Tonite’s Open Thread:

You gots to admit it: These markets simply refuse to go down. Whether its POMO of the PPT o9r just natural buyers, there is a very firm bid underneath.

Look, I am not saying this as a rampaging bull. We are now down to 33% cash in our long short accounts. The more wood we deploy the more I expect a correction or other surprise.

But goddammit! This market is resilient.

Wednesday was a perfect example: Down 150, off nearly a 1% across all indices. If the bears had any mojo, they should have whacked that bitch down another few 100, for a down 300 point day. That would have been the start of something scary. But the markets reversed, and closed off marginally. Then on Thursday, after opening up strong, we reversed into the red. Once again, the Bears had a chance to press, and drive equities lower. They couldn’t.

What is the bid beneath? How long can this go on for? Willt he end of the Mutual fund year (October 31) end the window dressing? Will the election be the peak? Year end?

What say ye?

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.

77 Responses to “Open Thread: Markets That Refuse to Fall”

  1. Niskyboy says:

    I’ve been annihilated this month. “But goddammit! This market is resilient. “ — indeed. Describes my feelings exactly.

  2. Jack Damn says:

    The bulls have the BOTD (buy on the dip) high frequency trading algos to thank for this Endless September. For all the pissing and moaning I hear about HFT, it’s the BOTD algos that keep catching each fall.

  3. YY says:

    While I agree with you fully in terms of observations, I moved to 100% net short for the 30% component that is invested (over 70% is cash). The market seems to want to have it all ways, QE+good earnings+weak USD+strong commodities+strong EEM, something is got to give, this can’t all be true for anything but for a brief time.

    Sept and Oct defied the norms, Nov and Dec may also do so in reverse…

    Volume is absent in all moves, so it appears there is no conviction, so cash is king for now.

  4. JerseyCynic says:

    it’s gone on too long. just like housing (which still needs to come down another 30-40%) is still way over valued.
    I’ve been in real estate for 20+ years. Many of us realtors sold are own properties in 2001 when we were convinced
    that the top had been reached and properties were now overvalued. THE MARKET REFUSED TO FAIL — the values went up another 30% or so. and here we are.

    as far as the stock market bubble — Too big to fail?

    I don’t know how the PPT could possible keep both markets chugging along. One of them has got to blow – no?

    I don’t know anything. I’m just a mom.

  5. Jack Damn says:

    This may be of interest …

    Bullish November
    http://marketsci.wordpress.com/2010/10/27/bullish-november/

    Since 1949, November has outperformed the broader market in every decade, and on average, has turned in about twice the return as the average month.

  6. JohnL says:

    I’ve been successfully trading index futures (read zero sum game) for a living for 20 years. Over the last month….I’ve not a clue.

  7. philipat says:

    The Fed QE announcement. Sell on the News. It’s already priced in.

  8. It’s unquestionably been resilient, every time the market looks like it’s about to crack it bounces strongly.
    That said there’s more market moving macro-things than normal on the docket over the next week (GDP nos, mid-terms, FED’s QE2 size and frequency) and it’ll be interesting to see how they’re all absorbed (positively or negatively).

    For those of bearish disposition, it’s definitely been a time to step out of the way and pick your spots…though, personally, I think it’s setting up beautifully for carnage in 3-6mos…but we’ll see.

  9. TakBak04 says:

    BR…. “Go With the Flow.”

    We out here know the TERRIBLE STUFF coming DOWN…but fighting “the tape?”

    You, at least can employ some “Stops/Shorts and all your resources to save your Investors.

    Others who are not “TRADERS” who read your blog…and are in to some extent with our 401-k’s and private investments are really at the mercy of Flash Crashes and Manipulation by Fed and Mainstream Financial and other Media……(OWNED).

    We thread our way through blogs..and try to get the jist of protecting ourselves….but ……IT’S GETTING to BE a 24/7 JOB!

    Yeah…still stuff in the “baggies hidden under the mattress.”

    DIVVIES…. and if THEY FALL DOWN…we are all lost..(conservative investor)

    Sorry for the Gibberish …but these are hard times……and sometimes we Oldies get kind of CRAZY! LOL’s

  10. Bill in SF says:

    Interesting, that you are down to 33% cash, cause I just recently moved up to 33% cash.

    Maybe, the anthem for the market should also be “Don’t Stop Believing”.

    OT: You already plugged the song on the other thread; but here’s another version…

    http://www.youtube.com/watch?v=AyVdbfyvwso&feature=player_embedded

  11. TakBak04 says:

    BR…Have you taken into consideration that the “New Normal” means adjusting your thinking? I used to believe in CYCLES and looking at HISTORY of MARKETS…but damn it!

    How can you not factor in MANIPULATION of the “NEW NORMAL” into your Assessments? No matter how Algorithmic or How QUANTITATIVE ANALYSIS you might be…can ANY Investor..really rely on the “Old Normal” with this Manipulated Market we have?

    But…the Monkey is…..Is it Really a New Normal or is that just More Spin from PIMCO? What IS the New Normal and are the Charts and Machinations more relevant through these times?

    I’m up 38%……..It’s Okay for me that way (and that doesn’t include the DIVIDENDS…which I’m not going to calculate out for you. But….I’m also in Cash and Fixed from my old Pension Fund which is beating my Cash Money in Three Banks for payout.

    I’m Conservative……. Manage my own, though.

    ~~~

    BR: I don’t buy the new normal — its back to the old normal–less leverage, less consumption . . .

  12. rmasand says:

    Excepting a black swan this thing will meltdown – but only after a significant meltup.

  13. wunsacon says:

    IMHO…

    Apparently, liquidity and improper regulation/enforcement trump insolvency. The Fed and its network of “dollar distributors” control the market. What happens? They decide. Heck, it’s even official now, now that the Fed has surveyed its own distributors “how much do you want?”

    Some establishmentarians say that letting LEH go under (where it belonged) was the biggest mistake of the crisis. Look how long LEH played their EOQ games. What if the Fed had lowered rates to zero back in 2007 and suspended mark-to-market, so that LEH could continue its games? How long could LEH have survived? I bet they’d still be alive today, as the establishmentarians wish.

    Correct me if I’m wrong. But, it appears to me that all Central Bankers are printing their own currency and buying each others’ debt. So, there’s a constant bid under everything. I don’t see the CB’s changing that. Maybe we’ll continue to see “deflation” by Mish’s definition. But, I expect significant commodity price increases — “inflation” by the lay person’s definition. And only after commodity price bubble threatens to overwhelm the system — in a worse way than insolvent banks — will the CB’s pull back.

    The CB’s do it because they want to save the current system. They want to avoid any other crises and thereby restore confidence and revive “animal spirits”. From their point of view, that’s more important than punishing the thieves, encouraging thrift, and instilling quainter notions of morality. And every impossible pension plan, underfunded 401k, and bankrupt/number-fudging government is counting on them to succeed with their reinflation plan.

    This can go on a long time. As long as it takes to make everyone’s nominal dreams come true.

    That’s my 2 cents. YMMV.

  14. wunsacon says:

    I’ve been wondering about the term “bond vigilante”. How do you become one?

    Merely “holding cash” is no threat to the CB. The CB is happy to devalue your currency by printing new money to cover the fiscal deficit. So, my hypothesis: you shun bonds and instead buy commodities until the price rises so much the CB has to stop printing.

    What say ye?

  15. dedalus says:

    What you’re calling “the bid underneath” would be the $1.5+ trillion the Fed has spent buying Treasury and MBS. (James Grant says the Fed has spent $2.2 trillion in this endeavor.)

    Remember, the “meltdown” in stocks occurred only AFTER bids for MBS (and junk- & high-grade-bonds) had already disappeared. (Dealers would only buy something from your inventory if you would buy something from theirs, which resulted in little or no trading.) All this occurred because the asset value of the collateral underlying these (non-trading) bonds was suspect, considered over-valued.

    The stock market bottomed in March ’09, well after TLGP had been announced, after the Fed had begun buying and after high-grade & junk bonds had bottomed. But stocks bottomed on the same day that a ‘Heard on the Street’ column suggested that bondholders shouldn’t rule out having to accept haircuts.

    Haircuts were never administered. Instead, the Fed’s injections bailed out everybody — the prudent & imprudent alike. And as a result, financial conservatism in this country no longer has an economic franchise.

  16. wunsacon says:

    Er, “price rises” -> “prices rise”.

  17. Winston says:

    Somehow I wonder if those people long on some stocks (≥12 seconds) are getting hounded by those running short (≤11 seconds).

    Please take care. The irrationality will drive you nuts. Remember Keynes: “The market can be irrational longer that you can stay solvent.”

  18. contrabandista13 says:

    yeah… we’re in a real bull market here… aren’t we….? resilient….? you buy the rumor and sell (short) the confirmation, it’s that simple…. no rocket science here…. even my grandmother is talking QE and she’s pretty hyped up about it…. let me tell you, it’s not pretty when you have a bunch of old ladies dropping F=Bombs, talking about Bernanke during canasta… not pretty at all…

  19. VennData says:

    QE2 can’t be priced in, because no one knows how much it is, not even the Fed.

    Furthermore all the Fed has to do is take the Big Money’s guess and top that by a few billion and it’s no longer “priced in.”

    There are a lot of bonds out there for the Fed to buy. That is the limit of QE2, everything else is unknown.

  20. wunsacon says:

    Commodities went on a tear the last few months. So, maybe it’s time for a downturn, for a while anyway.

  21. b_thunder says:

    First, until JNY today, it seems like every stock that dropped 8-10% in one trading session was BOUGHT aggressively by the end of that session, the following day, and it rallied to the old level within 4-5 days. It didn’t matter why the stock was down – earning shortfall, acquisition announcement, or even accounting issues – which gives me a feeling that the buyers were the machines. The stocks, the companies, the situations were so different, but the trading in all of them since august was alike! No, those weren’t the human beings buying on the dip, those were machines “trained” to look for next AMZN ($150 to $100 back to $150 in 2 weeks!)

    Second, the trillions of free ca$h from Uncle Ben, plus billions of OPM (other people’s money) make somewhat perverse incentives for trading. Why fight them? Just go with the flow until you get to the high watermark.

    Third, more and more bailouts up the Fed’s sleeve. More free ca$h is almost within reach.

    Fourth (conspiracy theory), the market has to go up to allow the richest of the rich cash out and pay Bush’s cap. gains vs. higher taxes next year.

    What can go wrong???

    Two words: BofA and Receivership. just what Prof. William Black is calling for (and what Barry himself was calling for for 2 years!)

    or two other words: Geithner and fired. or Bernanke and outvoted by the Board. or wall-street-ceo and jail. or BP poisoned the entire Gulf with Corexit and people are dying.

    —– end of rant ——-

  22. FrankInTheFalls says:

    BR, you said it in your book- I’m reading it now, a good read. Fed has decided
    to support asset prices. Can they really override genuine market forces & how
    committed are they to this idea of asset price support? Answer that & I think
    you have the answers. (maybe the answer comes later in the book, haven’t finished)

  23. SCTTD says:

    Resilient yes. For how long?

    Ask me next Friday. We’ve got Q3 GDP tomorrow, Elections, the Fed and October jobs report next week.

  24. call me ahab says:

    QE2 can’t be priced in, because no one knows how much it is, not even the Fed.

    wrong-

    the Fed has sold the sizzle- and the market responded-

    but when it’s served- it better be fucking impressive- otherwise folks will be getting up and walking out and refusing to pay for the over cooked, under portioned special that was sold to them

    (not that its right (to begin with) to yank the market along with dreams and fairy dust- creating paper creates what exactly- except paper)

  25. kaleberg says:

    dedalus is absolutely right. There is still all that money floating around out there and nothing to invest in because most Americans’ wages have been flat for 30 years. Thanks to the bailout and subsequent Fed manipulation, that big pool of money is still sloshing around out there. A lot of it is being lent to the government at stupid low rates, but there is are still plenty of folks trying to get higher returns. We saw this in the early 90s. Unemployment was up. The economy and rates were down. The market rallied as if there were no tomorrow.

    There are two possible ends to this bubble:

    1) When wages start rising and it makes sense to invest in plant, equipment, and hiring, we’ll see the rally falter. Don’t hold your breath.

    2) More likely, Goldman Sachs or some other player will decide its time to cash in its chips, and since there are no fundamentals underneath, the game will be sauve qui peut.

    3) A third scenario is possible, but it requires cash rich companies to start liquidating and paying – are you ready for it – dividends. I’m not sure where that would lead. I don’t think any living investor has had any experience with companies that actually pay dividends.

  26. ToNYC says:

    If you step back a few to look at the bigger picture, you might see that the receding sea looks like a radical rally in sand exposure. The Jarawa , Andaman Islands people, took to the high ground and had no worries on Boxing Day, 2004.

  27. pintelho says:

    The more disbelief there is the likelier it is for the rally to continue.

    The election and QE2 may draw sell the news events…

    In the end if doesn’t much matter…do your best while there is a trend…because trading ranges suck ass…

    When the trend reverses….go with it do not fight it…

    These things are easier said then done…but then again…that’s what we are all here trying to perfect now isn’t it.

    McClellans Oscilator is in neutral territory…that in and of itself allows for further continuation (I am not much of a believer in the Summation Index…but that is over bought..

    Momentum is getting a bit weaker…but that may be due to the big event risks next week…or window dressing or…

    WHO GIVES A SHIT THERE IS A TREND DON’T FIGHT IT.

  28. vipasyana says:

    http://market-vipasyana.blogspot.com/2010/10/easy-road-to-higher-stock-prices.html

    As of 10/20/2010 TTM returns:
    15 lowest priced Dow stocks — up 6.08%
    15 Highest priced stocks — Up 18.83%
    DJIA up 11.65%

    Go Reverse Split your stock MSFT, INTC & CSCO — a sure way to higher Stock Prices and more wealth Bill Gates!!

    Now they will ry take bonds the other way to try to continue this upward trend heading into December.

  29. call me ahab says:

    wunsacon-

    fwiw- I’ll take vigilantes over “bond vigilantes”

    Winston-

    I too am a long term holder- greater than 11 seconds- hopefully I qualify for the tax benefit afforded to “long term” capital gains

    BR- dude- How long can this go on for?

    please- that’s atrocious English

  30. Tarkus says:

    As Keynes said, “The market can remain irrational longer than you can remain solvent.”
    He was, however, talking about the market of his time, which was run by humans.

    These days, the market has a strong bid – until it doesn’t. And because the structural issues are still there (despite the SEC’s diligence), it can become “doesn’t” in a nanosecond.

    I don’t see any major weakness yet, but you don’t know if the next weakness that matters comes from a policy maker or a supercomputer transposing a 0 and a 1.

  31. Cult of Reason says:

    No kidding … The bitch is resistant, but thanks to Bernanke money printing there are so many bubbles to short everywhere — feeling like a kid in candy store — shorting these bubbles on the pops has been working handsomely lately.

    For example, the rear earth metals and ETF (NYSE: REMX) are overhyped and overvalued more than the internet bubbles were in 1999 — it opened today at $20.50 and never looked back for a ~4.5% plunge.

    Currently staking and waiting for a pop to short Titanium Metals (NYSE:TIE) — yet another overhyped bubble by the CNBC Fast Money dorks and over-pumped by the Chicago Pump & Dump Citadel-Najarian Club.

  32. ATH says:

    It’s next to impossible to determine exactly which straw it will be and when it will happen, but this camel’s back will be broken. Next week, there are a bunch of “heavy” straws being laid so who knows…..?

  33. rahuldeodhar says:

    Agreed! Lost some on shorts. But there is something more.

    Bears are losing their mojo when I would expect them to hammer everything. Other times bulls seem to retreat back into the woods just when things are clearing up. The way market moves is not right. The relative valuations seem out of whack. Typical news that should drive the market turns out to be a dud.

    Something is wrong – I can’t put a finger on it – but something is seriously wrong.
    Rahul

  34. perogy says:

    I missed the move from the 8/25 lows and it is too late to go long now, so I am on the sidelines waiting for a pullback. I never buy into an overbought market because you never get a chance to get out when they cap everyone at the knees.

  35. powerpenguin says:

    I think it’s simpler than all you guys are making it out to be. There’s just nowhere else for people to put their money, and corporate earnings have been great, despite all the main street woes. As long as there’s lots of cheap money all over the place there’s every reason for corporate earnings to stay solid.

    As for where the markets going…I can’t imagine investors aren’t anxious, and I really can’t see the markets going up. I would view equities investing right now as kind of like tiptoeing around a big herd of buffalo. It’s all fine until the herd gets spooked, and then you’re done.

    If I had to guess what does spook the herd, I would go with a negative GDP reading;
    http://www.consumerindexes.com/
    speaking of which…isn’t the 3rd quarter GDP a bit late?

  36. johnborchers says:

    Um, Japan can’t get out of deflation. What makes us think the US can without time fixing the credit problem and currency rebalancing?

    See Nintendo profits (down about 50%) and warnings from Samsung on LCD panel weakness? And the Jap Yen keeps rising. Japan market is not doing so well tonight and futures looking down about .5%. Not terrible but someone’s going to panic when they figure out there’s no growth.

    It’s about 6 months after the double dip talk. Probably the market was early. US still has a lot of people going without unemployment benefits coming up and one person currently every six seconds becoming unemployed but not watched in the statistics.

  37. powerpenguin says:

    oh and don’t forget ECRI:

    May 2010 “The risk of a cyclical downturn in stock prices has risen significantly. Moreover, we are approaching the most dangerous period of the business cycle to employ a buy-on-dips strategy.”

  38. GetReal1 says:

    Yeah, I bought a ton of SH last year thinking for sure the market would tank, only to have my head handed to me 5 times in a row, each for a 2% loss. Each trade I made was before a major announcement like GDP, unemployment, etc., and when the govy’s stats came out, they were always better than expected only to be revised lower a month or so later (to the number which I was expecting). I learned this the hard way, don’t trade on what the government should report, but on what it will report.

  39. Greg0658 says:

    isn’t the market doing the slow climb to find the herds jump point into cash to buy real assets (whatever that thing would be – something liquid & near return of principle – so as not to feel played) ../.. the other side is wondering what corporations are an honest to investor real asset with future principle payback + interest in the meantime (a TBTF that isn’t playing the investor for that buildup cash to go private in a manipulation play with the nearly free money at arms reach)

  40. Ilya says:

    The Feds have been unsuccessful in their attempt to stablize the housing market. They will pull out any stops in an effort to goose the financial markets. There is a certain amount of a Bernanke put that encourages this ‘buy the dip’ psychology. Yet the markets are terribly overbought. A correction of 5 to 8% would be healthy and constructive.

    That said, this farm boy cashed in at SP 1160 and went short the 20 year T-Trash a few weeks ago. A 33% cash position implies that 77% of your client’s money is working somewhere. You have both feet in the game.

    Risk management is 70% of the game. The object is to not lose the purchasing power of Aunt Minnie’s money and add 3 to 5% per annum over time.

    I really pity Mom and Pop who are lucky to get a measly 2% CD return. The FED is getting their revenge on us geezers. Not only do they cook the CPI books but with ZIRP, we are now forced to hoard rice.

  41. spider92 says:

    I think the ppt is supporting things right through the election. The tape doesn’t look quite right to me….something fishy is going on.

  42. Eye Wall says:

    Two parts, my light, constructive reply:
    The market is doing whatever it wants. I want to find ways to keep making money that don’t violate what I believe (we’re screwed) with the short-term way the market is trending. So, find crappy ETFs with negative role like VXX or the 3X ETFs and sell call spreads against them as they slowly self-destruct monthly. Also, sell naked puts against TBT below 29. They expire worthless every month but if you get assigned, I wouldn’t feel bad about owning TBT below 29.

    The dark reality:
    Pretend you are the US Gov complex (executive, congressional leadership, Fed, Treasury, etc.). You actually understand the truth of where the country is because you know what the real statistics are (e.g. unemployment equivalent to the great depression, bread / soup lines are hidden due to food stamps or the modern equivalent – the pre-paid debit card). The sellout of our manufacturing base and the fallacy that was good for us (we’ll make it up by trading paper back and forth to one another!). You know there can be no pay back of the US debt. You know there is no solution to social security, medicare / medicaid. You know how little control you have vs. the corporates / lobbies. You know the country is broke. You know all pensions are underfunded. You know that there’s no way back to the America that has been destroyed. What would you do in that situation?

    The end game is the same, something very dark. Perhaps civil unrest and rioting before we try Constitution II (we would all be traitors of course – thanks Patriot Act – so this would have to turn into more of an internal war of the people vs. the Gov). Perhaps WWIII. Perhaps a massive trade and currency war which we would lose as we can’t actually build everything we need anymore. Pick your dark scenario – eventually this all ends very, very badly. So, being logical, wouldn’t you do everything possible to delay the end as long as humanly possible? Doesn’t that make sense in this context? Isn’t that the only real option any of them have? If they don’t keep trying you get to the end game tomorrow, but maybe there’s a chance – through some miracle – that QExx will work. So keep delaying as long as possible – QE2, QE3, print up new currency, POMO, buy ES outright, buy stocks, buy all the mortgages in the country – put everything on the pile before….that SOB burns to the ground. Happy thoughts…

  43. johnborchers says:

    Eye Wall. I see Fed direct lending to citizens for mortgages in the future to help. But otherwise yes. The country has been sold out. But the US isn’t alone. It’s all over the place.

  44. IdiotInvestor2 says:

    I am as bearish as anyone on Zero Hedge, but why wouldn’t the market be resilient ? The stocks respond first and foremost to earnings and expectations. With most of the SP500 components beating earnings expectations, the only debate is valuations. You can bitch about how companies guide conservatively and play beat the numbers game. But if there is no earning miss, and companies guide higher, there is no panic to sell stocks. Period.

    Eventually, the economic reality will catch up with earnings and companies will revise down projections. Then there will be a sell off.

    Till then, it’s just a valuation debate or waiting for black swan (like yet another PIIGS default). Valuation is NOT a good timing device. And future earning problems is an opinion. Till then, as a bear, I choose to hibernate.

  45. Winston Munn says:

    This bid under the market has to me more the feeling of buying from a sense of a limited loss risk – a complacent type of buying that doesn’t expect a big return but at the same time can’t afford to miss a rally.

    Just when you thought it was safe to get back into the water…

  46. NormanB says:

    I don’t know BR. I’m in with both feet, looking forward to the FRB fertilizing the crops and the GOP stopping Obamism in its tracks and the market ain’t going anywhere. There’s a cap on the market which is below the April peak. Worried is me.

  47. Pantmaker says:

    I am big short SPX, NDX and Gold. All the bumper sticker BS quotes about the trend being your friend…trade what’s in front of you…don’t fight the fed…etc. is just meaningless momo market top jibber jabber.

  48. wngoju says:

    Lots of different comments here. It’s a market!

    My take: Up (ish) through the election. Then… Wiat! Santa Claus rally (ish). Then, reality: Gradually, but truly, it begins to set in.

  49. ToddM says:

    Fundamentally it makes almost no sense whatsoever. Check out the most recent port data from around the world. Here we have LA, Singapore and Hong Kong all down 7-10% MoM yet all markets are firm.

    http://www.portoflosangeles.org/Stats/stats_2010.htm

    http://www.mpa.gov.sg/sites/pdf/cargo-throughput.pdf

    http://www.pdc.gov.hk/docs/Hkport.pdf

    The only explanation that I can offer is POMO, traders gaming POMO and few left stupid enough or willing to fight the tape. Prag Cap has looked into this a bit but if you consider what we see everyday – down markets finishing barely up on the day (a regular occurrence), up openings that fade immediately the impact is not readily apparent if one just regresses the outcomes. In short the fed is not stupid and someone just needs to take the time to parse their data 2005 – present to establish the pattern or at least rule of thumb that Brian Sack and the primary dealers are employing. The SPX has a total cap of $11 Tln now but only 4Bln shares trade on average each day and the average stock price is $46 that means that in the S&P500 $150Bln in value trades each day. The POMOs tend to be in the area of $3-5Bln but it doesn’t seem likely that the primary dealers would plow all of this into the markets regardless of where the ten year is. So it seems as if the POMOs alone could not explain the bizarre action we are seeing. The X factor could be the fact that old buddies of mine that I run into joke openly about gaming the POMOs and how one can no longer just front run them and fade them but now you have to apply game theory anticipating other informed actors behaviors. Maybe they/we are picking up the slack, maybe the PPT is there also or maybe it does not require a tremendous show of force in today’s HFT dominated market? Either way, in real terms, this is guaranteed to end badly.

  50. dss says:

    Internals have been signaling a top, but the market keeps bubbling up on every small pull back so that makes me very wary at this point in time.

  51. Why awaken the electorate to the pending collapse of some large chunk of the global banking system (this via an RMBS crash) when prospectively ruined as a consequence could be opportunity to infest Congress with some of the best friends a bunch of corrupt fascists ever had in America? Theirs is a shallow pool of political towel boys momentarily skilled enough to talk in tones sounding like “change” and “solution,” but who walk in lockstep with policy made to keep the republic prostrate to fraud and corruption.

    Now is not the time to awaken FDR Democrats and Lincoln Republicans. Next week, however, is a different story…

  52. LoriInNC says:

    I am just a Mom, a working Mom. I read BR’s post and it sounds like a game: Bulls vs. Bears. There’s no fundamentals that I can see as one of the traditional buy and hold investors. When I read in comments from traders in the biz for 20+ yrs that they have no friggin’ idea what to do next, it’s a big warning sign to me. I’m not investing to get rich, I invest to save for my retirement and put my kids through college….I am not into gambling and I know that I cannot beat the House. Frankly, I’m tired of the banks/institutions raping me of my hard earned income. I have no confidence in this sham of a free market that we supposedly have today.

  53. bulfinch says:

    When President Obama went on the John Stewart Show and stated that his administration had done things for the economy that people didn’t even know about and went on to state they had successfully stabilized the stock market, I didn’t read any subtext into it; but I was surprised it wasn’t seized upon by my more paranoid brethren as cypher for PPT or whatever.

    Does anybody really put any stock in the idea that the Fed or the government is somehow manipulating the stock market? It seems like the only thing that makes it dive nowadays is if one algo triggers another algo into a domino death spiral, or if an Arista switch overheats and fails.

  54. Twitter: “DougKass close to and almost all in short now $$ ”

    Im mildly bullish but lots of people are starting to point in different directions, before they were all pointing in the same direction.

  55. hdoggy says:

    I’m looking for a double top in gold so I can rebuy the gold I sold in the last two months. That’s all you need to know. Some moron like me is looking for a rebuy opportunity.

    Things have to fundamentally change marketwise before prices follow and that change has to be enough to make me think I made a mistake otherwise I would be the market.

  56. Pocket QQ says:

    A consumption fade is looking promising. I’ll take “Year end” for $1000 Alex. But, I am always looking for a daily double.

    http://www.youtube.com/watch?v=wCuTrfTfGd0&feature=related

  57. You really need to get a grip on the fact that, equity largely is in weak, far-too-leveraged hands lacking capacity to further their leverage in a manner possessing even the illusion of sustainability. There is no hope private-label securitization markets will be revived. That credit-creating machine equipped with an infinite multiplier remains frozen. Only the dull memories of our descendants will ever get it working again. Thus, capacity to further leverage is dead, putting us at the crossroads of hyperinflationary blowout or deflationary collapse. Either way, equity, like the Fed, is dead — no match to a tsunami of claims with absolutely no hope of ever being honored.

  58. fundaman says:

    I feel this will go on for some more time. Any weakness in the US GDP doesn’t affect stocks — most of the S&P 500 earnings come from overseas. As long as the unemployment rate stays high, corporates have the benefit of cheap labor. Bond yields are low, real estate is falling, and gold is expensive — so people have nowhere else to put their money.

  59. w says:

    Here’s a good read that says it all IMO:

    http://cache.dealbreaker.com/uploads/2010/10/TudorInvestmentsLetterOctober2010.pdf

    The ‘Bernanke Put’ should be renamed ‘Bernanke Bid’. The things that could kill the party: there might be an RMB deal in the pipeline (such deal would curtail QE) and the fraudclosure mess is like a sword of Damocles + all the usuals (AAll, sell the news, etc.). I think your bullish call was right, the WSJ piece would have crashed the market otherwise (I bet that’s what prompted Ben to survey the PDs, he was so surprised by the muted market reaction).

    Cheers

    W
    P.S. How embarrassing it would have been for the administration had bank shares crashed just before the elections.

  60. rallip3 says:

    With plenty of corporate cash around, perhaps it’s company boards ordering buying, either of their own stock to ward off takeovers or competitors’ stock as a prudential bargaining chip. If 2011 top line earnings growth is uncertain and interest rates are low, the easiest way forward is to buy earnings in the stockmarket. That is the big difference between the way the USA and Japan do capitalism.

  61. myopia says:

    At least no “this time its different” comments ;)

  62. andrewp111 says:

    There is nowhere else to put money that has a yield above zero, and corporate earnings are performing. The market will hold up as long as these 2 things remain true. If either of them reverse, the market drop could be brutal.

  63. lambert says:

    They’re not “incompetent.” They’re highly competent, both at stealing and gaming the political system to their benefit. That’s what living in a kleptocracy is all about.

  64. ACS says:

    Someone who is a far better student of markets than me pointed out that stocks are in a transition from strong bull to weaker bull to two-sided trading now and will soon roll-over into a bear. Is Amazon really worth 70 times earnings or a sign of trouble ahead?

  65. wally says:

    Corporate profits are good and the alternatives to stocks stink. What’s the mystery?

  66. Greg0658 says:

    “the next weakness that matters comes from a policy maker or a supercomputer transposing a 0 and a 1″
    “put in my ATM no account card and it gave me cash” that’s paraphrased from a few moons ago
    “I’m up 38%” is there a term that defines that 38% is numbers in an instrument /or/ liquid cash in a $250K FDIC insured demand account /sorta/ ready to unleash on stuff

    and ps Eye Wall .. thanks for chime’g in .. I think just about everybody (never generalize) wants a work out (as long as it doesn’t short-change me) huh NCmom .. best wishes all .. and vote tuesday like it matters .. capital vs labor

  67. ShakyShot says:

    Presidential cycle results show Fed’s reliable effectiveness of stimulating stock markets. Greenspan’s/Bernanke’s “perpetual” stimulations resulted bubbles that burst at much higher that current over-valuation. Therefore, as long as investors believe Fed will continue stimulation, the probable medium-term outcome is higher over-valuation.

  68. louiswi says:

    Jeeze Barry, it looks to us here your readers (for the most part) are watching too much TV. We , as you, yanked that critter out of here some years back and it was the best move we ever made. As one of our friends loves to point out; “keep your eye on the doughnut, not the hole”.
    GDP growth today around 2%. A 14 trillion dollar economy. Most good restaurants hard to get into. Airport terminals packed. The Fed pumping some serious dough. Of course it will end-most likely not for a while.

  69. sditulli says:

    Long 125%.

    Tape feels good. Earnings have been solid if not better than expected. And QE will give a lot of liquidity for the market. I’m rarely bullish but I’m targetting 1400 before valuations get too streteched to continue.

    But what else can you buy right now at reasonable valuations. I only see silver as somewhat cheap and stocks are certainly at reasonable P/E. Unemployment doesn’t matter; we don’t need the bottom 20% of the population; trade is now between our upper class and the global working class; I might not like it socially but its how it works right now.

    I bought the sell-off to 1000 on oversold expected a bounce and later became more bullish and have added leverage of late.

  70. Darkness says:

    The trigger for a correction’s got to be . . . Greece defaulting? War in Korea?

  71. market_disciple says:

    Barry, you mentioned “We are now down to 33% cash in our long short accounts.” Could you tell us more about the emphasis of your existing “chips on the table”, whether you are more biasedly long or short given the current market condition?

    My trailing stops were already hit during a mild correction on 10/16 last week. The only positions I have left are just puts sold against things that I don’t mind owning but already became a bit too expensive for my taste during the rally.

    I opt out from shorting the market regardless how tempting it has been. Instead I’d rather buy the dips when the correction takes place (SPX 1120-1150 perhaps?) I don’t see the point of going gung-ho on shorting the market right now while the governments and central banks globally in developed countries are determined to sweep all of the problems under the rug and eagerly pushing band aid solutions that may demolish your short positions whenever they sense asset prices are heading south.

    Probably next year would give more shorting opportunities when the liquidity train runs out of steam.

  72. Jessica6 says:

    Haven’t read through the comments yet but thought I’d share this article from FT Alphaville on the divergence between the SP500 and fund or ETF inflows:

    http://ftalphaville.ft.com/blog/2010/10/19/375371/sp-500-curiosity-du-jour/

    This is the first time in twenty-five years that a three-month gain in the S&P 500 of 10% or more was not accompanied by net inflows into U.S. equity mutual funds and ETFs.

  73. Lugnut says:

    Equities are a trailing indicator to reality.

  74. davossherman@gmail.com says:

    70% of trades done with computers, average trade time 11 seconds.

    20 some months of continues outflows totaling 80 some billion.

    Come on. It’ll be like this until the effing computers lock up when the bond market blows its chunks.

    Besides, its all nominal – (think USD).

  75. JimmyDean says:

    Hard to be short here – short interest ramps up on all the ‘mo stocks into earnings – nflx, ffiv, crm, cstr, the list goes on…..and they all those co’s keep beating and raising guidance and shorts r getting killed. How long this continues I have no idea.
    Economic data is mixed, but past few regional fed surveys + today’s chicago PMI are suggesting stagflation, or screwflation, whatever you want to call it. This could mean the Fed does less QE than anticipated, which would probably make markets go down.
    Geopolitical risk is biggest risk out there – witness market selloff around the UPS bomb scare today, imagine if it had been the real thing, I think we’d have -200 Dow points within hours.
    Only choice is to be either flat or long here, not short. Everyone is affraid to fight the fed, with good reason. BR your comment abt “do you want to be right or do you want to make $?” is spot on, imo.
    Performance anxiety is high and seasonality is positive. Lots of crosscurrents but if stocks hold 1175-1185 area after election and Fed announcement, we probably see SPY melt up to 1225-1250 by year-end.

  76. mote says:

    Not a trader, still fully invested.

  77. ToNYC says:

    Live to Short or Put Spread.
    Trust the Free power of the force of gravity..real or metaphysical…It is all about the stored, inertial, potential Energy.
    The only other free lunch is the Sun.
    Yes, Easy answers. Just doing it.
    …and remember PTJ’s screen sign,
    “LOSERS AVERAGE LOSERS”