Today we will get a real test for whether the recent pullback is merely a buying opportunity, or the start of something more serious.

- Shanghai shares fall the most in 9 months, hitting a 2-month low;
- Nikkei Index fell 3.1%;
- HK shares post biggest drop in 4-½ months;
- Hang Seng falls 3.6%;
- Oil, coal, metals stocks hit by lower commodity prices;
- Singapore dropped 3.2%.

Here is what the Shanghai Index looked like prior to today’s fall:

shanghai1

chart courtesy of Investech

US Futures are down significantly:

817-futues

Asian bourses fall:

asia-indices

Category: 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.

174 Responses to “Look Out Below”

  1. montyhigh says:

    Nikkei down 3%, Japan GDP up 3.7%… What Gives?

    http://finance.yahoo.com/news/Japans-economy-rebounds-in-2Q-apf-2340371503.html?x=0&sec=topStories&pos=2&asset=&ccode=

    If the USA economy grew by 3.7%, I don’t think the S&P would be down.

    MontyHigh

  2. dead hobo says:

    To me, this looks like a couple of things. Both have in common that the fall in everything at the same time means that a coordinated worls wide effort to drain central bank injected is beginning.

    1) The Fed has cajoled the rest of the central banks to help lower rates one more time to boost housing by crashing not only the US stock market, but all markets everywhere in everything simultaneously. This, probably. is not, the ‘big one’. It’s just the prelude to the last pump before excessive central bank liquidity is removed world wide.

    2) It seems ludicrous for the Fed to pull the rug out one last time in a terminal way. This is only a ‘last call’. The S&P will drop to maybe 850. We will see one last pump, and then, late this year, the liquidity driven aspects of our newest asset bubble will be removed. At that point, the bets for a bottom will be worth making.

  3. Bruce in Tn says:

    Well, maybe the problem is we should start a cash for clunkers program to jump start the industry…what could go wrong with that?

    http://www.foxnews.com/politics/2009/08/16/auto-dealers-paid-just-percent-clunkers-claims-congressman-says/?test=latestnews

    Auto Dealers Paid for Just 2 Percent of ‘Clunkers’ Claims, Congressman Says

    ‘Rep. Joe Sestak says only 2 percent of claims have been paid and that four of every five applications have been “rejected for minor oversight.” ‘

    …..But when the recession is over, our GDP will have a substantial pop…and people are just lining up early, right…er…

    http://www.hussmanfunds.com/wmc/wmc090817.htm

    “One of the things to notice immediately is that because of demographics and other factors, projected 10-year growth in potential GDP has never been lower. This is not based on credit conditions or other prevailing concerns related to the recent economic downturn. Rather, it is a structural feature of the U.S. economy here, and has important implications for the sort of economic growth we should expect in the decade ahead.”

    Well, don’t worry, just take your kids out tonight and have a good meal. Surely spending patterns will allow eating out on a frequent basis…er…

    http://www.usatoday.com/money/industries/food/2009-08-16-restaurants-kids-eat-free-deals_N.htm?loc=interstitialskip

    By Bruce Horovitz, USA TODAY
    The battered restaurant industry is about to go wide on a risky tactic to nudge cash-strapped parents to take the family out for grub: Kids eat free.
    Monday, IHOP will unveil plans to offer free kids meals seven nights a week for the next month.

    IHOP’s move, unprecedented by a national restaurant chain, is another signal of just how tough times are in the $566 billion restaurant industry. Restaurant operators have reported customer traffic declines for a staggering 22 consecutive months, the National Restaurant Association reports. Families are staying home: Visits from families with kids were down 5% for the year ended in June, NPD Group says.

  4. Andy T says:

    This little “rumble” seems a bit more serious and different than the others….

  5. zell says:

    It does seem more serious. Fear of the retailers and consumer. James Stack reiterated his February new bull market call on Friday, now undermined by his charting.
    The Fed and the Treasury are at the end of the line sooner or later their balloon starts to leak and gravity will take hold. To mix metaphors, the shaky canal of New Orleans couldn’t handle the liquidity pumped in. Without a sound economic structure, liquidity will seek a lower level.
    Next program will be cash for equities; or did they do that already?

  6. ben22 says:

    I agree, AT, looking a little bit more serious this morning. Those that purchased FXP and ZSL last week will get a little reward this morning.

    I think all the economic news that comes out in the next two months will be secondary to information about the consumer including that lagging indicator unemployment. For this to be a buying opportunity the consumer has to come back, (see: go into more debt).

  7. ben22 says:

    take a look at Gold this morning as well.

  8. Mike in Nola says:

    May be too big even for GS to stem.

  9. Mike in Nola says:

    Which brings a related question:

    Have all the allegations about HFT and manipulation, combined with a migration of free capital to other markets which have looked more promising, pushed the US stock markets into either an equal or even following status in influencing the rest of the world? I don’t know the relative sizes, but could it be that the rally here has been partially or wholly a result of following the near doubling bubble in the Chinese other emerging markets?

  10. BG says:

    IMO, what we are seeing now is a direct result of the decision made by the Chinese government about 10 days ago to pull back on additional domestic lending in the Chinese markets. In other words, the Chinese government responsibly took away the punch bowl after their equity markets became frothy. They are trying to stabilize their markets, protect from run-away growth & creating their own bubble.

    (Once upon a time, our Federal Reserve did the same thing before it became so politically connected to the fat-cats on Wall Street and in DC.)

    However, in this case I think it is a China/US power-play. Like others, I am reading this morning that the Chinese are considering the purchase of Mortgages in the US. Very interesting. Hum…..an under-water mortgage which is tied to a piece of real-estate in the United States. To China, that probably looks pretty good compared to holding a bunch of Treasury bonds, which are tied to the promises of a tax cheat.

    China maybe splitting it obligations of the financial needs at home versus the market opportunities presented by crashing real-estate markets here. I think Geithner went begging for help from the Chinese and maybe got it in the form of additional financing. I also read this weekend that the PPIP is now being bounced around again. Two weeks ago, everyone was saying it was dead.

  11. manhattanguy says:

    Game over..correction came earlier than expected.

  12. zorba says:

    BG:
    I am not sure if I would call what Chinese government is doing responsible. They tried to re-inflate the asset bubble by increasing lending by almost an order of magnitude. Things got way out of hand and now they are trying to put the genie back in the bottle.

  13. Mike in Nola says:

    BG:

    Well, the TPIP or whatever the hell it’s called is no great bargain for us. So, the Chinese are only being smart in participating. They certainly have plenty of $’s to play with and make Geithner not look so stupid.

    As to the Chinese bubble pricking, it seems they may already have their own bubble, not only in stocks, but real estate and commodities, and they are like the Fed of the 1920′s where they feared any removal of the punch bowl might have been fatal. It is possible that the Fed of the 1920′s was right.

    OTOH, this might just be like the early part of the great crash, where hikes in the discount rate were counteracted by private lending. By all accounts, there are two camps in the Chinese government fighting it out at the moment, the bubblers and the anti-bubblers. The bubblers may do some end running to try to reflate the bubble and this may not be a straight down event.

    Of course, I’m wrong a lot :)

  14. emmanuel117 says:

    Not good for the Chinese since a sustained correction this early threatens the hallowed 8% GDP target and increases the chances they redouble the credit.

    Panda Put by October? Not so Red?….

  15. BG says:

    Yeah, kinda like we did, huh.

    The US has a different set of problems that does the Chinese. The Chinese are going to do what is best for the Chinese markets. They don’t owe us a damn thing. Their markets are not saddled down with debt rot from the last 25 years and as a result their stimulus worked ~ all too well. Now, they are unwinding that stimulus. They are now doing the things we used to do.

    The Chinese are now doing two things: moderating their markets and investing in areas outside China (i.e. US residential/commercial real-estate) offerring superior returns. They are doing the things that are in the best interest of the China. We are ones who are fucked and only have our own stupid selves to blame. We exploited opportunities of the past and the past is now over! Now, we must deal with it!!

  16. Mike in Nola says:

    emmanuel:

    That’s why I think we may see some swings in policy by the Chinese over the near term as the two camps battle it out and the more conservative camp gets panicked by market breaks like this, thus occasionally loosening the reins in an attempt to generate the mythical soft landing. I think most everyone here agrees that hubris is not limited to western bankers.

    Keep an eye on http://www.mpettis.com for now. He is in Bejing and some of his students and friends have some info on what’s really going on.

  17. mcHAPPY says:

    I’m not buying this as anything more than a correction. It may be a correction of sizeable magnitude however we need another run up after some volatility to suck in the rest of the morons. It almost seems too predictable but I expect things to play out like last year – fall volatility on fear, Christmas recovery on hope, winter crash on reality. This will probably bring about more stimulus talk and the beginning of the eventual demise of the USD. The next rally market/commodity upswing (spring) should result in stagflation and an uprising by the common people. Fear of fall elections and political survival might actually inspire “real” change – if only for the campaigning period.

  18. Mike in Nola says:

    Interesting new post by Michael Pettis on why treasuries are rising: they are being bought by American savers.

  19. ben22 says:

    well, just got my question from last week answered, TALF has been extended, and obviously there are major problems with CRE based on how long they extended focus there.

  20. manhattanguy says:

    @ben22
    GLD will continue to splutter as Dollar gains strength. Last Friday I noted the bearish Harami on the weekly SPX candle chart. This week we test 960.

    @BG
    Agree, I think most economies in Developed (Japan, Europe, Singapore etc) and Developing countries (Brazil, India, China) will recover quicker than U.S. We will be sitting on this “fake recovery” for quite some time.

  21. Bruce N Tennessee says:

    @Ben 22:

    Ben, if you haven’t had a chance to read the Statistical Recovery, Part II, in the Think Tank…I mentioned this last Friday, but the foreclosure rate predictions look to me as though it will be nearly impossible to get this ship off the ground before 2011 at the very earliest…it is worth a look.

    B in T

  22. emmanuel117 says:

    @Mike in Nola:

    Yeah, I’m following Pettis more now that the government has snatched Brad Setser away.

    Another angle that will help the bubble camp is that most of the Party leadership’s family members are on the boards of the top Chinese companies (the media isn’t allowed to mentions this, I think). I’m guessing 3 months of pain in the ol’ retirement portfolio is gonna bring a lot of phonecalls to the Premier’s Office. Can’t let the kids go po’.

  23. constantnormal says:

    The best hope that we have for this *not* being “The Big One” is the plethora of bloggers and pundits either proclaiming or wondering that it is. Maybe a bit of a pullback, to be followed by another rally, but I doubt that things will get “too exciting”. (especially for the large amount of money market cash)

    I am not a proponent of the coming recovery — either local or global, due to the shrinkage in global trade. No way that a recovery can happen without increased levels of business activity, and financial trading activity is not the same thing as business activity.

    I think that it is muddle-through for now. Next month I may change my tune.

  24. cvienne says:

    If you’re holding VERY LARGE positions that have been weighted towards equities for the bulk of ’09…

    …and the equity market has rallied over 50% in a straight line for 5 1/2 months now…

    …and the DOLLAR is making increasingly stronger signals of at least an intermediate bottom (which may last for 6-9 months)…

    If you had ONE TRADE, what do you think you’d be inclined to sell & what do you think you’d be inclined to buy?

    Note: The question IS NOT for day traders…& furthermore I don’t need an answer, the question is rhetorical…

  25. The Curmudgeon says:

    I think DH gets it right. The Fed knows it has to crash the stock markets in order that its money-printing orgy, particularly that part directed at residential real estate, can continue to succeed at reflating prices. Unfortunately for the Chinese, juicing treasuries will likely be at the expense of the dollar, which so long as they stay narrow-range pegged, means their economy continues to bubble. The Chinese need a mild correction now or they’re gonna get a severe one later.

    Of course, they could just quit out-sourcing their monetary policy to the US Federal Reserve, and allow a much wider float, or abandon the peg altogether. IMO, it would help cure a whole lot of what ails both economies.

  26. ben22 says:

    @BNT,

    That letter is sitting in my inbox but I have yet to read it. Those OTB letters have been really good this year, maybe since Mauldin moved out of Rangers stadium he can focus more in the summer time. Thanks for the heads up.

    Seemed like this morning and late last night all the Bloom and CNBC interviews were primarily the “buy the dip crowd”…. were they talking treasuries? lol.

    Probably going to take some recent purchases gains off the table here this morning. 4 is a long way away right now.

  27. ben22 says:

    The Fed knows it has to crash the stock markets in order that its money-printing orgy, particularly that part directed at residential real estate, can continue to succeed at reflating prices

    If they don’t “crash it just right” then there will be no support to continue on this path of reflation and therefore we will finally feel the effects of credit deflation, when it really takes hold, they will not be able to print fast enough. So far, it looks like this is what the consumer wants. Does anyone want to bet on the Fed making the exactly correct moves over the next 6-7 months. They are the group, after all, that got blindsided by round 1.

  28. I-Man says:

    Watch SPX 969… you will have your answer.

    Although a bit remiss at having taken the short risk trade off on Friday to take profits, I-Man is content to watch this one play out a bit.

    My instinct of course is to channel CV and encourage new shorts to “Be Cool.” We dont want to all go piling in and be fuel for the face ripper squeeze. Actually, I am a bit inclined to wait for a pivot reversal at 969ish and possibly get long, because the squeeze is still a high probability.

    I might be enticed to take a day/swing trade shot at SDS on a successful retest of gap support at 47… you know I like my gap support trades…. but only if it retests this morning. If it keeps running higher I wont, if it breaks below 47 when the 10:30 crew shows up I wont.

    The setup would be long SDS, stop a little below this mornings open at 46.80 or so. Only on a successful retest of gap support.

  29. cvienne says:

    @I-Man

    CV is content to let the shorts ride a bit more because the move has the look of a developing mini 5 wave to it…

    I’m more content to lower the “stop out” point from 1014 to 1008 on the other side (at which point at least A LITTLE would be made on that trade)…

    In other news…the UUP took out 23.63…Now if it takes out 23.73, I’ll be VERY happy because it would take out the recent high & AT THE SAME TIME, break out of the downward trendline since last March…

  30. I-Man says:

    I would really like to see the VIX hold up above the upper trendline of the bearish channel (daily TF) before getting fully committed on the short side. We’ll call it 27.

  31. leftback says:

    LB has covered the rest of the shorts but retained a small FXP position with a tight stop. It will certainly be fun to watch, it’s nice to be right, but LB is happy to exit temporarily with a wheelbarrow filled with cash.

    The € will probably find support at $1,40 so we are not going to push the commodity shorts here. This move has worked out much as many here predicted, and we are watching the $ from here. SPX 975 area is the near-term support of interest for now, maybe only a weak knee-jerk rally off the better of these dismal retail earnings reports.

    Might be fun to see last week’s bear-baitin’ tauntin’ bulls return later this week…

  32. Mannwich says:

    I wonder if the Fall in the fall part deux is here and a bit early. Feels a bit “fallish” outside this morning. This certainly feels different to me. Anecdotally, my recent discussion with the wife about the goings on at her company and others with whom I’ve spoken tells me that sentiment is turning. Fear is ratcheting up again. Brown shoots indeed..

  33. cvienne says:

    CV is also welcoming the “Johnny come latelies” to the Jan 2010 “out of the money” TLT calls…

    2nd time in the past 2 weeks CV has caught a DOUBLE on that…

  34. cvienne says:

    2 “months”, I mean

  35. leftback says:

    EUR:USD will probably find support around 1.4025-1.4033 or so, and SPX 975 should hold for now. This last swing was very profitable, and made up for some damage inflicted by prior squeezes.

    LB is thinking that profit-taking at the long end makes TBT the trade du jour…. nice work on TLT calls, CV.

  36. I-Man says:

    It would be an opportune time for a global currency crisis to enter stage left…
    Lot of rumblings in Eastern Europe that be a cause for concern, not really my area of expertise.

    I found it downright laughable the coincidental announcement of the TALF extension this morning as futures were tanking…

    Incidentally, that is what got me snooping around for impending global crises.

  37. manhattanguy says:

    Manhattanguy is glad to have sold his sugar trade last Friday. But added some CZZ in the morning on a 10% correction with tight stops ofcourse. Sold half of $DUG as well (was holding for a while).

    Just doing LB, CV impression :)

  38. The Curmudgeon says:

    ” Does anyone want to bet on the Fed making the exactly correct moves over the next 6-7 months.”

    No. In fact, I’ll go just the opposite, and bet that whatever they do will be just what shouldn’t be done to promote long-term economic viability. They are spinning in place, chasing their own financial tails, while the real economy slowly slips away. The Fed is as hubristically confident that monetary mischief can change the world as Goldman Sachs is that the world exists for their pleasure.

  39. IdiotInvestor2 says:

    This could be the beginning of the big one. As I mentioned on Fri the Chinese market was below 50day MA with support still far far below.

    OTOH, this is OpEx week. So big moves are not all the surprising.

    OTOH, pundits are advertising to “buy on dips” on TV. That’s encouraging as a bear.

    Levels I am watching for SP500 as per Yahoo Finance.
    21day MA : 987
    50day MA : 946
    200day MA : 877

    Watching oil and copper as well. I believe a burst in copper bubble will precede a larger crash in SP500.

  40. Space_Cowboy_NW says:

    Time for another Stimulus program:

    Democrats, realizing the success of the President’s “Cash For Clunkers” rebate program, have revamped a major portion of their National Health Care Plan.

    President Obama, Speaker Pelosi, and Sen. Reed are expected to make this major announcement at a joint news conference later this week. I have obtained an advanced copy of the proposal which is named….

    “CASH FOR CODGERS” And It Works Like This…

    Couples wishing to access health care funds in order to pay for the delivery of a child will be required to turn in one old person. The amount the government grants them will be fixed according to a sliding scale. Older and more prescription dependent ‘codgers’ will garner the highest amounts.

    Special “Bonuses” will be paid for those submitting codgers in targeted groups, such as smokers, alcohol drinkers, persons 10 pounds over their government prescribed weight, and any member of the Republican Party.

    Smaller bonuses will be given for ‘codgers’ who consume beef, soda, fried foods, potato chips, lattes, whole milk, dairy products, bacon, Brussels sprouts, or Girl Scout Cookies.

    All ‘codgers’ will be rendered totally useless via toxic injection. This will insure that they are not secretly resold or their body parts harvested to keep other ‘codgers’ in repair.

  41. leftback says:

    Put a toe into TBT. Those who follow LB will know that this is a hedge against our Treasury longs. The strategy for the rest of the day is to put one’s feet up and wait for the pump.

  42. Mike in Nola says:

    Black lady on CNBC is telling us what’s going up today! I think we should buy those.

    Does she do the opposite on up days?

  43. ben22 says:

    I-man says:

    I found it downright laughable the coincidental announcement of the TALF extension this morning as futures were tanking…

    You and me both. I was wondering last week how long they would wait to take action on this, it seemed almost certain if we tanked and they waited until it was supposed to stop in October it would have been too late. I’m thinking we can see what panic mode they are in still, China tanks and then we get this early this morning.

    They are throwing wet noodles at the wall to see what sticks. I don’t think they have a damn clue. The Fed only reacts, another example.

  44. batmando says:

    @Mannwich 10:10 am
    “I wonder if the Fall in the fall part deux is here and a bit early.”
    same thought i’ve been entertaining this summer, many want to get a jump on red october?
    friday’s nibbles on tza and zsl have been tasty

  45. cvienne says:

    @LB

    I’m inclined to let at least half of the OTM TLT calls ride…

    The last batch I bought at 40 cents there was another purchase of 6,500 contracts the same day…

    I’m happy taking a 150% gain on half (they’re selling for a buck today), but those 6,500 contracts have not been closed out yet (to my knowledge)…

  46. Mannwich says:

    Curmudgeon said:

    “They are spinning in place, chasing their own financial tails, while the real economy slowly slips away. The Fed is as hubristically confident that monetary mischief can change the world as Goldman Sachs is that the world exists for their pleasure.”

    So true. And maddening to watch unfold. My attitude now is one of resignation. Well past the anger state now. The Fed fiddles while BananAmerica burns. Heckuva job, BananaBen.

  47. cvienne says:

    @ben22

    Your ZSL calls must be having a PHI-ne day! :-)

  48. cvienne says:

    @Manny

    karen “spins in place” all the time (with Hercules)…I doubt she’s chasing her tail tho…

    karen for Fed Chief!

  49. Bruce N Tennessee says:

    http://www.bloomberg.com/apps/news?pid=20601085&sid=aGIATunT3Aao

    Pension Funds Pare Stocks, Ignoring Economic Rebound (Update2)

    “Aug. 17 (Bloomberg) — The world’s biggest pension funds lost confidence in stocks as the best long-term investment, cutting holdings or leaving them unchanged during the steepest rally since the 1930s.

    Funds overseeing money for California teachers and public workers, Dutch government retirees and South Korean private- sector employees reduced their target weightings for equities this year, data compiled by Bloomberg show. The rest of the 10 largest kept them the same. U.K. pensions have cut stock allocations to the lowest since 1974, according to Citigroup Inc. Managers handling Oxford and Cambridge University professors’ assets have been selling shares as the MSCI World Index posted a five-month, 51 percent rally.

    “Given the storm in financial markets that we have seen, the name of the game is risk management,” said Dirk Popielas, head of the Pension Advisory Group at JPMorgan Chase & Co. in Frankfurt. “The majority of pension funds have not finished taking risk off their portfolios. Some have not even started.”

  50. constantnormal says:

    market forecast:

    … cloudy, with a chance of anvils.

  51. karen says:

    Cvienne, I want to be the Crude Czar… looking at the mini dbl top in crude last week (second week of June hit 73.90, second week of august hit 73.92, look at $wtic candles on a weekly..) DTO has been painful but worth it every time so far.. looking to part with some dxd around 40.55 and fxp, still holding for now. SRS and FAZ still ugly for me. Betting LB was a few points early on TBT, btw.. looks like 46 will be tested again..

  52. emmanuel117 says:

    @I-man:

    http://ftalphaville.ft.com/blog/2009/06/02/56497/waiting-for-latvia-to-devalue/?source=rss

    Latvia has to choose between deflation and devaluation. Since its debts (specifically mortgages) are denominated in euros and its economy is in the crapper, it may default on its debts.

    default on debts -> bye-bye Sweden? -> contagion spreads to European banks?

  53. cvienne says:

    @karen

    I don’t usually like to go against lefty, but I think you’re right on TBT (being early)…It was just a small “hedgie” I think tho…

    I’m sure I closed the half of the TLT calls I was holding early (even with a 150% gain)…It already looks like its rounding 2nd base & heading for a triple…

    I want to raise some cash and play around tho…

  54. ben22 says:

    cvienne,

    I’m 3/3 on shorting silver this year for nice gains. I know everyone wants to play stocks but that market has been far more predictable over the last couple of months. My dollar long via UUP is actually now in the money as well if I use my average basis. My accountant is going to love my transaction details this year. I can envision my fee increasing…

  55. leftback says:

    LB has been known to be a few points early.
    Faster than Usain Bolt sometimes, well, OK – no-one is THAT fast. Never seen anything like it. Awesome.

    “Managers handling Oxford and Cambridge University professors’ assets”
    Those guys would not be dummies, Bruce. Wonder if their US counterparts are that smart? Hahvahd?

    “The majority of pension funds have not finished taking risk off their portfolios. Some have not even started.”
    LB has been talking about this for months, and this is why it could be a VERY Red October™.

  56. The Curmudgeon says:

    An incredibly reliable contrary indicator:

    Aug. 17 (Bloomberg) — The U.S. recession is ending “right now,” said Abby Joseph Cohen, a senior investment strategist at Goldman Sachs Group Inc.

    The economy may grow by 3 percent in the next couple of quarters and expand by 1.5 percent to 2 percent next year, Cohen said. While consumer spending is likely to rise, it probably won’t increase as fast as at the end of prior periods when the U.S. was emerging from a recession, she said. ”

    http://www.bloomberg.com/apps/news?pid=20601109&sid=a0sLU2hOmYZ0

  57. Bruce N Tennessee says:

    @LB:

    Well, B in T’s pension fund has been in callable cd’s all the way down and for the pop since March..But with a little luck, this fund will be cashed out for 2010 and B in T will join the grasshopper class..(one reason he has been Sooooooo conservative…)

    I love the Abby Joesph Cohen post, too…

  58. karen says:

    Please, no one fall out of your chair upon reading this “surprising” news item: BofA credit card defaults edge higher in July http://news.ino.com/headlines/?newsid=68965478174791

  59. manhattanguy says:

    agree with TBT retesting the 46 range. I am watching TMV closely at 70. My sugar trade CZZ got stopped out. Will enter later in the afternoon after another wave down. $FUQI looks like a great buying opportunity as well.

  60. manhattanguy says:

    @karen: regarding credit card default rate – I am surprised to see COF still holding up very well…thanks to Mr Lampert and Johnson.

    Anyone watching VIX?

  61. Mannwich says:

    @karen: Capital One’s defaults edged higher as well. What’s in your wallet?

  62. Mike in Nola says:

    ben22:

    be thankful you have need of an accountant increasing his fee

    Interesting video someone sent me this morning. Shot in my hometown. Obamatrons might want to give it a miss:
    http://www.youtube.com/watch?v=ivpshw2yn4g

    Love Abbey, too. Sorta like Dennis, but w/o the nastiness.

  63. cvienne says:

    @karen

    I have a BofA credit card…No balance, don’t use it (except for the occasional internet purchase)…But I do get the monthly paper statements…Mostly I just file them away but I happened to open the one this past month and noticed that the interest rate had jumped from 9% to 27% out of the blue…

    Imagine if that is happening to people with BALANCES…

  64. karen says:

    cof hit a brick ceiling on friday and vix is done being 24.. the market may actually attempt to reflect fundamentals this week.. what a novel prospect.

  65. Mannwich says:

    @cvienne: It IS happening and I’m guessing A LOT of people are seeing that and just not paying as a way to stick it back at them. What are the cc companies going to do – - repossess that dinner and trip? Ah, the ironies…..

  66. cvienne says:

    Re: AJC

    So Goldman Sachs is hoping to play the “buy the dip” chatter…

    Which officially means we’re in “sell the rip” territory from here forward…

  67. Thor says:

    Interesting morning folks. Will be fascinating to see if this is “a” correction or “the” correction. Question – how does one (if at all) determine the difference?

  68. cvienne says:

    @Manny

    What I’ve heard also is that the “cash advance” aspects that used to be available with these cards is either no longer available (or EXTREMELY limited)…

    I guess they don’t want people writing themselves big checks and troddling off to Mexico! :-)

  69. leftback says:

    @Karen: Re: TBT. Hope you’re not suggesting that LB might be PREMATURE? SSO, for a bounce anyone?

  70. Mike in Nola says:

    Thor:

    It’s like the end of recession; you don’t know til you see it in the rear view mirror.

  71. cvienne says:

    @Thor

    “Question – how does one (if at all) determine the difference?”

    We’ll tell you in six months! :-)

  72. I-Man says:

    I-Man just bought the dip.

    Long SSO @ 29.74… Stop @ 29.54

    Not married to it by any means, but if it pays me… WTF?

  73. beaufou says:

    @cvienne

    I think the rates only went up for people who didn’t use the cards.
    They want you to cancel it and save on administrative cost.

  74. I-Man says:

    LOL Leftback…

    Just saw your 11:39. What are we? Clones?

    :)

  75. cvienne says:

    @LB

    “SSO, for a bounce anyone?”

    Not for me…I’m only selling RIPS now, no dip buying (and “stops” on short positions still in place are getting moved lower)…

    Probably the right spot for a bounce tho…

  76. cvienne says:

    @beaufor

    Maybe…But none of my other cards (AMEX) changed anything…

  77. ben22 says:

    If the economy were as strong as some of these pundits say it is, the fed would have REACTED and raised interest rates already, maybe just .25 or so but they would have raised imo. Instead we got an extension of TALF this morning. All the people who have been consistently wrong about all of this are getting a moment in the sun right now due to the countertrend rally in the stock market. In the fullness of time, they will look like fools all over again.

  78. Mannwich says:

    @cvienne: I got notices from AMEX a couple of weeks ago raising my rates and late fees and called them to question it. The “supervisor” claimed they were doing this for all customers. Gee, maybe he lied to me? He would never do that, would he? I think the safe assumption now in our economy when doing business with any big corporate entity is that you’re being lied to until proven otherwise. What a most excellent and sustainable model for the future.

  79. Mannwich says:

    @ben22: No problem though. Those “fools” will just blame Obama or some other person/extraneous factor/event. There are no penalties for the royals even if they are disastrously wrong.

    Love live The Tyranny of the Incompetent.

  80. hohandy says:

    @Thor – “Will be fascinating to see if this is “a” correction or “the” correction. Question – how does one (if at all) determine the difference?”

    Assuming you don’t know a whole lot about technical analysis, if you watch charts, there will be areas of possible support on the way down. Sources of support include 1) Chart areas that provided resistance going up 2) important moving average lines and 3) other traditional support/resistance areas such as determined by Fibanacci ratios (the top of this last uptrend corresponded with a failed attempt at an important Fib ratio).

    Depending upon where you expect the difference to be between “a” correction and “the” correction, look to see how the market responds when it gets to these possible/potential support areas. If it blows right through the early ones, we could be in for “the” correction. If instead various support levels kick in and provide a break on downward momentum leading to a reversal before a whole lot of damage is done (basically enough to move the things away from “overbought” status on other indicators), then it will merely be “a” correction.

    The big areas to keep an eye on is S&P 950ish and S&P 880. The latter was a HUGE resistance area on the way up.

  81. ben22 says:

    @Mannwich,

    Sadly, that’s probably exactly what will happen. I long for the day that people like Don Luskin will not be on tv claiming they called the bottom to the day for clients.

  82. ben22 says:

    I haven’t had any changes to my Amex card in the last year however, we have a biz american express card and there have been plenty of terms changes on that card. plenty.

  83. beaufou says:

    @Mannwich

    I have the creepy feeling they are not fools at all judging by the rapidity of bonus distribution when the bailouts came.
    And executives dumping their shares?
    now, why would you do that, maybe because you can tell it’s not gonna work

  84. Thor says:

    I agree with beaufor – I carried a balance on my Amex (for SPG points) up until January when they arbitrarily cut my credit limit to within 500 bucks of the amount I had on the card. I wrote a check for the balance the same day and closed the card. M best friend also had his limits changed and his interest rate go up – he carried a very low balance.

    I think they’re trying to get rid of the customers who aren’t making them enough money.

  85. Thor says:

    Wonder where E2C is or if he’s coming back. Now would be a very good time for him to rub last Friday in my face. I’d happily take the beating too! :-)

  86. cvienne says:

    I’m going to make a guess here that whatever bounce we get isn’t going to extend past 988-989…

    I keep remembering that phenomenon at the turn back in March that the rally wouldn’t let anybody in…

    Likewise, the selloff might not let anyone out…

    I’m moving my stops down to 990 from 1008 (which would still be 6% profitable)…We’ll see what happens…

  87. manhattanguy says:

    Stopped using credit card 2 years ago. But I see a purge coming in cc offerings. We have way too many credit cards in the market.

    The Fall correction we were anticipating may have started earlier. But once the correction (100 points on S&P) is over, we might bounce back sharply. I am predicting S&P 1100 by year end.

  88. cvienne says:

    @Andy T @ ben22

    Both of you know that $23.73 is an important level to break for dollar bulls…

    FYI…There was a 500 contract purchase on the UUP Sept 24 calls this morning…On Friday it was pricing in a 20-1 shot…Odds are now 4-1…

    The thing is too…Taking out 23.73 probably makes Prechter’s call right…I might even add a little if it can inch its way down to $23.57…

  89. cvienne says:

    @manhattanguy

    I can’t see making 1,000 if the dollar stays bullish…

  90. cvienne says:

    @manhattanguy

    I use the AMEX card because I get 1% back on all purchases…I figure, why the hell not?

  91. manhattanguy says:

    @cv
    I said 1100 by year end. We will see a rally later this year.

    Re Amex card: I get 1% from my citibank debit card. Why use a credit card when I can use my debit card and get the same benefits ehh? Only time I am forced to use my credit card is when I rent a car.

  92. Bruce N Tennessee says:

    @manhattanguy:

    If you have a Schwab account, you get 2% back on everything with a Schwab credit card…not just gas, hotels, etc…

  93. manhattanguy says:

    sorry no credit card for me. Will never use it except when I am forced to. I am happy with my debit card.

  94. cvienne says:

    @manhattanguy

    261.8% of today’s low vs. the top would be 914-915…So I’m with your “100 point drop” call (about a 10% correction)…

    I’d buy into to seeing bounce there, but being that we’d then be UNDER the 233 day MA, I’d be looking for all kinds of overhead resistance there…

    So for me personally, I wouldn’t be willing to make that aggressive of a call until I was able to “feel” the landscape at that moment…Some of it might depend on HOW FAST we might get to 914…

  95. cvienne says:

    @manhattanguy

    BTW – I’d have us hitting 914-915 (maybe 919 is the number) around the week after Labor Day (9/16 to be exact)…

    If that happens, it “may” set up a H&S off of 919 (so that “could” be a catalyst for your 1,100 call)…

    That’s 3 chess moves ahead, but all things considered, it’s too early to call at this point…

  96. cvienne says:

    …oh and to GOLDBUGS out there…

    Things ain’t lookin’ too hot…

  97. Onlooker from Troy says:

    Re: CC and rates. I have a Chase card from way back that I don’t carry a balance on (no cc balance carried on any card) but used for a while for 2% cash back rewards. No rate raise on it at all. Still at the same rate since it actually went down a point back in Nov 08 (I just looked back to see what the rates had done since I don’t usually pay any attention). No rate raises on my USAA cards either in the last year. And the Pen Fed Credit Union card I currently use (5% back on gas, 2% back on groceries, 1% back all else) hasn’t changed since I got it in March.

    All are apparently are prime + something. Again, I don’t usually pay attention as I don’t carry a balance. I’m kind of surprised that JPM Chase hasn’t cut my credit limit down or raised the rate, as I’m one of those “deadbeats” that they make no money on (or at least very little based only on transaction fees). They’re all running scared for good reason, IMO.

    They have huge exposure out there and with jobs still going away and people living on credit as their emergency funds (which was all too many peoples’ plan all along), there’s huge default potential that’s going to build not fall, regardless of what the recent numbers have shown. I think that a lot of cash flow has been freed up by people stopping payment on their mortgages, and paying on CCs instead. Kind of backwards from the usual advice but with RE continuing to depreciate it’s the right call in many cases these days.

  98. karen says:

    au contraire, cvienne.. some of us would love to see gold under 900 : )

  99. manhattanguy says:

    “BTW – I’d have us hitting 914-915 (maybe 919 is the number) around the week after Labor Day (9/16 to be exact)…”

    I am with you on that. We should see a bottom soon after labor day with heavy volume. That might be a time to go long.

  100. cvienne says:

    @karen

    You know what I’m saying…

    Hell, I’d like to see it under 840…I’d be on the phone…