I did a fun few segments at Yahoo Tech Ticker this week — the first of 3 was posted this AM:
You can see the video here:
Rally “Guilty Until Proven Innocent” But Not for Suckers, Barry Ritholtz Says.
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof. —John Kenneth Galbraith
Knowing that the vote over the weekend in Greece was really a referendum on Euro membership, a majority of the Greek Parliament said yes to staying. European Finance Ministers meet again on Wednesday to solidify the 2nd bailout package for Greece at the same time hopefully a deal is consummated between Greece and its creditors this week. The Greek 14.5b euro bond that matures on March 20th is up by 2 pts. The optimism that all will be completed and contained AGAIN to Greece has yields lower in Portugal, Spain and Italy. The iTraxx Financial Index is also narrower by...
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May 14th, 2009 at 12:01 pm
Yes, it’s a sucker rally because the stock markets don’t represent the economy. Magic charts appear to be the basis for the future. Kudlow’s shtick is shouting people down and talking over them. Here it’s magic charts. Agreed that significant bottoms call for significant rises if those bottoms exist because of excessive fear. I would describe it as a relief rally. However, at this time the market is more a function of available investment cash (asset inflation) than a real reflection of the economy.
When buy and hold for Joe or Jane Average, as in 401k withholding, becomes safe for an extended period of time, then I would say the economy is on the mend and the markets are safe. This is otherwise a speculator’s market and a market driven by funds in search of fee income
May 14th, 2009 at 12:35 pm
I am certainly hoping that some more suckers enter so I can short the market again.
May 14th, 2009 at 12:36 pm
“Cash is Trash”
Well, maybe. If the deflation view prevails, not so much. Congrats on your record, BR. I like TechTicker and it’s always interesting when you’re a guest.
May 14th, 2009 at 12:36 pm
@LB 12:35
There seems to be a stampede of lemmings this morning…
May 14th, 2009 at 12:41 pm
Hey Barry,
Maybe this will bring in enough readers to take your RSS feed over the 40K mark. You have been creeping closer to it every day. Maybe you need to have a blog block party when you pass that huge milestone.
Congrats yet again on your success
I never knew there were 40,000 people on the net let alone in one place. I certainly haven’t seen them all post at the same time ;)
May 14th, 2009 at 12:47 pm
@ Cursive: and I join you in welcoming the lemmings. I hope they buy an enormous amount of trash. ;-)
May 14th, 2009 at 1:30 pm
Rally “Guilty Until Proven Innocent” But Not for Suckers, Barry Ritholtz Says.
“”Perhaps the sentiments
contained in the following pages,
are not yet sufficiently fashionable
to procure them general favor;
a long habit of
not thinking a thing wrong,
gives it a superficial appearance
of being right,
and raises at first
a formidable outcry
in defence of custom.
But the tumult soon subsides.”
– Thomas Paine
Common Sense, January 1776
~~
Guilty Until Proven Innocent, quite apt
– maybe we should wonder where else this applies?
May 14th, 2009 at 2:13 pm
Suckers are in it big. Oil is creeping back up, as are copper and nat gas. Both oil and nat gas are in glut and ignoring fundamental logic. People just want to buy something, without rational thought supporting the decision. Stocks might be scratching the ceiling, but it’s too soon to say for sure. Nothing in the economy says “recovery is beginning” except for magic charts that reflect economies of yesteryear.
At some point sentiment and fundamentals will go back into sync for a few months. Runaway poor sentiment might create another bigassed sell off in a month or two. So, yes, this is a sucker market now. It was a sucker market and a trader market. Now it’s only a sucker market.
May 14th, 2009 at 2:28 pm
@dead hobo
But wait!…As I heard a guy come on today and say…”There’s HOARDES OF CASH still sitting on the sidelines waiting to get it”…
I’ve got news for him…He’s right!…But little does he know that that HOARDE OF CASH is either “waiting to get in” at S&P 400…Or waiting to “short” the market at S&P 1k+
May 14th, 2009 at 2:34 pm
I mean really…
I’m just a chump with a few bucks to throw around here and there and I’M AFRAID OF LOSING THAT…
So how does a MM (who probably got creamed last year), justify buying large chunks of equities with other people’s money that he’s simply “praying” at the moment that they don’t pull their money out?
If he ends up not making a dime this year (but not LOSING any either), his clients may stick around for another year…
Face it, you caught the rally or you didn’t…
Anything left on the bone is for high beta jockeys
May 14th, 2009 at 2:34 pm
Things that make you go… hmm:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aOjrmIV8vT7A&refer=home
People are asking me what they should buy. I tell them go buy me a burger for lunch.
HORDES of InvestTools™ are waiting to lose more of the money they didn’t already lose in 2008.
May 14th, 2009 at 2:39 pm
Looks like Johnny Retail has the all clear to start buying the dips today.
May 14th, 2009 at 2:49 pm
Well done.
May 14th, 2009 at 2:54 pm
Good day not to be short, but to be thinking about re-entry into one’s favorite vehicles.
May 14th, 2009 at 2:59 pm
leftback Says:
May 14th, 2009 at 2:54 pm
Good day not to be short, but to be thinking about re-entry into one’s favorite vehicles.
reply:
————-
No can do. I’d have to be 16 again, with a case of beer in the back seat and with my friends doing things we wouldn’t tell our parents about. Good times. I don’t think kids do that anymore. And if they did, they’d probably wear some kind of damn helmet.
May 14th, 2009 at 3:06 pm
LB
Probably right because it’s so damned gut wrenching to do it right now, eh? But if we’ve switched the momentum and the trend is down, it’s certainly the way to go. After the strong downdraft the last few days I guess it’s expected to get some bounce the other way, but if the mo mo has shifted then it’s just a bull trap for those who want in on a “correction” to their supposed new bull.
May 14th, 2009 at 3:12 pm
As inpatient as I am, waiting for the Inevitable Fall (TM)*, I am comforting myself that the big boys at the MM’s and proproprietary trading desks must be worried as all heck. Any strong wind could easily topple this dead tree of a market. There may be no chair for them once the music stops. I’m already jaded about opex week tricks from the MM’s and the volume here is not convincing.
* As most of us are weary of waiting, I’ve taken the liberty of trademarking the Inevitable Fall (TM)
May 14th, 2009 at 3:13 pm
Music post:
“Inflation or deflation?
Tell me if you can.
Will we become Zimbabwe?
Or will we be Japan?”
http://www.merlehazard.com/Merle_Hazard/INFLATION_OR_DEFLATION.html
May 14th, 2009 at 3:17 pm
Reading some respectful and interesting comments by Ray Dalio, Bridgewater Associates, in yesterday’s UP AND DOWN WALL STREET DAILY. http://online.barrons.com/article/SB124216547946012487.html
What we’ve got now is strong deflation that’s being met by strong reflationary forces in the form of quantitative easing, aka printing money, by the Fed and other central banks, “which are essentially offsetting each other,” they write in Bridgewater’s daily missive to clients.
Eventually, they say they’re confident the central banks’ reflation will succeed. “We expect this to be bearish for the dollar, bullish for gold and bullish for commodities, especially next year.”
“There is a good chance of significant bounce in economic activity in the second half of this year due to technical reasons (an inventory adjustment, a temporary dip in the savings rate and the government’s fiscal stimulation kicking in) which could give a misleading impression that the economy and markets have returned to normalcy. But this should fade by year-end,” they add.
“Next year, there will be an enormous number of bankruptcies and debt restructurings among lower-grade credits, which could cause disappointment, weakness and another round of fiscal and monetary stimulation. We believe that this will be bearish for the dollar and it has a good chance of triggering stagflation-like market action.”
May 14th, 2009 at 3:22 pm
I’m bored today so I’ve been looking at the charts…
Looking at the S&P chart on a ‘daily’ I noticed the following…
Take the 1/20/09 close and draw a line and connect it to the 2/13/09 close 9that’s where the S&P broke down into the eventual 666 low in early March…Extend that line through, and you get just TWO closing days “above” that line (and those were last Friday when all the “stress test” hullabaloo was swimming around)…
My point is, the trendline is the “neckline” to a REVERSE head & shoulder pattern…If the S&P can’t break above that line and stay there for a few days, I’d say this rally is done…
What’s more interesting is the line runs EXACTLY parallel to a former H&S (starting from the October 10th low and extended to where it broke down on January 6th)…
The rally from the November 21 low to the January 6 high also runs parallel to the rally started on March 6th and extends to the recent peak…
Where’s Andy…He could probably make something out of this…I’m not really a chartist…But these lines are oddly similar…
If these patterns repeat again, it looks to me like the S&P could print 560 in mid-August…
May 14th, 2009 at 3:36 pm
a good short might be crude oil… just looked at 2 charts, $gaso and $wtic, both seem to indicate the upswing has run its course.. and we all did think $60 was tops for crude anyway. think i’ll work with DUG this time since UCO is a complete b*tch. USO looks overbot as well. the other bonus is that crude oil can run independently of the S&P..
May 14th, 2009 at 3:38 pm
@karen,
thanks for the post @ 3:17
those are some pretty interesting comments.
I completely missed everything today as I was on a train to DC. Doesn’t look like much has happened though.
@cvienne,
I’m reading things a little different but looking since the bottom. I see a primary trend line and a secondary trend line and both look o.k. for now. I’m going to try and look for what you are seeing.
May 14th, 2009 at 3:39 pm
karen,
what about shorting some individual names in that space, lots of oil stocks have had massive run ups since 11/21 of last year.
May 14th, 2009 at 3:41 pm
The real buy was DTO under 120 yesterday… today’s range has been 124.49 – 136.74. see? today wasn’t as boring as we all thot… we’re just not in the right vehicle : )
May 14th, 2009 at 3:43 pm
if you are banking on a slow down in the coming months it might be smart to short PRFM. That has had a big run up, it’s the basic materials ETF.
May 14th, 2009 at 3:44 pm
Last, I was a little early on my short call for M, but clearly that would have worked had you done it at 14 and change.
I thought of another short candidate in the retail space, Jos A. Bank.
May 14th, 2009 at 3:44 pm
ben22, i don’t have a margin account (one of my trading rules) so i can’t short other than via a short etf.
also, my favorite trading book is “Japanese Candlestick Charting Techniques” by Steve Nison.
May 14th, 2009 at 3:46 pm
karen,
no margin eh? that’s kind of interesting, I actually brought up margin here yesterday. Maybe I could pick up that book, I finished the other book I was reading during my trip today. I’m working hard on my TA skills lately.
May 14th, 2009 at 3:46 pm
cvienne @ 3:22
Take a look at Michael Kahn’s latest missive
http://online.barrons.com/article/SB124216538984812439.html
May 14th, 2009 at 3:46 pm
ben22
God awful low volume on PRFM, eh? Gives me the willies to go into anything with volume that low. Don’t trust the moves it could make. Am I off base here?
May 14th, 2009 at 3:53 pm
@onlooker,
No you are exactly correct, it rarely trades more than a few thousand shares a day. That’s like 30 seconds for an MSFT or BAC, etc.
it’s a high risk, but possibly high reward trade, maybe makes some sense with a very small amount, that you’d be willing to use. There was a time earlier this year that a few days went by and it didn’t trade at all.
May 14th, 2009 at 3:54 pm
karen @ 3:44
“ben22, I don’t have a margin account”.
I’ve had a margin account for many years, and, for the most part, I’ve managed to resist the urge to go more than 100% long.
Being able to short (without having to resort to those “decaying” short funds) is an absolute must, IMO.
May 14th, 2009 at 3:54 pm
Instead of shorting PRFM, you could buy the 2x inverse basic materials: SMN
Volume is much higher on that one…
HCF
May 14th, 2009 at 3:57 pm
HCF
Except it’s 2X leveraged and I don’t want any part of it. Not looking to be an intraday trader and I don’t care what anybody says, holding these things is a big risk; some more than others but still…
May 14th, 2009 at 3:58 pm
ben22 @ 3:44
No interest in shorting XRT…?
May 14th, 2009 at 3:58 pm
Karen I want to short crude too… but I just cant. There is one word to sum up why I cant and it is:
Ahmadinejad.
May 14th, 2009 at 4:00 pm
Onlooker from Troy @ 3:57
Yeah, holding SMN for more than a few days is poison.
May 14th, 2009 at 4:01 pm
Yep, there’s always that geopolitical wild card with oil. That could sure blow up in your face in a hurry. Talk about black swans.
May 14th, 2009 at 4:02 pm
@DL
So according to that…i calculate that the S&P needs to probably “close” above 921 tomorrow if this 2 month rally has anymore legs…
May 14th, 2009 at 4:02 pm
I-Man @ 3:57
No need to worry about that guy until prices get above $100 (or so).
May 14th, 2009 at 4:03 pm
DL, the second and equally important reason for not having a margin account is that the broker can’t allow my shares to be borrowed for short sales…
May 14th, 2009 at 4:04 pm
@DL,
XRT could also work but I think you have more upside on JOSB. I have a bias against retail so I may not be the best person commenting on this. If there is one type of store I think we have WAY too many of in this country it is clothing stores. My view is also that consumer spending is going to sharply pull back in the coming years so I’m looking not at high or low end retailers but the in-betweens that sell products for way too much. Macy’s was one example, not sure if you have ever gone to Joe Banks but the suits aren’t great and they are overpriced. Abercrombie would be another I’d look to short though I haven’t looked at that stock in a couple years.
I have margin for exactly what you talked about, at the same time, I do understand why Karen doesn’t. It can sometimes be very tempting, though I have never gotten in trouble with it or gotten a margin call.
May 14th, 2009 at 4:04 pm
Kinda the same reason why I never feel comfortable shorting gold… the geopolitical risk card.
May 14th, 2009 at 4:04 pm
I re-entered some short ETFs. Not big in view of options expiration and people trying to make the number.
Looking for lower highs, lower lows as evidence of a breakdown here very soon.
Today felt like an unconvincing retracement bounce of exactly the type that occur around tops.
May 14th, 2009 at 4:06 pm
I played in DUG last year and made a little bit of money in it. I think karen is on to something here with the oil short idea.
I had read somehwere that many of the big oil countries had based budgets on $70 oil. Does anyone have any proof of this. Is it valid?
May 14th, 2009 at 4:07 pm
cvienne @ 4:02
What I’d really like to see (don’t know if we will or not) is a failed rally attempt, maybe up to 915-920, then a rollover.
That would get me motivated to go short.
May 14th, 2009 at 4:08 pm
speaking of shorting gold, LB, what’s the update on your short position if you care to share. ARe you sticking with it?
May 14th, 2009 at 4:10 pm
karen @ 4:03
What possible difference could that make?
May 14th, 2009 at 4:13 pm
@ben22:
Wouldn’t SCO be a better play for shorting oil than DUG because it is a play on the commodity instead of the oil service sector stocks?
HCF
May 14th, 2009 at 4:16 pm
@ Left:
I added to QID today to make it up to 2/3′s of desired position.
Still long 2/3′s of FAZ position.
Long 1/3 of SRS position.
Out of all longs now… except for old MOS’ey and Arch which I’ll probably own until I’m your age.
May 14th, 2009 at 4:22 pm
@HCF,
that I don’t know. I have never actually looked at SCO. I do see though that it has bonds in it? What is that.
May 14th, 2009 at 4:22 pm
DL, i don’t want my shares working against me; it’s the principal of the thing; especially if I have several hundred thousand shares of a micro cap…
May 14th, 2009 at 4:24 pm
@ben22: My DZZ is more or less flat. It’s a play on a modest $ rally.
@ I-man: I am long 1/3 of SRS and FAZ again. I AM NOT OLD. I guess it’s all relative.
Don’t ask me why I covered yesterday, just a gut feeling after the big sell-off – better to be lucky than good.
May 14th, 2009 at 4:25 pm
I-Man, I Love You!
May 14th, 2009 at 4:26 pm
The Mistress plays for keeps. Yall should know that…
May 14th, 2009 at 4:28 pm
After taking quite an epic beating during this rally, I’ve been slowly re-loading SRS, QID and SDS (and a tiny amount of FAZ) in recent days and slowly liquidating remaining longs. Also sold most of GDX yesterday and today.
May 14th, 2009 at 4:28 pm
karen @ 4:22
O.K., I won’t push it any further.
May 14th, 2009 at 4:29 pm
Mannwich @ 4:28
What are your views on S&M…?
May 14th, 2009 at 4:30 pm
@ Left:
I know bro- just playin. Not too old for surfing lessons anyways…
But I’m only 29… so old IS relative.
May 14th, 2009 at 4:30 pm
I-man,
I think i figured that out about Karen. She’s a killer.
Karen, I’m looking at setting up a trade in DSX as I’m still short term bullish. I would use a very tight stop. The stock got killed the last few days as they are issuing shares. I think you were working on some of the other shippers. I was thinking of setting up a limit at 13.60 to see if I could get it there.
May 14th, 2009 at 4:35 pm
And while we’re on the topic of SCO-UCO
Can anyone tell me what the hell is actually in this thing???
“Dow Jones AIG Crude Oil Sub-Index”
Thats the underlying for these two.
May 14th, 2009 at 4:35 pm
@DL: It’s not really my thing but a buddy of mine who is a documentary film-maker (among other things) here completed an interesting documentary film on S&M (called “Mondo Bondo”) that he released in last year’s Minneapolis Film Festival. I actually thought it was pretty good (pretty objective, not raunchy or anything) but he’s been having problems selling it. I’m being totally serious. It was actually very well done. You’d be surprised at how big a subculture there is out there that’s into this stuff.
Not my thing at all though. I just don’t get it, although one could argue that maybe it IS my thing lately after the beating that I’ve endured. Tomorrow’s another day though.
May 14th, 2009 at 4:37 pm
@mannwich,
fwiw: I’d just be careful on those ultra’s. I noted last night that last Friday the Investors INtelligence bulls were only at 41%. I got my hands on the internal ML report last night and they are adding to equity NOW. Lot’s of folks have yet to come into this rally imo.
then again, I also noted yesterday that declines vs advancers were 10/1 yesterday vs. 5.7/1 on Monday signaling to me that this pullback could be pretty strong, in which case you have a nice trade.
I suppose stops are key there, as always.
May 14th, 2009 at 4:38 pm
I-man
I just said the same exact thing. It has bonds in it. Something is off to me there. I’ll read the prospectus.
May 14th, 2009 at 4:48 pm
I-Man,
It looks like you have a fan on the West Coast, the lady does prefer the younger men, apparently.
Well, I am just off to buy some Centrum Silver and the Just for Men so I can “get back in the game”…
May 14th, 2009 at 4:50 pm
@ all (Manny, ben22, I-man, karen, DL, LB)
Boy it sure looks like we’re all on the same page here (sensing that it’s almost curtains for this rally)…
DL – I think you’re right…A rally attempt tomorrow in the AM that started to fizzle out around 915-920 and then rolled over would probably signal the end…We’d probably be looking for a big GAP DOWN on Monday (especially if some clown gets on the Sunday morning talkshows and says the wrong things)…
Ben – look at those chart lines I was referring to…It even looks MORE interesting if yo then toggle it over to a “weekly” chart…
Question now is, if the market rolls over, how deep does it go?…I was playing around with some lines today that would make it very convenient to bounce around between 750-850 all June…If it gets too low, i’d bet there would be some effort to AT LEAST close out June above 793…After all, it would “suck” for all those green shooters out there to do all that work and the STILL close the Quarter as the 7th straight quarterly loss…Lotta work for nuttin’…
Anyway, then comes July and earnings season all over again…That ought to be a hoot with no more “orphan” months to exclude…
I think you’re right about shorting retail Ben…There was heavy PUT buying on the retail ETF today for the September month…I’d do a little studying b4 you short ANF…Despite what you think about their prices, I’ve heard their balance sheet isn’t that bad…I’ve never checked those facts (just remember hearing it once from Karen Finerman)…
I really think it’s over…All the BIGGIES are breaking down together (and they’re usually the last to go)…
May 14th, 2009 at 4:52 pm
another good etf to follow: NLR
as an aside, i noted that Nike is cutting 5% of its workforce.
May 14th, 2009 at 4:54 pm
I-Man, he must be old.. I don’t even know what those products are.. i’m gonna look em up now, though.
May 14th, 2009 at 4:58 pm
leftback,
you’re the man. bring your A game.
Now “back to the back to the beat yall…”
So left… whats up with the dollar? Is this thing gonna hold support or break down hard? Kind of hard to trade against FXB and FXE here… and you know I like FXY… how can these look so bullish if the UUP is going to reverse? What kind of catalyst could break the dollars pain? What do you see that I dont?
May 14th, 2009 at 5:12 pm
@What do you see that I don’t?
Answer: Deleveraging. Redemptions. Liquidation. The dash for cash. Money for the Hamptons rental, college tuition, anything that you can no longer borrow for.
We are nowhere near the end of the Great Debt Unwind. Once the Big O signals no more bailouts/stimuli, there is going to be a bleed down of all kinds of overvalued assets.
@karen: Harsh, mistress. I can’t reveal my age, but I do play soccer every week, so I am as fit as any surfer dude. Another thing: lately I have had outstanding trading mojo…
May 14th, 2009 at 5:30 pm
@leftback,
I think you get back in the game with Nutrisystem. It’s “real food for real guys”, pizza, burgers, POT ROAST. Centrum Silver may be tough to digest.
May 14th, 2009 at 5:34 pm
I do not think the dollar is going to break down it seems to be holding the bottom of the channel well. I’d say I’m bullish the dollar heading into the summer.
May 14th, 2009 at 5:37 pm
http://zerohedge.blogspot.com/2009/05/shorting-in-these-stocks-is-now.html
Y’all might want to take a look at this one.
Also, I’m thinking about long DRYS between 5.60 and 6.00. How crazy am I?
May 14th, 2009 at 5:49 pm
I have to say I think silver may be a reasonable bet myself. I bought a little Coeur D’Alene Mines to go with my gold. The metals are hedges against both currency and stocks. The $NZ is very unstable, any increase in risk aversion and it goes to the toilet.
May 14th, 2009 at 5:51 pm
I also think its a correction thats coming up not a retest.
May 14th, 2009 at 5:54 pm
Re: the dollar. There’s pretty wide “consensus” that the dollar’s going down and stocks are going up, that inflation is right around the corner. In my layman’s opinion (and per the contrarian in me), they’re all too early to the game and don’t appreciate the power of the ongoing debt deflation.
We’re all scared of the inflation bogeyman that lurks in our future and I know that Bernanke will do all he can to try to douse the deflation bogeyman, but I think the powers of that enormous imploding mountain of debt are going to be more than he can handle for now. Mish has me convinced. I know there’s similar opinion here from LB, ben22 and others.
The market’s going to whiplash that trade in the coming months, I do believe. LB is on the mark with the deleveraging forces coming to the fore again.
May 14th, 2009 at 5:58 pm
Skys are ominous right now, probably just rain coming in, but if feels like the calm before a market storm, who knows.
Still a little shocked that people are still gambling with the leveraged shorts. Keeping it simple now, short SPY.
May 14th, 2009 at 6:03 pm
Simon,
I missed what would have been a great traded in ECU when this all started by setting up a limit at .40. I hate to look back when I don’t get my priceand just tend to move on to the next but that one bothered me. I’m having a hard time reading silver in the short term, just as I am with gold and as a result I’m just watching.
onlooker,
that is exactly my stance, there isn’t anything anyone can do to stop the credit deflation, which btw, is already here, they are all going to be powerless against it. I even brought this up yesterday in relation to the PPT. The bags of credit they hold will not be enough.
May 14th, 2009 at 6:06 pm
@MRegan: Last time shorting was made difficult the stocks dropped like a stone. They’ll never learn. Perhaps the I-banks all bought each other on the way up and now are shorting each other on the way down.
@Onlooker: I think you are correct. Shorting the $ is premature and a crowded trade. Mish and Gary Shilling have provided so many examples of deflationary forces (wage deflation, decreased hours etc..) that are going to be hard to overcome. Since most of the debt we think about (private, public and many foreign governments) is denominated in $, then any payment of that debt, decrease in credit balances, increase in savings, or flight to quality (treasuries) will be $ positive.
This in turn is negative for exports, and reinforces a downward spiral. The printing is simply offsetting what would otherwise be a crushing deflation on a scale far larger than the Great Depression.
May 14th, 2009 at 6:13 pm
@LB,
That was a very good and short explanation on the US$. Basically why I’m bullish on the buck moving forward. The final implosion of credit should be so swift that they won’t even have time to react to it. Let’s get real, all those guys do is reactive, proactive work isn’t part of the Fed job description.
Also a very good point about that link MRegan put up. when they banned shorts on the banks last year was when the bottom really fell out. It accomplished nothing. Again, no amount of meddling will stop the deflation.
May 14th, 2009 at 6:16 pm
Bear in mind also that as the $ firms, gold may go down, but if a panic starts again, anything can happen. :-)
May 14th, 2009 at 6:23 pm
LB
Re: gold. That’s indeed the beauty of the gold stuff at this juncture. It can hold up in the short term due to the panic/end of the world trade, and eventually the inflation coming someday will give it a lift. I have a modest position accordingly.
May 14th, 2009 at 6:27 pm
@ben22
@all
Want to see something scary?
Look at the Dow Transport chart…$TRAN
Draw the downtrend line from the top in July ‘o7…to the peak in 12/07…then a bubble breakthrough (ending at the Lehman Collapse 9/08)…failed break to upside 1/09…failed break to upside 5/07/09…
The Transports have led the way on every S&P move…There’s your DEFLATION indicator…
May 14th, 2009 at 6:27 pm
As Mish says, gold does well in instability (deflation, hyperinflation) and poorly in stability (disinflation).
G’night all.
May 14th, 2009 at 6:54 pm
gold bugs and short sellers … how they love to party.
when shorts get tight, they squeeze gonads, and this causes the pitch of the voice to go way higher. all squeaky and tremulous. makes you want to get out a big chart and draw lines all over it!
it’s a market, and it’s in an amazingly volatile phase. put in enough money to let yourself sleep at night, and don’t put in so much that it keeps you awake. only your gut knows for sure.
what ridholtz is saying is that you can’t tell at this much how much theory matters, and how much fundamentals matter. i guess that leaves bird entrails and luck.
everyone who has ever bet on the sanity of human beings and the rationality and efficiency of markets has lost money. deal with it.
May 14th, 2009 at 7:08 pm
@drollere
Thanks for the clarity drollere…
We just were all too stupid to understand…
May 14th, 2009 at 7:14 pm
This board has been bearish all the way up and a tiny dip has sent the bearishness into the stratosphere. Bought some SSO. Will dump when you guys start chattering about printing presses and S&P 1400, like you we’re about a week ago. I agree with most of what’s posted here about our ponzi economy, but you all might be 3 or 4 years too early.
May 14th, 2009 at 7:27 pm
Cougar alert!
May 14th, 2009 at 7:29 pm
@antman
You may be onto something there…
Since BHO was so overwhelmingly able to mesmerize the American voting public by the wide margin of 7-6…
Perhaps that will be all that’s necessary for him to get everyone feeling so good that they’ll forget about anything fundamental and call the S&P back up to 1400…
I’m sure those 6 out of 13 are have dicovered the ERROR in their preponderence and idealogy because the S&P is up for 8 weeks…
That’s all it takes…Skies are BLUE!
May 14th, 2009 at 9:13 pm
cvienne
BO has a 70% approval rating. People tell me with glassy eyes that he’s saved the World. So forget the 7-6, that’s old news. People want to believe so bad they can taste it, and the tidal wave of “money” will make things look better. After that we’re toast, but these things always go on longer than makes sense. We are about at the point the dead cat bounce from the ’29 crash rolled over. I’m not saying 1400, but we’ll get to at least 1000 and then reassess. GL.
May 14th, 2009 at 9:16 pm
cvienne, it’s the $tran and $wilsh that told me the rally would continue when others kept going short. it could carve out a right shoulder this week and next.. all we’ve had in the $tran is a mini correction. i did short at the end of last week via srs and faz for a quick $20k gain. tomorrow and monday may be the tells. trend is still up on $wilsh, $tran, and even $gold turned up this week. On $gold, today’s and yesterday’s candles are very sketchy.. could be signaling the run is over… and i do think the dollar is headed up, now.
May 14th, 2009 at 10:33 pm
@I-Ma: “I just said the same exact thing. It has bonds in it. Something is off to me there. I’ll read the prospectus.”
I haven’t read the prospectus, but almost all of the ETFs that are based on indexes use bonds as collateral for their futures positions. That could be why you see bonds.
May 14th, 2009 at 11:18 pm
@cvienne
“The Transports have led the way on every S&P move”
True at the March bottom, but not other times. Looks to be coincident most of the time. Actually lagged the May ’07 rollover. However, some of the transport stocks have taken epic beatings in the last few days.
May 15th, 2009 at 4:53 am
Dollar up?
http://bespokeinvest.typepad.com/bespoke/2009/05/us-dollar-index-enters-downtrend.html
How does one contort that chart to look bullish? On a slightly longer chart there is a pretty clear head and shoulders top.
Deflationary forces unable to be overcome?
http://online.barrons.com/article/SB124216547946012487.html
“What we’ve got now is strong deflation that’s being met by strong reflationary forces in the form of quantitative easing, aka printing money, by the Fed and other central banks, “which are essentially offsetting each other,” they write in Bridgewater’s daily missive to clients.
Eventually, they say they’re confident the central banks’ reflation will succeed. “We expect this to be bearish for the dollar, bullish for gold and bullish for commodities, especially next year.”
Ray Dalio is arguably one of the smartest guys in the business with a great long-term track record of making money. Just my opinion, but you had better be darn sure of yourself if you are going to be on the opposite side of the trade with him.
May 15th, 2009 at 8:39 am
@tanman
In this case, I was underlining the move off the bottom in March…In the other cases, I was referring to the fact that when the GAP between a TRANS rally & S&P rally gets particularly wide, the ‘correction’ which inevitably occurs is your signal that the move is over…So in this case, when TRANS aggressively sell off (and the market follows), keep alert…I had been watching it lately in the NAS vs. S&P relation, but the TRANS seems to even be stronger…
@karen
I agree with you that we may see this breakdown occur (or not) either today or Monday…I still have it within the realm of possibility that the S&P could continue it’s rally to the 965 -1k level (as some others on this blog have), but the odds took a real beating this week…Last week I’d have placed them at 50% – 50%, now I have it at less than 20%…
One thing interesting with the TRAN chart is is you take it all the way back to 1928…
If you draw a line on a log scale from the TOP of the 1929 crash diagonally upwards and let it intersect around the June ’83 timeframe (which would have been the peak of the first big rally after the 1982 recession lows)…then intersect that with the (floor), of the ’87 crash…Then follow the line until the present day, and on into infinity…
Look at the AREAS above and below that trendline (and apply them to global economics and geopolitics)…I’d interpret it as this…You basically have the GREAT DEPRESSION, and then a long “catch-up” period which culminated after the first post 1982 rally…At that point, you had Reagan with all his tax cuts, Volcker having calmed down interest rates, etc…There was a GO-GO period from 1983 – 1987 which culminated in the crash (bringing you back down to that level)…But then 1987 and on it was UP UP and AWAY…Those are the Greenspan years of FREE MONEY which created “bubble” after “bubble” after “bubble”, with a few mini crashes tossed in there…The scary thing is, that we’re not even HALFWAY to the point of erasing that last bubble…And all the “toxicity” is still on balance sheets…
If long term time horizons are any indication (and if TRANS are leading indicators)…It would seem to me that the overall markets have to get back to 1991-1992 levels before VALUE and ORDER is restored…