Last week, we saw Continuing Claims decrease — proof, said the green shooters, of the imminent economic recovery.

Only, not so much:

Those of you (who can still afford the luxury of) a trusty Bloomberg will note the ‘exhaustion rate’ for jobless benefits – EXHTRATE – reveals that people are not leaving the pool of continuing unemployment claims because they are getting new jobs; Rather, they are leaving because they have exhausted their benefits.

They are now unemployed AND broke. That is hardly a green shoot . . .
>

Exhaustion Rate: U.S. Workers Losing Unemployment Aid

exht-rate
>

Hat tip Bill King

Category: Film, Finance, Friday Night Jazz, Investing, Markets

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

87 Responses to “Continuing Claims “Exhaustion Rate””

  1. Transor Z says:

    Barry, FYI that data is old. Try 49.17 thru 5/31.

    http://ows.doleta.gov/unemploy/claimssum.asp

  2. That is how the Exhaustion rate is reported — on a month delay so next month (July) we get the May data.

    The link you provided also only goes to 5/31/09

  3. franklin411 says:

    /sarcasm on

    You really love those 100 year charts, eh Barry?

    You know, unemployment is not bad at all if you compare it on a long term chart, since…say, the dawn of time.

    /sarcasm off.

  4. call me ahab says:

    BR

    many here suspected as much Barry

  5. syphax says:

    The number is 49 for May.

    I had wondered about this when I first heard the stats on the radio. This is the sort of thing that pisses me off with the press- it’s not any real or perceived bias, it’s terminal vapidity. It’s not *that hard* to do this research. And I know many of us want to smile, close our eyes, and wish for green shoots, but let’s at least be realistic about the facts.

    By the way, this is one of those graphs that really should start at zero on the y-axis. The first impression is that exhaustion rates are growing exponentially, when it’s really “just” a linear growth of 1-2 points a month- scary, but not as scary as the graph at first glance.

  6. VennData says:

    Here’s the WSJ’s take:

    “…But even many bullish investors see a downturn ahead…”

    http://online.wsj.com/article/SB124561705762935201.html

    I ask how can they be bullish then? But then I read another point in the same missive, “…Stocks have surged since March because “…Some investors have moved money out of cash into stocks…”

    …and I’m left asking, so what did the people who sold those stocks do with the money? as the writers perpetuate the comical “money on the sidelines” fallacy …Money doesn’t move from the sidelines. Money is there as a result of Fed cash/bond preferences. When someone buys a stock, another someone sells. It’s simple.

    So all-in-all if the WSJ supports their partisan bearishness with this sort of blather, I’m bullish.

  7. Transor Z says:

    @Barry:
    The 47.06 datapoint on the chart is for the set labeled 4/30, which is one month behind the most recent (“5/31″) figure of 49.17. Just sayin’.

  8. Mannwich says:

    @f411: I noticed in one of your posts yesterday you referred to the Obama administration as “we”, so unless you do indeed work for the administration (which would make a lot of sense, considering the kool aide drinking), I think everyone here knows to take your posts with a giant-sized grain of salt by now, including Barry.

  9. Didn’t they extend benefits to keep people on the rolls? How did that skew the numbers if at all? The problem with the recent data is all the government tinkering and then normalizing. Is this unintentional by the Feds to get people’s heads spinning or a just surprise bonus for them?

  10. Bruce N Tennessee says:

    Well, the logical extension of this would be to ask…What would be the true unemployment rate if those people who’ve used up their benefits were included?

    …just wondering.

  11. [...] in unemployment numbers was the result of a sizable number of the unemployed having exhausted their unemployment benefits, rather than a turnaround in the Cheney recession. Possibly related posts: (automatically [...]

  12. Bruce,

    To be counted as unemployed, one needs to be actively seeking work. I suspect many who are receiving unemployment benefits have given up looking for jobs, in which case they are not included in the unemployment rate. However, they are included in the broader U-6 measure, which currently stand at 16.4%.

  13. drollere says:

    47.06 of what? is that a percentage? a percentage of what?

  14. Bruce N Tennessee says:

    @Expected:

    I understand that, but somehow wonder if those whose benefits are gone are really getting on the U6 reports…

    How does that work anyway…in real life..

    “Hello, Sir, we are taking a poll by the government. We see you’ve used up all employment benefits 6 months ago. We were wondering, are you too discouraged to continue looking for work? How do you pay for your telephone? On a scale of one to ten, are you somewhat discouraged, very discouraged, extremely discouraged, or about to go postal? What seems to be the problem in finding a job?”

    ….and so forth..

  15. jpm says:

    So when does someone move off of the U3 roll and onto the U6 roll?

  16. franklin411 says:

    @Mannwich,
    Work for the President? Well, I can dream, can’t I?

  17. Mannwich says:

    They may also need to create a U9 roll soon.

  18. Gatsby says:

    Chart satire aside, this a nice “spin stripping” insight Barry.

  19. Mannwich says:

    U9 will include those businesses that are no longer making money. We’ll put unpaid “interns” in that category as well.

  20. rob says:

    Most of the people I know on benefits right now are taking a teppid look at the job market. “Oh I’m just taking some time off, when my benefits get close to ending then I’ll look for a job.” Most are spending their time fishing (we live on the Gulf Coast) and enjoying the summer, then with about one month of benefits left they get the slap in the face there isn’t anyone hiring. Then the panic and sleepless nights start to kick in. Suddenly they forget their statements like… “The extra $50 a week from Obama in addition to the state benefits really help, the extention with benefits make it feel like vacation.” Never was it written “Life is fair” other than an expression of hope.

  21. kstills says:

    The author makes an excellant point, one which I’m glad to see reported.

    Aside from the highly debatable B/D data, is there any reliable measure of job creation that can be accessed?

  22. Transor Z says:

    Since Exhaustion Rate was first reported for the 6/72 data set, the average value has been 34% and the median value has been 33%.

    In 37 years there have been 44 monthly values of 40% or higher. Only 7 of these were NOT in the period 2002-2009 and the highest of these was the 8/31/83 set with 40.83.

    38.3 was the peak for the 1970s — 11/30/76.
    40.83 was the high for the 1980s — 8/31/83.
    40.11 was the high for the 1990s — 11/30/92

    Until 3/31/09, the previous all-time high was set in 7/31/03 with 43.9. The March, April, and May figures have set successive all-time highs. You have to go back to 1/31/91 (29.87) to find a rate under 30%.

    When you plot 12-month average benefits duration on the same graph, you see a clear correlation between the two. One question the data raise is that, during the early 80s recession, the average went over 17 weeks from 5/31/82 to 3/31/83. The 27 year average is 14.76 weeks. The latest figures put us only at 15.67 weeks. Given that even the “green shoots” crowd is predicting a jobless recovery at least in the short term, a 17+ week average would seem likely to follow, sending the exhaustion rate to further 27-year highs.

  23. Transor Z says:

    37

  24. olephart says:

    If U6 contains those who are “involuntary” part time but seek full time work then

    U9 will include all those who choose to remain in school or return to school but seek full time work.

  25. dss says:

    We might as well put on our decoder rings and eat moonbeams in order to make sense out of many of these extremely flawed numbers.

    Does anyone really know what the true unemployment rate is? If the government actually knew, do you think that they would tell us?

    All I know is that I see more houses for sale, more vacant store fronts, email offers of 2/1 specials at nicer restaurants, $dollar meals at all fast food joints and coupons given out like popcorn at the retailers that I frequent. Things are pretty awful in my neck of the woods and I do not live in one of the big five states that are having trouble.

    There are no green shoots, just people and businesses struggling to survive and the massive numbers of unemployed or underemployed are hiding out at home where no one can see them, but their financial absence is everywhere.

  26. Thor says:

    Does anyone know if there are any historical charts for U6 unemployment? I’ve been trying to find some but no luck. I remember back in the early 90′s when I was in college one of my Sociology teachers talking about “real” unemployment so I know these numbers have been around awhile . . .

  27. Onlooker from Troy says:

    dss

    “but their financial absence is everywhere”

    Good line. Depressing, but aptly descriptive. But then what should we have expected. The hangover after the biggest party in ages was bound to be a doozy, despite the efforts to keep the alcohol flowing from a tapped out keg.

  28. Thor says:

    Troy – “despite the efforts to keep the alcohol flowing from a tapped out keg.”

    One apt description followed by another.

  29. Bruce N Tennessee says:

    There is another thing that always bothered me, and was really a phenomenon of my generation’s political leaders..that was that having a chronic debt and chronic deficit spending were “ok” as long as the gdp was large enough we could “service the debt”…I didn’t understand that when I was young, and still don’t…from reading history, since this thing was put together until about the mid-20th century, the United States only went into deficit spending in times of emergency. But now a couple of generations have been raised with politicians on both sides of the isle tacitly or overtly agreeing that deficit spending was ok…

    Problem was, as I understand Keynes, we were supposed to pay back those deficits and debts in good and prosperous times…but we didn’t…and that is where our national leaders failed us…

    …Did we fail in voting them in? Maybe, but it seemed like this was the prevalent attitude in Washington, and no one seemed concerned. Budgets nationally probably are as simple as your home budget. Unless it is an emergency, don’t spend unless you bring it in first.

  30. AmenRa says:

    New column for Employment Situation will not be U9 but U382533 :)

  31. Thor says:

    Bruce – I think the kind of mentality you’re talking about made it’s way from government debt spending to consumer debt spending. It was ok to spend beyond your means because your home was going to be an unending ATM machine. Unfortunately I think the change in attitude is going to have to be much larger than just the politicians changing their ideas on debt. . .

  32. Mannwich says:

    @Bruce: Reading “Market Wizards” by Jack Schwager. This passage by Paul Tudor Jones in reference to the crash of ’87 hit home. Keep in mind this was written nearly 20 years ago, I believe……

    “I think the financial community, particularly Wall Street, was a dealt a life-threatening blow on October 19, but they are in shock and don’t realize it. I remember the time I got run over by a boat, and my backside was chewed up by the propeller. My first thought was, “Dammit, I just ruined my Sunday afternoon because I had to get stitched up.” Because I was in shock, I didn’t even realize how badly cut up I was until I saw the faces of my friends.

    Everything gets destroyed a hundred times faster than it is built up. It takes only one day to tear down something might have taken ten years to build. If the economy starts to go with the kind of leverage that is in it, it will detereriorate so fast that people’s heads will spin. I hate to believe it, but in my gut that is what I think is going to happen.

    I know from studying history that credit eventually kills all great societs. We have essentially taken out our American Express card and said we are going to have a great time. Reagan made sure that the economy would be great during his term in office by borrowing our way into properity. We borrowed against the future, and soon we will have to pay.”

    This could have been written today. Mr. Jones may have been 20 years too early but I think that day of reckoning is upon us. Again, I’m not Reagan-bashing, but I agree with f411 that all this did start with his administration (e.g. Cheney proved that by saying, “Reagan proved that deficits don’t matter”, au contraire dumbass Cheney, au contraire). Other adminstrations that followed Reagan saw how well that worked and simply copied him. The one that didn’t (George H.W. Bush) and who raised taxes, got his ass booted out of the White House after one term. Clinton actually did the best job of them all, but he rode the dot.com wave and was able to cut the military budget after the Cold War to save money.

  33. KidDynamite says:

    i wrote about this a few weeks ago. i have a longer term chart that shows a pretty interesting cyclicality with a massive upwards bias to the exhaustion rate

    http://fridayinvegas.blogspot.com/2009/06/unemployment-data-exhaustion-rate.html

  34. [...] is with no great glee that I note I was right again: The reason unemployment rolls are going down is because so many people have exhausted their [...]

  35. Thor says:

    Manwich – Agree with your post, more specifically, I was in high school from 85-89 and I remember a lot of talk at the time that we would “one day” have to pay the price for all of the deficit spending. I specifically remember my economics teacher senior year saying “it’s you kids who will have to pay for all of this one day” Being 17 at the time
    one day” seemed like an eternity. Here we are, 20 years later, and he was right – the only problem was that he grossly underestimated just how much we would have to pay . . .

  36. Transor Z says:

    @KD:

    No doubt. The 2000s have seen an avg rate of 37%.

    Let’s put it this way: within a couple of months more than half of UI checks cut will be final checks. Unprecedented.

  37. Mannwich says:

    @Thor: Just one reason, of many, that we Gen-X’ers tend to be one cynical lot, myself included.

  38. The Curmudgeon says:

    We need another Andrew Jackson. His administration was the last (and only) time the US was debt free. He considered it one of his greatest accomplishments that he left the country debt-free. Jackson came from what David Hacket Fischer described as the “back-country” people in his book “Albion’s Seed”.

    According to Fischer, back-country folks that settled in what was then the frontier–Appalachia and westward–came from the border regions of England and Scotland, and due to decades of border wars in the old country, were fiercely combative and deeply suspicious of government of any stripe, having seen the worst of both England and Scotland’s governments in their on-going battles for border supremacy.

    Andrew Jackson also fought and won a battle against big business and its financiers to shut-down the Second United States Bank.

    He wasn’t without his drawbacks (as I’m sure, F411 can expound upon) but at this point in history it seems that a populist like him that would fearlessly call bullshit on this idea that we the people exist to serve the banking system, and not the other way ’round, would serve wonders to right the ship of state.

  39. sharkbait says:

    http://www.financialsense.com/Market/cpuplava/2009/0610.html

    See 5th chart: “Employment Growth by Decade”

    Might as well see 12th chart as well (related to chart 5).

    More debt eventually = zero growth…

  40. KidDynamite says:

    @TransorZ – another thing is that the exhaustion rate calculation is a little bastardized – it’s (#of people losing their benefits) / (#of new unemployment filings)…. as you can see, with 5 seconds of thought, that’s kinda an odd methodology – seems like it needs some sort of standardization. what’s amazing is that even as new claims are increasing (ie, the DENOMINATOR), the exhaustion rate is still increasing – which is even more bearish. i think your comment about 1/2 of UI checks cut being final checks is wrong – that would imply that the exhaustion rate was calculated with continuing claims as the denominator – which it’s not.

    one more nitpicking point: barry’s conclusion about cause and effect of the continuing claims number is not necessarily true (ie, that claims dropped only because people have exhausted their benefits). although i wrote a post last week essentially agreeing with the claim,

    http://fridayinvegas.blogspot.com/2009/06/unemployment-data-improvement.html

    we can’t be sure if it’s correct because of the extensions in benefits.

    what IS true is that even if no one gets a job the continuing claims numbers can still go down because people exhaust their benefits. it’s far from a certainty that this phenomenon explains the recent drop in continuing claims though, Barry. Although I agree with you, it is POSSIBLE that lots of people actually found jobs – just unlikely.

    bottom line: these people will still show up in the unemployment rate – so watch that continue to climb

  41. FromLori says:

    Just as many suspected glad you pointed it out Barry the Communist All Barack Channels do not seem to want the truth out there.

    Isn’t it time to start the OMI=Obama MISERY INDEX charts? The only one I could find is from June 5th and it is already outdated with the “Real” rates of suffering far greater in just 16 days! Maybe someone here knows what they are smoking it must be good stuff to put out the baloney they spew with a straight face over at ABC,CBS. etc/

    http://seekingalpha.com/article/143696-worst-housing-number-in-decades-what-is-the-wall-street-media-smoking?source=email

    I cannot be amused personally since everyone I cherish will suffer as a result of the obamageddon’s corrupt policies but it seems the rope a dope with hope people should not be surprised say the Chicagoans …

    http://www.chicagotribune.com/news/columnists/chi-kass-21-jun21,0,1177440.column

    http://market-ticker.denninger.net/archives/1138-Executive-Branch-Corruption.html

  42. Onlooker from Troy says:

    Bruce

    It is astounding, isn’t it? Not to let the common man off the hook, but we were sold out by our politicians and a whole bunch of prominent economists who enabled their debt spending ways by saying it was all justified and wasn’t a problem. You know, the “deficits don’t matter” line. And it wasn’t just Cheney. Most all the politicians fed into that B.S., with few exceptions, Ron Paul being the most remarkable of them, Heck, they’re (politicians and some economists) out there still saying it’s not really a problem and minimizing the problems of our current debt load and the probable (certain, actually) debt in our near future.

    So most people suspended their own gut feelings of common sense and figured it must be some complicated macroeconomics thing that we just didn’t get. Stupid, just plain stupid. And greedy too, of course.

  43. WaveCatcher says:

    It’s this type of insightful analysis that keeps me coming back to The Big Picture.

  44. WaveCatcher says:

    It’s this type of insightful analysis that keeps me coming back to The Big Picture.

  45. leftback says:

    Nice chart Barry. I knew that data had to be out there available somewhere. Long-term unemployment is always a feature of deep recessions. I remember 1980-1982 all too well.

    The SPX has pulled back into that little groove between the 50 and 200DMA. Later in the week I think we will say hello to SPX 880, but not here. Bounce coming for SPX, gold and crude tomorrow, as the dollar trade is due for a reversal again. The 880-925 area might be established as a trading range for a little while. At least that’s the model I will be working from this week.

    Looks like the long dollar call from two weeks ago was a good one. Nice going, ben, Andy and others.

  46. call me ahab says:

    sharkbait-

    thanks for the link- good information- money line-

    “The current decade’s growth in employment produced such a meager marginal return relative to the debt taken on by the economy with the only true measureable increase seen was the propping of asset bubbles such as stocks and housing. The question becomes, are we approaching the zero hour? That is the hour where throwing another dollar of debt at the economy produces zero GDP dollars.”

  47. leftback says:

    ahab – We are already there. Throwing money at C and AIG is certainly producing zero GDP dollars.

  48. Mannwich says:

    @leftback: But it’s producing big bonuses so the nice folks at C, AIG and others on Wall Street can keep up appearances and go to the Hamptons this summer and snag some hookers and blow.

  49. manhattanguy says:

    @leftback yes the long dollar call did work. As well as Oil shorts (remember my call on $DUG). S&P tested 50dma and bounced back. My shorts on $RIMM and $COF are working amazingly well on this fine Monday. But I will cover soon as a bounce is imminent.

  50. AmenRa says:

    LOL I just noticed this: U382533=U24=U6. Go Figure.

  51. Transor Z says:

    @KD:
    Thank you and I apologize. I misread the “First Payments” column as total payments for the month. Stupid.

  52. ben22 says:

    @LB,

    Thanks for the shout out. I haven’t made much on it ($ long) but I did sell some longs to get into it some I’m keeping that in mind as those longs have gone down quite a lot since I sold. Lets all remember this one, you had 96% bulls on the Euro and 3% dollar bulls when the dollar put the bottom in.

    I’m watching 880 very close, if we blow through that with some serious momentum it could be that the decline I’ve been worried about has already started and my targets will neve be hit, but I’ll be all out of longs at that point. I don’t think we are just going to re-test those March lows. For now, I’m more with your 2:01 scenario above and I’m still looking for a close above that intra-day high print of 959 on the S&P. Now down to 9% longs in my accounts as some were sold with trailers early today. It’s been an awesome year so far.

    @manhattanguy,

    I didn’t follow your DUG trade but remember you calling that. Nice one. That was basically the same as going long the dollar, or shorting tech for that matter.

    Last, is there potentially a new reversal indicator being tested here? Franklin, and I’m pretty sure this is two straight weeks, telling Barry he doesn’t know how to interpret data is what I’m talking about. Last week he told Barry he had blinders on in one thread. Franklin, how are you more qualified than Barry exactly? Oh thats right…. you aren’t, you don’t know shit.

    When people that don’t know anything suddenly become economic or market experts it might be a sign that a top is at hand. After all, didn’t we see this with tech, real estate, and most recently treasuries?

  53. call me ahab says:

    LB-

    I know- I wonder the fallout of a failure instead of bailout $?- would it have sent us over the cliff- or would it have been quicker and more cost effective than being nursed along by Uncle Sam- I mean- would I now be foraging in the woods for my dinner if we let C and AIG fail- or would I be eating in a mac and cheese in my Kitchen- happy that we cleared the deadwood and knowing that a stong economy will emerge-

    AmenRa-

    ok I give up- please elaborate

  54. [...] Our earlier post on Exhausted Unemployment claims has provoked an interesting if wonky debate. [...]

  55. I-Man says:

    Yall are wonky.

  56. DL says:

    Mannwich @ 2:15

    “…the nice folks …can …snag some hookers and blow”.

    Spending on hookers definitely qualifies as economic stimulus.

    But expenditures on coke constitute stimulus “leakage”, as a lot of that money presumably will go to Columbia.

  57. ben22 says:

    DL,

    I think a lot of junkies have switched over to Meth at this deep stage in the downturn. It’s cheaper and can be made right here in the states. : )

  58. Transor Z says:

    @Kid Dynamite:

    You can back into something like the NSA continuing claims # (i.e., within 5%) by dividing total benefits paid by (avg wkly benefit amt*4). I get 5.7 million; the “official” NSA number is ~6 million.

    Working with the 5.7 million figure, that puts final payments at ~10% of total # payments — definitely not near the 50% mark I erroneously stated earlier.

    Now, check this out: If you work with the approximated NSA continuing claims figure using the quick-and-dirty calculation above, you can chart monthly expired claims as a % of NSA continuing claims. You see sustained peaks of >12% in 1975, 1983, and 2003. What don’t you see? You don’t see a >12% peak for 2009 . . . yet. Talk about bearish and ominous.

    As you point out, you start with a base eligibility of 26 weeks and then have to tack on extended benefits, which are substantial right now (30+ weeks under EUC08 plus the various state/federal shared EB plans).

    Another interesting thing to note is that the Exhaustion Rate is a moving average . . .

  59. leftback says:

    DL: That would be Colombia, the home of coffee and coca, as apart from Columbia, S.C. ??

  60. I-Man says:

    They’s got some good yay down thayerre… LB.

    Sorry folks… I-Man is a bit giddy today for some reason.

  61. ben22 says:

    I-man,

    Might it have something to do with all those shorts you hold? lol.

    Must have been a good day for you.

  62. I-Man says:

    Just riding the emotional yo-yo… yo.

    Constant struggle. I’m not poppin any bottles yet though… still waiting to be confirmed. Although today was a bit encouraging, if you’re net short.

    Still work to be done though.

  63. ben22 says:

    I’m kicking myself for not staying with ZSL just a little longer. Just need to move on from that though.

  64. I-Man says:

    I’m actually scoping that one out B22… Here are my thoughts:

    On the 15min charts:
    SLV might take a shot at filling the downgap from this morning early in tomorrow’s session… Watch for a test of a partial gap fill at 13.83… last wednesday’s intraday low.

    Would be a good entry for ZSL if that level is met with a smackdown.

    If you are more prone to watch ZSL on its own, then a bounce off of today’s low at 9.03, or bounce off of 50 period MA would be a good buy entry, at least then you can stop out just below that level. Makes for good R/R. I do these trades alot, because even if they start as a day trade, if they work right, you can adjust them into swing or position trades fairly easily without risking alot of capital.

    If SLV is really breaking that uptrend on the daily charts, then there is still plenty of meat on the bone of ZSL.

    Alternatively, if you check a weekly SLV chart, big showdown at 13.oo (also very close to 50d EMA) for a test of the major uptrend… I might wait for that and see what happens… either buy the bounce on SLV, or if it breaks, wait for the backtest of that same trendline, and THEN bust out some ZSL.

  65. DL says:

    LB @ 4:58

    O.K., so I made a spelling error.

    Shoot me.

  66. chaingangcharlie says:

    DL says : “Spending on hookers definitely qualifies as economic stimulus. But expenditures on coke constitute stimulus “leakage”, as a lot of that money presumably will go to Columbia.”

    Just trying to think of as many patriotic vices as I can.

    Laziness looks ok ( cheap too ). Cheap locally brewed beer. Some home grown stuff. Local girl ( cheap is beautiful ). Looks like you CAN still have a good time & look the flag square in the eye… because it’s all good economic stimulus. :-)… except probably the ‘laziness’ bit. Shit.

  67. ben22 says:

    I-man,

    Thanks for the analysis. I had bought ZSL a couple weeks ago, made 17.9% in a few days and got out. I’ve been burned a couple of times on these ultra’s over the last 18 months and have seen a many others get in trouble so I got in and came right back out. I’m looking to buy it back though, it looks like silver could go all the way back into the 8′s again. If so, there’s plenty to be made in the ZSL.

  68. leftback says:

    ben,

    Agree with make ‘em and take ‘em, I closed my DZZ, FAZ and SCO trades today, nothing like cash in the bank.

    I figure we will see a bounce in commodities and then I will take a look at the dollar charts and reopen them – because there is ONLY ONE TRADE. Holding SRS and looking to buy more. Playing SPX 880-925 range now. Was today the most predictable sell-off ever or what?

  69. ben22 says:

    LB,

    It really was predictable wasn’t it. Still not in the SRS but man, what a great trade that was just below 17. I’ll watch 880 close as I said before, there is also the 840 as well. depending on how that looks when we get there I’ll probably just by SPY since I have very little longs left and try to catch some of this last move up before we head down in a more serious way. Still don’t want to go heavy on the short side yet.

    As you say, it’s all one market.

    And here is the hilarious sell signal headline of the day:

    http://www.forbes.com/2009/03/31/consumer-behavior-recession-business-commerce-buying.html

    Only fitting that the #1 thing to buy is, yep, a house. Hurry, before the prices just skyrocket right back up again. What a joke. Or GE stock if you scroll through a little more, that might be the biggest joke.

    Now, I must get back to Kudlow to hear how counterintuitive it is that the dollar could possibly be going up right now. It makes no sense say the tools!

  70. call me ahab says:

    so . . . I’ll bite- what made it so predictable- the movement into treasuries to keep rates under control? market action last week? weekend stories about Chinese commodity purchases speculation plays and not due to economic recovery? other reasons?

    I’m all ears

  71. Onlooker from Troy says:

    ben

    Yep, in the bubble states it seems that the knife catchers are already out in force. They’re going to regret it as prices continue to fall and they can’t get renters, or the rent they get is woefully insufficient. Just proof that this isn’t over yet. The psychology of bubble buying is still there and needs to be wrung out. Of course that’s been enabled by the easy money policy that’s trying hard to reflate things. There will be much personal tragedy before it’s all done.

  72. Onlooker from Troy says:

    Oh, and don’t you just love the reasoning for buying houses. They’re down 25% from 2006 prices, so it must be a good deal! That kind of thinking is soooo faulty, in all kinds of assets. Looking at the peak bubble prices for houses and stocks and using that as a benchmark for valuation is such a mistake. But it’s being done all over the place.

  73. call me ahab says:

    interesting charts- Weimar Republic- look familiar?- (compliments of Jesse’s Cafe Americain)

    T Bills

    Trade_union

    Weimar_Gold_Silver

  74. ben22 says:

    @onlooker,

    bubble buying in RE just like in stocks right now. The div yield on the indexes is not close to what it has been in other deep bears so clearly the InvesTools are still looking for major capital appreciation, especially if they are buying right now.

    @ahab,

    big picture, if you go with the one market trade idea then you had the dollar making a low while you had huge bearish levels on the dollar and huge euro bulls and at the same time you had sentiment on the stock market coming close to where it had been at the peak of the market. I’m sure you can figure it out from there.

  75. cvienne says:

    I got the move I wanted early today and have been gone most of the day…

    I missed the recent party here and posted the following on a different thread…

    @Thor (4:36) @Manny

    I’m back…If you’re reading this old thread late…RECAP AS FOLLOWS…

    I’ve been playing in the options markets lately…Friday I bought S&P “puts”…I bought the August 84 puts at 1.65…This morning I sold them at 2.11…Once again, I sold too early, but I don’t hang around these markets much when I have a winner on my hands…

    Today, I bought SRS just after the open…(20.60)…I’m holding onto that, but I also took a half position off of SDS & hedged it long on SSO…(so I’m basically neutral on that trade for the time being)…

    I expect the following…

    I can’t really say what will happen on the open tomorrow (but there’s a very good chance of a positive open, or, a quick half hour selloff followed by a pretty good reversal…the lowest I’d expect to see, if I remember, would be around 887, but I’ve been away since noon (I made all my moves in the AM) so I’ll have to check…

    I think this market will actually RETRACE some of todays losses over the next 10 days…Open on the year was 903 on the S&P, so I believe tht even the big houses will carry the market a few rounds here to close the 1H’09 ‘flattish’…

    A FIBO retrace back to the high is now in the 925-932 range…I think we’ll make some half assed attempt to get there (considering you have the end of quarter – first few days – and a holiday weekend to make one last push upwards)…I’d expect a failure, but I’m keeping a lot of my remaining powder dry until I see that move)…

    At this point, I’d pretty much say the market will fail by either July 2nd, or July 6th…

    And BTW, Thor…it was ME who made the comment about GS & JPM paying back the TARP…I’ve been on that theme since April…

  76. call me ahab says:

    b22-

    but bull sentiment has been high for a while, $ has been tanking for a while- so you can expect a sell off- but doesn’t mean it will happen- so timing is key- I have expected a sell off quite a few times that never materialized-

    so you can think it’s a slam dunk- but then the market may go the other way for no reason that you can easily grasp-

    outside of massive manipulation

  77. cvienne says:

    @ben22

    Ben my man…Remember I asked you last week if you weren’t holding on ZSL for $9.30? and you said “no I’m outta here”…

    No problem…Both of us carted off a 20% on that (so it’s all good)…

    At this point, I think silver just might go to 8 but there is plenty of time to let that trade come back to you…

    These days, I’m all about taking the money and running…

  78. cvienne says:

    @ahab

    “I have expected a sell off quite a few times that never materialized”…

    Patience my friend…The smart guys had a bunch of rabbits that they’ve been able to pull out for 4 months now…They ran out of rallies two peaks ago (but still have the attention of the public)…

    One last rally (from the depths of worry – co-inciding with the end of 1H’09)…

    No new highs this time…CURTAINS…LIGHTS OUT…Next stop, S&P 572-576

  79. ben22 says:

    Ahab,

    Bullish sentiment being high and being at extremes are two very different things. I just try to do trades when the probability is far in my favor. I’m almost certain you had all time record levels of sentiment in October 2007. At the March bottom I think there were about 6% bulls. That’s extreme. You saw the same extremes on the dollar sentiment recently. To be a little more specific on the dollar, you can see a clear 5 wave up pattern from July 15 of last year in the dollar index that ends late in the year , I’m sure you’ve seen me try to lay out the dollar bullish thesis, to see it in action, as credit deflation was really taking hold last year the dollar had a very large rally while everything else went down.

    The dollar index shot lower at the very end of the year coupled with a stock rally into Jan, then the dollar moved up early this year while stocks tanked peaking out around the March bottom then the drop as we move up since then in stocks. Among many other things you again had the extreme sentiment at the March bottom in stocks. Fast forward to now, A few weeks back Peter B had put up a post specifically about the fibbo retrace the dollar had done right around the time you had the extreme high bearish levels in the dollar. This was also when there was a lot of buzz about AAA status being lost in the US and the first loud discussion on the dollar being replaced or being crushed by inflation. Also when we just started to see the extreme bullish levels in stocks on a more consistent basis.

    Hope I’m not rambling here but the point is:

    Of course the timing is important but in these cases you see the all the same markets idea. Nothing is ever a slam dunk but in these cases the probability was in your favor if you were going the other way of the herds. In my case I’m not day trading as much as I’m trying to get the bulk of my portfolio into a trend before it starts.

  80. AmenRa says:

    @ahab

    Using the numbers from a telephone U382533=U f*&ked. QED.

  81. cvienne says:

    I see no posts for the last 2 hours so I’ll make a final one…

    BR likes to use Friday Night Jazz…I’ll use Monday Night “New Wave”…to suggest that the action today provided an actual 2nd volley…While a retrace of some of todays losses are likely over the next 10 days (until 7/2 – 7/6)…I’ll leave you all with the following lyrics to contemplate…

    If you smell the smoke
    You don’t need to be told
    What you got to do…

    Yet there’s a certain breed
    So very in between
    They’d rather take a vote…

    Running short on time
    Still they can’t decide
    But we already know…

    That we are here to go
    We are here to go
    We are here to go
    We are here to go
    We are here to GO…

    What is really mine
    Who’s at the top of the pile
    Where does he draw the line?…

    Let them figure it out
    Go on and step across
    Just remind yourself…

    That we are here to GO…

    When it grows too long
    The tail wags the dog
    The hand that bites gets fed…

    Troubled multiply
    The crowd begins to cry
    For some common sense…

    Let them all dig in
    When the odds are no win
    Head for the nearest door…
    ‘CAUSE WE ARE HERE TO GO

    Go

    Lyrics courtesy “Devo” (go download the song for some fun)
    DEVO/SHOUT/1984

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