Housing Starts
By Barry Ritholtz - May 20th, 2009, 5:30AM
I mentioned the weak housing starts yesterday (New Construction Falls 54%: Less is More), but here is a great chart from RM that puts it into perspective:
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Building permits in April 2009 decreased 3.3% from March and declined 50.2% from April 2008, to 494,000. Housing starts in March 2009 decreased 12.8% from the prior month and declined 54.2% from the prior year, to 458,000.
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Sources:
NEW RESIDENTIAL CONSTRUCTION IN APRIL 2009
Census.gov
MAY 19, 2009 AT 8:30 A.M. EDT
http://www.census.gov/const/newresconst.pdf
http://www.census.gov/const/startsua.pdf
http://www.census.gov/const/www/newresconstindex.html
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May 20th, 2009 at 5:55 am
This chart looks like Schwarzenegger’s poll numbers – remember how the GOP wanted to change the Constitution to allow him to be President? – and there’s a good reason for that. California’s prosperity after the dotcom crash was driven by house prices. The Golden State’s economics are unsustainable in a world that is becoming more focused – on all things green and – sustainability in general.
Schwarzenegger started off without a clue about leadership. While he learned a little on the job, he’s been a failure and now California’s in for a long, rough ride.
May 20th, 2009 at 7:05 am
Well, the vote in California has nothing to do with Schwarzenegger. Nor did it have anything to do with Gray Davis. How do you go from housing starts to Arnold? I hope not everyone here sees a political boogeyman under every bed.
Sheeesh….
May 20th, 2009 at 7:16 am
Getting back to Barry’s topic…I know all saw the Home Depot report yesterday about how weak the housing market would be in the future. Not surprising.
My thought about housing starts is that the main picture is still the global nature of the downturn. It is not regional, it is not limited to the western hemisphere, and it has further to run. We had our group meeting of the partners last night, and one of our guys (our most junior partner) has decided to move and will try to make more income elsewhere. Just at the time I thought he was beginning to make long strides. Well, most workers would love to make what he made last year, but he thought that the economy forced his move . We all wished him good luck.
The Japanese economy contracted 15.2 per cent:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a_jsUBH352fg
and again, I don’t see any evidence that worldwide demand is picking up. Housing crisis may have started it, but it still seems like a long slog to me.
May 20th, 2009 at 7:51 am
re Arnold- I will give it to him in that he appears to like challenges- however I don’t think he realized the buzz saw that awaits all politicians-
the biggest problem w/ California is out of control benefits- if they want the benefits- great- then there taxes will need to go up accordingly-
problem is Californians are always defeating the very measures being put forth to close the budget gap.
re housing starts- lets’ see- 5% interest rates – check, $8,000 tax credit- check, FHA 3.5% down loans to $729,750- check, damn- looks like we’ll need a builder bailout- important industry you know-
as an aside- I am still amazed that not one national builder has filed for BK
May 20th, 2009 at 7:52 am
looks like that ma line has now become resistance. if anyone is a housing bull please correct my reading here.
May 20th, 2009 at 7:52 am
Housing news was horrible yesterday, but the spinsters decided to confuse the issue by trying to sell the idea that existing stock was going like hotcakes, crowding out new housing. Today, a new spin will emerge. And the spin will continue as long as banks need to raise new capital. The stock market needs to remain as high as possible to maximize the inflows. Note the timely GS upgrade of BoA right before they raised capital in the stock market.
Logically, we are not only at a market high but the rush to sell new issues ASAP implies a big market fall is in the offing soon. Otherwise, the bankers would wait for the green shoots being hyped so freely to grow and spread.
A new day, a new spin about something.
May 20th, 2009 at 7:53 am
We’ve had 6 houses under construction burn in the last week. Officially its under investigation, but I wouldn’t be surprised if the insurance claims are honored. I guess this is what they mean when they say burn off inventory.
May 20th, 2009 at 7:55 am
BR, about Bailout Nation V2, what about the new FASB rule that takes effect on 3-31-10 bank financial statements about bringing in off balance sheet debt and requiring reserves against it. Is that going to need more cash from Uncle Stupid?
May 20th, 2009 at 8:02 am
Dead Hobo Say:
“Note the timely GS upgrade of BoA right before they raised capital in the stock market.”
scam of scams- It will be a fine day when all those in on the new issue lose their ass when the stock price tanks again
May 20th, 2009 at 8:19 am
OT:
Immelt just says on CNBC that since there was no paper on how to deal with what happened after Lehman went under we should “tip our hats” to that team (BB, Paulson)
yeah, I think I’m gonna pass on that hat tip. Sorry Jeff.
May 20th, 2009 at 8:19 am
Assuming the worst – that this rally has been manufactured in order to sell new bank issues and assist with the banking bailout – then at some point the support has to be withdrawn. Logically, it appears the fix is in, otherwise banks would be waiting a couple of months or more to profit from an even higher market. In other words, all they would have to do to make billions more would be to sit on their asses for a few weeks. That’s not hard work. So, the general expectation in those circles would appear to be that a big drop is imminent.
So, if the market support is manufactured and has a finite duration, what would be the event, logical date, activity, or something else that marks the end point and the market must rise or fall on it’s own afterward.
When’s D-Day?
May 20th, 2009 at 8:22 am
@dead hobo
“Today, a new spin will emerge. And the spin will continue as long as banks need to raise new capital.”
Couldn’t agree more. The new spin is going to run and run for years. Its like a giant Ponzi scheme, orchestrated by Team Obama and mainstream media.
Certain people I respect on this blog expect March lows to be tested this fall – right in the middle of Q2 reporting season. Dream on! We no longer operate in a FREE market.
Expect record Q2 “profits” as banks maneuver to free themselves of TARP and further issues.
The best Ponzi schemes can go uncovered for a decade – but the longer they run the bigger the fall!
May 20th, 2009 at 8:24 am
Hobo, even if it was a pump, is there reason to believe that the market is not now, at these levels, self-sustaining? I’m not sure there is any reason for anyone to sell here — not until an “event” like, say, the next leg down in GDP.
May 20th, 2009 at 8:26 am
New housing starts have nothing to do with demand for the products being built, but are a reflection that money is still flowing from the banks to the builders. Consider:
In light of the fact that many communities have houses in various stages of construction that have not been finished, and are not being worked on (and considering what the weather alone will do to a house with no shingles/windows/doors), the idea that there are new starts of any kind is an indication that the criminal insanity continues, unabated.
There is no market for the products that are being built. A good analogy would be if the auto manufacturers — in their current financial state — had decided to restrict manufacturing to SUVs and larger.
The robbery and rape continues.
Once again: The whole catastrophe we are witnessing is a matter of law enforcement. Nothing else will turn the tide.
May 20th, 2009 at 8:28 am
bill_from_chicago Says:
“Couldn’t agree more. The new spin is going to run and run for years. Its like a giant Ponzi scheme, orchestrated by Team Obama and mainstream media.”
__________________
And you would replace team Obama with . . . ?
May 20th, 2009 at 8:31 am
ben22-
the key players are only too willing to pat each other on the back- before all the data is in and the damage is assessed- check out this cover of time- Feb 1999
http://www.elliottwave.com/images/marketwatch/Greenspan%20Time%20cover.JPG
May 20th, 2009 at 8:33 am
@Marcus Aurelius
Anyone who doesn’t hand out my taxes, my children’s future taxes and my grandchildren’s future taxes to filthy deceptive bankers and Automobile Trade Unions.
May 20th, 2009 at 8:33 am
Bruce:
What kinda business are you in? I’ve been sorta out of it the last few weeks. I don’t think that partner will do better elsewhere. For example, Houston had been relatively insulated, my assumption was because of the oil bubble last year. But, it has been catching up with us. House sales are down 23% Y/Y and high priced houses are stacking up in the listings. Million dollar spec houses all over with for sale signs. Realtors spin on the new report was “Just look how much better we are than Reno.”
May 20th, 2009 at 8:34 am
rww Says:
May 20th, 2009 at 8:24 am
Hobo, even if it was a pump, is there reason to believe that the market is not now, at these levels, self-sustaining? I’m not sure there is any reason for anyone to sell here — not until an “event” like, say, the next leg down in GDP.
comment:
—————
I’ve had a rather abstract theory about market pricing and market tops for a few years.
People will only buy if they think the market ceiling is of infinite distance away. Thus, they will only buy if they expect the market to rise. By ‘infinite distance’, I mean they can’t see the top. Wishful thinking and herd mentality play a part. It’s OK if the actual top is obscured by clouds, people will buy if they think it’s a long way off and they can’t actually see it. The desire to buy is tied together with optimism and dreams and greed.
This is helping to power the market rise today. Enough reality will put a ceiling into view. Once people see a top, they won’t buy. Then comes simple math. A lack of buyers means falling prices since people always need to sell for one reason or another. Then selling begets more selling; another herd mentality reaction.
Thus, it won’t take much bad news to set off a fall. Only a reduction in optimism. Thus the daily hype cycle.
May 20th, 2009 at 8:59 am
A lot of people might have had their 401k’s and retirement accounts as their last stack of cash (but they didn’t want to pull that money out until it was absolutely necessary)…
In the meantime, since the October – March dip in the stock market, maybe they decided to run up their credit purchases even further to avoid taking cash out (because their “broker” told them to hold on and avoid paying CAPITAL GAINS tax)…
So now they run-up MORE credit card debt, and since the market seems to be recovering, they think they can go on like this and simply pay off the credit card debt with profits in the stock market…
So they haven’t learned ANYTHING (because that’s the game they were playing with their house before)…
So something will trigger a selloff eventually, this time it will wipe out their 401k, AND their debt burden will have increased even more…
May 20th, 2009 at 8:59 am
Since the gummint is full in with all of the big banks/financial firms wouldn’t it be approprite for the plunge protection team to take actions to jack up the share prices and help the #1 shareholder – uncle Sugar?
A turning point for this rally could be a collapse of CA RE prices prompted by bank sales of their growing 80,000+ shadow inventory
May 20th, 2009 at 9:06 am
@Mike in NO:
I am a surgeon. Trained at Charity in NO. LSU.
May 20th, 2009 at 9:07 am
Time to buy in Phoenix?
THE BOOM IS BACK (???!!!??)
http://www.latimes.com/news/nationworld/nation/la-na-phoenix18-2009may18,0,7979477.story
May 20th, 2009 at 9:13 am
@Dead Hobo 7:52
As they are now classified as a bank holding company, my two questions about GS:
1.) Where are the deposits?
2.) Why are they still issuing buy/sell recommendations?
These kleptocrats were saved by an inside job via Hank Paulson. The rampant criminality we are experiencing must stop before an sanity returns.
May 20th, 2009 at 9:15 am
@JDinCT
Great…So the “service” on the mortgage payments finally met the criteria for one set of renters (by coming down $100 a month or so)…
Move in!
3 months later…
Dear Homeowner:
We inform you that the city is broke and therefore we will have to raise your property taxes $200 per month…
CITY OF PHOENIX
Of course Uncle Sam is going to raise their taxes as well, AND, since the global economy has now FULLY put the recession in the rearview mirror, now gasoline prices can go back up to $5.00 a gallon…
Welcome to homeownership!
May 20th, 2009 at 9:16 am
http://seekingalpha.com/user/416645/comments
And to think I voted for this change
May 20th, 2009 at 9:16 am
BnT
Herr Doctor, was the salt mine a metaphorical reference?
May 20th, 2009 at 9:18 am
@cvienne
good one!!!
Futures up again.
May 20th, 2009 at 9:18 am
ahab @ 8:31 – now that is a scary magazine cover.
May 20th, 2009 at 9:18 am
If we’ve HIT BOTTOM in the stock market & this has initiated a whole new generation of “buy and holders”, then that means nobody will ever sell, right?
So that means nobody will have to pay any capital gains taxes by buying and holding…
At some point, probably the government will have to manufacture an idea to SELL stocks so they can tax the capital gains off this bounce…
May 20th, 2009 at 9:30 am
Bruce:
Judging from your posts, you’re awfully well-mannered for a surgeon. ;)
May 20th, 2009 at 9:31 am
cvienne Says:
May 20th, 2009 at 9:18 am
At some point, probably the government will have to manufacture an idea to SELL stocks so they can tax the capital gains off this bounce…
reply:
—————–
Good point. The only other options are to stimulate credit or convince stockholders that the wealth effect is back. But since most buy and holders are still at least 30% – 40% down from 11-07, I don’t think many consider themselves wealthy or plan to sell soon just to buy something. Using the house as an ATM is out of fashion and not likely to take off again at any time soon. Banks also seem a little averse to this credit idea that gets in the news from time to time.
The only realistic option is to create a trader’s market and stimulate a little Short Term Capital Gain Money. Maybe that will stimulate Consumption. I know it would for me.
I doubt Uncle Stupid is calling the shots about much of anything, although he is probably being led to believe he is in charge of everything because he is supplying all the money.
May 20th, 2009 at 9:34 am
@ahab,
Nice link, seen that cover before. Nice shot of the crooks.
It was funny, Nick Murray read Rubins resignation letter at the conference I was at last week to close things down on Saturday. He then described Rubin as “one of the 12 smartest people in the world”
and then went on to describe how even he didn’t see this coming. Meanwhile, dummy me, that didn’t go to an ivy league school, and certainly don’t consider myself one of the 12 smartest people in the world, had people in cash.
May 20th, 2009 at 9:37 am
“there is no reason for people to sell”
Wrong.
May 20th, 2009 at 9:39 am
ben22 Says:
May 20th, 2009 at 9:37 am
“there is no reason for people to sell”
Wrong.
reply:
————–
I stand corrected.
May 20th, 2009 at 9:42 am
hobo,
I don’t disagree with your theory really. That said, I think I can find more than a few reasons to sell if you are long right now.
May 20th, 2009 at 9:47 am
rww http://www.ritholtz.com/blog/2009/05/housing-starts-2/#comment-173688
There are always sellers in the market, of course. Even on low volume days there is lots of activity. So the price is set by the latest transactions, and if the new buyers aren’t so thrilled with what they see as future price prospects for share price appreciation due to economic conditions (and company specific) then they’re going to hold out for lower prices.
Right now there’s some kind of delusion that we’re coming out of a cyclical downturn while ignoring the terrible structural problems and huge debt overhang. Eventually the market won’t be able to ignore that anymore, and therefore the bleak business prospects, and sentiment will change. When it does the herd will follow.
Look at any number of market valuation measures and it’s hard to justify this market’s level. Only a rosy and optimistic outlook that portends a return of historically average growth rates can allow one to hold here.
I like dead hobo’s reply too.
May 20th, 2009 at 9:48 am
@Cursive:
Yes. I haven’t “worked” a day in my life since I finished medical school. I was not suited to work for someone else…
May 20th, 2009 at 9:49 am
ben22,
btw, nice posts re: confab..those fee-fleecers are swell bunch, no?
some things never change..
past that, keep an eye peeled this way: http://quotes.ino.com/chart/?s=NYBOT_DX&t=f
as you might imagine, PMs are heading North..
May 20th, 2009 at 9:50 am
also, I agree with a few others above that I don’t think there has to be one single event that starts the selling again. The bags of credit held by those propping up the market are not big enough to stop the deflation.
confidence has been shaken. 10 years of negative returns for buy and hold investors, highest unemployment in decades, billion dollar ponzi schemes, TARP, TALF, UBS tax evasion for the wealthy, wars, terrorist attacks, real estate crashes, school shootings etc.
people are worried right now about catching this wave up, but be patient, it’s only been a couple months after a 17 month downturn. I don’t think you’ll have to be mad about it much longer. I know where you are coming from. In general, my opinion is that people are still more worried about keeping what they have and will remember this very quickly as credit deflation continues and this turns the other way.
May 20th, 2009 at 9:51 am
@ben22
VIX at 27 on first print this morning…
Apparently SOME people believe there is no reason to sell…
Just not you or I, or most of the people hanging around here…
Maybe F411 has everyone on TWIT-ter and he’s pumping them full of green shoots
May 20th, 2009 at 9:53 am
ben22 http://www.ritholtz.com/blog/2009/05/housing-starts-2/comment-page-1/#comment-173727
From your lips to God’s ears! :)
I’d like to buy some more someday, at levels that give me prospects for good long term returns and healthy dividend rates. That’s not here.
May 20th, 2009 at 9:54 am
ben22 Says:
May 20th, 2009 at 9:42 am
hobo,
I don’t disagree with your theory really. That said, I think I can find more than a few reasons to sell if you are long right now.
comment:
—————–
Agreed for some. Traders should take profits. Anyone who plans to start trading should consider raising capital now and buying back in at a later date after the market declines. Someone who needs cash should just go for it.
But someone who has held on since 11-07 with a 401K and no investment skill should just hold on for a while. They’ll probably never see a full recovery, but in a few years the might get a chunk back. If hyperinflation takes off, they might even see a nominal gain. While the market is being hyped tremendously today, at some point in the distant future there will be a real bottom and a real upturn from it. These are the people I was thinking of.
The wealth effect via stocks is long gone and not for this world for many many years hence.
May 20th, 2009 at 9:54 am
What’s interesting about this rally is that the further it extends upwards, the more devastating it’s going to be on the way down…
I mean, I was thinking back in April that if the rally had faded around 840 or so on the S&P we might go down and “retest” 666…
Now, with all this FRESHLY MINTED cash piling in, I’m convinced the next dip could go FAR BELOW 600
May 20th, 2009 at 9:54 am
Roubini this morning: “Commodities may be getting ahead of the economy”.
Let’s keep an eye on oil this morning. Might be time for a turn down, which would lift the US$.
SCO and DUG are the trades du jour. But we could be wrong, we often are…
May 20th, 2009 at 9:56 am
Oh dollar… poor little you.
May 20th, 2009 at 9:57 am
It’s true that the market has become very numb to bad news and is letting everything just roll of it’s back. So I understand the opinion that it will take a big shocker to start a leg down here. But eventually the weight of all that will settle in and the illusion of a recovering economy will be dashed, and buyers will be wary. Some day.
May 20th, 2009 at 9:59 am
Anyone watching Secretary Geithner’s testimony? Wow…he had a shaky start but he’s really grown into role.
May 20th, 2009 at 10:04 am
Geithner’s such a stud
May 20th, 2009 at 10:05 am
Gosh golly wow that Timmy is so awesome…
I’m so filled with confidence…it makes me want to just go out and spend all the $$ for the next 5 generations of Americans today…
put it on the VISA
May 20th, 2009 at 10:05 am
Reflation trade back on. GDX up over 40. Bubbliciousness in the United States of La-La land. Beautiful day here today in the North Shore (Hamilton, MA)! Time to go for a nice walk and smell roses, listen to the birds, etc.
May 20th, 2009 at 10:09 am
@definitely better outside Manny…
In here we’re just SMELLING THE BIRDS and LISTENING TO ROSES
May 20th, 2009 at 10:10 am
Manny, say it isn’t so! You’re a North Shore guy???
Tell me you don’t have a mullett and hang out at Kowloon when you come home to visit…
May 20th, 2009 at 10:10 am
@MEH,
The $US has become a great indicator for the DOW movement. I continue to watch that and the bond market lately. That’s where the story is being told.
@cvienne,
Still short term bullish so I get all that. Sentiment remains at levels that I still think are lower than they will be before this is over. Again, watching CNBC this morning, nobody is saying anything different than what we’ve been hearing, really since late March.
The rally is tired
We are due for a pullback
etc etc.
The longer it goes the more people will pile in. We all need to be patient, the first wave down was long, 17 months, wave 2 could last several months.
Steve Barry was an excellent example to all of us last year. People came on here all year to slam his investment strategy in the early parts of the year and into the summer. Around mid August I didn’t see much mention of him being wrong.
I laid out two thoughts on where we go Monday. Either a double zig zag up from here on our way to my initial targets or a sharper correction down to retest and then a bounce to my levels. I still think both are on the table. I had expected prices to roll-over after Monday and they didn’t so the first scenario seems more probably right now, but, it’s only Wednesday. Lot’s of trading hours left this week.
According to my almanac Memorial Day week could be interesting
Dow Down 7 of the last 12, Up 12 straight 1984-1995.
May 20th, 2009 at 10:10 am
@BnT 9:48
My dad graduated from LSU Medical School in New Orleans in 1958. I’ve got a brother and two sisters who graduated from the Shreveport school in 1987. I enjoyed growing up in the hospital and making house calls with dad (one of the few times I saw him as a kid), but didn’t want to spend 12 years in undergrad/med. school/internship and then have to work weekends.
May 20th, 2009 at 10:11 am
notice – there is no posting by George Voit while Timmy is live on TV
May 20th, 2009 at 10:12 am
@Manny
hey Manny…
While you’re up there, if you take in a SOX game, get in jacoby Ellsbury’s ear and tell him to start freakin’ producing!
he’s on my fantasy team and has been nothing but a dead weight…
May 20th, 2009 at 10:15 am
@cvienne: As a season ticket holder (still have my CF, 8th row bleacher seats living in Mpls), I’m going tonight, Friday and Sunday. I’m right behind Jacoby, so I’ll pass on my message to him. Damon was a lot more fun out there. He interacted quite a bit with the fans. I like Jacoby but he’s been a bit of a disappointment thus far. He’s still young though.
May 20th, 2009 at 10:15 am
That’s pass on YOUR message to him.
May 20th, 2009 at 10:16 am
retail sales yesterday:
http://www.nasdaq.com/asp/EconodayFrame.asp
ICSC sales.
Down another 1.2%…the consumer has figured out that this isn’t going away..
May 20th, 2009 at 10:17 am
Think of it this way:
Have you ever watched a dog interact with its owner? The dog repeatedly looks at th eowner, taking cues constantly. The owner is the leader, and the dog is a pack animal alert for every cue of what the owner wants it to do.
Participants in the stock market are dong something similar. They constantly watch their fellows, alert for every clue of what they will do next. The difference is that there is no leader. The crowd is perceived leader, but it comprises nothing but followers. When there is no leader to set the course, the herd cues only off itself, making the mood of the herd the only factor directing its actions.
- Robert Prechter
This will be good to keep in mind as this goes along.
May 20th, 2009 at 10:19 am
@Cursive:
I imagine if he was like me, he got ahead with investments, not with salary.
May 20th, 2009 at 10:19 am
@ben22
I read both of those possibilities you posted the other day and can see a CLEAR case for either of them to happen…
Despite being on here frequently, I’m not really doing much trading…The last transaction I made was 9 days ago (shorting the S&P a little more when it hit 930)…
I don’t think I’ll really do much from here on out unless I see 1,000…
These days I’m more interested in the indices…I don’t see any point in trying to “stock pick” because when the crash comes, it’s going to take EVERYTHING down regardless of quality…And I never saw much purpose in the “pairs” trade idea (perhaps in a different market environment, but not this one)…
I agree with you…We might need a lot of patience here now that this thing has taken on a life of its own…
May 20th, 2009 at 10:20 am
@Transor: No, not really. I grew up in Ayer, a very small blue-collar town in north central Mass up route 2. There used to be a military base there (although I was not an army kid), Fort Devens. All those kids went to school with us. Was an interesting childhood, as we had a more integrated school than most even in the inner city, and mostly everyone got along pretty well. We probably were the only school that had minorities on our sports teams (I played hoops and baseball) and we heard our fair share of racial epithets in other, whiter, richer towns when we played those teams (mostly from parents and towns-folk) but, of course, we usually got the last laugh and almost always beat the crap out of them due largely to the diverse nature of our teams. My sister now lives up here with her family and my parents are selling the childhood home to high tail it to FL. I’m going back there tomorrow probably for my last visit (might be back one more time this summer though).
Am still thinking of growing a mullet again. Had a mini-mullet growing up in the ’80′s. Maybe it’s time to bring it back “in style”?
May 20th, 2009 at 10:20 am
Peep are still buying stocks but someone smart is buying the short-dated Treasuries….
May 20th, 2009 at 10:21 am
Onlooker from Troy
“But eventually the weight of all that will settle in and the illusion of a recovering economy will be dashed, and buyers will be wary. Some day.”
————————————————————————————-
But when? Next week? Next month? Next year?
What could possibly be the “big shocker” to end this rally? If things like GM bankruptcy and Japan’s GDP declining 15% can’t effect markets – then what could possibly be this watershed event?
We all know Q2 banking profits are going to be rigged again.
And even if results are bad in Q2 – I am 100% they will be “better than anticipated”.
May 20th, 2009 at 10:23 am
Gotta be a double top going on here… I hate this part of being short. I will never open a short prior to the lower high again. And if I do, someone call me a dumb rasta.
May 20th, 2009 at 10:26 am
I and I agree wit I-Man, we hate this part here at Schadenfreude, despite our Oxford degree and natural sang froid.
May 20th, 2009 at 10:27 am
@bill_from_chicago
Speaking of “events”…headlines in the news this morning that Iran successfuly does rocket launch capable of delivering a payload as far as Israel…
Ho-hum…Obama’s great…Let’s put Timmy on TV!
May 20th, 2009 at 10:28 am
@I-man
We’re ALL “DUMB RASTA’s” here baby…haven’t you figured that out? :-)
May 20th, 2009 at 10:30 am
bill,
what you are saying is the paradox that the market is always saturated with. People always seem to ask “why would it I do that?” at the wrong times:
When T-bills sported double digitrates in 1979-1984, investors saw no reason to leave T-bills for stocks. In 2000, investors saw no reason to put up with the low yield of T-bills. The first was a great opportunity to buy stocks, the second, maybe the greatest stock selling opportunity ever.
When oil was 10.35 a barrel in 1998, no one made a case that the world was running out of black gold; but when it was 7-8 times more expensive, some three dozen books came out arguing that global oil production had peaked, which among other things, convinced investors to begin buying oil futures… a year before the price collapsed 78%.
Weren’t stocks the best investment “in the long run” in the late 90′s? BR posted a chart not long ago that showed the S&P has underperfomred boring Treasury bonds for the past 40 years since 1969!
Now, just when nearly everyone conceded in March of this year that the financial and economic system was done, the market has now turned around and shot upward with its fastest rally in 76 years.
I don’t know why people try to fight the reality of what is going on here. This is a bear market rally. And, I’m not talking mybook, I don’t have a single short position on right now, haven’t for a while.
May 20th, 2009 at 10:33 am
Joe Six Pack is back in the market trying to recoup some of his losses. Watch this thing grind higher for a while. However, gas prices could put a crimp in the party just when Joe is about to leave with the hottest chick there.
May 20th, 2009 at 10:33 am
@Manny: The Cape Ann area is great. Full disclosure: We take the kids up for day trips often.
I go out 2 past what used to be Fort Devens every now and then. Last time I was out that way they hadn’t sprung for new road signs; they just painted over the word “Fort.”
May 20th, 2009 at 10:34 am
Jah would say, “when in doubt take in half” here… but whats the fun in that? Or, when in doubt GTF out. Might be more appropriate here if it wasnt emo based.
Cant do it though.
That said I’m going to have to draw a line in the sand here and reality “check myself before I wreck myself.” (a la Ice Cube)…
If we make new highs on strong volume in the coming days… Q’s: 35.50 XLF: 13.25 SPY: 93.50 I-Man will have to run for the Maroon country and live to trade another day.
May 20th, 2009 at 10:35 am
I’m looking at the June “call” contracts for C…
65,000 @ $4 strike for .25
68,000 @ $5 strike for .10
54,000 @ $6 strike for .05
May 20th, 2009 at 10:37 am
@Transor: Yep, they just call it “Devens” now. Many companies have set up shop there (Gillette being one of them, I think) and I believe a state prison. It’s a little weird driving through there because some of the old military homes (some nice stately brick ones for officers too) still stand there empty. I remember just how busy that base used to be as a kid because I used to deliver pizza there as a teenager. Hustled my ass off but made some nice coin as a teen doing it.
May 20th, 2009 at 10:41 am
Ben22
Sounds like you are trying to explain hindsight….seen that most here think we are in a Bear Market rally…would anyone prepared to hazard a guess when it will end? Might be fun to look back in a year and see who was correct.
May 20th, 2009 at 10:45 am
@ben22
You know I see your point about the possibility of the market going higher…One question that i keep asking myself is this…
If the “bulls” are so convinced that we’ve turned a corner, WHY NOT THEN JUST CONFIRM IT…I mean a nice fibonacci retracement down to .50 or .618 and a bounce off of that and the technicians would go NUTS!
They could subsequently take the S&P all the way up to 1150 by the end of the summer if they wanted to REGARDLESS OF FUNDAMENTALS…
So if they’re SO BULLISH, why the fear to test the downside and see if it holds?
May 20th, 2009 at 10:45 am
Big gains for no reason. Is this the last push w/ Memorial Day as D-Day?
May 20th, 2009 at 10:46 am
“I don’t know why people try to fight the reality of what is going on here”
ben, some people fight reality every single day of their lives. That’s why we are in this mess.
I-Man, if we make a new high, Schadenfreude will also head for the sidelines. Patience. Discipline.
The XLF is the key here, since this is a garbage rally. If XLF > 13 I am gone until we hit the 200DMA for SPX.
May 20th, 2009 at 10:55 am
bill,
The exogenous-cause model fools investors. One reason is that rationalization follows upon mood change. Mood change comes first, and attempts at reasoning come afterward. Financial markets express moods immediately, but reasoning lags, and by the time investors adopt compelling convictions, social mood is ready to charge in the other direction. Another reason is that mood change comes first, and its results in social action follow. These events then provide a basis for endless rationalization about the stock market, all based on mood changes that have occured in the past and without a clue as to mood changes that lie directly ahead. Paradox after paradox results.
I’ll still be here in a year so indeed, it will be fun to look back and see who was right. I hope you are, I fear I am.
May 20th, 2009 at 10:58 am
@ BnT 10:19
That was painful to read. My dad was a country doctor (general practice/general surgeon) in every sense of the word. I still have an old sugar kettle that he accepted as payment for services. He was not financially astute and his “business friends” often bled him of any investment cash he had. We found a bunch of worthless stock certificates after he died. Still, he reared 6 college grads who are all successful. I started managing his old profit sharing plan ($150k sitting in cash) in 1994, rolled it into an IRA and now it is a very generous nest egg for my mother.
May 20th, 2009 at 11:08 am
Most of us physicians stink at investing…not our fault…most, like your dad, just too busy doing their job..
May 20th, 2009 at 11:10 am
BnT: Too many physicians get fleeced by Brian the Broker. They have a big target painted on their backs.
May 20th, 2009 at 11:12 am
Ben – thanks for your thoughts – the market reminds me of a school of sardines – no one really sure of what’s going on but nevertheless all moving along together
May 20th, 2009 at 11:15 am
Lefty:
Yep, you are right again…I cannot tell you the number of times I have gotten cold calls in my office before I moved here…brokers are a sneaky bunch..
May 20th, 2009 at 11:20 am
They tell us in broker training to target you guys Bruce. :)
May 20th, 2009 at 11:21 am
@call me ahab at 8:31 am
clicked on your link to the 1999 Time cover and at first sight, almost lost my cookies, instantaneous revulsion
May 20th, 2009 at 11:23 am
BnT: You just know that docs are having C and BAC pitched to them all month long here.
I-Man, I and I is sharing your pain today, mon, as we wait to see whether this trade is going to work….
May 20th, 2009 at 11:31 am
@ BnT 11:08
BTW, I enjoy reading your posts. Sorry to all to have been OT and this is my last post on the matter. I just wanted to agree that it’s not all about the money. I still run into families where my dad was the attending for every birth in the family. This kleptocracy may ruin or nearly ruin our economy, but good people are always their own currency.
May 20th, 2009 at 11:31 am
Here’s a very disturbing video clip of Jeff Macke, who must be on the verge of a breakdown.
http://www.cnbc.com/id/15840232?video=112860814...
Really uncomfortable watching that. I wonder if he has puts crumbling under the falling VIX.
May 20th, 2009 at 11:33 am
@Onlooker: I saw that and wondered if he was taking the piss – he seemed almost incoherent, or medicated.
Hope he is OK.
May 20th, 2009 at 11:38 am
@ onlooker:
I really want to see that but that link aint working.
May 20th, 2009 at 11:46 am
@ Onlooker
I actually caught that last night. Missed the talking to car people that he kept referencing, but yes something was not right about that. I usually pause the 7-8 hour while doing bedtime for the kids. Then scan it for the highlights. That segment I actually went back to try and make sense of what he was saying.
Then I caught the HP talk an fast money later which was earlier and he looked ok.
You can’t rationalize the irrational.
May 20th, 2009 at 11:49 am
Let me try it again:
http://www.cnbc.com/id/15840232?video=1128608144&play=1
May 20th, 2009 at 11:53 am
Just takes you to the main video page at CNBC. No worries bro- thanks anyways.
Geez…
did the Big Bears just come out of the den or what?
May 20th, 2009 at 11:53 am
Yeah the Macke thing is really unsettling. Something very wrong there. I hope he’s OK too LB. Sure doesn’t look like it though. He’s always been high strung and prone to rant. But this is something entirely different.
I just checked that link again and it looks like they took it down. I know that’s what happened because I had it in another browser window and when I refreshed it went to that page that you get with the link I posted. I guess I don’t blame them. Very unsettling.
May 20th, 2009 at 11:56 am
type in Macke and click videos… it’s the top one… but it’s so unsettling that i immediately stopped it…
May 20th, 2009 at 11:56 am
Now you really got me wanting to see it… what did he just go postal… or does he really seem to be cracking under the pressure?
May 20th, 2009 at 11:56 am
Maybe this guy’s thesis is playing out. 1-2-3 reversal off the 930-ish high.
http://garyscommonsense.blogspot.com/2009/05/1-2-3-reversal.html
May 20th, 2009 at 11:58 am
I-Man
Cracking. Really. Pretty much incoherent and almost muttering gibberish. It was definitely hard to watch, I agree Karen. I stayed with it but had a very bad feeling in my stomach all through it. Still do actually.
May 20th, 2009 at 11:58 am
I-Man: Breathing a little more easily over here….
May 20th, 2009 at 12:02 pm
Ok wow… that was one of the most bizarre things I’ve ever seen. Wow. Thanks Karen.
Dude is strugglin. I hear him though. I dont know if he just couldnt stand the smell of D Kneale and it got him flustered, or if he’s really losing it. The CNBC must really be getting to him.
Fred Dicksons face during that was priceless.
May 20th, 2009 at 12:02 pm
Surely Macke wasn’t short from the bottom? That would make anyone crack up. Here is another idea.
Sometimes traders take so much Provigil to stay alert that they might present with a few psychotic side effects..
Anyway that would be reversible, completely. No idea really. Just a thought. B in T is the expert.
May 20th, 2009 at 12:03 pm
I-Man, you can watch it. Click on the link, if the video doesn’t come up (it just did for me), then type macke in the search window, and click on video.
May 20th, 2009 at 12:05 pm
Either that or he blew a bunch of ritalin or something… unsettling is an understatement, that was downright uncomfortable.
@ Left: Yes indeedy, but would like to see a little gap filling in USO. XLF is the tell here. Taking the whole boat lower.
May 20th, 2009 at 12:09 pm
@I-man
Here’s what’s taking the XLF down…(I posted this in the other feed)…
—
Look at ‘Goldie’ on a weekly chart going back to the october ‘07 high…
Then look at today’s price action…
It’s only Wednesday…but I’m just saying…
May 20th, 2009 at 12:14 pm
Nah, he’s (Macke) not been short from the bottom. I remember towards the beginning of the rally he sounded like a downright bull. And I believe I heard a week or so ago that he’d gone short. So if he went hard that way and he has to listen to all the B.S. on CNBC, I can see how he’d crack. I certainly would! And thus I can’t watch it myself.
May 20th, 2009 at 12:24 pm
Now Kass is beginning to behave like Cramer…
http://www.thestreet.com/story/10502419/1/kass-leave-the-bonds-take-the-equities.html?puc=_ttt_html_pla2&cm_ven=EMAIL_ttt_html
Step 1: He “calls” the generational bottom and says stocks will rally through summer…
Step 2: He “warns” everyone of the run-up in April
Step 3: His ‘correction’ never materializes so now he’s back to saying all along that his first thesis was correct
None of these guys are EVER wrong…EVER…amazing!
May 20th, 2009 at 12:25 pm
dug and dto do not move the same way at the same time… interesting and dangerous : )
May 20th, 2009 at 12:27 pm
Betweeen the three of them Karen, DUG, SCO, and DTO… they’re all over the place.
DUG has a bunch of oil service stocks in it though does it not?
May 20th, 2009 at 12:29 pm
So the dollar fell out of bed and the stock market did too at the same time. That’s not the usual relationship. Has something fundamentally changed?
Looks like the dollar kind of tracked with the market today.
Am I seeing this right?
http://js-kit.com/blob/NzoxxWCzQrcY0k_q_L_A_i.png
May 20th, 2009 at 12:33 pm
cvienne
Yeah I saw that too and thought the same thing. Seems like he’s positioning himself to be right almost no matter what. Notice he doesn’t commit to any time frame on the correction so he can be right if we go up here and he can be right if we go into a real correction. Then if we don’t shoot up to 1050 or so he’ll say he just missed that part but he’s right because he thinks we’ll go down eventually.
Granted it’s obviously hard to make these kind of predictions, but if you’re going to you should just stick to it.
May 20th, 2009 at 12:35 pm
It was the yen move that was odd today. The fact that crude did not rally on the inventory data was interesting.
Relax. Small changes are noise. Money is made on the big moves. If we called the top correctly we will make money. If the $ rallies strongly, and I think a rally is WAY overdue, then all the short trades will work at once.
May 20th, 2009 at 12:36 pm
karen, I was thinking of you with faz at 4.75
Right now, it looks like I should have done my final double down.
This morning I was thinking: I can’t trust it, Geithner speaking…. seems like the fix is in on the financials
so, no action taken. We may never trust the financials again…
anyway,
still waiting for our rollover, thinking this could be it.
from leftback, recall — it’s probably the pain trade… shaking all conviction out of everybody before the decisive move.
—————–For the end of the bear market rally, timing call:
FWIW: I say, when the last of the 19 sells stock to raise capital as per Fed requirement, then we roll over.
May 20th, 2009 at 12:38 pm
@onlooker
I’ve always generally liked Kass…but this recent behavior strikes me as being odd and out of character…
He’s always been a VALUE guy…since March he seems to have become a TRADER…
That’s fine…whatever…OK everyone – shooting gallery is OPEN…Start sending me your replies saying…”It’s not all about being right or wrong…It’s about MAKING $$”…
Hey – isn’t that the problem that got our country into this mess in the first place? and isn’t THAT the BP?
May 20th, 2009 at 12:38 pm
That Macke guy was in meltdown mode. It wasn’t hard to watch, but, how embarrasing.
The guy on left said the stress tests were a success and that lit up the corporate bond market. Hmmm.
May 20th, 2009 at 12:41 pm
@cjpca
I say the day we roll over is the day that GS & JPM pay back the TARP money…
They will be able to say ‘sayonara’ (in a sense) to the USG, meanwhile, they’ll REVERSE all their trades and say…”Thanks a lot…S-U-C-K-E-R-S!”
May 20th, 2009 at 12:51 pm
Analogy:
GS = Lucy Van Pelt
TARP = the football
Obama & Co. = Charlie Brown
May 20th, 2009 at 12:51 pm
Correct. When GS (Government Securities) decides to go short, that’s when we roll over. 666 indeed.
May 20th, 2009 at 12:52 pm
cj, hope you were thinking of me when srs made a new low today, too. I really think you guys are mixed up about where this market is going… the trend is up. why try to be smart and short? use stops or take quick profits.. well, i’ll buy faz in the 3s and 2s eventually, or not at all. i got into dto at 110.30 today.. and dug at 17.52.. also doubled my gold short, crazily enough. i’m less than a dime off on that… it’s been a good exercise in seeing the other side.
cvienne, traders keep the market liquid at least. and value hunters put the floor in.
May 20th, 2009 at 12:55 pm
@Onlooker 11:49
I just watched the video and here’s my take:
Oscar Meyer > Fritz Meyer
May 20th, 2009 at 12:58 pm
@Onlooker,
That video was pretty wild. Very uncomfortable. I’ve never been a huge Macke fan, think a lot of us understand where he is coming from but that was a little silly IMO. Not the best way to make a point.
Funny, I have a meeting with someone from AIM/Invesco in about an hour. Fritz Meyer likes financials. Can’t wait to hear the pitch from this guy.
May 20th, 2009 at 1:00 pm
karen,
just the fact that you said 2′s and 3′s gave me pause as well.
yet another reason to stay away.
you’re right, but I cannot ‘watch the market’ all day…
May 20th, 2009 at 1:01 pm
Karen-
the market going negative as I write
May 20th, 2009 at 1:02 pm
karen,
you are right, the trend is on up to that 965-1k targe for SPX. Still firmly in that camp here. I wouldn’t try to fight it just yet.
I’m slowly noticing more bulls on this site too, which is great for my thesis.
May 20th, 2009 at 1:06 pm
ben22 @ 12:58
“Fritz Meyer likes financials”.
Fritz Meyer has liked financials every day since the beginning of 2007.
May 20th, 2009 at 1:06 pm
Wow, just watched that Macke video. Is he on something? He looks like he’s losing it (or a lot of money).
May 20th, 2009 at 1:06 pm
ahab, i didn’t say it can’t go negative… my point was, if you are a bear, the current trend is not your friend. lol. i bot faz recently, too. i just didn’t keep it. none of these etfs are for buy and hold.
May 20th, 2009 at 1:07 pm
Some of us think of Karen even when FAZ isn’t at $4.75
May 20th, 2009 at 1:10 pm
DL, that is the sweetest comment i’ve ever received… lol. i hope they are good thots and you are not cursing me… : )
May 20th, 2009 at 1:13 pm
‘none of these etfs are for buy and hold.’
true- I don’t think anyone is endorsing that-
get some oysters- Hog Island!
May 20th, 2009 at 1:13 pm
Karen:
I cant argue with you, because you’ve been right. But for my money, the current trend is bullshit. But I’ve always struggled with the old, “Do you want to be right, or do you want to make money?”
That said, its hard to call tops and not be early… its just making sure that once the tide turns you arent so eager to get out at breakeven that you psych yourself out of the move that can be the tricky part with being early.
I still believe the top to be in on the Q’s and XLF, and until I’m proven otherwise by a higher high then I’m hangin tough. Kinda like the New Kids, but way doper.
May 20th, 2009 at 1:16 pm
@DL,
yes, indeed he has. I got to have lunch with him last summer as part of some AIM sponsered event for advisors at my company here in DE/philly area. Well, I shouldn’t say I, there were about 25 of us there.
He went on and on about how some banks were very healthy and some were not while most people nodded along.
We all know what happened over the next few months.
On another note, I’m going to think of Karen now every time I hear about arugula.
May 20th, 2009 at 1:18 pm
One for ben22 and I-Man. Recognize anyone in this story??
http://finance.yahoo.com/retirement/article/107094/Many-Bought-Shares-High-Sold-Low
Fritz Meyer = another knob with a bow tie.
May 20th, 2009 at 1:19 pm
@Mannwich,
Yeah, clearly something is going on with Macke there. You don’t just get that upset because of what is going on, I mean, he would have been acting like that for months now if that’s all it was about right?
My guess is he was real short and got pounded and of course is pissed, as well as his clients. Didn’t he just open his own shop? Maybe the start he thought he would get off to didn’t work out so well.
All those Fast Money people are InvesTools anyway. The goal of investing should be
1. keep money
2. make money
Fast Money doesn’t make my list of 2.
May 20th, 2009 at 1:22 pm
The 2-yr at 0,84%. Sell the SPOOS Lloyd, and buy the TWOS.
May 20th, 2009 at 1:25 pm
@LB,
What a complete joke.
Yeah, I know Judy, I have met her about 400 times in the almost 8 years I’ve been doing this.
“All my friends were in cash and gold” um, no they weren’t
“We got together in March to talk them out of selling” REally???? you had your first conversation about making changes to a portfolio in March!!!!!!!!!!
“we sold in November and we are flat from there so we are o.k.” hmm, sold in November, yeah, I might have missed it but I sort of remember that the market had already gotten destroyed by then. What, they won because they cashed out down 40% instead of down 60%. LOL
“can you take some sleeping pills to get through this” hmmm. I haven’t suggested that strategy to anyone ever. That’s a new one.
alright, I’m starting to sound like Macke….. but my god man.
May 20th, 2009 at 1:27 pm
I know I’ve mentioned it already a few times, but that volume print on SPY yesterday was astonishing… lowest print since 12/31/08…
Thats an eyebrow raiser.
Nice story Left, sounds all too familiar… the closing quote is ridiculous. “It’s not all about money.” What a load of crap… What IS it about then? Perpetual pain? Perpetual Ignorance?… Nah… Perpetual Preferreds. Thats it.
May 20th, 2009 at 1:57 pm
I-man
I was reading somewhere that the low volume was actually a positive sign – something about it meaning the market is not getting ahead of itself at these prices – i.e. a good sign it is likely to keep going up.
The spin can be anything someone wants it to be – unfortunately the bulls have the US govt, CNBC and Bloomberg in their corner whilst us bears only have our lowly blogs….
May 20th, 2009 at 1:57 pm
watching bonds to see if someone is gonna buy and support the dollar here.. it would be a trick to get that dollar back up…
May 20th, 2009 at 1:59 pm
i posted yesterday that i saw the low volume as a positve… especially on a down day, not that yesterday was very red..
May 20th, 2009 at 2:09 pm
Someone’s making some noise… check the last two bars in Q’s and SPY in the 5 min timeframe…
May 20th, 2009 at 2:09 pm
on the flip side- low volume could also mean not much conviction by large players = easy reversal
May 20th, 2009 at 2:23 pm
is it just me – or does the daily volume seem to be picking up a little
May 20th, 2009 at 2:38 pm
Treasuries rallying across the curve, but the $ being pounded by everything. This is fairly unusual.
May 20th, 2009 at 2:41 pm
So the Fed minutes show the continuing decline of the economy. Their forecast has been updated to reflect worse conditions than their last meeting minutes. It’s pretty gloomy. Rally on!
http://zerohedge.blogspot.com/2009/05/fomc-minutes.html
May 20th, 2009 at 2:43 pm
Another link with the minutes attached.
http://pragcap.com/fomc-minutes
May 20th, 2009 at 2:53 pm
Late dump, anyone?
May 20th, 2009 at 3:04 pm
leftback,
that’s what I’m looking for now. Bonds have been real interesting today.
I wonder how far the US$ can go down from here, pushing the market up along the way. Then a reverse.
May 20th, 2009 at 3:15 pm
•Geithner Says Treasury May Move `Quickly’ to Sell TARP Warrants From Banks
Why? Before everything goes in the crapper again? Look at the move in the 10-yr yield now down to 3.19 after FOMC basically said they would support the Treasury market. The $ is very likely to rally overnight on the back of this. Also check out the move in JPY today. The Euro rally looks seriously overdone here. Sell ‘em, Lloyd.
May 20th, 2009 at 3:18 pm
@Onlooker 2:43
From Pragcap:
“The Fed has downgraded their outlook for economic growth, but is seeing “tentative signs” or recovery.”
Another green shoot!
May 20th, 2009 at 3:21 pm
Sell em Lloyd!!!
May 20th, 2009 at 3:24 pm
cvienne Says: May 20th, 2009 at 10:35 am
see: http://finance.yahoo.com/q/op?s=C
note how thin the pricing is on the 5 puts v. the 4 puts..
the 5′s are being Sold. fading a blend of the 4′s y 5′s is what’s up..
as things stand, C will close over 4, closer to 5, 19 June 009
–Note, that isn’t Tomorrow..
May 20th, 2009 at 3:28 pm
XLF 11.68. That’s not 13. SELL ‘EM LLOYD !!!!!
May 20th, 2009 at 3:29 pm
Mark, i was wondering where you were… when the market closes today, i will be out the door and on the streets of SF.. flying home, this evening. took that darn dto on a round trip. bot more in the 109s.. i still think it can work for me.. dug has been very nice, on the other hand. crazy day. and it’s not over yet.
May 20th, 2009 at 3:31 pm
leftback. in re: US$ down from this highs, its’ beginning to take the shape of a nice abc type pattern…a “zig zag” [5-3-5] type pattern. I’ve been short the US$ against this S&P short and it’s been beautiful, but at this point I’m keeping a VERY sharp eye out for any hint of bottoming action.
The Loonie achieved some nice objectives today as well…from 79 – 88 you can now see a “five wave” completed move with daily RSI divergence.
The Euro has now retraced 61.8% of the big move down from 147 to 125 and has bounced in an “abc” type manner….
There are definitely signals out there that the dollar should be finding some support soon.
It’s a good thing the stock market has rallied….otherwise we’d be getting really poor as a nation…(Snark)
May 20th, 2009 at 3:34 pm
AT: Commodity currencies (AUD, CAD) and markets (EWZ) seem overbought here, no?
May 20th, 2009 at 3:38 pm
probably worth noting that the a=c target on the DX is 80.67 and the 50% retrace of entire move up comes in at a similar level….DX low ticked 80.98 today. Nothing about today’s action says “that” was the bottom…should probably expect more weakness tomorrow, but if we see some overnight congestion…and a drop down to 80.60′s and then a bounce….then it will be time for me to exit DX shorts.
May 20th, 2009 at 3:39 pm
lb,
the Cando has been on fire, as AT points out, that’s a huge move..hope they’ve got their positions in, time for the Loonie to come back..
May 20th, 2009 at 3:41 pm
leftback. yes….energy seems to be into it’s ‘blowoff’ into a seasonal peak mode….big targets for me 64-65 on oil. i see a lot of resistance there….if you noticed, RBOB ran into some difficulty at an EXACT 38.2% of its massive decline….
May 20th, 2009 at 3:41 pm
mark has been too busy trading options for the board lately. I don’t even think he commented on the Ron Paul thread about the Fed. I thought for sure he’d be all over that one.
May 20th, 2009 at 3:43 pm
AT,
btw, I hope you’re right re: DX, I’m thinking if we lose the 8x. xx, we could get ~72, in a hurry..
+ Ag gets harder to buy N. of ~15
May 20th, 2009 at 3:46 pm
AT: I am already short energy, look at this sell-off. BEARISH…. Blankfein selling the SPOOS.
May 20th, 2009 at 3:48 pm
Anyone see a possible break in the XLF support? Trendline touching 3/9 to 4/21 to 5/4?
May 20th, 2009 at 3:49 pm
I think MOO just topped today… Check the volume on that!
May 20th, 2009 at 3:50 pm
nice 200 pt drop going here. this might be the roll-over.
May 20th, 2009 at 3:51 pm
i’m using uup to watch the dollar… the 30 and 60 min show good turn around candles.. but the last 3 days candles look bad, badder, and baddest. waterfall decline.. if it doesn’t find support soon. rsi is not indicating a severe oversold, either…
May 20th, 2009 at 3:54 pm
@karen
Party pooper :)
May 20th, 2009 at 3:55 pm
ben22 Says: May 20th, 2009 at 3:41 pm
ben22,
nah, been out with the Farmers, and on the Hustings–Trading Options doesn’t take too much time, if you leave them alone–one of the legs always goes to Zero. Sell’em, they, usually, take care of themselves..
May 20th, 2009 at 3:55 pm
ben, ben, ben, there isn’t going to be a roll over : ) just some corrective action for now. : ) if the dollar dives, it’ll be buy america, again, too. nyc will be awash in tourists…
May 20th, 2009 at 3:57 pm
karen,
I was using UUP also to watch the dollar. I’m seeing about the same. If we go further it should push equities right on up. I wonder what impact that has on oil, nat gas, etc.
May 20th, 2009 at 4:00 pm
ben, you know, dollar down crude up… but i’m short crude and gold still (just a bit), so that doesn’t work for me.
look, faz couldn’t even get to 5.80… tomorrow maybe.. and you bears better sell out : )
May 20th, 2009 at 4:00 pm
@ Cursive:
If you are a believer in the “Fan Principle”… Here’s an ok description of it:
http://www.mysmp.com/technical-analysis/fan-principle.html
XLF is just teetering on the support of the third trendline. Trends like this die on the break of the third trend, and signal major reversals.
On my XLF Fan count, Trend 1 broke on 3/30′s down gap, Trend 2 broke on 4/20 (and incidentally was reclaimed on 5/6 and then broke again on 5/12)
Trend 3… Looks like its gonna go bust today in the final minutes or on a gap lower tomorrow… remains to be seen. But either way you slice it… XLF is runnin on empty.
May 20th, 2009 at 4:02 pm
okay, i’m out the door, hope you all don’t miss my cutting edge commentary, lol. will check in from the airport this evening. no talking about me behind my back, please.
May 20th, 2009 at 4:05 pm
Man… I just did a nice post on the Fan Principle and XLF but it must have gotten eaten… I didnt even curse or say anything dirty…
May 20th, 2009 at 4:06 pm
Interesting day. After a Phat Phinger™ trading event occurred at Schadenfreude about 10am, we had rather a lot more FAZ than had been intended, but it worked out well on the day. :-)
We added to our energy shorts into the close. Even if we are not right here, the $ rally and the correction in crude is coming soon (see Andy T above). Since energy and materials have been leaders, the whole rally may stop dead.
May 20th, 2009 at 4:06 pm
Karen, yeah, I’m just wondering how up it will go. Like, US$ 72 = crude: ?? Just curious how far people are going to run with that.
Mark,
You ever take a look at the PBP? I never really have. I’m sure you’d rather roll your own but it’s the buy/write strategy I think you prefer.
May 20th, 2009 at 4:14 pm
“Like, US$ 72 = crude: ?”
Oil is not purely a speculative plaything of the GS prop trading desk boys and $ hedgers.
Fundamentals don’t support a push much higher. Storage has been filled to the brim.
Watch the NYMEX boys flip the jawboning switch to “over-supply” as soon as the $ turns upwards.
May 20th, 2009 at 4:14 pm
@ I-Man 4:05
Happens to me all the time. Very frustrating…
May 20th, 2009 at 4:17 pm
Munis. It’s not just California any more. Another reason why the Fed will support the Tsy market. If rates get away on the long end then all these cities and companies are going to find it impossible to issue/rollover more debt.
http://globaleconomicanalysis.blogspot.com/2009/05/huge-deficit-stuns-cincinnati.html
The country is broke. Sooner or later we are going to see more deleveraging and a move into higher quality assets.
May 20th, 2009 at 4:20 pm
It was in response to your post too bro-
I’ll try to sum it:
Fan Principle. Takes breaking of 3 trendlines to signal a reversal.
Trend 1: broke on the down gap from 3/30
Trend 2: broke on 4/20
Trend 3: teetering on support right now as of todays close… remains to be seen if it will hold. A gap lower tomorrow would seal the deal. (after a back test of the last broken trend)
Each one of those breaks was backtested and failed.
May 20th, 2009 at 4:21 pm
ben22,
PBP: “The investment seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the CBOE S&P 500 BuyWrite index. The fund normally invests at least 80% of total assets in common stocks of the 500 companies included in the S&P 500 index and writes (sells) call options thereon. It writes (sells) one month call options on the S&P 500 index, in order to generate income on its portfolio holdings each calendar month. The options generally are the prevailing price of the S&P 500 index, and are expired in the next calendar month. The fund is nondiversified. …”
http://finance.yahoo.com/q?s=PBP
I haven’t spent any time on this, but, at first blush, it looks ill-conceived/ginned-up by the MKTG boyz..
They’d be better off buying the SPX and selling calls off that, it would seem..
also, as I mentioned in a previous context, it’s hard enough to have 1-5 good ideas, let alone 30, 500, 2000..
peep are better off doing some Homework, as a +, they might learn something..
and, to tell you the Truth, I don’t understand why peep waste time ‘owning’ so many stocks, to begin with…
May 20th, 2009 at 4:25 pm
@ I-Man 4:20
Regret that I missed the post. Yes, we need confirmation tommorow. Everything to date has been a head fake. Interesting setup for tomorrow. To FAZ or not to FAZ….
May 20th, 2009 at 4:28 pm
ben22,
see this: http://biz.yahoo.com/indexuniverse/081023/4715_id.html?.v=1
BuyWrite ETFs Struggle To Find Mainstream Appeal
Thursday October 23, 2008 2:23 pm ET
By Eric Rosenbaum
Smoothing out returns during major market swings is a front-and-center issue for many investors who have been through the carnage of the past two months.
One approach used by institutional investors is so-called BuyWrite strategies. It’s a method that allows fund managers to buy a basket of stocks and then write covered call options on the holdings.
~~
no wonder, their approach is all wrong, And their results show it
LSS: stay away from this piece..
May 20th, 2009 at 4:32 pm
@ MEH:
The more I read your option posts, the more you strike me (no pun intended :) ) as a veteran CBOE pit trader. I know what they sound like, because I was taught by one. Well, for as much as I would listen anyway.
May 20th, 2009 at 4:34 pm
Buy/write is a bull market strategy. Fat tails and bear markets blow it up. Right, Mark?
The muni market could seriously turn out to be the next sub-prime. Local governments have these choices: tax, cut services or default. Expect a liberal portion of each. State and local govt cuts = more unemployment.
May 20th, 2009 at 4:38 pm
God, I hope Obama doesn’t guarantee the muni market. That would put him to the left of Karl Marx.
May 20th, 2009 at 4:43 pm
Mark,
Thanks for the comments. I guess now I’m glad that I never wasted time looking into it. As the ETF’s get more and more popular, as you’d expect, more garbage gets into the game.
Not a surprise that it doesn’t really work the way a buy/write should. Mutual funds are classic for slapping a name on a fund that doesn’t actually come close the what the name implies. My favorite are HY Bond funds that hold 40% or more in stocks.
Great point about coming up with ideas as well. Funny, Cramer has a new BIG idea every night.
May 20th, 2009 at 4:59 pm
Leftback,
Re: Muni’s
Every mutual fund wholesaler out there has been pushing muni’s hard since the beg. of the year. What could happen there is very scary but very few people are even talking about that right now.
The most common thing I hear when I bring this up is that states/locals, will just tax themselves out of it, typically followed by “muni’s default rate is just above treasuries”
May 20th, 2009 at 5:04 pm
“muni’s default rate is just above treasuries” and “I hope Obama doesn’t guarantee the muni market”
As Mish would say: “Things that can’t happen, are about to….” . I wonder which one will happen first??
May 20th, 2009 at 5:07 pm
Alright, lets think about that for a minute. How much would it take to guarantee the muni market?
I suppose if anyone would do it, it’d be BO.
How long before we all work for the USG?
May 20th, 2009 at 5:12 pm
The Muni Time Bomb has me in fits…
Its going to be one hell of a day of reckoning when all the 2008-2009 inflows into muni MF’s need to run somewhere else. I’m beginning to think that muni funds will be the next debacle, much like the “Floating Rate” funds were in late 2007-2008. Anyone remember those?
I’m thinking the day that a few big states announce the jig is up and they need a Fed bailout will be that day… could be any day now, could be months from now. Who knows?
The million dollar question is though… where do those assets go when muni’s are exposed as the next rat hole. Surely not to corporates… govies? But maybe that’s what the Fed is banking on to keep the long rates low. One hell of a mess. Pick your poison.
May 20th, 2009 at 5:16 pm
“How long before we all work for the USG?”
USA = TBTF !! We have (GS) Government Securities, (GM) Government Motors and (GE) Government Enterprises. I was raised a socialist but this really isn’t my idea of socialism (free markets + welfare safety nets – Swedish style).
Privatization of gains + socialization of losses = corporate fascism. Everyone who made egregious mistakes in this country is heading out the back door with the silverware.
May 20th, 2009 at 5:19 pm
ben22 @ 5:07
“Guaranteeing” the muni market is one thing; paying off in the event of a default is quite another. There are retired teachers and retired firefighters in places like Philly and L.A. that are apparently getting 75-100K in retirement. That’s fine with me, as long as the local residents pay for it. But I sure as hell don’t want to have to pay for all the graft and corruption in the big cities.
May 20th, 2009 at 5:19 pm
I-man,
not sure what to say, though never did dive the pits on La Salle St..
lb,
re: buy writes, yes, the trend is, again, your friend, and in that case, preferably up..
lb, y ben22,
peep in munis are going to find themselves w/ a surfeit of red ink..
“The muni market could seriously turn out to be the next sub-prime.” Yes, we’ve already seen some of the early tremblors..
May 20th, 2009 at 5:23 pm
I-man,
Oh do I remember floating rate funds. . That was the pitch from these clowns early last year. They are still pitching them this year, now because the yield prices in the risk. Ha. Most of them couldn’t even tell me what a floating rate loan was let alone what the fund would do. They all got destroyed.
As for where that money goes when it leaves a muni, I’d think only one of two places:
Cash
or yes
The Govies.
And lets not forget, those are typically higher income/net worth types that hold the big bags of muni’s. The outflows could/will be huge. From a tax perspective, most everything else is gone when it comes to tax free holdings. You can’t really buy tax credits and the like anymore and those folks won’t ever qualify for a Roth IRA contribution.
May 20th, 2009 at 5:23 pm
In a debt deflation/deleveraging event, money always migrates to the highest quality bonds. Govies. I know it sounds nuts at first, but then think of institutional investors and think of the alternatives. Are Gary Shilling and David Rosenberg stupid? I suggest not.
Risk may be rising again, and TBP readers almost always see are able to see the Canary in the Coal Mine before the financial press, and certainly before Johnny Retail gets wind of it. Brian the Broker? Not a big deal, the FEES are ALREADY IN, baby….!!! It’s mid-May and it’s almost time for the yacht.
May 20th, 2009 at 5:26 pm
@ MEH: Take it as a compliment amigo. You deserve it.
@ Left: TLT.
May 20th, 2009 at 5:27 pm
@DL,
Very good point. Oh, and those teachers you mention, I work with some in PA. That’s not a lie about the amounts. One of my clients gets about 82k/yr gross from her pension. PSERS pays a fatty pension, however, I just read an eye opener in the Pittsburgh Post about the Tsunami coming for them. Young teachers, like my wife’s sister are being asked to put much more in, and they won’t be getting any out.
The place is a complete disaster, it often takes months to collect a first benefit, there are health benefits involved, partial lump sums. The whole thing is a mess.
May 20th, 2009 at 5:31 pm
I-Man:
Already in, across the curve. The traditional summer trade. Sleeping like a baby – until the next Wave o’ Bailouts. Now if we are Lucky Lefty, Mr Market will go on summer hols soon and Short Vehicles will deliver their Bounty.
Evenin’ all…
May 20th, 2009 at 5:37 pm
The city of Vallejo, CA had the right idea: bankruptcy
http://calpensions.com/2009/03/24/vallejo-bankruptcy-judge-wants-a-settlement/
May 20th, 2009 at 5:41 pm
I-Man,
Claro~ it’s nothing, really..
and, w/that, the door awaits..
ben22,
you should consider becoming conversant in Trusts/ tagging-up w/ a sharp lawyer, a lot of your Clients are fixin’ to get pick-pocketed by our beloved Uncle Sugar..
May 20th, 2009 at 5:42 pm
DL: That’s the ticket!!
Barry’s final book in the trilogy. Bailout Nation, Reflation Nation, and finally BK Nation….
May 20th, 2009 at 6:49 pm
anyone-
check out the mregan’s post on the most recent thread (business press)- fucking wild- regarding Ratigan and Macke
May 20th, 2009 at 6:57 pm
Mark,
For the last two weeks I’ve been looking at other firms or getting out. I can’t be my best where I’m at. Had a pretty positive interview today to switch over to an RIA platform, they are going to show me the technology/trading platform in a few weeks. Your idea is a good one, problem is, not many lawyers have any respect for a young kid like me.
Most people associate being old with knowing something about investments. A lot of them have no idea that there are 24 year olds trading prop money at Goldman Sachs, etc.
May 20th, 2009 at 7:35 pm
ben22,
I hear you, though, you’ll have to wade through: “not many lawyers have any respect for a young kid like me.”, they=”Most people associate being old with knowing something about investments.”=Idiots.
w/this: “A lot of them have no idea that there are 24 year olds trading prop money at Goldman Sachs, etc.”, remember there are, some, sharp lawyers about, of similiar vintage..
I have no idea, but you may want to shoot BR a ping, he, probably, has a bead on the scene. Those that know, know others that know, and like that..you may find a capable group in your neck of the Woods..
May 20th, 2009 at 8:20 pm
Mark,
good idea about going to BR, and already done. I wrote to him as soon as he posted for the office opening the other day. I’m working on a review of my book for him to see if I’m worthy to possibly just work for him. I’d much prefer it to anything else I’ve looked at so far, but I just might not be large enough for him to want to take the time. My biz partner and I only manage about 70 million. In any event, I’m going to at least try.
May 20th, 2009 at 8:24 pm
you know, I just watched the Macke video again. I missed it the first time but Fritz meyer called a bottom in
auto sales
and
housing.
I’m pretty sure he was the one on crack on that panel…. well him and the always impaired Kneale.
May 20th, 2009 at 8:54 pm
ben22-
it’s all a big shell game- duping the common man – that- all is good-
hypnosis and mind control-
jim jones and Kool Aid
May 20th, 2009 at 9:37 pm
Volume:
1: NYSE up volume was up above 80% at one point today but closed at just 48.3% which suggests the near term rise may be tired.
2: Total volume contracted on Monday and Tuesday but it expanded into the close today which could spell some selling pressure.
I think some shorts had to have gotten squeezed out of the market the last few days but I still believe a pullback is underway here. It could be that the countertrend rally is over, but I still think that is unlikely right now and we still move higher eventually. unless we break today’s high, which I’m seeing as 924.6 I think the SPX pulls back to 873 or further to 841. So my view on SP and DOW remains the same, we are pulling back. What is odd is I don’t get the NAS. In my early attempts at reading waves, it looks like a 5 wave up pattern from the May 13 low on the Nas. AT am I way off here? I think it then points to wave 5 going to 1780-1786
Perhaps this would be the return of the divergence we were seeing earlier in the year when the NAS was outperforming the DOW and SP on a consistent basis. It’s odd though as the tech cycle is coming to an end.
if gold doesn’t correct it should peak around 968 on any st move up
May 20th, 2009 at 9:51 pm
ahab,
no doubt. sad most people have already forgot these people told you to buy last year. like on this board I see someone spouting about how meredith whitney’s 15 minutes are up.
May 20th, 2009 at 10:12 pm
Good news. No need to worry. Birinyi says it’s nothing but straight up from here!
http://www.bloomberg.com/apps/news?pid=20601087&sid=arkZfe8.A15o&refer=home