Flatlining since 9:40 am
By Barry Ritholtz - August 17th, 2009, 4:00PM
If you missed the first 10 minutes of trading, you missed the entire day!
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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 17th, 2009 at 4:22 pm
continuation of correction tomorrow? nothing major unless we go under 950, no?
August 17th, 2009 at 4:25 pm
It was a little surreal wasnt it?
The phrase “Never short a dull market” comes to mind for some reason.
Of course… its all about tomorrow isnt it?
August 17th, 2009 at 4:27 pm
Barry:
I know you don’t want to be accused of libel (or is it slander on the net?), but what do you think was going on?
You don’t need to name names. We can tell who you refer to. Bet ZH has some interesting comments.
August 17th, 2009 at 4:29 pm
Was short overnight and went flat about 9.45. Easy money.
August 17th, 2009 at 4:34 pm
So no pump today at the end of day, heh ? Or maybe there was an attempt but it got drowned by the strong volume. Finally, volume. Finally.
I have never quite accepted the MSM explanations of end of the day shenanigans. Why would the mutual funds wait till the last 15 minutes to start buying ? And that much ?
August 17th, 2009 at 4:39 pm
What’s this about?
http://www.ritholtz.com/blog/2009/08/early-morning-look-broad-sell-off-this-morning/
This post is password protected. To view it please enter your password below:
____________________________
What password? Who gets access? Just wondering, as it isn’t clear at all.
~~~
BR: That is a mockup I did of a friend’s research product for a large wqell known trading house.
I would love to offer his work in the Think Tank, but we keep encountering compliance issues.
I thought if we could show the compliance folks what it looked like, that might hasten the process along.
August 17th, 2009 at 4:51 pm
that flatline- pretty much going to look the same for consumer purchases- the economy will deleverage dragging the Fed along for the ride- the Fed will have done nothing but ensure a long slow brutal economy for years to come- tripping over dead wood that should have been cleared away-
the bankers- greedy, inept and small minded as they are- will be hanging onto the patronage they recieve from the the Fed and USG-
the current administration is losing all credibility w/ the American people because you cannot run as a populist but protect the very institutions who gamed the whole country if not the world-
interesting times ahead
August 17th, 2009 at 5:04 pm
@ ahab
Good points!! But according to Pisani, “it’s a buying opportunity”! Maybe when he retires from CNBC he can get a job working for the NAR.
August 17th, 2009 at 5:31 pm
Big end-of-day spike in TZA volume, but not much in the way of a price change. Perhaps those that bought in the morning were selling into the eager hands of those believing that tomorrow will be more of the same?
August 17th, 2009 at 5:33 pm
well pat- during the GD- people lost money during the crash sure- but the geniuses buying on the dips got crushed in 1932- after a few too many double downs you run out of cash no matter how much you started with-
CNBC is the rah rah section for the “rock star” CEO’s and the “celebrity” traders making money manipualting the market whether it be DJIA or commodities such as oil-
they could care less about the plight of regular folk – with a hat tip to Donny Deutsche doing the the “Big Idea” where people would go on the show talking about their incredible new idea such as women’s panties with “shocking phrases” stiched in the waist band- with the hope they could get on the “get rich” train- behaviour so expected of Americans
nothing useful- just stupid shit for a bored populace
August 17th, 2009 at 5:40 pm
So that we can put to rest anyone trying to claim that bearish sentiment is still out there, from tonights EWI update, and then remember all the headlines you’ve been reading about the worst being behind us, the recession is over, we’ve avoided another depression, etc:
8/3 and 8/4 DSI recorded back to back readings of 88% bulls, highest extreme since 10/2007.
while the bearish respondents is now the lowest since the week after the 10/2007 all-time high.
AAII of individual investors shows the highest level of bulls since April/early May 2008.
ISE sentiment Index of 224 is the most extreme reading in three and half years, if smoothed out over a 10-day average to help identify outliers, this shows the highest level since July 2007 when the Value Line Index of secondary stocks topped.
The bulls are going to have to put this argument to bed, at least for a little while.
August 17th, 2009 at 5:48 pm
b22-
dude- just buy some stock- no matter what stock- just blindly pick anything- and sit back and enjoy those double digit returns-
it can’t be easier than that- and don’t let it bother you that previous high sentiment presaged a brutal market sell off-
it’s different this time- i promise
August 17th, 2009 at 5:54 pm
ahab,
I know, what am I thinking.
August 17th, 2009 at 5:55 pm
Ben,
Are there any measures of the “durability” of sentiment? What I am imagining is a measure of how a change in these sentiment readings changes with price action(or some other variable) in the market. I say this because while bullish sentiment might be the same now as these turning points, the reality of the situation is different if today a 10 point drop in the S&P leads to a 50% bullish reading vs. needing a 100 point drop to do the same at some other point in time. Not sure if that’s clear…Basically I’m wondering if there is a measure of whether bulls are looking to bail or whether they’re looking to buy the dips…
August 17th, 2009 at 6:27 pm
It’s good to see the market finally following the economy and “leveling off”. lol
August 17th, 2009 at 6:27 pm
@spoonman,
really good points there. The only way I think you can see what you are looking for is overlapping the DSI with the portfolio allocation survey to see what they are doing, not just what they are saying. The most recent example that I can think of that shows this was back in March when you had extremely low bullish readings and then decades high allocation to cash, one of the many things I used to start getting long, on the October high I believe mutual funds had all time record lows in cash and record highs allocated to stocks.
What I do know is that while these more extreme bullish or bearish sentiment readings while not exact in the past, they at least represented a coming change in the direction of equities up or down. That’s not to say we can’t come down and test say 920-925 on the S&P just to see us push above the highs from a few weeks ago breaking through the 38.2% retrace from the lows.
A hardcore follower of socionomics that believes in social mood driving the markets would probably tell you that the price action on the index isn’t driving the social mood, it’s the social mood driving the price action on the index.
I’ve tried to warn about that on here but it seems like I’m not getting it out right. When I look out there today I’m seeing that the trend in social mood seems to be changing again from optimism to fear and anger. Just my own observation after talking with almost 100 households about personal finance in the last 60-70 days or so and seeing certain things that I read or in the media. This seems to be reflected in the continued bad data coming out of consumer land, despite all the “other signs of improvement in the economy” as well as in the recent dip again in the consumer confidence survey. Sadly, while there have been many changes in the last 18 months, our reliance on a consumer based economy wasn’t one of them.
August 17th, 2009 at 6:45 pm
I guess the PPT didn’t show up for work today.
Fortunately, the WaveCatcher model portfolio (StrategicGrowthModel) was fully hedged going into today’s open.
I expect this is just the beginning of the topping action which will occur over several more weeks and perhaps months. Assuming that the market will eventually test the March lows (and I do) there will be plenty of opportunities to get short.
August 17th, 2009 at 6:45 pm
-200 in 10 mins then flat = Plunge Protection Team LOL
Maybe?
August 17th, 2009 at 6:57 pm
ben22 : Re anger
Count me in one of those who have “anger” more than “pessimism”. And I am fortunate to still have a job. The anger is because the future of this country is being ignored / robbed. This is not the change I voted for.
I am one of those people who feel that whatever “recovery” is happening is happening only for the politically well connected – like Wall St execs and auto unions. All the problems we have had are still there and left unattended – like Social Security for example. Was healthcare really top priority ? Over all the fiscal issues we have ?
FWIW. I am net short now for the trade. So if my anger brings down the market :-) I will become less angry in near future.
August 17th, 2009 at 7:09 pm
Got my 979 print today, let’s see what happens tomorrow. I completely pulled that number out of my ass, but i was looking for a pull back and then back up on dip buying and renewed demand to 1062 in a long drawn out confirmation of the top of this Bear Market Rally. After that, it’s on down the fall part deux to S&P 474, beginnining October. (Mannwich might be right on the early start, however). Thinking of shorting the SSO or UPRO until President’s day, but I don’t know if I’m allowed. I just moved a ton of cash into an internet bank account that was advertising 3%APY for the first 3 months. . . Should be nice come Christmas (if I still have a job). Now have to make sure I’m out of everything else risky before this top really does blow off! Interesting times, indeed!
August 17th, 2009 at 7:20 pm
Is this OpEx related?
August 17th, 2009 at 7:25 pm
Zero Hedge’s comment was better than I thought it would be:
http://www.zerohedge.com/article/spy-tag-ends
August 17th, 2009 at 7:51 pm
Ben,
I find the socionomic thesis provocative, but I’m not ready to fully buy into the hardcore version of the story – surely social mood is driven by the fundamentals on some level. It seems more likely to me that the prevailing social mood will tend to dampen the effects of some fundamental factors and amplify others, an effect which would feedback on itself. I thought that you don’t necessarily see sentiment lead market action, but rather sentiment tends to “saturate” in one direction or the other, then once the market moves, sentiment will follow. I haven’t studied this as closely as you or Barry, obviously, but that’s how it appears to work to me.
August 17th, 2009 at 8:18 pm
spoonman,
probably not a good idea at all to base your entire thesis off sentiment, just one tool to help you get a sense of direction, if the fundamentals drive markets imo that would not happen until the fundamental trend is identified by the many, not the few, so when these extremes hit it’s really important to pay attention to them because in the early going I think social mood determines the next trend, the thought that the current fundamentals will continue might then help push that trend to an extreme (see any bubble) by the time EVERYONE sees it. While I’m using figures above to make a point, it isn’t the only reason I have no longs right now but the dollar long I’m holding. If you are really interested in socionomics, here is a starting point.
http://www.amazon.com/Prechters-Perspective-2004-Robert-Prechter/dp/0932750613
August 17th, 2009 at 8:20 pm
@spoonman,
Are you a Soundgarden fan?
August 17th, 2009 at 8:23 pm
and judging by all the comments I’m hearing now from mm’s, if they do what they are saying this is going to end up being a buy the dip event if we trend another 25-30 pts down from here.
August 17th, 2009 at 8:50 pm
Ben,
Thanks for the book rec, I am definitely intrigued by the socionomic thesis and I will check it out. What you said about fundamentals not mattering until the herd recognizes them makes sense(and would explain why savvy fundamentals guys like Jim Rogers are “always early”), but there have to be real constraints to how delusional crowds can be, right? Maybe not. I started my interest in markets by reading the Austrian economists, who I still subscribe to, but one thing I think that many Austrians have gotten wrong is the source of credit creation. Almost by definition they tend to be anti-fed(and fractional reserve banking) and think that the business cycle would disappear if we had a gold standard(which is empirically untrue). Stephen Keen’s article on credit creation made me question that whole story(credit cavaliers), but then the question is, what drives the expansion and contraction of credit? Keen has his own guesses, but I think maybe socionomics provides a better answer. Maybe credit expansion(and contraction?) is a function of social mood. I still think the Austrian story of the effects of credit expansion on the real economy is correct(misallocation of capital, etc), but socionomics provides a better explanation of the origins rather than the traditional libertarian bad guy of interventionist government agencies. Governments tend to act under consensus and therefore embody the prevailing social mood, so they tend to make some of the biggest screw ups, but they don’t have to be alone in that. Not sure what the solution is for that though.
And yes, I am a huge fan. Superunknown has to be one of my favorite albums of all time. Of course, people always say this about whatever music came out when they were ~7-10th grade, as can be seen by the fact that people actually like music from the ’80′s(no offense meant), but I really think it is an all time great album. I use the handle because that was the song I happened to be listening to the first time I ever had to create an online name for myself and I just kept using it.
That turned kind of rambling and OT, sorry Barry.
August 17th, 2009 at 8:56 pm
@spoon,
One more book rec then for you:
http://www.amazon.com/Extraordinary-Popular-Delusions-Madness-Crowds/dp/1604594411/ref=sr_1_1?ie=UTF8&qid=1250556888&sr=8-1
and, lol, totally agree on the band thing, pearl jam for me.
August 17th, 2009 at 9:00 pm
Ben,
I have heard of that book so many times, I just have yet to find the time to pick it up and read it. Two more weeks of summer left…my goal will be to have them both read by the end of the summer.
August 17th, 2009 at 9:03 pm
@ben22
Go back to the “Look out below thread”
I’ve got some interesting new geometry to apply to the lingering PHI effect…
August 17th, 2009 at 9:09 pm
When I say that there have to be fundamental limits, I’m thinking of the insight of von Mises that no matter how much everyone wants the boom to go on, eventually you run out of resources. Oil last year, for example. Eventually it got bid up so high on the back of leverage that things started to break. That is the Austrian explanation for why credit expansion has to end eventually. I don’t think that social mood can overcome those sorts of barriers. Those sorts of things have to be fundamental shapers of social mood, not the other way around, I think.
August 17th, 2009 at 9:27 pm
Where was fictional “Plung Protection Team” ?
August 17th, 2009 at 9:43 pm
the ppt does exist, and I believe there is proof of that, the idea that they have control though is fictional.
August 17th, 2009 at 9:46 pm
Ben,
What are “mm’s”?
August 17th, 2009 at 10:26 pm
spoonman: what are you refering to ?
August 17th, 2009 at 10:34 pm
ben22 @ 8:23
“and judging by all the comments I’m hearing now from mm’s”
who/what are mm’s?
August 17th, 2009 at 11:07 pm
Money Managers.
August 17th, 2009 at 11:12 pm
ah, thanks…brain fart…all I could think of was market makers, but that didn’t make any sense
August 18th, 2009 at 12:19 am
Ahhh…ben the two of us need look no more. Rats!
August 18th, 2009 at 12:37 am
Vanguard Cuts Access to Stock Funds as Investors React to Rally
“Investors are gaining faith in the stock market and earmarking money to these funds,”
Ah yes, the incredible timing of the retail investor, AKA dumb money. It’s really unfortunate.
August 18th, 2009 at 8:48 am
@spoon,
manny got it right, money managers.
kmikev,
nice,
@OT,
that should be of no surprise given the sentiment figures I listed above. Anecdotal but I had more calls from clients to buy equity earlier in this rally. It’s getting tired. People buying now are truly late to the party. Vanguard has done a good job getting the word out that it’s time to buy and hold again, and after all, with index funds being so cheap, how can you lose? (snark)
(Don’t want to bash Vanguard though, great company, and what I would advise for a do-it-yourselfer that doesn’t want to trade)