Rally! Ugly Fade! Reversal Wednesday!
I am off to a meeting, but (as of 3:15 pm) I am impressed with this turnaround.
I was all set to write how ugly this morning’s fade was, and how problematic it is for the breakout thesis, when this puppy lit up around noon on some nonsensical rumor out of Europe.
It seems that the European leaders have come to some sort of an agreement about the near term deliberations. They now apparently have mapped out all of the details about their strategy for their next meeting, where they will make a plan to debate what sort of tactics they want too engage in on their next group summit to kick around an agenda for their next symposium, where they may discuss the bank problems. Over breakfast. Or not.
Meanwhile, the S&P trading range has held, and markets are still in breakout mode. Until they fade, in which case they obviously were not in breakout mode, but rather breakdown mode. In which case they will go lower, until they find support (unless that breaks) and then they go lower and find support (that holds) in which case they can reverse. Unless they don’t. If that happens, you might have been caught leaning the wrong way, which helps set the stage for the next turnaround. Unless it doesn’t. Which goes to show you how dangerous crowded trades can be. Unless they continue, cause after all we know the trend is your friend and you can’t fight the tape and its tough to be a contrarian and long and strong is the posture you want. Until it all goes into reverse, and then the trend is not your friend and you should not have gone along to get along with a tape that was a bull trap and it looks like we are heading lower. Unless we don’t.
Meanwhile, I gotta go. (Unless I don’t).
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October 26th, 2011 at 3:22 pm
Yeah, I guess we are all where we are because it’s to crowded where we are supposed to be.
I was thinking about your seasonality post the other day. I wonder what would happen if sold in May then bought the summer dips?
October 26th, 2011 at 3:26 pm
amazing how everyone. make conclusions based on the market’s action.
slippery slope.
d
October 26th, 2011 at 3:28 pm
That about sums it up BR. Thanks for the crystal ball.
October 26th, 2011 at 3:29 pm
Barry: Glad you cleared that up. Maybe you should be in charge of the super committee on debt reduction. Funniest thing I’ve read this week.
Roland
October 26th, 2011 at 3:30 pm
BR: All of my trades right now are contrarian on short term extremes. Market goes too far on hope, I sell. Market goes too far on anguish, I buy.
Until Euro has something concrete, I won’t change this pattern.
~~~~~~~~~~~~~~~~~~
4whatitsworth: You’d have enough money to buy a flux capacitor and keep going back to the future.
Regards,
George … The Greek …. From Canada
October 26th, 2011 at 3:31 pm
Over on MarketWatch, today’s chart of the GlobalDow looks like a patient in cardiac arrest who has a single heartbeat and then goes back into arrest. Seems to fit somehow.
October 26th, 2011 at 3:35 pm
BR concluded
It seems that the European leaders have come to some sort of an agreement about the near term deliberations. They now apparently have mapped out all of the details about their strategy for their next meeting, where they will make a plan to debate what sort of tactics they want too engage in on their next group summit to kick around an agenda for their next symposium, where they may discuss the bank problems. Over breakfast. Or not
reply:
———
I think you got it.
October 26th, 2011 at 3:41 pm
You are right, Barry!!! Unless you’re not.
October 26th, 2011 at 3:44 pm
“Meanwhile, the S&P trading range has held, and markets are still in breakout mode. Until they fade, in which case they obviously were not in breakout mode, but rather breakdown mode. In which case they will go lower, until they find support (unless that breaks) and then they go lower and find support (that holds) in which case they can reverse. Unless they don’t. If that happens, you might have been caught leaning the wrong way, which helps set the stage for the next turnaround. Unless it doesn’t. Which goes to show you how dangerous crowded trades can be. Unless they continue, cause after all we know the trend is your friend and you can’t fight the tape and its tough to be a contrarian and long and strong is the posture you want. Until it all goes into reverse, and then the trend is not your friend and you should not have gone along to get along with a tape that was a bull trap and it looks like we are heading lower. Unless we don’t.”
The paragraph would be purrfect if it wasn’t punctuated and rather just written as one looooooong run-on sentence!
October 26th, 2011 at 3:59 pm
Doug Kass Says:
October 26th, 2011 at 3:26 pm
amazing how everyone. make conclusions based on the market’s action.
slippery slope.
reply:
———-
After finally figuring out the ESFS and the bullshit problem that seems to be infecting the overall dialog in Europe, I can only conclude the slippery slope is really an 80 degree drop that will appear as soon as the fog clears. At what point on the calendar can Europe’s debt problems no longer be papered over with meetings and gifted debt servicing?
October 26th, 2011 at 3:59 pm
Would you be interested in becoming the Official U.S. Special Envoy to EU/ECB/IMF deliberations? They’re in dire need of clarification & decisiveness. Nice work, if you can get it!
October 26th, 2011 at 4:06 pm
What’s that old line from “Hill Street Blues?” “Let’s be careful out there.”
October 26th, 2011 at 4:10 pm
Hogwash – market rallied due to the Kardashian honeymoon plans finally coming together; and were then dashed in the afternooon after it was discovered she had a run in her stockings…
October 26th, 2011 at 4:12 pm
I say f*ck it, I’m out. The market subtext is “year end rally” which will work as long as it works and then it won’t. We’re on the knife edge of a double dip recession in case anyone’s been distracted by the whole Euro fiasco.
You left out my favorite: “Don’t fight the Fed.”
October 26th, 2011 at 4:21 pm
dead hobo asks: “At what point on the calendar can Europe’s debt problems no longer be papered over with meetings and gifted debt servicing?”
When the overnight funding for a European bank runs out and the alphabet soup of bailout funds they have are not big enough to open that bank (doesn’t much matter which one) the next day. Better hope it happens on a Friday. Once one goes like that and it’s public, then the music stops and the search for chairs begins in earnest.
October 26th, 2011 at 4:27 pm
The only alternative I see to the impending world of hurt is if China, as rumored by Bloomberg Radio today, stepped-up to buy/pay-down some of Europe’s debt. On the one hand, it could soften the blow of austerity measures, but I just can’t imagine China willingly throwing away 50 to 75 percent of their principal (on hundreds of billions) to save the European Union.
October 26th, 2011 at 4:30 pm
Quote without comment: via Bloomberg @3:02 pm: Sarkozy Said to Plan Plea to China for EU Fund
http://www.bloomberg.com/news/2011-10-26/euro-rescue-fund-chief-goes-to-china-as-europe-seeks-investors.html
How do you paper that one over?
October 26th, 2011 at 4:57 pm
Barry: You’re reading my mind.
October 26th, 2011 at 5:08 pm
Awesome! (unless its not)
October 26th, 2011 at 5:13 pm
Tx to BR’s cogent advice I’ve decided to stay in cash.
October 26th, 2011 at 5:14 pm
It really isn’t funny when leaders choose a societal breakdown over a systemic change; they will pay dearly for their mistake.
The only accord was recapitalization of banks…..those banks:
http://moneymorning.com/2011/10/10/one-of-these-banks-is-europes-lehman-bros-and-were-going-to-profit-from-its-collapse/
October 26th, 2011 at 5:15 pm
Noone could have said it better…what a piece of utter garbage this market and the world’s economy are….going fishing….
October 26th, 2011 at 5:19 pm
I think the unspoken plan is just wait and let what’s going to happen, happen. Greece default, Spain default, whoever, etc. If France and Germany put together a plan that falls apart, then the markets crumbling and countries going bankrupt is their fault.
If they just keep putting off meetings long enough, Greece will go under on its own and any calamity that follows will be Greece’s fault. Or Italy’s fault if it’s Italy. Or Spain, etc. Why should Germany saddle itself with debt it can’t get out of with some kind of ‘deal’? Whereas, if Europe goes belly up they’ll at least have the freedom to try and figure out how to protect themselves… individuals, banks, etc. If they’re legally hamstrung with debt in some deal and everything goes to crap, then they go down with the ship.
October 26th, 2011 at 5:25 pm
As for the market… F**K it, I’m out too. I’m putting on a huge January Strangle over this whole pathetic, robot controlled range and I’m going to reap the time decay that will come when everything grinds to a halt in a couple of weeks and stays that way until mid-January.
October 26th, 2011 at 5:30 pm
This is the most coherent analysis of today’s market action I have read so far. Keep up the good work.
October 26th, 2011 at 5:48 pm
@geaufeau:
“It really isn’t funny when leaders choose a societal breakdown over a systemic change; ”
One of those concise, well-targeted truths. Bravo.
October 26th, 2011 at 5:49 pm
@beaufeau not geaufeau. Fat fingers.
October 26th, 2011 at 6:09 pm
Health
Family
Faith
Water
Food Security
Physical Security
Energy
Gold
Silver
The rest is complete bullshit at this point…..now its just a matter of how long before more sheep start to realize how bad they are getting fucked…..probably a long time from the looks of things….certainly won’t happen during football season….LOL
The markets are broken. They have been broken for over 5 years now. I’d rather go to Hollywood Park….at least I get the enjoyment of watching those amazing horses run their guts out for oats while I’m pissing away my cash….beats making some fuckstick stockjock’s beemer pymt any day.
October 26th, 2011 at 6:22 pm
“The markets are broken. I am out.” Translation: “I have no fricking clue what I am doing so I will pretend to not care but still post anyway.”
The actual sheep spend all their time pointing out that everybody else is the sheep.
October 26th, 2011 at 6:38 pm
A view of the future, offered for the fun of it…
Ever try to get a suburban HOA’s members to chip in a couple thou for road paving? VERY difficult and it’s a whole lot less than each country over there has to chip in.
Let’s say they procrastinate, etc. and let Greece fall. After all, how much is Germany or Holland willing to chip in so that the Greeks can retire at 55, not pay income taxes and have 1/3rd of their workforce working for the government? Then too there is the matter of the cooked books that got them into the EU in the first place.
So, we have a Lehman moment. The lesson has been given, everyone is “appalled” at the fallout (have your seatbelts tightened over here) and suddenly unanimity arises and the crisis is solved.
It will be fun to see if that’s how it turns out.
October 26th, 2011 at 6:38 pm
I like this post. Really. It is how I feel about this market. We are trading rumors.
October 26th, 2011 at 6:53 pm
Look out below IMO.
Calls for “Santa Rally” suggest the opposite.
End of Month window dressing, then Santa becomes Scrooge.
Unless . . .
October 26th, 2011 at 7:32 pm
Actually… the real sheep spend all their time pointing out the people who spend all their time pointing out the people who they think are sheep.
October 26th, 2011 at 8:40 pm
Ha, good 1 BR.
It reminds me of when the only market I was interested in was the cattle and hog market. I was listening to the noon market reports on the radio and the announcer (we didn’t call them pundits) was giving his opinion of what the cattle market was going to do when he said “The cattle market should go up if it doesn’t go down”. There was a pause, then he said” Idon’t believe I just said that”
Jack
October 26th, 2011 at 8:43 pm
I guess sheep must be like fleas
“Big fleas have little fleas,
Upon their backs to bite ‘em,
And little fleas have lesser fleas,
and so, ad infinitum.”
October 26th, 2011 at 9:30 pm
Barry,
Saw an interesting interview tonight on the PBS newshour. It was with Richard Epstein at NYU. It seemed to me to be propaganda regarding the benefits of inequality disguised as rational economic thinking. Thought you might have some insights and want to share it with the community.
Here is a link.
http://www.pbs.org/newshour/bb/business/july-dec11/makingsense_10-26.html
October 26th, 2011 at 9:32 pm
Barry you sold em to me back at 1100 now I am selling them back to you. Good luck.
October 26th, 2011 at 10:04 pm
That is the most honest bit of financial writing I have seen a very long while. Thanks for that!
October 26th, 2011 at 10:28 pm
OMG, Barry you have to see this assclown (R. Epstein clip) if for no other reason than for a guffaw or two! Even mild-mannered PBS NewsHour reporter, Paul Solman, looked at him incredulously when he claimed special status as an affluent person to wisely transfer assets to his progeny (and therefore should be free of estate tax) whereas inheritors of less means would see their sense of industry adversely effected by such largesse. Unbelievable. I’d love to see this chump on the same stage as Ezra Klein, or even better, Elizabeth Warren.
October 26th, 2011 at 10:54 pm
Seemed like a tribute to “Stengelese.”
“Good pitching will always stop good hitting and vice-versa.”
——Casey Stengel
October 27th, 2011 at 4:50 am
Thoughtlessness be damned – saw it live .. and if it emerges out of “moderation” come morning light my thoughts:
I think the state of the economy proves that disposable income (in degrees) across the entire spectrum of quintiles is important to everyone continue’g to contribute their labor (muscles &or brains) .. the real worry of capital hoarders is that steak & lobster will become in short supply with the world population now doubled in 50 years if they give an inch … I also contend that money does not evaporate or burn up circulate’g in a closed system / our problem is we are not self sufficient as a country and burn up more imports than we export performing work of insufficient exportable GDP
(2nd post – ps)
I’m sticking with steak & lobster as a motivator but feel strongly to present a 2nd ie: to drive invention* from the unwashed masses that capital needs to compete with other capital hoarders in this game of life ie: capitalism
*coda – to study the mechanical sciences ie: foundations to real invention.
psst – the unwashed masses need to be connected to this 21century world or they will just not get it
October 27th, 2011 at 9:56 am
Are you still short stocks? If so you can catch up on the next drop to 666.
October 27th, 2011 at 11:36 am
it was 667 (rounded) .. the system goofed up .. maybe next time
kidding off thanks for the opportunity .. are we playing to a script ? it just must play out ? it is written .. see me feel me
The Who – See Me, Feel Me – Listening to You (1975)
http://www.youtube.com/watch?v=QV_9pn7MGUo
psst – I do not believe in pre destined time (unless we are working backwards in spacetime) and a blackhole is waiting as a detour (or not)