01 pm
this is simply the casino run by godam saks and the others in power mainly paulson and rubin and blankcheck. the quants control the market and will squeeze the small short whenever they get the chance. like i mentioned previously only they know when the trigger will be pulled. this has most likely been the master plan all along since the banks met with the guy that we call the president. the gov had no choice but to get the market up and help the insolvent banks. i believe the TARP money was used for trading purposes.
May 6th, 2009 at 12:03 pm
LB
You mean there’s really strong resistance for anything out there? LOL
Friggen casino right now. Or a fireworks tent lit on fire with random shots going off all around. It was always hard to understand those market charts from ‘29-’32. It’s much easier to understand now. The cognitive dissonance is rather overwhelming though.
May 6th, 2009 at 12:04 pm
Of course at that time 10/07, Goldman was trading at $240 (and going to $350 according to Cramer)…
May 6th, 2009 at 12:04 pm
I hear ya Left… “Breakeven Season”…
Two words: OVERHEAD SUPPLY.
May 6th, 2009 at 12:11 pm
Apparently Wells needs $15Billion in capital (which, of course, means they probably need at least $30Billion+ in reality but we won’t harp on that little detail). Stock up 10% today.
May 6th, 2009 at 12:12 pm
tangential to the ‘unemployment’ theme:
“May 6 (Bloomberg) — The drought in California’s Central Valley is so severe that it’s drying up money for haircuts.
One customer waited six months to get a $10 haircut, then asked to have his head shaved so he could wait another six months, said Armando Ramirez, a barber in Firebaugh.
“People come in and say, ‘Hey Armando, how about I give you a dollar for a cut, it’s all I have,’” said Ramirez, 63, who has owned his shop for four decades. “Saturday is supposed to be my busiest day, but I’m lucky if I get one customer before I go to lunch.”
Businesses are casualties of the three-year drought that is forcing farmers to leave hundreds of thousands of acres fallow in the Central Valley, the semi-arid agricultural region running 400 miles (600 kilometers) down the middle of the state. The drought may cost the valley 35,000 jobs and $959 million in lost revenue this year, said Richard Howitt, chairman of agricultural and resource economics at the University of California, Davis.
“I’ve never seen a drought this bad,” said Bob Diedrich, who has been farming near Firebaugh, 140 miles southeast of San Francisco, since 1973. “It’s putting a chokehold on us.”
http://www.bloomberg.com/apps/news?pid=20601109&sid=a8X3k8FhImlc&refer=home
w/this, among other factors, we’re fixin’ to have some Food/Commodity Price problems going fwd:
May 6th, 2009 at 12:16 pm
With continuing claims up 700,000 from the past month, ADP’s data, already suffering a credibility shortfall makes no sense at all.
May 6th, 2009 at 12:18 pm
My crystal ball says there will be some type of news event in the not-too-distant future (days or weeks), specifically related to all of the leveraged bear ETFs, that will cause mass capitulation/liquidation in all of these products.
May 6th, 2009 at 12:26 pm
The reason the market keeps going up is because the WH now realizes that it is past the “grace period” that was allotted to spout rhetorically about the “INHERITED” problems (even though it was not a lie to characterize it somewhat in that manner)…
Yet with office comes responsibility…From this point on, nothing that happens will be INHERITED, it’s your baby now…I think they’re just trying to keep enough balls in the air until they can concoct a scenario on what to BLAME the next set of problems on…
May 6th, 2009 at 12:26 pm
Mannwich @ 11:11
“there’s clearly something wrong with our economy and country when buffoons like Brian Wesbury are still in positions of power and authority… Tyranny of the Incompetent”
No question that Wesbury has been disastrously wrong. Throughout most of 2008, he denied that a recession was even possible. It wasn’t until the market crashed in October that he was finally forced to admit that a recession was likely, but upon so admitting, he assured us that we would get a V-shaped recovery.
However, I don’t see him as incompetent or even stupid; instead I believe that his agenda is to brainwash people into believing that stocks can only go higher, and the economy can only get better. I don’t know why he does it; maybe the company he works for can only hold “long” positions. Or maybe there are politicians who are paying him off.
In any case, the days when I gave his analysis any credence whatsoever are long gone.
May 6th, 2009 at 12:30 pm
@Clem Stone
If that happened, the agency (or government) responsible would have a mass class action lawsuit on their hands.
May 6th, 2009 at 12:30 pm
black is white, night is day- leftback’s assertion that GS is the market is of course accurate- they can push the market where they want because their moves in the market is the trend- especially now that many other large institutions such as pension funds are on sidelines
still mostly cash- have some SKF and QID which is getting crushed- my own fault though because did not take off the table when I had a small gain and did not set stops-
oh well- regarding frankln-
he is a shill for the Obama administration and will stick up for any position that is Obama’s position- I commented to that fact a few days ago- his is the mark of a closed minded person incapable of an original thought-
any position by Obama’s admin id franklin’s position
May 6th, 2009 at 12:31 pm
Clem Stone Says:
May 6th, 2009 at 12:18 pm
My crystal ball says there will be some type of news event in the not-too-distant future (days or weeks), specifically related to all of the leveraged bear ETFs, that will cause mass capitulation/liquidation in all of these products.
comment:
———————
You could be right. This would be analogous to the GS pricing memos last year that helped hype the price of oil. As the level of the S&P increases, the value at risk for GS increases. They will need to get others in on the plan, otherwise they will hit a ceiling. Outright collusion would be a federal crime, I suspect. Thus, an equivalent for the pricing memos will be required. This would likely hype the market to new levels. People are stupid.
Also, I suspect the rise in oil prices recently is indirectly connected to the SLP. Oil prices are probably rising in sympathy to the stock market. In other words, a rising tide raises all boats. Unfortunately, this means the wealth transfer is not only coming from the gullible who are chasing a rising market, but also from Joe and Jane Public who buy gasoline.
May 6th, 2009 at 12:32 pm
Clem Stone @ 12:18
Cramer hates these ultrashort funds when the market is declining. No doubt he just loves them when the market is rising.
May 6th, 2009 at 12:33 pm
Little snippet from the transcript of last night’s News Hour with Jim Lehrer:
Psychology of the markets
JEFFREY BROWN: Hugh, what about this notion of managing expectations and psychology in the markets, whether it’s looking at the situation of banks or all these other numbers you’re talking about, the way that the administration has to kind of walk a fine balance, and Chairman Bernanke today?
HUGH JOHNSON: Well, you’ve got to sort of exercise leadership so you want to be, to some extent, a little bit optimistic or upbeat. But at the same time, you don’t want to raise expectations, expectations that the economy is going to turn around, say, in the current quarter or sooner and that the recovery is going to be strong, because there’s nothing worse than raising expectations too high and then having to deal with the disappointment if the economy isn’t as good as you’ve led those expectations to believe.
I think they’re doing a pretty good job. Both the president and Chairman Bernanke, especially Chairman Bernanke, is really kind of telling it like it is. He’s saying, yes, it looks as though we’re headed towards a recovery in the economy, but a lot could go wrong along the way, so be optimistic, but don’t be overly optimistic. And I think that’s both credible and the right tone.
JEFFREY BROWN: Do you see things that they have to be careful about when it comes to tone?
GREG IP: Yes. If they’re too optimistic, they will sound disconnected from the situation that ordinary people face. But if they’re too pessimistic, they’ll be accused of talking down the economy and hurting confidence. I do think that they’re basically getting the balance right.
May 6th, 2009 at 12:33 pm
Looks like initial claims for unemployment have finally peaked… Bob Gordon observes that final peak is likely to signal the trough of this cycle.
http://mast-economy.blogspot.com/2009/05/unemployment-initial-claims-peak.html
May 6th, 2009 at 12:36 pm
Re: the leveraged ETFs. It sure seems as if these things may be the cause of such market weirdness these days. The late day drops or ramp ups that have been attributed to PPT efforts are really due to the massive rebalancing of these things daily. I truly think they should be banned due to their distortion of market forces and dynamics and increased volatility. They are not essential to an orderly market. They are purely speculative plays and we would be better served without them.
And apparently there’s a proposal by some company (can’t remember which one) to put out about 90+ more of them. Can you imagine what that would do?
More and more individual as well as institutional investors are using ETFs of all kinds vs. individual stocks. That is probably contributing to the massive movements in the market as well. It’s becoming less a market of stocks with the increase of index and sector instruments. Is there really price discovery going on in anything that resembles a rational way?
May 6th, 2009 at 12:41 pm
TransorZ: I actually do think that Bernanke et al are walking the line pretty well. If you really look at what they’ve been saying it’s pretty understated and well tempered. Summers said a little while back that the economy was not in a free fall anymore. That’s pretty much it. But the market is apparently soooo desperate to see a bright side that they are reaching for the second derivative, etc.
I’ve certainly learned a lot in the last few months about market psychology. I still don’t know how to read it very well though. Too much cognitive dissonance. My head’s going to explode.
May 6th, 2009 at 12:41 pm
@Franklin411,
If you dislike the tone of posters here at TBP, why do you spend so much time hanging out here?
May 6th, 2009 at 12:43 pm
Bernanke announced QE in mid- March…the 10 year went down to about 2.54..today 3.19..
I think there must be more to this than the Fed is pausing in the buying of treasuries…there must be.
I just think when we look back on rates in two-three months and we are more informed about what the Central Banks in China, Japan, Middle East, etc. were thinking and doing, that this is probably a tipping point in the treasury policy of these institutions…
FWIW….
http://finance.yahoo.com/echarts?s=%5ETNX#chart1:symbol=^tnx;range=3m;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined
May 6th, 2009 at 12:43 pm
On coffee at home vs. Starbucks, Mannwich writes:
> I wonder how many others are now doing this?
3 1/2 years ago we bought a 12-cup thermal pot at Starbucks, and a fancy-dancy burr grinder (both on clearance), and now we buy bulk beans. Our monthly coffee bill went from > $80 to < $25, even wit the occasional Starbucks store visit.
Now if I could just get the same kind of return on FAZ. I think the market can remain solvent longer than I can remain rational.
May 6th, 2009 at 12:44 pm
Onlooker from Troy @ 12:36
“I truly think [leveraged ETFs] should be banned due to their distortion of market forces and dynamics and increased volatility”.
I am not convinced that the 10 day moving average of the SPX is affected one way or another by the leveraged ETFs. Probably not the 5 day MA either. If your average holding period is at least a couple of weeks, these funds probably won’t affect the value of your holdings over that time period. And if you’re a day trader, the presence of these ETFs may create opportunities that wouldn’t otherwise be there.
May 6th, 2009 at 12:44 pm
@Good News Economist: If I recall correctly, were you not pooh-poohing the idea that the market was headed for a steep downturn late last year/early ‘09?
May 6th, 2009 at 12:45 pm
hmarr @ 12:41
Probably gets his kicks making condescending remarks.
May 6th, 2009 at 12:47 pm
@ Onlooker from Troy
I agree with you to some point that these things can skew the market on a daily basis (especially in low trading volume scenarios), but if you look at it OVER TIME I believe the landscape changes…
I mean, take for instance this recent bull run in the S&P (after a bear market that started 18 months ago)…Now that some ‘bullishness’ has finally taken hold of some, why shouldn’t the S&P be given the opportunity to trade up and test it’s 200day MA? (which is still higher than where we are today – despite the run)…
Maybe these leveraged ETF’s (short side ones), serve a purpose of getting us to that price discovery (as the WEAKER ones capitulate as the move up gets steeper and helps RESOLVE the move)…
I’m a BEAR in this market (and on these fundamentals)…But just as the BULLS get a chance to TEST their support levels, BEARS should be forced to TEST the resistance levels…
If the leveraged ETF’s serve a purpose in expediting that price discovery (either on the bull side or the bear side), so be it! Why should they be reviled?
May 6th, 2009 at 12:51 pm
Onlooker,
the ‘bean-counters’ have found a new, not so new, really, toy, like this: http://www.cs.sandia.gov/capabilities/index.html
applied to: http://www.thearling.com/text/csss93.htm
(note date in 2nd link)
LSS: Cary the Computer can Trade some Stox, and then sum..(:
May 6th, 2009 at 12:57 pm
I think that the leveraged ETFs have served a great purpose of giving choices to those hedging or speculating in retirement accounts and other accounts that do no allow margin. I think the argument that they “distort” the market is a bit of a red herring. If there were that much distortion on an on-going basis, there would be great arbitrage opportunity that someone would probably figure out. Most price distortion seems to be occurring based on price volatility and compounding effects.
HCF
May 6th, 2009 at 12:58 pm
@cvienne
Hmmm. Interesting thoughts. I am by no means fully resolved on the issue, despite my rather strongly worded post I suppose.
Interesting thoughts. What about the issue of more and more trading via indexed and sector instruments? Doesn’t that really start to skew the market of stocks thesis? Really crappy stocks get bid up and good stocks get dragged down as investors run back and forth. Aren’t we ill served by that? And eventually fundamental analysis is thrown out the window entirely, even on a long term basis.
Just thinking it through.
May 6th, 2009 at 12:58 pm
Many more layoffs are coming. Just talked to my buddy who’s a sales guy at Oracle and he says a third of all sales people are going “on plan” (a precursor to getting the pink slip). Luckily he wasn’t one of them…yet.
May 6th, 2009 at 12:58 pm
gne1963:
We’ll only be able to tell if they peaked a few months from now.
May 6th, 2009 at 12:59 pm
@Mannwich,
I was claiming strongly that the dire commentary about the end of the world was overblown and that things would turn around much more quickly than most expected… a return to GDP growth sometime between then and July 4th… that still looks quite likely from the manufacturing data…
http://mast-economy.blogspot.com/2009/05/ism-data-signals-return-to-growth-is.html
And the ADP data and initial claims data seem to also agree with that assessment.
GNE
May 6th, 2009 at 12:59 pm
@hmarr
Because I enjoy reading opposing viewpoints, particularly when they’re so easy to shred. Barry has good posts on this blog and I enjoy responding to those as well (you’ll notice that Barry and Peter, while not completely endorsing the green shoots optimism of the market, have both stated that something positive does seem to be going on in the broader economy).
Finally, 95% of the posts on this blog say the same exact thing, in different ways:
Poster 1: “Grumble grumble grumble…world’s coming to an end.”
Poster 2: “Grumble grumble grumble…not before swine flu kills us all.”
Poster 3: “Grumble grumble grumble…ridiculous…we’ll survive, but civilization will be replaced by a post apocalyptic war zone in which the living shall envy the dead.”
ad nauseum.
May 6th, 2009 at 1:00 pm
I’m puzzled as to why there still appears to be some confusion as to the nature of the underlying rally. Perhaps because there are two factors at play that seem to offend the resident analytical bears:
First, the euphoria of the retail investors (ie the “green shoots” component) is contrary to the fundamental truth about the economy, which is that there is nothing in which to provide sufficient growth & productivity to drive employment and increases in real wages.
Second, the almost like faith like belief that the central government wouldn’t pursue unConstitutional methods in which to secure illusory, psychologically driven buying behavior.
Once you tease out these two threads, it’s easy to identify what is occurring. While it is true that the less astute investors fall into the first category, the more ‘worldly’, less naive investors know exactly to what lengths the Fed and FedGov are capable of in pursuit of their objective, namely defeat deflation.
We’ll get the DJI back to 16k; it won’t be based on any fundamental factors like earnings, P/E, etc. It will due solely to the efforts to get the debt/GDP ratio back to 150%, which means nominal GDP needs to hit $30T. How do you that? 100% inflation.
May 6th, 2009 at 1:01 pm
I would also like to add- my hopes for this country’s improvement have been diminished- in that the banks, who recklessly endangered the whole world economy, are the benefactors of the current administration- no different from Bush- no better that Bush- and that the view towards this country’s citizens have not changed- you are a consumer- here is some more money- go buy something- it will help the economy- we are seen as chumps and fools- fodder- to wander the aisles of the local big box stores- grazing- through the fields of Chinese made goods.
May 6th, 2009 at 1:01 pm
Calvin,
Agreed that hindsight is 20/20. But indication are now quite strong. If this is not the lagging peak then according to past bears, the new spike must jump to 800,000+… not likely.
GNE
May 6th, 2009 at 1:02 pm
@Onlooker:
I’m learning a huge amount also. The last few days I’ve been keying in on the term “orderly markets.” It was part of the NYSE’s rationale for the SLP program ZH has been hammering on lately. I’m thinking that it is a good example of a “thought-ending cliche” — something we hear so often that we assume has definite meaning when, in fact, it does not.
I found this law review article Disorderly Conduct: Day Traders and the Ideology of Fair and Orderly Markets, 26 J. CORP. L. 63 (2000) that helped me get a handle on big picture issues.
http://personal.law.miami.edu/~cbradley/articles/DayTraders.html#Document1zzFN_F10
The circuit breakers are an obvious example of regulating orderly markets. But then you start getting into the idea of regulating around gaming of the system and “gambling” vs. “investing.” So this SLP program by NYSE with SEC tacit blessing is put forward under that aegis. It “reduces volatility.”
My spider senses are tingling.
May 6th, 2009 at 1:03 pm
Franklin:
Tell you mom the new word for the day is hyperbole…
May 6th, 2009 at 1:09 pm
Here’s a good quote that the President should take counsel from:
“A nation that is afraid to let its people judge the truth and falsehood in an open market is a nation that is afraid of its people.” -John F. Kennedy
I’m not hopeful though. Too far down the wrong path.
May 6th, 2009 at 1:16 pm
Franklin’s straw men.
Poster 1: “Grumble grumble grumble…world’s coming to an end.”
Poster 2: “Grumble grumble grumble…not before swine flu kills us all.”
Poster 3: “Grumble grumble grumble…ridiculous…we’ll survive, ….
May 6th, 2009 at 1:19 pm
this, instead of the 2nd-link, above, is a little closer to the mark:
Stochastic-Programming Models for Portfolio Optimization with Mortgage-Backed Securities Comprehensive Research Guide (1993) (Make Corrections)
Raymond McKendall, Stavros Zenios, Martin Holmer
http://citeseer.ist.psu.edu/old/mckendall93stochasticprogramming.html
as well, the newer apps aren’t, usually, broadly published, the “Hedge Fundz”, “Prop Desks” view it/them as Proprietary..
and: “Financial-services industries: The financial-services industry has been a pioneer in the application of high-performance computing technology, and today it is a leader in the application of grid technology. An application ten years ago deployed on a Paragon™ supercomputer produced real-time quotes on certain mortgage-based securities. Computations that took several hours to run on a mainframe could be run in seconds on a parallel supercomputer, allowing customer representatives to deliver quotes immediately.
Today, grids are promising for securities trading, for tasks such as performing risk and derivative calculations, trading decision support, performing “what if” analyses to assist in building optimization strategies, and in data mining. They can be equally useful in banking, asset management, and insurance, speeding up tasks such as risk analysis, fraud detection, and actuarial analysis.
Benefits conferred by grid computing will include fault tolerance through virtualization and geographical distribution through multiple service providers. Grids allow throttling resources up and down to meet a service-level agreement. For instance, when a computation needs to finish within a pre-determined time, the application can be designed to take advantage of parallelism. Once this capability is architected within the application, it is matter of scheduling the appropriate number of processors to ensure that the run time does not exceed a pre-determined interval. Furthermore, it is not necessary to wait until the next procurement period; the extra processors can be summoned from a service provider just for the duration of a run.
The interoperability among grid components is also applicable to legacy integration. Where it makes sense, pre-existing applications could be integrated into the new grid infrastructure, perhaps through the use of a Web services API. The grid middleware should be able to keep track of resource usage, allowing highly deterministic cost accounting.
http://www.intel.com/cd/ids/developer/asmo-na/eng/dc/enterprise/optimization/202679.htm?page=2
LSS: those that are giving you the “Whocoodanode?” routine are ________________…
May 6th, 2009 at 1:22 pm
@ Hoffer:
They’ve come a long way since Donchian’s 5 and 20 havent they?
Although I’m certainly a rookie when it comes to system based mechanical trading… I bet that the 5 and 20 could out trade these crazy new ones.
May 6th, 2009 at 1:28 pm
Wow, I-man, thanks for bringing him up, hadn’t thought about him in a while..
http://www.marketmasters.com.au/85.0.html
“…Richard Davoud Donchian was born in Hartford, Connecticut in September 1905. His parents had migrated to the United States from the Armenian province of Turkey in the 1880s. Young Richard went to school in Connecticut, later graduating from Yale University with a Bachelor of Arts degree in economics. Upon graduation he worked in his family’s Oriental rug business.
After reading Reminiscences of a Stock Operator, Donchian’s interest turned to the markets. He lost money during the crash of 1929, which led him to study technical analysis.
He began his Wall Street career in 1930. He published a stock market service called ‘Security Pilot’ which he sold to brokerage houses. In 1933 he became an account executive and securities analyst with Hemphill, Noyes and Co., while remaining in the position of Vice President of the Samuel Rug Company.
During World War II, Richard Donchian took part in the invasion of Sicily and later became an Air Force statistical officer. After the War he became a private investment adviser and securities analyst. He was self-employed until 1960. In 1948 Donchian changed his focus from securities analysis to trading. He established Futures, Inc., one of the first publicly held commodity funds.
Donchian developed the trading approach which became know as “trend followingâ€. It was based on the assumption that commodity prices moved in long, sustained moves. Donchian developed and used a trading system based on moving averages. He wrote many articles on futures trading and securities and became known as ‘the father of trend following’.
In 1960 he was appointed Director of Commodity Research with Hayden Stone Inc. He commenced writing a weekly newsletter Commodity Trend Timing based on his 5-20 moving average method. His newsletter reached a weekly circulation of some 10,000 copies and he wrote it for 19 years. He wrote numerous articles including ‘Trend Following Methods in Commodity Price Analysis’. He later joined Shearson Lehman Smith Barney, eventually becoming Vice President….”
~~
franklin,
w/this: “..reading opposing viewpoints, particularly when they’re so easy to shred.” could you show an example of you’re having done so?
May 6th, 2009 at 1:36 pm
And further… here’s a blast from TBP past:
http://bigpicture.typepad.com/comments/2006/08/donchians_20_tr.html
May 6th, 2009 at 1:47 pm
from that link that I-Man posted:
The following trading guidelines were first published in 1934:
General Guides
1. Beware of acting immediately on a widespread public opinion. Even if correct, it will usually delay the move.
2. From a period of dullness and inactivity, watch for and prepare to follow a move in the direction in which volume increases.
3. Limit losses and ride profits, irrespective of all other rules.
4. Light commitments are advisable when market position is not certain. Clearly defined moves are signaled frequently enough to make life interesting and concentration on these moves will prevent unprofitable whip-sawing…
another piece of Gold in the vein that is TBP.
BR,
these trading pieces are excellent, maybe one of the Editors can round them up and post them every once in a while, or jam them under their own Tab ?
May 6th, 2009 at 1:48 pm
“. . . Anecdotally, we had five windows replaced on our house yesterday. Talked to the guy who did the work and he said they are still not very busy. Bad sign to be this far into spring and not be very busy . . .”
“. . . this company (one of the more reputable window/door companies in the TC) doesn’t seem to see business ticking up all that much. He said they were busy right through most of last year but things just fall off a cliff around fall/early winter.”
A similar anecdote: A painter is finishing up on our house this week. He told me yesterday that after he finishes our house and another he is working on, he has no work lined up for the summer. Zero. Nothing.
Of course he’s worried, since he usually carries a heavy work schedule in the summer. This spending pullback is especially striking here in Iowa City, which the WSJ reported last week boasts the lowest unemployment rate of any metropolitan area in the US, 3.6%.
May 6th, 2009 at 1:53 pm
Why does anyone bother reading/responding to Franklinbot anymore??
Any semblance of “credibility” was long ago tossed overboard.
May 6th, 2009 at 2:10 pm
@Butto:
Messianic expectations? The poor benighted readers of this blog yearn for The One whose Truthiness will lead us to the Promised Land of milk and honey. Many here were hoping the he was The One . . .
May 6th, 2009 at 2:14 pm
LOL
May 6th, 2009 at 2:24 pm
@Franklin
You appear to equate ‘negative’ comments regarding the fundamental nature of the economy with GRUMPINESS…As if all of the contributers here walked around with frowns on their faces all day long.
Not me, I’m a pretty happy guy…I appreciate the TRUTH…
Now let’s say if the S&P were trading at a single digit P/E to, say, $30 earnings…Let’s use 9x as the single digit multiplier (putting FAIR VALUE on the S&P at around 270)…
Heck, I’d take a shot at being a BULL at that point…I’d be looking for ‘green shoots’ everywhere I could find them…
- If homeprices were to drop another 20-25% and I could get a 30 year loan at 4.5%, all the while knowing that house prices were on a 5% or above upwardly sloping trajectory, and the job market could support a population of qualified buyers, I’d be a bull there too…
- If I could start a business and know I’d have good customer base that didn’t have to run up personal debt to buy my product, I’d be a bull…
- If I knew my taxes, or my energy costs weren’t going UP to pay for my President’s pet projects, I’d be a bull…
All of us WANT to be BULLS, and when conditions formulate a scenario which warrant that sentiment on a VALUE basis, we’ll all come join you.
May 6th, 2009 at 2:41 pm
Well. On the intraday chart (60 min.), we hit the exact top of the Elliott Wave channel at 920. We should see an imminent reversal. If the volume is strong to close out this week, we may get a “throw over” to 930s (as I discussed two days ago), but I’m expecting a reversal very soon. Short term bears will have to use a close above 937 as stop out to avoid taking a ride to 995-1008. I’m 50% short now, so my level of bearishness is increasing.
Are we having fun yet? – AT
May 6th, 2009 at 2:52 pm
Thanks Andy. You have any projection on the low?
May 6th, 2009 at 3:12 pm
Mortimus- Under the most bullish case, we’re setting up a large “inverted Head and Shoulder”, where the left shoulder = 741 lows, the head = 667, and now after we go to the neckline around 943, we will reverse to 741 to complete a large right shoulder, which would be the target. This sort of formation would be very bullish, but it requires a little trip back to 741, a 20% decline.
The large Wave I = V target, if we peak at 920 (hypothetical), would be 600, which, coincindentally, aligns very well with the 61.8% retracement of the entire 1932 – 2000 bull market at 595.
May 6th, 2009 at 3:16 pm
Andy – you’re the only thing keeping me sane right now, thank you
May 6th, 2009 at 3:32 pm
AT,
that’s the ol’ Pepper..
May 6th, 2009 at 3:43 pm
I don’t understand AT. You’re latest above suggests going to about 943 for the H&S pattern. That conflicts with your thoughts above of reversing at 920. Is the latter just more short term, with the former coming after? I realize this isn’t precision stuff, just trying to clarify. I got a little more short exposure at about 918.
May 6th, 2009 at 3:51 pm
AT
I think I understand where I misread you. The 920 was just an intraday reversal, right? Set me straight if I’ve got this wrong.
Thanks
May 6th, 2009 at 4:01 pm
Onlooker. Picking tops is tough to do. I’m allowing for various short, short term situations to play out, including a rush to the 930s or a more bullish scenario to 943.
Whatever you do, take whatever you read here skeptically….please don’t rely on my stuff…it’s free advice on the ‘net, so that’s what it’s worth. If you’re short at 918, I would suggest stopping out any close above 937 or any action above 943. I think we’re facing 20% of downside minimum. With a stop of a 944, you’ve got < 3 % downside. I try to seek out strong risk/reward scenarios and I think being short right now is a decent deal. Again, it’s free advice….
May 6th, 2009 at 4:06 pm
Andy- do you know much about Wolfe Wave targets?
May 6th, 2009 at 4:11 pm
[...] No Comments While all eyes are on the release tomorrow of the bank stress test details and the BLS Unemployment data on Friday, the market is once again choosing to look on the bright side of [...]
May 6th, 2009 at 4:46 pm
Franklin sez:
1. grumble, grumble, grumble … all the posts are the same
2. grumble, grumble, grumble … you all suck
3. grumble, grumble, grumble … I have ‘womanly’ issues
ad nauseum
Go back to the gym, loser
May 6th, 2009 at 8:05 pm
Andy…
I too like your technical picture & analysis…I know to take it for what it’s worth as it’s only a hypothesis, but AT LEAST it’s a plan with a defined exit strategy (which makes it sensible)…
I’m interested too in your larger TOP and BOTTOM points…(As 943 would be an exact ‘double top’ of the January 6th high – and 600 was my target on the downside in March b4 the market suddenly decided to stop at 666)…
It’s funny, I was ALL READY to start going long around March 5th…When the S&P was at 666 I said to myself “this is perfect”…”we’ll get a capitulation event where the S&P dives down to 640-600 and then reversed INTRADAY, if I see that, I’M GOING LONG…It never happened, and it never looked back…So I never got long because at first I thought it was a ‘headfake’, then the VALUATIONS never met my parameters as it kept going up…I just kept saying to myself…”Alright, I’ll wait for the final surge to the upside and just go short”…
Anyway…I LIKE the 600 number…
Here’s the thing though…To me it’s shaping up in a way that it could just do a .618 retracement from 943 down to 772…Then it could SUPPORT at that number (which would make the bulls all drunk with joy as they thought it was support for a new SECULAR BULL MARKET)…it would give them the freedom to call the market all the way up to around 1150 by late July…
Then the hammer would come down…Further data and earnings would not reveal the giddiness of this earnings season…You’d plummet from 1150 down to 600 between August and October…
That’s A LOT of $$ to be made percentage wise either way in the next 6 months…
Last interesting note…
The day the market hit 666…I had a print on my screen that showed 616.87 (which doesn’t show up on any charts because it was a TICK)…Do you think that that might have been a “SEARCH & DESTROY” execution, or might it just have been a key error? I wonder…
Anyway, I’m witcha bro…
May 6th, 2009 at 9:09 pm
@franklin: I’m on to you. You’re just baiting people.
You are way too young and inexperienced to get it.
My advice: Stay in the Ivory Tower if you can. Then things are much simpler. You can play petty bull-shit politics jockeying for tenure against your obviously less enlightened competitors.