Comparing the 1973-74 Bear/Recovery with 2008-09
By Barry Ritholtz - August 6th, 2009, 12:00PM
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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.
August 6th, 2009 at 12:09 pm
I’m not a chartist, but I have to admit these look pretty compeling. I may have to close out my loser shorts and go 100% long soon. I am getting wiped out on anything on the short side these days.
BTW, you may remember I told you guys to short those 3x inverse ETF’s (FAZ and FXP) a while ago. Take a look at their charts and count how much money you would have made had you followed this advice….
http://finance.yahoo.com/q/bc?s=FAZ
http://finance.yahoo.com/q/bc?s=FXP
It’s damn near automatic (i.e. printing your own money)….
August 6th, 2009 at 12:14 pm
Weak tape here. Dollar bouncing off recent base (possible 5 wave down completed). So far so good on a set up for a correction here.
August 6th, 2009 at 12:19 pm
If this is a change in direction for the markets, higher quality stocks leading us down. Possible low quality upside blowout completing here.
Maybe a quiet move down for a few weeks followed by acceleration. But, one step at a time.
August 6th, 2009 at 12:21 pm
OK, but I recently saw a chart from David Rosenberg that compared the uptick to the Depression, and noted the similarities between the chart today and one that retraced the fall plus a little, starting right about now, in relative terms. According to that coincident chart, we are on our way down to a retest of the low, not a euphoric high that keeps on going.
Which magic chart rules?
Also, I know magic chartists hate such things, but how did fiscal and monetary policy in the early 70s compare to today? Irrelevant, I assume. Astrology doesn’t worry about such things.
August 6th, 2009 at 12:31 pm
One more thing, my TBP comments sentiment indicator is flashing “sell.”
August 6th, 2009 at 12:39 pm
Yep! And the ensuing inflation charts in restrospect, will look eerily similar also.
August 6th, 2009 at 12:43 pm
Ah geez, here we go again comparing charts again with no other context. I’m so confused. Is it 1930, or 1937, or 1974, or 2002, or some other year with which we can find a comparable chart pattern?
I know it’s a fun exercise though. And always good for some speculation.
August 6th, 2009 at 12:47 pm
I’m with DH here – I’m not sure I understand the usefulness of constant comparisons of the market at different times. One chart comparison is used for awhile until it no longer matches up (The Depression) then another one is trucked out (the 70′s).
August 6th, 2009 at 1:00 pm
Also, didn’t Nixon take us off the gold standard about the time that downturn ended. Today is the culmination of that ride. While I won’t preclude the further advance of the paper standard or the sovereign debt standard, I really think we’re breaking new ground here.
August 6th, 2009 at 1:06 pm
I’m just wondering. While the US, Russia and old Europe follow the practice of stockpiling gold for their treasuries, has China broken away from that and moved to stockpiling US debt? Do they occasionally walk down to the vault and admire the accumulated wealth? When do you think they will cash in their green stamps and what do you think they will want to buy with them? California? Probably not … too screwed up. Maybe NYC?
August 6th, 2009 at 1:19 pm
The best charts I’ve seen comparing the most recent bottom to the GD bottom, 1973-74 bottom, and Tech boom bottom is at
http://www.dshort.com/articles/2009/bear-market-volume-getting-technical.html
The primary difference seems to be lack of volume in this rally as compared to other major bottoms.
HCF
August 6th, 2009 at 1:20 pm
start of 2nd.week @ the spa 17,000 show up on a beautiful wednesday afternoon…. good ole days you have 30+ ..chart that!
August 6th, 2009 at 1:25 pm
Riveting stuff.
Until you consider that the MACD MA crossover “strategy” with the 12,26 and 9EMA returns…
drumroll please….
a whopping -3.2% since 1970. If you started trading it 10 years agao, you’d be at -67% and 5 years ago almost -30%.
I suppose the results would be different (maybe better…maybe not) if you data mined for some optimal exit and stop parameters…but please…
Go to random.org, pull up the coin flipper. You’d be a hell of a lot better off. The only thing that should be projected from this chart is vomit.
August 6th, 2009 at 1:26 pm
Deflation or inflation? Great Depression II or Stagflation II? This is the major argument being discussed right now on blogs like this which will be answered in time. In the end some of us will be wrong, some of us will be right.
August 6th, 2009 at 1:28 pm
I think Abby Joseph Cohen just rang the top bell. My conspiracy theory(not necessary to confirm the contrarian implications of her pronouncement) is that Goldman Sachs uses her as a secret messenger to the insiders to do the opposite of what she says, and this is a coded signal that Goldman is about to let the bottom drop out. This also gets Joe Retail to pick up the tab by acting as a pied piper for less savvy investors.
If we were to get to S&P 1050, it would be too easy, most would know to take profits.
Already 10% short, about to get more so. Hoping for more rally.
{posted on another thread originally.}
August 6th, 2009 at 1:28 pm
PS
Sorry..I only ran the numbers up July. It’s been a while since I updated my data. So…tack on that last month of irrational exuberance, and it’s not quite as bad as I stated (to be fair). But still….
August 6th, 2009 at 1:30 pm
Jdamon33 @ 12:09
“…I told you guys to short those 3x inverse ETF’s … a while ago… count how much money you would have made had you followed this advice….”
I never doubted that the advice was good. But which broker lets you short them? My broker won’t even let me short XLF.
August 6th, 2009 at 1:32 pm
scott simpson @ 1:28
“My conspiracy theory …is that Goldman Sachs uses [AJC] as a secret messenger to the insiders to do the opposite of what she says, and this is a coded signal that Goldman is about to let the bottom drop out”
Funny. But maybe there’s a grain of truth there also.
August 6th, 2009 at 1:33 pm
What was the debt to GDP in 1973? 1930? Now?
August 6th, 2009 at 1:34 pm
“Fascinating pair of charts from Ron Griess of The Chart Store.”
…somehow, someway, we must wean you from putting “fascinating”and “charts” in the same sentence….
B in T
August 6th, 2009 at 1:35 pm
@scott:
This is what I could find on debt to GDP
http://www.chrismartenson.com/blog/crisis-explained-one-chart-debt-gdp/11570
HCF
August 6th, 2009 at 1:41 pm
HCF, that, I think is the best assesment of the situation, and the best answer to Onlooker for Troy’s important question above. Thanks for the link.
August 6th, 2009 at 1:46 pm
I was being somewhat facetious in my post above. There’s no doubt in my mind that the debt and deleveraging is factor number one in our situation. That will weigh on us like a ball and chain for a long time. For me that puts us closer to 1930. But there are some real differences that make it harder to chart the future than to just assume it will play out like ’30-33. The Fed’s actions along with the global dynamics makes it tough to call.
August 6th, 2009 at 1:47 pm
Can we add a line to those charts comparing total $$$ injected into the economy by the Fed?
August 6th, 2009 at 1:47 pm
Entire 19 page report by Deutsche Bank on the underwater homes in 2011 becoming 48% of homeowners can be accessed here: http://contraryriches.blogspot.com/2009/08/look-at-underwater-home-mortgages-50-of.html
August 6th, 2009 at 1:53 pm
HCF– Great link” But I ran the numbers for Onlooker. Rough figures include Federal Debt to GDP only:
1930 = 18%. 1973 = 33%. Now = 90%. What I found interesting on HCF’s link is the conclusion:
“And the choices for reversing this ratio to a manageable level, notwithstanding Paulson’s confusing alphabet soup array of government bailout programs, are quite limited.
Pay the debts down
Default on them
Inflate them away”
Choice #1 ain’t happening.
Choice #2 why default when
Choice #3 totally cleans the slate?
August 6th, 2009 at 1:55 pm
I need someone to run a composite chart of the Red Sox batting stats and pitching rotation to see whether their current struggles mirror their 1978 fade or whether they’re going to be okay and crush the Yankees this year.
Thanks.
August 6th, 2009 at 1:56 pm
DL Says:
August 6th, 2009 at 1:32 pm
Funny. But maybe there’s a grain of truth there also.
reply:
———
Maybe so. Their oil pricing memos became especially aggressive before the collapse and some have said they forecast a continued fall in oil right before the recovery in oil prices. It’s too early to call a pattern, but this is a good one to follow. They’ve been very optimistic on the market recently in other postings.
I’ve heard some rumors about GS shorting gold a lot for late this year and someone bought 122,000 SPY puts (dated later this year) a couple of weeks ago when the price was about $85 or $90 ish.
August 6th, 2009 at 1:57 pm
Those charts don’t jive with what I’m getting from the tea leaves and chicken entrails.
August 6th, 2009 at 2:00 pm
Thanks, investorinpa. Those numbers on prime going underwater by 2011 are shocking.
August 6th, 2009 at 2:00 pm
@Onlooker–For me that puts us closer to 1930.
During the GD, the FED essentially stood by and watched. Neither the FED nor the rest of the world’s central bankers can be accused of that this time.
August 6th, 2009 at 2:03 pm
@ Pat G.
Good points you make… I looked up and found a chart of household debt to GDP on NPR:
http://www.npr.org/blogs/money/2009/02/household_debt_vs_gdp.html
The numbers on the y-axis are different but the trend is the same… scary!
I guess when it comes to our relationship with big brother government, we’re not that different from our distant lower primate cousins: Monkey see, monkey do!
HCF
August 6th, 2009 at 2:07 pm
Pat G.,
Question is, have they gone too far in the other direction?
We shall soon find out.
August 6th, 2009 at 2:08 pm
Marcus Aurelius Says:
August 6th, 2009 at 1:57 pm
Those charts don’t jive with what I’m getting from the tea leaves and chicken entrails.
reply:
———–
I like the new South Park method for professional prognostication. First you build a platform and mark off lots of sections. In each section you write a forecast, such as UP, DOWN, BUY, SELL, … whatever. Build an enclosure wall around the platform perimeter about a foot tall. Then you cut the head off a chicken and put it in the enclosure. It will run around and eventually die. The future is foretold where the chicken finally dies. Foolproof.
August 6th, 2009 at 2:10 pm
@HCF “Monkey see, monkey do!”–Indeed. That makes the combo of Federal and household debt to GDP around 200% which means something’s going to have to give soon.
August 6th, 2009 at 2:10 pm
@ Jdamon33:
Isn’t FAS the opposite of FAZ? Why short the shorts? Why not just buy the inverse of the inverse?
Did that make sense?
August 6th, 2009 at 2:12 pm
I’m wondering if GS has someone on the inside at the BLS and is setting up the market for one hell of a short squeeze.
August 6th, 2009 at 2:14 pm
OkieLawyer @ 2:10
“shorting the shorts” is indeed good advice if you can find a broker that will let you do it.
August 6th, 2009 at 2:38 pm
Transor Z Says:
August 6th, 2009 at 1:55 pm
I need someone to run a composite chart of the Red Sox batting stats and pitching rotation to see whether their current struggles mirror their 1978 fade or whether they’re going to be okay and crush the Yankees this year.
————————-
LOL
Don’t know about that ….but my MLB sw is still running over 60% winners….that works out well when there is no spread and you don’t play over around -140 moneyline….
Todays picks:
FLA
PHI
PIT
LAD
MIN…moneyline too rich…
BAL
CWS
TEX
NYY…again…bad moneyline
SEA
August 6th, 2009 at 2:38 pm
I-Man is in a serious head scratcher over here looking at an intraday USO chart…
karen?
August 6th, 2009 at 2:41 pm
Okie,
You want (if you can) to short the shorts because they go down a TON more than the FAS will go up over time. It is called 3X inverse ETF “decay”. It is a real mathematical phonomenon and you can almost guarentee that over a long period of time, you won’t lose $.
August 6th, 2009 at 2:41 pm
Sorry but in 93-64 the market tank while inflation went from 3% to 12%. Market took off when inflation receded until it took off again.
Nothing like today.
August 6th, 2009 at 2:42 pm
I’ve been spending a fair amount of time studying the relation between 10yr rates and S&P. I’m not a finance guy so its rudimentary at best.
I think DH and others here are onto something with the 4% worry wall….
August 6th, 2009 at 2:43 pm
Sorry but in 93-64
—-
73-74. God knows how I did that!
August 6th, 2009 at 2:44 pm
“That makes the combo of Federal and household debt to GDP around 200% which means something’s going to have to give soon.”
I thought it was currently about 375%.
August 6th, 2009 at 2:47 pm
The 375% is Gov + Corp + Household debt.
August 6th, 2009 at 2:54 pm
Ah yes, forgot the corp part. Thanks
August 6th, 2009 at 2:58 pm
fwiw
no current longs here with the exception of a small UUP position 5% of portfolio currently.
30% short in various ways/markets, all the rest cash.
will buy more shorts if/when we see 9700 on the DOW or when more momentum starts on the downside.
scott simpson,
interesting and funny theory re: joseph cohen
as for the AIG performance over the last week, that’s at least worth a laugh
good luck to all
August 6th, 2009 at 3:22 pm
ben22,
So far the market has behaved more or less as you thought it might.
At this point, I’m sure not one to bet on any big rallies going into September.
I did put on a bear spread (last Friday) using August QQQQ call options (although not a huge position).
August 6th, 2009 at 3:30 pm
I-Man.. just wait.. crude can’t be going back to $100 (can it?) so, it’s got to break and fall (right?) Look at crude oil and AIG through the same glasses.
August 6th, 2009 at 3:31 pm
.
Jeebus, Barry. Enough.
Please call a halt to comparisons of previous recessions to this recession, when said comparison doesn’t consider the pattern of the Fed funds rate (FFR) in the two recessions?
To the point: the 73-74 market died as the FFR was rising. The recovery came as the FFR was falling.
The 07-09 market died as the FFR was falling to historic lows.
The market continued to fall as the FFR hit bottom and the Fed moved to quantitative easing and every other giveaway and bailout and guarantee it could throw at the big financial firms. There is no FFR cut available to goose the recovery, and there is a hell of a lot of aid to unwind.
So, please, make the comparisons worthy of The Big Picture or just don’t do them.
.
August 6th, 2009 at 3:35 pm
Yeah, we’ll see $100 crude oil during O’s first term.
August 6th, 2009 at 3:45 pm
uso and $wtic exhibiting high wave candles.. a group of which can foretell a turn.. you can’t tell me we can turn much farther up here.. unless there is a black swan event, of course.
August 6th, 2009 at 3:47 pm
sorry, should have posted the ino crude chart that i used as an updated $wtic isn’t available at stockcharts till later.
http://quotes.ino.com/chart/?s=NYMEX_CL.U09.E&v=d1&w=1&t=c&a=50
August 6th, 2009 at 3:58 pm
@karen
K…you’re spot on there…
DL, though, will be RIGHT (within 1st term)…
August 6th, 2009 at 4:02 pm
@ dead hobo
DL Says:
August 6th, 2009 at 1:32 pm
Funny. But maybe there’s a grain of truth there also.
reply:
———
Maybe so. Their oil pricing memos became especially aggressive before the collapse and some have said they forecast a continued fall in oil right before the recovery in oil prices. It’s too early to call a pattern, but this is a good one to follow. They’ve been very optimistic on the market recently in other postings.
I’ve heard some rumors about GS shorting gold a lot for late this year and someone bought 122,000 SPY puts (dated later this year) a couple of weeks ago when the price was about $85 or $90 ish.
—–
Could it possibly be GS and the other big banks getting out of long positions amidst the euphoria of the market only to be selling to the average joe who is trying to get back in after missing out on a 50% rally?
(posted previously on another thread)
August 6th, 2009 at 4:04 pm
IOW
I-Man…
You may YET get your Island Reversal (a few days late)
August 6th, 2009 at 4:07 pm
DL,
We’ll see if I continue to be right. One thing I have been so dead wrong on is oil but fortunately I never had an investment one way or the other in it. I really didn’t think it would stay up here this long. I see above your bullish over the next few years, any near term thoughs? I find it pretty interesting we are at 71 or so given the fact that at the beg. of this year I remember that a lot of oil countries needed to be in that range for govt budgets to work.
Just feeling a better probability at least in the near term of being on the short side in stocks and long the dollar.
This site has served as a pretty good short term indicator at times in the comment section over the last few years, noticed an awful lot of people making bolder calls for 1200 or in that range lately, more bulls in general as well coupled with an 88% on the DSI and I like where I’m at right now. It’s not a Steve Barry strategy though, if I make decent profits I’ll take em.
I think when I’m older I’ll look back at this time as one of the best times to be trading ever.
August 6th, 2009 at 4:09 pm
@mcHappy
I think you gotta be careful in reading into those 122,000 SPY puts at 85 & 90…
I said at the time it sounded more like an insurance policy…A chance to bid this puppy up to see where it will go, but have your bases covered…
It’s UNDER 900 that people really need to start getting nervous…
Funny thing is…at this point it’s a long fall to 900…Buyers on THAT dip may end up getting crushed…
August 6th, 2009 at 4:11 pm
I’m hanging in there with SCO… (no pun intended)
Although, today’s tape was a little disconcerting… there was some big positioning going on there… very hard to read.
I agree with you on the daily TF… it aint looking good for USO.
I’m going to be in the desert for the next few days, so I wont have any access to markets. I went ahead and placed a stop a stones throw below the recent lows, and I’m going to let it ride.
Hopefully, I dont get whipsawed out on a spike before the fade… but whats a dread to do? Obviously, if we get another colossal squeeze tomorrow on a “good” number… I’ll be happy to get stopped out, but not if the former occurs.
And alas, CV, its not a real “island” anymore, on account of the long shadows that filled the gap, but if this truly is a lower high for oil, I’ll take it, and daydream about that island reversal I’ll get one of these days…
August 6th, 2009 at 4:11 pm
karen,
what do you think of the dollar right now?
August 6th, 2009 at 4:13 pm
@cv,
I think it was hobo that brought up those puts not mcHappy, in any event, I agree with you, that looks much more like an insurance trade than a one way bet imho.
August 6th, 2009 at 4:15 pm
benn22,
speaking of Steve Barry, anyone heard from him lately? He is gone very silent during this market rally. I hope everything is OK.
August 6th, 2009 at 4:18 pm
jdamon,
I’m sure he’s fine, I think he said he does a lot of fantasy baseball in the summertime. Seeing as how the season is drawing close to the end, he might be in one of those extra serious leagues and that’s his focus? Not really sure. I suppose it’s possible he’s changed his mind about things but I doubt it. It’s not as if any of the things he was talking about on a regular basis have gotten any better.
What did you end up doing with those muni’s your broker was suggesting?
August 6th, 2009 at 4:19 pm
Christopher Says:
August 6th, 2009 at 2:42 pm
I’ve been spending a fair amount of time studying the relation between 10yr rates and S&P…. the 4% worry wall….
reply:
——–
Thank you for noticing. First, don’t worry about relationships unless you can explain them using some kind of reasoning outside of chartology. For the sake of this reply, lets use the phrase ‘fundamental analysis’ as the technique that actually tries to figure out how things interact and affect each other.
In a normal market, some charts are really graphic representations of a fundamental relationship. Fusion is probably an example. An analog used in manufacturing is Statistical Process Control. Basic educated thinking is another way to figure things out.
About the 10 year and 4%, My personal guess is that it is a high point that would make policy makers believe that mortgage money will soon be too high to be conducive to lending. To remedy this, debt will be purchased and/or the stock market wil be tanked via Fed removal of liquidity.
Debt buying is potentially inflationary because a lot of cash is injected into the economy. Normal Philips curve inflation is a historical curiosity, though. Asset inflation is the new elephant that, unfortunately, the Fed has agreed to ignore because of some idiotic analysis that says they can. So, if cash goes to the stock market or oil, it is just ‘market forces’ if prices rise.
To come to the point, I think 4% is the line they drew and massive shitstorms of liquidity will be unleashed to see that it holds. All this to sell a few houses. Who cares about the dislocations? Not the Fed.
August 6th, 2009 at 4:20 pm
jdamon,
that said, you and I both know that holding QID all year has been serious pain. ouch.
August 6th, 2009 at 4:22 pm
ben, barring some unforeseen event, i think yesterday was the low.. but i’d really like to see another up day.. prior to this, i thot last week marked a low and we’d see a stronger dollar this week.. that was not the case, however.
August 6th, 2009 at 4:22 pm
Today, Richard Suttmeier on M’Ville says Market tops on Aug 12, ’09 and then goes down 20%. He’s been a fairly good forecaster. FWIW….
August 6th, 2009 at 4:24 pm
@ben
hobo was the one who pointed it out…you’re right…
I remember responding that day to that post suggesting the “insurance policy” feel to it…
Hope you’re having fun in Chi-town :-)
Just got out here to the farm…Gotta go mow the lawn…Nice rains this week…greened & lushed up the grass a little…Fired up the pool filter too…So for the next 3 hours I’m mowin then soakin’ :-)…
August 6th, 2009 at 4:31 pm
karen,
we are on the same page on all accounts on the dollar then re your 4:22. Just curious where you stood. That will spell trouble for stocks if that rally starts, assuming that relationship is still on, which I believe it is.
@nojak,
I tried using suttmeier’s service for a while but it was very difficult to follow, you are right though, he’s made some real good calls since this all started, big picture calls that is, some of his short term trading calls were not nearly as good.
@cvienne,
this is my first real stay here and I must say, this is one great city. having a really nice time but have been walking all day so taking a little break right now to rest our feet. it’s very clean too. my wife and I caught a great jazz band today for free in Millenium Park, the weather is great and the food is wonderful.
August 6th, 2009 at 4:35 pm
cvienne Says:
August 6th, 2009 at 4:09 pm
I think you gotta be careful in reading into those 122,000 SPY puts at 85 & 90…
I said at the time it sounded more like an insurance policy
reply:
———
That’s the pollyanna view. The opportunistic view is that somebody somewhere suspects the market might be pretty low later this year and these puts will be a fine way to tide them over until the next pump.
August 6th, 2009 at 4:40 pm
Incidentally, wouldn’t the exercise of 122,000 SPY puts in the money just blast the stock market into a new record gain for a day? Properly planned, that would be a great two-fer.
August 6th, 2009 at 4:41 pm
hobo,
you may be right but cvienne is anything but a pollyanna, not even close. Wasn’t a massive call buy done on or around that same day or am I wrong about that?
August 6th, 2009 at 4:42 pm
Re the blastoff … I take it back. It would just be a cash settlement on the side.
August 6th, 2009 at 4:45 pm
ben22 Says:
August 6th, 2009 at 4:41 pm
hobo,
you may be right but cvienne is anything but a pollyanna, not even close. Wasn’t a massive call buy done on or around that same day or am I wrong about that?
reply:
——–
Beats me. Let’s wait until Dec 31 and settle up on this little puzzlement. The underlying question asks if the market is being gamed and who might be doing it. This answer should be obvious by the end of the year unless the pump is still going on while the economy still sucks.
August 6th, 2009 at 4:47 pm
ben22 @ 4:07
“I see above your bullish over the next few years, any near-term thoughts?”
Short term thoughts on oil? If the SPX makes a significant move in either direction, oil will follow.
My betting, FWIW (probably not much), is that we’ll get a small rally in SPX and crude oil during op-ex week, then a decline into September and October. Those months (Sep and Oct) tend to be “seasonally weak”, and we’ve also got Congress deciding some major issues during that time frame.
August 6th, 2009 at 6:02 pm
so, ben, you are in chicago? ! I’ve never been except on a cancelled connection due to weather and stuck in admirals club (phrase dropping for andy) on my way to aspen (more for andy). ha ha.*
i have heard only the most stellar reports of chicago from natives as well as californians.. Oprah lives there afterall… : )
*it only happened once and i was on my way with family to stay for free in a tiny condominium. 4 of us sleeping on the living room floor…
August 6th, 2009 at 6:37 pm
OK…
The mowing is done…Now it’s time to jump in the pool…(or as Fred Flintsone would put it “pewel”)…
@hobo…
I’m definitely not pollyanna…I’ve said all along that I think this puppy is going down “prima o poi” (Italian phrase for ‘sooner or later”)…I think we take out the March lows in the end…
Notwithstanding…catching a TOP (interim or otherwise) is tricky…The likes of Andy T have identified the 1008-1014 range as a possible top (and I’m on board with that)…Not to hedge, but one has to be vigilant of the 1054-1060 range as well, and there are possibly others…
My point regarding those 122k puts as an “insurance policy” was simply because when you see long datred puts (I think they were for January 2010 – if I recall) AT THE MONEY…It’s often an insurance policy…There is enough time to either exit those if a clear trend is subsequently established, OR…one can average & bail…
What I’m saying is that I’m thinking the position was insurance for a BIG CHUNK of share buying (which ended up to be the case as you have witnessed the recent rally)…
Back at the March lows, there was the same phenomenon (but at the AT THE MONEY 65 & 70 strikes for the June contracts)…and think…the premiums were MUCH higher back then…
FWIW…I own some January 2010 105 calls on the TLT (most likely, a proxy for a long dollar, long Treasury, short equity, position)…Since I own it, the activity is in my face every day on the screen…About a week ago, I saw a 6,500 contract purchase on that (and that’s 15 out of the money right now)…Now THAT was a bold move if you ask me (but it’s paying off nicely so far because whoever purchased those contracts has a 100% gain already…btw, so do I)…
Anyway – I’ve been doing a lot more of THAT kind of stuff lately (buying 2010 & 2011 PUTS while the vix is low)…If there happens to be another market meltdown, I don’t think puts are going to be this cheap for quite awhile…So I’d rather own those, than levered etf’s (since I can’t tell which day the trap door will actually get pulled out)…
August 6th, 2009 at 6:41 pm
here something for you to do Karen when you decide to visit Chicago-
go to a Bear’s game at Soldier’s Field- it is right off Lake Michigan- pretty cool- but trust me- you will freeze your ass off
August 6th, 2009 at 7:14 pm
But this time its different, right ?
I mean its always different so why shouldn’t it be different this time ?
August 6th, 2009 at 7:37 pm
karen,
yep, in chicago, just back from another great meal here, this is the first time I’ve ever been, so far, I’m impressed, it’s a great city, if you ever get a chance to go I would reccomend it.
August 6th, 2009 at 9:38 pm
Today was the most bullish day I have seen in 15 months in stocks. SPX stayed on support, and the market-based sentiment I follow (2CS plus two others) finally jumped up to a reasonable level from being deeply depressed. My guess is that shorts and side-lined players flush with cash are being forced into the stock market (for very different reasons!) above 1000 spx.
There is still plenty of overhead sentiment room and any and all pullbacks are being bought
August 6th, 2009 at 10:07 pm
great pairs trade, short sso and short sds.
August 7th, 2009 at 12:06 am
hrux,
you could be correct. I’m curious, what sentiment are you following exactly? I find the DSI on stocks, but especially on the dollar more than valid right now. we’ve got lower bulls on the dollar right now than we did last July. Look out dollar bears imo.
August 7th, 2009 at 1:39 am
@Christopher
Here’s a weekly chart of the 10 year bond with fibo’s.
http://www.charthub.com/images/2009/08/07/10_Year_Bond_US.png
current range 3.86 to 3.29
Chartology in full effect :)
August 7th, 2009 at 9:23 am
Thanks, Barry! These charts are very fun and thought provoking. Gotta imagine that mass psychology for such large-scale events has to be a pattern … the question is how similar in detail ;)
August 7th, 2009 at 2:18 pm
[...] If human behavior operates in patterns, then this is a compelling analysis to consider. (Source: The Big Picture via The Chart [...]