I have previously mentioned key levels to watch on various markets. I have been especially watching the S&P500 levels at 1310-15 — and we are right there.

Today’s trading is going to be crucial . . .

Category: Markets, Technical Analysis

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.

40 Responses to “Markets at Key Level”

  1. blinblin says:

    I’m not sure why you see 1310-15 as a key level. The 7% sell off was needed for the next move higher. POMO operations will continue for 3+months, which should support the market for at least 4-10 weeks. Also the VIX collapsed last week, offering potential clues that the Bernanke put is still very much in play.

    The index is above all key moving averages and should move higher at least until the beginning of earnings season… imo …

  2. Ivan71 says:

    The question is when the market will get out ahead of the end of QE (if there is indeed going to be an end to QE). POMO may continue, but as the market begins to come to the realization that the Put is coming to an end, the crowd may begin to quietly exit the theater. My guess is the smart ones already have (unless they know something regarding future QE).

    Plosser’s comments over the weekend notwithstanding.

  3. curbyourrisk says:

    Come on Barry…… What is so crucial about Benny having you back????

    Him and his InkJets ain’t about to let anything go down. No matter how high the price of oil goes. No matter how much of you paycheck you have to pay for the necessetities. As long as he is in control (ha ha…that’s funny) everything goes up…….stocks……bonds….food…..oil…..gas…. just buy the f@cking dip…..and walk away.

    It’s all a joke.

  4. tagyoureit says:

    Still 75% cash?

    ~~~

    BR: A little over 60% cash

  5. cognos says:

    My Oil chart shows oil prices down 26% since July 2008 (almost 3 years of down, down, down) and oil stands at a $103 handle this morning.

    Furthermore, despite significant Mid East tensions… that is, real REVOLUTIONS in Egypt, Tunisia, Libya and others brewing… Oil was $95 on May 3rd, 2010. Oil was $81 in June of 2009. The price does not seem very high.

    Doesnt seem like “Bernanke is causing oil prices to skyrocket…” paints a very accurate picture.

    The reason to “buy the dip” is because corporate earnings and cash flow are very, very strong and this is the recovery part of the business cycle. S&P500 will do $100 in EPS this year… which means the index will price 1,400 to 1,600… possibly even higher in about a year. Of course, select stocks will do even better so if you’re good at that… its another 30-50% year.

  6. curbyourrisk says:

    Bull crap. There are no fundamental reasons for oil to be where it is except for the dollar ebing forced lower…creating under higher prices.Oil ramped up on blatant speculations on both occassions. I don;t want to hear any crap about oil not being expensive. There have been NO disrutpions in the flow of oil since any of the REVOLUTIONS =you speak about started. There has been absolutely NO PICKUP IN DEMAND for oil either. In fact, there has been a lowered demand from China over the previous 4 motnhs. Let’s see going froward with NO demand for production coming from Japan what happens. you can take your positive spin on things and take it somewhere it actually impresses people. Corproate earnings are only there due to CUTS in expenses. what happens when youc an;t cut anymore??? There is no wage pressures on companies. They let people go….don;t replace them and expect more out of people already working. That is not a growth environment….in fact, over the long run, it is a vey big negative for corporations. As for cash flow……..companies are more highly levered now than at any time in history….. it is all bullshit…….When reality sets in…and the market is no longer massaged higher by the felatio master Ben Bernanke…lets se how trading goes. As for now, you continue to follow your pipe dreams. I don;t give a shit about the market……I care about the economy and what it means for my kids and their kids going forward.

    I am sick and tired of all the polyannas screaming profits at the expense of our kids. You should all go die in a fire. Stop the goddam generationa ldebt and take some fiscal responsibility.

    Sorry Barry..I know this is your forum…in a real pissy mood today and al the bullshit stories in the market today are not helping.

  7. curbyourrisk says:

    Cognos…how is this for reality??

    http://market-ticker.org/cgi-ticker/akcs-www?post=183082

    Go ahead…say what you will about Denninger….He is right A LOT more than most of other pundits out there. And HE stands by everything he says……..

  8. cognos says:

    Curb –

    FULL STOP.

    Here is Denninger in Jul 2009: “the consumer has hit a wall”

    http://www.shtfplan.com/headline-news/denninger-on-retail-sales-and-unemployment_07092009

    Still stupid after 2 full years… same g-d thing.

  9. cognos says:

    Please try to read real intelligent wealthy people… they are not often on CNBC. In fact they often keep a low profile. But they tend to have $Bs and their clients are very happy:

    Good examples: Soros, Tudor, Bill Gross, Steve Cohen, Ray Dahlio, Bill Ackman, Einhorn, the best macro research guy is Ed Hyman at ISI, Bogle is smart… but an indexer, Peter Lynch was a master “buy line out the door”… AAPL, CMG, GMCR, DECK… he would be doing great. Ken Fisher is not so bad. Bob Doll at Blackrock. Etc.

    Even Buffet… who has been S&P +100 bps for 15 years… even he is bullish on equities.

  10. econimonium says:

    curbyourrisk, you know what I’m sick of? People trotting out the “screaming profits at the expense of our kids” utter crap. You know what? I’ll say this out loud: I don’t care about my kids or yours. Especially yours or anyone else’s. You had them, you worry about them. My dad didn’t care about my finances I was raised to worry about my own and deal with circumstances as they were dealt. Do the same and such rather non-specific and crappy lines will disappear from your posts along with your anger. And if you remove this emotion and political bias from your trading habits you’ll learn to love Big Brother too.

    I do, however, believe that consumers will have to make choices in the face of stagnant wages and high unemployment. So I play equities with this in mind. I’m very heavy in cash and selective bonds right now. Looking at equity charts has made me come to the conclusion that everything is ahead of itself given current financial realities. So where’s the upside? Better to wait a bit and buy selectively given what I said in the first sentence. And buying near a pullback is all you need to make money. You don’t have to hit it exactly. Anything discretionary is suspect and will be volatile as long as unemployment is high. And remember I’m going to say it here first: Apple is WAY over-valued. The time to buy it will be when Steve Jobs finally passes, depending on how it gets hammered. Now there was a statement designed to get you to take your emotion out of trading. Those of you who reacted emotionally to that sentence are the ones I like to take the opposite side of a trade with because I’m guaranteed to win.

  11. rootless says:

    Barry,

    I’m curious. Is your relative cash or stock allocation, like the 60% now, based on a mathematical algorithm, which gives this a bit more an objective touch? Or are these relative allocations more subjectively based decisions you make? Thanks.

  12. Ivan71 says:

    Why focus just on oil prices? Why not look at the CRB as a whole? Higher than 2008 by a longshot.

    The difference is that a lot of it is in food prices. And it’s still in the pipeline, coming to a supermarket near you. Oh, I know. Let them eat cake.

    Sure, it’ll end well.

  13. curbyourrisk says:

    I review companies all day long for a living……Not your poster children benefiting from the government ethos, but hard working middle sized companeis…Occassionally I will do a big company, publicly traded. I visit these customers, I speak with them. BUSINESS SUCKS for them. They don;t get the government gravy. We are leaving a poor sorry excuse of a country for the next generation.. YOU want to revel in our demise you go right ahead and keep making profits. Hope you are transferring those profits out the good ole US dollar, because ben is set out on destroying that…in an attempt to preserve the way of life of the oligarchy that has been and is continued to be createad.

    As for Cognos…..you would not know the truth….yes the TRUTH…if it walked up and smacked you in the face. Keep smoking the hopium and be a GOOD american. ben needs millions more like you in order to complete his destruction of America. One day, probably not to far in the future you’re all gonna wake up and ask….WHAT HAPPENED???? I went to bed lat night and everything was fine….I wake up and it all went to shit…. Market gaps down 20% because reality set in. Don’t laugh….that day is approaching. I AM NOT GOING TO SET MYSELF UP AND PICK A DAY, just know it is coming. I will relish saying I TOLD YOU SO!!!!

  14. curbyourrisk says:

    I review companies all day long for a living……Not your poster children benefiting from the government ethos, but hard working middle sized companeis…Occassionally I will do a big company, publicly traded. I visit these customers, I speak with them. BUSINESS SUCKS for them. They don;t get the government gravy. We are leaving a poor sorry excuse of a country for the next generation.. YOU want to revel in our demise you go right ahead and keep making profits. Hope you are transferring those profits out the good ole US dollar, because ben is set out on destroying that…in an attempt to preserve the way of life of the oligarchy that has been and is continued to be createad.

    As for Cognos…..you would not know the truth….yes the TRUTH…if it walked up and smacked you in the face. Keep smoking the hopium and be a GOOD american. ben needs millions more like you in order to complete his destruction of America. One day, probably not to far in the future you’re all gonna wake up and ask….WHAT HAPPENED???? I went to bed lat night and everything was fine….I wake up and it all went to shit…. Market gaps down 20% because reality set in. Don’t laugh….that day is approaching. I AM NOT GOING TO SET MYSELF UP AND PICK A DAY, just know it is coming. I will relish saying I TOLD YOU SO!!!!

  15. crunched says:

    No QE3 = Market down. And there is no way in hell there will be QE3.

    Do you really think the hedge funds and squids will wait until the last week of June to sell? Throw in the Japan impact… any prudent manager will be selling NOW or has already sold.

  16. cognos says:

    Curb –

    I dont understand what “companies” these are you review… every restaurant I want to go to is FILLED at any good time. Every hotel is BOOKED. The good dentists are all FILLED for appointments. Car sales are up massively since the trough (up about 50%) and one cannot get a high-demand BMW or Audi without a 3-month wait. One cannot get an iPad without a 1-month wait.

    WFMI is jammed and growing fast. As is CMG. As is DECK. As is OPEN. Etc, etc.

    Yet… to you… this is not a recovery? It hasnt really even begun… the next 2 years are the real sweet spot.

    I am already up 100-150% since the bottom. Didnt actually lose that much in the downturn. I am not worried about “not losing 20%” in some event… Im worried about making 60% instead of 30% from hard work and smart risk taking.

    Every word you said was said in a dozen recoveries before… 1982 old men said the same thing, “too much debt, country broken”. They said the same thing in 1992. Its stupid.

  17. cognos says:

    The farmers I know (midwestern roots) are all licking their chops buying the biggest, newest combines (see CAT, DE) and loving the profit potential of current corn, soy, beef, and dairy prices. North Dakota has the lowest unemployment in the US at 4%.

    Etc, Etc.

  18. krice2001 says:

    Well Barry hasn’t “sold” but he has said that he’s more than 60% cash, not a huge change from his last stated position that I read which was about 70% cash. I’m assuming that the decrease from 70% to 60%reflects primarily targeted buys resulting from the recent mini-slump.

    I try to follow Barry’s advice and positions as closely as possible for my own sake/safety/opportunities. I don’t trade for a living so I’m fairly ignorant. I’m in defense research and development (management level) for a number of years now so what do I know about markets? Not too much.

    Just seems that the market has not priced in the yet to be determined after effects of Japan, higher oil prices, corporate profit margins at extreme highs, equities that haven’t really corrected for several months, confusion about what’s happening and will happen in the middle east. And then of course, QE may be coming to an end in June.

    I’m currently light on equities as I don’t feel like the risk/return ratio is very good right now and as a non-trader, I’m not very agile to resp0nd to quick turns in the market.

  19. cognos says:

    But you dont need to be “agile” Krice2001.

    This is year 3 of the 5 year “recovery” part of the business cycle. Just buy and hold, buy on dips. Leading indicators continue to show a very strong recovery.

    After the Fed tightens for 2-years… and the curve is flat to inverted… its prob time to exit.

  20. curbyourrisk says:

    Cognos…..

    I hope they enjoy the curernt price hikes…once the QE stops they collapse. The rise is not due to demand, but speculation. We sell into that market, amongst many others,. We too are enjoying all the profit right now…but we ain’t stupid. We see whats ahead and are hedging ourselves accordingly. By thew way. No one lives in North Dakota unless they have to work there. How is the unemployment rate in Nevada? Florida? Texas? California? New York??????

    Come on…since when do we base economic views on the employment level in North Dakota. I would have expected more than that from you.

  21. rootless says:

    cognos,

    So according to you, everything is just peachy and fine and back to normality now, like it was in the years before the Great Recession. And there is no such thing as too much debt in an economy. Ever. Debt levels to GDP can grow infinitely.

    Why again have the extraordinary Quantitative Easing measures by the Fed still been in place, if the economy is booming like after every garden variety recession since WW II? Remind me, please. Somehow this doesn’t go together with your cheerleading point of view.

    I am already up 100-150% since the bottom. Didnt actually lose that much in the downturn.

    So down only 50 to 75% during the downturn, while waiting for the sell signal that the PE ratio based on 12 month operating earnings is going above 20, and therefore busy with buying the BIG DIP all the way down? And now up 100 to 150% since the low in March 2009?

    I am not worried about “not losing 20%” in some event… Im worried about making 60% instead of 30% from hard work and smart risk taking.

    I have read your forecast. S&P500 at 3000 in only a few years from here.

  22. cognos says:

    Curb –

    Lets pick this up at 1,400 and then 1,500 and beyond.

    Payrolls will continue to grow, economy will continue to strengthen and stock will continue to go up… because its a recovery, duh!

    No amount of data (ALL ecnoomic data points this way — ISM, payrolls, claims, yield curve, leading indicators, etc)… or arguement will convert bad investors.

  23. rootless says:

    cognos,

    Im worried about making 60% instead of 30% from hard work and smart risk taking.

    To what “hard work” are you referring here? To the “hard work” that is required to redistribute money from other people’s pockets into your own? Because that’s what trading in the stock market actually is. Not really different to the kind of the “hard work” of a bank robber, which he applies to acquire his loot. Only latter is illegal and socially ostracized, whereas former is not.

  24. louiswi says:

    Can we have some clarity on the Federal Reserve. It isn’t run by “one guy” contrary to popular opinion. There are seven governors and they are supported by an absolute shitload of MBAs. Their charge is to maintain price stability AND to work toward full employment. IMHO, they are doing a masterful job considering the mess they have had to deal with. The mess created by the political industry.

  25. curbyourrisk says:

    Payrolls will continue to grow???? Excuse me, but just because they are no longer falling off a cliff…that does not mean they are growing….. That is an outright lie!

    Just becuase the stocks are going up, does not nor has that ever meant the economy is strangthening…. Stocks do, what stocks want to do…or in this case, what they are FORCED to do.

    By the way, I am not an investor….and I have clearly said that on other posts….not today though. I used to be a stock jockey……back in 1998-2003, but that was another lifetime ago.

    By the way……for every data point you use, I can find one that says you are flat out wring, but then again. you prould probably dismiss that because it disagrees with you…..OBJECTIVE ananlyss highlights ALL DATA, whether you like it or not.

    based on the references you chose to utilize for your research, I bet you also believe in GLOBAL WARMING and PEAK OIL……slective data to yield pre-determined views.

  26. rootless says:

    @curbyourrisk:

    based on the references you chose to utilize for your research, I bet you also believe in GLOBAL WARMING and PEAK OIL……slective data to yield pre-determined views.

    That’s funny, since I thought of the strong possibility that cognos was an anthropogenic global warming denier, just because of his approach to outright dismiss any data as “bad” data, when those data contradict his preconceived views, like AGW-deniers do with respect to the findings of climate science on global warming. But maybe latter doesn’t contradict his views, so he doesn’t do in this case.

  27. econimonium says:

    Why is it when someone says “Peak Oil” or mentions gold is it that I just stop listening? Same for using the phrase “fiat currency” if you’re not in a heavy discussion about explaining the reserve system in an academic way….

  28. rootless says:

    @cognos:

    Payrolls will continue to grow, economy will continue to strengthen and stock will continue to go up… because its a recovery, duh!

    Your reasoning about this alleged automatism between economic expansion and rising stock market is fallacious, since it’s based on at least two too simplistic assumptions.

    The first assumption is that economic expansion is sufficient for a rise in the stock market, no matter what stock market valuations have already been reached.

    The second assumption is apparently that earnings just going to continue to go up over the next few years like they have been going up since the low in the earnings cycle, just by extrapolating the past earning growths into the future.

    Not saying that markets can’t go up further from here. The stock market is largely irrational in the shorter term and not really predictable. There might still be room for further speculative upward movement. What I’m saying is that CAPE is already at >23 and dividend yield is very low. In history, there aren’t many cases where as lofty valuations have lasted for long and gone up even higher. That makes investment in the stock market very risky at this point, particularly, if this investment is thought to be for a longer time period.

  29. curbyourrisk says:

    louiswi….. Those OTHER Fed Heads you speak of. Do they make policy???

    I thought not.

    The show IS run by 1 man, with the help of Tim Geithner and the EXPRESS approval of the White House and CONgress.

  30. Ivan71 says:

    Its amazing how many people I meet didn’t lose much in the downturn, but are up 100-150%. I’m tellin’ ya, all these winners and no one admits to losing a dime.

    Geniuses.

  31. cognos says:

    Rootless, Curbyourrisk, and the people they cite…

    Still ALL bearish after 2 years of the same arguments.

    When does it change? How much data and growth and cashflow is enough?

  32. louiswi says:

    Curbyourrisk:

    It is getting pretty clear you don’t know very much.

    I know that sounds rude and crass but you are the painter of your picture and that is what I am seeing.

  33. cognos says:

    Curb –

    I just want to put one final nail in the coffin. All my points have specific data that support growth and recovery. I cite the key data points — ISM, leading indicators, SPX earnings… but often not the data itself bc that is easy enough for anyone to look up. The major problem with most people is that they following lagging data — unemployment or sentiment (you WANT to invest when people are afraid!) or the level of data rather than the positive change.

    Payrolls… have been +200k per month recently, up from -700k per month at the trough.

    The BEST THEY EVER GET is +300 to 350k. So we are MORE THAN 85% of the way to PEAK PAYROLL and job growth!

    How is that not pretty clear to you? You describe this as “not falling off a cliff”. Hmm… sounds like bad economics. Id say we are heading to 100% of peak job growth in the next year. Is that not text book recovery?

  34. nandro says:

    Cognos – the S%P returned 15% last year and we’re up about 4.9% this year, I would love to hear you are making “60% a year” instead of 30% a year…..Wow, with such consisently outstanding returns, and the fact that you don’t lose much in the downturn, I’m sure you’re running a multi-billion hedge fund by now. I mean that’s what people who are able to achieve constently outsized returns do. And it would certainly lead me to wonder what you’re doing spending your days putting out snappy little comments about your amazing returns and how obviously the market is going up forever and ever and this is time different, etc. I mean how do you find the time to be an investment genius and a time-wasting middle-of-the-day blog comment doofus?

    Please do tell!

    PS – Anyone that is not concerned about losing money in the market is not an investor, is not an adult, is not a serious person. They are a gambler, a buffoon, and a child, and eventually they will lose their shirt.

  35. rootless says:

    @cognos:

    Rootless, Curbyourrisk, and the people they cite…

    Still ALL bearish after 2 years of the same arguments.

    I wasn’t particularly bearish around the stock market low two years ago. I was fully invested and highly levered up back then. And what people are you talking about whom I have cited here, supposedly? Why are you lying here about what I have said and done? Is it because you don’t know any rebuttal with substance to what I actually say above, so you need a straw man for distraction?

  36. cognos says:

    Nandro -

    The point is… the desired profile is not — “never lose money”. The desired profile is large upside… lets take David Tepper who’s return profile is something like 25% net of fees annually for 20 years. The top hedge fund investors ARE up 20, 30, even 40% annually for a decade or 2.

    Tepper was -28% in 2008. And then +120% in 2009. This is a reasonably good goal for your average HNW investor.

    The greatest losses occur because one holds cash… forgoing 20% annual returns (or more!) during the run up. You are basically giving the bank your cash at 0% or 1% instead of borrowing!

    Most of the extremely wealthy investors I know are not particularly awsome at “avoiding 10% losses”… they made 100x their money in one of the great booms / recoveries that we seem to have after every downturn.

    Its all about stock picking… last year BIDU +153%, AAPL +53%, CMG +153%, SIRI +171%; NFLX +218%.

    Many names were up 200% or more off the summer lows…

    But what I dont get … I dont get it at all… is this “fear” of losing 20%. First, this does not seem to be a big deal. Second… this is the same as being up 15% when one could’ve and should’ve been up 35%. Exactly the SAME… Yet there is little fear of that? Why?

  37. cognos says:

    Nandro… I AM concerned about not losing 50%… even 30% is too high for me. But I am not all super worried about 10 to 20%. That seems like a silly amount when one can make that each and every year… and really with hard work and a nack for stock picking a really good year is 100% and no down months. (I havent had one of those yet… but my record is pretty good and I am working hard to have one.). I am typically both long and short stocks and try to have significant outperformance on both sides.

  38. Thor says:

    Why are so many of the threads lately nothing more than either Cognos or Curb (or both!) arguing the same points over and over and over and over and over again?

  39. rootless says:

    @cognos:

    Payrolls… have been +200k per month recently, up from -700k per month at the trough.

    The BEST THEY EVER GET is +300 to 350k. So we are MORE THAN 85% of the way to PEAK PAYROLL and job growth!

    Assuming you are right. Is this supposed to be good news for the economy, considering how many jobs have been lost in the Great Recession and how small the fraction of recovered jobs has been compared to the number of lost jobs? See:

    http://cr4re.com/charts/charts.html#category=Employment&chart=JobLossesPercentFeb2011.jpg

    Id say we are heading to 100% of peak job growth in the next year. Is that not text book recovery?

    Well, I guess like almost exactly a year ago when you wrote:

    Havent we gone from -700k on NFP a year ago… through flat the last 4 months… to +160k in March. I dont know much about trends and the business cycle… but where do you think that is in 3 months? maybe +350k? Howabout 6 months out? +500k?

    (Source: cognos, April 2, 2010 at 9:50 AM, http://www.ritholtz.com/blog/2010/04/nfp-162k/#comment-269004)

    And hasn’t everyone who didn’t follow your cheerleading views back then been proven an idiot, too?

  40. wobbler says:

    SP500 will turn to south somewhere nearby to 1430-1480, it is too early yet.