Dow

[Jess9]

Closed below 12,000 on more concern about further credit crunch fallout. More volatility to come me thinks.

[malcolm]

Closed below 12,000 on more concern about further credit crunch fallout. More volatility to come me thinks.

l take a bit of interest in U.S MARKETS NOT TO TO TRADE STOCKS but to see what the power engine of the world is doing (or was) and the honest opinion of those guests on CNBC and their own-- riff raff --its not looking bright the banking (financials) are going bust one more time -soon ----DOW WILL BE 11000--WITH IN 4 to 5WEEKS--- we all follow SUIT -- -- don,t do any margin buying----;););)

[shasta]

Closed below 12,000 on more concern about further credit crunch fallout. More volatility to come me thinks.

DOW down 220 points & DOW Futures down 200 points on Friday = very ugly day on ASX tomorrow.

Watch for the panic selling, followed by the recoup on Tuesday...

My stocks dont seem to get catch up with the general market sentiment.

Probably cos they never go up on green days!

[Hawke]

Margin buyers........I think many have come back into this scheme over the last few months- as things appear to have become more stable.
With the Dow again on the skids.............look for some stocks to drop 3-10% as Margineers gets squeezed.
What about all the NZOers on Margin loans......could get ugly?

Hawke.

[shasta]

Margin buyers........I think many have come back into this scheme over the last few months- as things appear to have become more stable.
With the Dow again on the skids.............look for some stocks to drop 3-10% as Margineers gets squeezed.
What about all the NZOers on Margin loans......could get ugly?

Hawke.

Im holding VIR (Alternative Energy) on margin lending, however it is very stable & generates large cashflows & pays out a distribution of 10cps.

To drop further than say 70c, only increases the yield beyond 14%.

[Steve]

THE USD is also acting a bit indecisive too...

[malcolm]

SOME may now ignore U.S MKTS a little bit( at their perril) but when they SNEEZE we all get INFLUENZA----;)

[Jess9]

Well, both the ASX and NZX shugged that off, for today at least.

[malcolm]

I,HAVE GOT A SMELL THAT THE--DOW--- WILL LET GO THIS MONTH the feeling i,m continuing GETTING---- is every US comentator is going around in circles and are getting embarrased by there previous statements.......

[Hoop]

The Dow is getting close to its primary support level of 11750.
Indications are, it has a better than average chance of falling below that support. If it does the TA target is 11000
see Colin Twiggs Diary (http://www.incrediblecharts.com/tradingdiary/2008-06-21.php#sp500),

[Packersoldkidney]

The Dow is getting close to its primary support level of 11750.
Indications are, it has a better than average chance of falling below that support. If it does the TA target is 11000
see Colin Twiggs Diary (http://www.incrediblecharts.com/tradingdiary/2008-06-21.php#sp500),

I would be surprised if the Dow didn't rally from around here: as you say, around a key support level right now. I think we may be around a low for the year in terms of the Dow - time will tell. A Dow chart from around the start of the decade and in particular the levels reached in 2002 tell a story as to where things might spring off in the near future.

[malcolm]

The Dow is getting close to its primary support level of 11750.
Indications are, it has a better than average chance of falling below that support. If it does the TA target is 11000
see Colin Twiggs Diary (http://www.incrediblecharts.com/tradingdiary/2008-06-21.php#sp500),

INTERESTING READ HOOP I,VE CAUGHT THE MACDUNK ILLNESS regarding -------dow----- i think the sh-t is going to hit the fan

[Packersoldkidney]

So much for my prediction: Dow tanking tonight along with the Naz.

Financials getting hammered - tech stocks getting pasted - gold and oil up, US $ down.

[malcolm]

So much for my prediction: Dow tanking tonight along with the Naz.

Financials getting hammered - tech stocks getting pasted - gold and oil up, US $ down.

oil up to Us139 nymex 3.30 am kiwi time---dow like u say now down to 11580down 220 tonite techsway down the yanks blaiming oil specs again---- nothings there fault-- prime melt down, housing, financials, etc all oil price fault --- blo-dy yanks can,t win simple wars viet-nam--- iraq----- and internal fi=nancles in a mess -- dow will let go this US summer

[Packersoldkidney]

oil up to Us139 nymex 3.30 am kiwi time---dow like u say now down to 11580down 220 tonite techsway down the yanks blaiming oil specs again---- nothings there fault-- prime melt down, housing, financials, etc all oil price fault --- blo-dy yanks can,t win simple wars viet-nam--- iraq----- and internal fi=nancles in a mess -- dow will let go this US summer

I have to admit that I am surprised that many, if not all, are saying the US is going to be in for a 'mild' recession - when all indicators point to a very long and very deep recession.

Thing is, in relation to the Dow, the reality of a recession hasn't even hit yet, let alone one that could be much nastier than anything in living memory - what is going to happen to the Dow if the USA really does fall into more than a 'mild' recession?

I was expecting a bear market rally off support, but clearly my call was wrong. The Dow will go much lower from here one would expect.

[Jess9]

re Dow fall: on the upside, gold bounces nicely ; )

[malcolm]

I have to admit that I am surprised that many, if not all, are saying the US is going to be in for a 'mild' recession - when all indicators point to a very long and very deep recession.

Thing is, in relation to the Dow, the reality of a recession hasn't even hit yet, let alone one that could be much nastier than anything in living memory - what is going to happen to the Dow if the USA really does fall into more than a 'mild' recession?

I was expecting a bear market rally off support, but clearly my call was wrong. The Dow will go much lower from here one would expect.

YEP; --USA HAS BEEN GETTING ROTTEN ALL YEAR and i watch CNBC EARLY mornning interviews day in day out and what has been standing out louder and louder as year gone on is--- ONE OF CONFUSION--- FROM PEOPLE WHO SHOULD BE CALM AND UNDER CONTROL i think that thier major investment banks are all in the SH-T AND WILL ALL START TO HAVE DIARHEA-SOON MONDAY COULD BE BLACK MONDAY AGAIN------MHOP-----no financial expert but have shallow pockets;);)

[AMR]

So it appears the Fed has run out of room to move. No more interest rate cuts = bad news for equities over the next two months?

[Packersoldkidney]

So it appears the Fed has run out of room to move. No more interest rate cuts = bad news for equities over the next two months?

The only move it can make is to raise rates - bad news for equities through this year and next at the very least.

[Hoop]

YEP; --USA HAS BEEN GETTING ROTTEN ALL YEAR and i watch CNBC EARLY mornning interviews day in day out and what has been standing out louder and louder as year gone on is--- ONE OF CONFUSION--- FROM PEOPLE WHO SHOULD BE CALM AND UNDER CONTROL i think that thier major investment banks are all in the SH-T AND WILL ALL START TO HAVE DIARHEA-SOON MONDAY COULD BE BLACK MONDAY AGAIN------MHOP-----no financial expert but have shallow pockets;);)

Yes I watch Closing Bell and Fast Money in the mornings on CNBC
Malcolm usually Fast Money is entertaining and funny with the traders joking away and taking the mickey out of their counterparts when they have a bad day...but this morning they didn't crack one joke..they were all rather subdued.
First time I've noticed this. I think this is a very bad bad sign.

[malcolm]

Yes I watch Closing Bell and Fast Money in the mornings on CNBC
Malcolm usually Fast Money is entertaining and funny with the traders joking away and taking the mickey out of their counterparts when they have a bad day...but this morning they didn't crack one joke..they were all rather subdued.
First time I've noticed this. I think this is a very bad bad sign.

BUT IF YOU CAN GET THE SCRIPT OF EARLIER INTERVIEWS OR START WAKING UP EARLIR 2AM FOR THIER SPECIAL GUEST,S NORMALLY SIMILAR CEO/ ETC ETC THEY ARE CONFUSED WHEN COMPARING INTERVIEWS A WEEK OR 2 EARLIER YOU ARE RIGHT --HOOP --IT,S GOING TO HIT THE --- SH-FAN;););)

[malcolm]

If Us$$$$ Down--oil Up --dow Down-- Thats The Trend;)

[malcolm]

The only move it can make is to raise rates - bad news for equities through this year and next at the very least.

there won,t be many positives coming out this month negative week on the dow will make minus 11000 a certainty

[Jess9]

Independance day was a breaker this/last week. Watching with interest, next. Maybe a few good buys will flow through into the NZ and AUS markets - bit of spare cash is handy to have ATM.

[malcolm]

Independance day was a breaker this/last week. Watching with interest, next. Maybe a few good buys will flow through into the NZ and AUS markets - bit of spare cash is handy to have ATM.

jess; you are right cash is king-- a load of FED news this week will see DOW -SUB 11000 before thurs- our mkts - will shudder---- ;)

[trendy]

OMG what a day. The carnage was amazing - look at the LEH volume 260% of normal daily volume. At this rate the LEH mid-year bonus will see staff own all of LEH. **** next staff salary will be simply be in stock bought daily from salary budget.

As for FNM and FRE they are dust - FRE down 22% today alone. THEY ARE BOTH INSOLVENT/BANKRUPT AS THEIR LIABILITIES EXCEED ASSETS(CAPITAL).

If the US government steps in to guarantee them the US WILL BE DOWNGRADED. T-BONDS will be dumped in mass. US i-rates will head up.

[trendy]

If this isn't the prelude to worse to come nothing is.

http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/07/11/cnspain111.xml

Spain pulls bond sale amid economic crisis

By Ambrose Evans-Pritchard
Last Updated: 10:21pm BST 10/07/2008

Spain has suspended an auction of sovereign bonds as investors take fright over the country's property crash and accelerating slide into economic crisis.

Spain has suspended an auction of sovreign bonds as investors take fright over the country's property crash and accelerating slide into economic crisis
Spanish government officials have been shocked by the intensity of the downturn

The treasury pulled an expected sale of 15-year bonds after probing the market informally, saying it would wait until credit conditions began to calm down. "We are not facing financing problems. We placed a successful three-year note on Wednesday," said a spokesman.

Government officials have been shocked by the intensity of the downturn now engulfing the country. Car sales fell 31pc in June, industrial production has fallen 5.5pc over the past year and the collapsing property sector is shedding almost 100,000 jobs a month.

Miguel Sebastian, the industry minister, said the economy had ground to a halt in the second quarter and was now in "virtual recession"

[trendy]

More doom and gloom...

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/11/cnmoney111.xml

The money tap turns off, leaving the world in short supply

Last Updated: 12:33am BST 11/07/2008

The lifeblood of countries' economies is draining away - with grim consequences for us all, writes Ambrose Evans-Pritchard

The money supply data from the US, Britain, and now Europe, has begun to flash warning signals of a potential crunch. Monetarists are increasingly worried that the entire economic system of the North Atlantic could tip into debt deflation over the next two years if the authorities misjudge the risk.

The key measures of US cash, checking accounts, and time deposits - M1 and M2 - have been contracting in real terms for several months. A dramatic slowdown in Britain's broader M4 aggregates is setting off alarm bells here.

Money data - a leading indicator - is telling a very different story from the daily headlines on inflation, now 4.1pc in the US, 3.7pc in Europe, and 3.3pc in Britain.
# Read more by Ambrose Evans Pritchard
# More on economics

Paul Kasriel, chief economist at Northern Trust, says lending by US commercial banks contracted at an annual rate of 9.14pc in the 13 weeks to June 18, the most violent reversal since the data series began in 1973. M2 money fell at a rate of 0.37pc.
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"The money supply is crumbling in the US. There was a very sharp lending contraction in the second quarter lending. If the Federal Reserve is forced to raise rates now to defend the dollar, it would be checkmate for the US economy," he said.

Leigh Skene from Lombard Street Research said the lending conditions in the US were now the worst since the Great Depression. "Credit liquidation has begun," he said.

The Fed's awful predicament does indeed have echoes of the early 1930s when the bank felt constrained to tighten into the Slump in order to halt bullion loss under the Gold Standard. Investors - notably foreigners - dictated a perverse policy. Over 4,000 US banks collapsed. This time a de facto "Oil Standard" is boxing in Ben Bernanke. Benign neglect of the dollar has started to backfire. It is pushing up crude, with multiple leverage.

The monetary picture is highly complex. The different measures - M1, M2, M3, M4 - have all given false signals in the past. Each tells a different tale, and monetarists fight like alley cats among themselves.

The Federal Reserve stopped paying much attention to the data a long time ago. It has abolished M3 altogether. The US economic consensus is New-Keynesian (dynamic stochastic general equilibrium model). Delving into the money entrails is derided as little better than soothsaying.

That attitude, retort monetarists, is the root cause of the credit bubble. The money supply almost always gives advance warning of big economic shifts. Those who track the data are now calling on central banks to move with extreme caution. If the rate-setters overreact to an inflation spike caused by oil and food - or confuse today's climate with the early 1970s - they may set off an ugly chain of events.

"The data is pretty worrying," said Paul Ashworth, US economist at Capital Economics. "US lending is shrinking dramatically in real terms, and we know from the Fed's survey that banks want to tighten further. People are clamouring for higher rates but we think deflation is now the biggest threat. The idea that the Fed should tighten with unemployment soaring is preposterous," he said. The jobless rate jumped from 5pc to 5.5pc in May.

In Britain, the Shadow Monetary Policy Committee - hosted by the Institute for Economic Affairs, and a refuge for UK monetarists - issued its own alert this week. The focus is on "adjusted M4", which covers loans to "private non-financial corporations" and may offer the best insight into the health of British business.

The growth rate has dropped from 16.1pc a year ago to minus 0.5pc in April. It is the suddenness of the decline that matters most. The data reeks of recession. Professor Patrick Minford from Cardiff Business School called for an immediate rate cut, arguing that the credit crunch is a more powerful and long-lasting force than the oil inflation.

Professor Tim Congdon from the London School of Economics said the UK was lurching from boom to bust. "Real money growth is virtually nil. The British economy is taking a thrashing and it is going to get worse. Corporate money balances have contracted 3pc over the last three months, which is double digits on an annualised basis. This is a serious squeeze for companies," he said.

Mr Congdon warned three years ago that surging M4 would lead to a "dangerous" bubble, which is what occurred. He now fears the MPC will react too late as the process goes into reverse.

Roger Bootle from Capital Economics said Britain could be facing a "real economic crisis and a financial collapse. The MPC does not have the luxury of waiting until all is absolutely crystal clear. By that time the bird will have flown."

The eurozone is at a later stage of the credit cycle. Even so, house prices are collapsing in Spain, and falling in Germany and France. German industrial orders have dropped for the last six months in a row. A joint IFO-INSEE survey said eurozone growth had stalled to zero in the second quarter.

"Consumer lending has fallen off a cliff. It is contracting in real terms," said Hans Redeker, currency chief at BNP Paribas. Core inflation has fallen from 1.9pc to 1.7pc over the last year.

Unlike the Fed, the European Central Bank keeps a close eye on money data (though not on real M1, now shrinking). It looks at the broader M3 figures. There is a raging debate in Europe over the signals now being sent by this indicator.

The M3 growth is still 10.5pc, down from 11.5pc in January. However, the data has been badly distorted by the closure of the capital markets. Firms have been forced to draw down existing credit lines from banks, which shows up as M3 growth. (It is the same story with America's M3 since the collapse of the Commercial Paper market).

"The credit lines are expiring. Companies cannot roll over loans. We are going to see the entire private credit multiplier go into a slowdown," said Mr Redeker.

Jean-Claude Trichet, the ECB's president, said last week that the M3 data "overstates the underlying pace of monetary expansion". The ECB nevertheless pressed ahead with a rate rise to 4.25pc, setting off a storm of protest. This may go down as one of the most unwise monetary decisions of modern times.

The strain on eurozone banks is growing by the day. They bid a record $85bn (£43bn) at the ECB's last auction for dollars. Only $25bn was available. The spreads on Euribor interbank lending are still at extreme stress levels.

Few disputes that "global inflation" is taking off. Over 50 countries now face double-digit price rises. Ukraine (29pc), Vietnam (27pc), and the Gulf states are out of control, with Russia (15pc), and India (11pc) close behind. China (7.1pc) is on the cusp. Interest rates are still below inflation across much of the emerging world. This is the driving force behind spiralling commodity prices.

The oil spike is already squeezing real wages in the Atlantic region. The debate is whether the Fed, Bank of England, and ECB should squeeze them further, trying to off-set energy rises with a deflationary bust in the rest of the economy. If and when oil peaks in this cycle, they may find inflation crashing faster than they dare to imagine.

The 9th Circle in Dante's Inferno - starring Judas and Brutus - is a frozen lake. Cold can be more frightful than heat. "Blue pinch'd and shrined in ice the spirits stood," (Canto XXXIII). Such awaits the victims of debt deflation.

[Jess9]

FTSE and CAC taken a hit today (more than 2% down). Oil up and then DOW tomorrow...

[malcolm]

i thought DOW would hit sub 11000 thursday USA --may be tomorrow fri usa (sat kiwi) black fri the financials in sh-t ps interesting reading trendy

[Jess9]

yip - would make 4 an interesting market open on Monday, here.

[AMR]

There seems to be a bit of a recovery due to Bernake basically sayign "They're too big to fail so we'll open the discount window a bit wider".

[Lizard]

The volatility this morning is pretty spectacular! Any bets on the close? I'll call 11147.

[malcolm]

There seems to be a bit of a recovery due to Bernake basically sayign "They're too big to fail so we'll open the discount window a bit wider".

DOW HUNG AROUND sub 11000 for half the day bernanke spurt tempary raised the market then sinking anothier 128 points finishing on a nervous 11100 LOWEST close since 06/ next week will consolidate sub 11000 ps fed will need to pump 5trillion $$$$$$$ in to fanny mac what a cock up

[Jess9]

European markets look like they took another hammering last night - much more than the DOW. As M says, cash is king in such times. Note gold and oil both up sharply.

[trendy]

STOP PRESS.......IndyMac fails....taken over by the FDIC.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aJnm4ytT0T7U&refer=home

IndyMac Seized by U.S. Regulators Amid Cash Crunch (Update2)

By Ari Levy and David Mildenberg

July 11 (Bloomberg) -- IndyMac Bancorp Inc. became the second-biggest federally insured financial company to fail today after a run by depositors left the California mortgage lender short on cash.

The Federal Deposit Insurance Corp. will run a successor institution, IndyMac Federal Bank, starting next week, the Office of Thrift Supervision said in an e-mail today. Customers will have access to funds this weekend via automated teller machines.

The Pasadena, California-based bank specialized in so-called Alt-A mortgages, which didn't require borrowers to provide documentation on their incomes. Its home state has been among the hardest hit by foreclosures.

``Given their focus on Alt-A and a heavy concentration in California, they would have suffered meaningful losses in almost any scenario,'' Brian Horey, president of Aurelian Management LLC in New York, said before the seizure was announced. Aurelian is short-selling IndyMac shares to gain from declines.

IndyMac becomes the largest OTS-regulated savings and loan to fail and second-biggest financial institution to close behind Continental Illinois in 1984, according to the FDIC.

The lender racked up almost $900 million in losses as home prices tumbled and foreclosures climbed to a record. California ranked second among U.S. states, with one foreclosure filing for every 192 households in June, 2.6 times the national average.

Needed `Common Sense'

Had IndyMac ``applied some common sense and changed their approach to underwriting as the housing market peaked, they might have lived to see the next cycle,'' Horey said.

After peaking at $50.11 on May 8, 2006, IndyMac shares lost 87 percent of their value in 2007 and another 95 percent this year. The stock fell 3 cents to 28 cents at 4 p.m. New York time today.

IndyMac came under fire last month from U.S. Senator Charles Schumer, who said lax lending standards and deposits purchased from third parties left it on the brink of failure. In the 11 business days after Schumer explained his concerns in a June 26 letter, depositors withdrew more than $1.3 billion, the OTS said.

``This institution failed due to a liquidity crisis,'' OTS Director John Reich said in the statement. ``Although this institution was already in distress, I am troubled by any interference in the regulatory process.''

IndyMac announced on July 7 that it was firing half its employees. The lender agreed to sell most of its retail mortgage branches to Prospect Mortgage, giving the Northbrook, Illinois based-company more than 60 branch offices with 750 employees. IndyMac also has a retail bank network with 33 branches and $18 billion in deposits, mostly insured by the FDIC.

[malcolm]

STOP PRESS.......IndyMac fails....taken over by the FDIC.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aJnm4ytT0T7U&refer=home

IndyMac Seized by U.S. Regulators Amid Cash Crunch (Update2)

By Ari Levy and David Mildenberg

July 11 (Bloomberg) -- IndyMac Bancorp Inc. became the second-biggest federally insured financial company to fail today after a run by depositors left the California mortgage lender short on cash.

The Federal Deposit Insurance Corp. will run a successor institution, IndyMac Federal Bank, starting next week, the Office of Thrift Supervision said in an e-mail today. Customers will have access to funds this weekend via automated teller machines.

The Pasadena, California-based bank specialized in so-called Alt-A mortgages, which didn't require borrowers to provide documentation on their incomes. Its home state has been among the hardest hit by foreclosures.

``Given their focus on Alt-A and a heavy concentration in California, they would have suffered meaningful losses in almost any scenario,'' Brian Horey, president of Aurelian Management LLC in New York, said before the seizure was announced. Aurelian is short-selling IndyMac shares to gain from declines.

IndyMac becomes the largest OTS-regulated savings and loan to fail and second-biggest financial institution to close behind Continental Illinois in 1984, according to the FDIC.

The lender racked up almost $900 million in losses as home prices tumbled and foreclosures climbed to a record. California ranked second among U.S. states, with one foreclosure filing for every 192 households in June, 2.6 times the national average.

Needed `Common Sense'

Had IndyMac ``applied some common sense and changed their approach to underwriting as the housing market peaked, they might have lived to see the next cycle,'' Horey said.

After peaking at $50.11 on May 8, 2006, IndyMac shares lost 87 percent of their value in 2007 and another 95 percent this year. The stock fell 3 cents to 28 cents at 4 p.m. New York time today.

IndyMac came under fire last month from U.S. Senator Charles Schumer, who said lax lending standards and deposits purchased from third parties left it on the brink of failure. In the 11 business days after Schumer explained his concerns in a June 26 letter, depositors withdrew more than $1.3 billion, the OTS said.

``This institution failed due to a liquidity crisis,'' OTS Director John Reich said in the statement. ``Although this institution was already in distress, I am troubled by any interference in the regulatory process.''

IndyMac announced on July 7 that it was firing half its employees. The lender agreed to sell most of its retail mortgage branches to Prospect Mortgage, giving the Northbrook, Illinois based-company more than 60 branch offices with 750 employees. IndyMac also has a retail bank network with 33 branches and $18 billion in deposits, mostly insured by the FDIC.

TRENDY THANKS FOR INFO the unwinding of these inst won,t be able to be continued BAILED OUT - i,m glad im out of the equity market CASH UP QUICK- IVE been out 2weeks.....

[trendy]

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/12/cndow112.xml

....The fears of a banking crisis gripped Wall Street, Lehman Brothers shares fell 22pc. Investors have been spooked by a filing this week showing that the bank still has $41bn of mortgage debt and other "toxic" Level III assets.

Lehman now risks the same spiralling loss of confidence that engulfed Bear Stearns, though the Federal Reserve's emergency lending window for broker-dealers offers a lifeline.

The credit default swaps on Lehman debt leapt 55 basis points to 380, flashing an extreme stress signal.

The implosion of Fannie and Freddie is disturbing. Neither has exposure to sub-prime loans.

"The situation is far more serious than Bear Stearns," said Bill King, chief strategist at Ramsey King Securities.

Under the US stimulus plan the pair have been deployed as lenders of last resort to the housing market, carrying out a quasi-official rescue mission on behalf of Congress since March. Now the rescuers themselves need rescuing.

Charles Schumer, chair of the Senate banking committee, said: "Fannie Mae and Freddie Mac are too important to go under. If they need additional support, Congress will act quickly."

If Washington does take on the liabilities of the two, this would double the US Treasury's outstanding debt load at a stroke and raise serious concerns about the triple-A sovereign rating of the US itself.

There may be no choice. Bill Gross, head of the bond giant Pimco, said a default by the two agencies would set off a "firestorm of intolerable proportions".

Standard and Poor's said in a recent report that Fannie and Freddie posed "a large contingent fiscal risk: if the risks were to translate into increased government debt, they could hurt US credit standing".

The markets have already begun to sense danger. The cost of insuring against default on 10-year US Treasury bonds surged from 8 basis points to 15 at one stage yesterday.

"America's 'AAA' rating has become a joke," said Peter Schiff, head of EuroPacific Capital.

"I believe the losses from Fannie and Freddie alone could reach $500bn to $1 trillion dollars.

'' The US government will not be able to meet repayments on its debt once interest rates rise," he said.

Mr Schiff said a big chunk of the agency debt is held by foreigners. A collapse of confidence could set off a dollar exodus.

It is unclear if Mr Paulson can delay a state bail-out for long. "There is concern that Fannie, Freddie, and Lehman will not be around on Monday," said one analyst.

Ironically, Fannie and Freddie shares, having halved in value at one stage, recovered slightly after Mr Paulson's comments. Investors were relieved the agencies might yet be spared a state seizure aimed at limiting "moral hazard".

This is what occurred in the Nordic financial rescues of the early 1990s, which left shareholders with nothing.

[lakedaemonian]

Fannie and Freddie make up somewhere around 70% (give or take a bit) of US residential mortgage secondary market.

Something like $5-7 TRILLION dollars US.

[AMR]

The Fed are insisting that if any bailout happens it should not benefit shareholders. Pity the only ones holding are the buy-and-hold types, the management probably cashed out their options long ago.

[trendy]

No worries. The US government is going to print some more US$$$ to bailout Fannie Mae and Freddie Mac. Essentially nationalizing the mortgage companies here. They are getting desperate it seems they have to cobble together another bailout package every other weekend now. remember BSC last March.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aKreTa_YgY9I&refer=home

Paulson Seeks Authority to Shore Up Fannie, Freddie (Update2)

By Brendan Murray and Dawn Kopecki
Enlarge Image/Details

July 13 (Bloomberg) -- Treasury Secretary Henry Paulson swung the weight of the federal government behind Fannie Mae and Freddie Mac, the beleaguered companies that buy or finance almost half of the $12 trillion of U.S. mortgages.

Paulson, speaking on the steps of the Treasury facing the White House, asked Congress for authority to buy unlimited stakes in and lend to the companies, aiming to stem a collapse in confidence. The Federal Reserve separately authorized the firms to borrow directly from the central bank.

The announcement followed crisis talks between the firms, government officials, lawmakers and regulators, after Fannie Mae and Freddie Mac lost about half their value last week. Paulson and Fed Chairman Ben S. Bernanke are trying to prevent a collapse in the companies that would exacerbate the worst housing recession in 25 years and deepen the economic slowdown.

Paulson's proposal, which the Treasury anticipates will be incorporated into an existing congressional bill and approved this week, signals a shift toward an explicit guarantee of Fannie Mae and Freddie Mac debt. The two shareholder-owned companies are government-sponsored enterprises, giving investors the indication of an implicit federal backing.

Making `Explicit'

``It is time to recognize that the GSEs were always dependent upon government support and now we must make the implicit explicit,'' said Christopher Whalen, co-founder of independent research firm Institutional Risk Analytics in Torrance, California.

Paulson proposed that Congress enact legislation giving the Treasury temporary authority to buy equity ``if needed'' in the firms, and to increase their lines of credit with the department from $2.25 billion each. The temporary authority may be for 18 months, a Treasury official told reporters on a conference call on condition of anonymity.

As lenders retreated from the housing market, Washington- based Fannie Mae and McLean, Virginia-based Freddie Mac have grown to account for more than 80 percent of the home loans packaged into securities.

Freddie Mac is scheduled to sell $3 billion in short-term notes tomorrow, and Paulson's comments indicate a concern about a collapse in private investors' willingness to fund the firms. The companies issue debt to raise money for their purchases of mortgage securities.

Bond Sale

``This will shore up that debt offering,'' said Paul Miller, an equity analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia. ``They need to make sure that that debt offering goes well and goes very well and they couldn't risk waking up tomorrow and having that offering go poorly.''

The dollar pared losses after Paulson's statement. The dollar traded at $1.5925 per euro at 7:19 a.m. in Tokyo from a low of $1.5971 and from $1.5938 in late New York on July 11. It bought 106.30 yen, little changed from 106.28 yen at the end of last week.

Preferred securities tumbled in Asian trading as investors questioned if Freddie and Fannie will be able to continue to pay dividends. Freddie Mac's 5.57 percent preferred lost 39 percent this year and Fannie Mae's 5.5 percent preferred dropped 31 percent.

President George W. Bush, in a statement, said ``it is crucial that Congress quickly works to enact this legislation.''

Democratic Lawmaker

Senator Charles Schumer, a Democrat from New York who chairs the Joint Economic Committee of Congress, praised Paulson's plan, saying it ``is surgical and carefully thought out and will maximize confidence in Fannie and Freddie while minimizing potential costs to U.S. taxpayers.''

The plan would give Paulson power to buy an unspecified amount of stock in Fannie Mae and Freddie Mac, the official said. He also said he didn't recall any time in the past when the government has taken an equity stake in either company.

``We continue to hold more than adequate capital reserves and maintain access to liquidity from the capital market,'' Fannie Mae Chief Executive Officer Daniel Mudd said in a statement today. ``Given the market turmoil, having options to access provisional sources of liquidity if needed will help to strengthen overall confidence in the market.''

Paulson also proposed that the Fed get a ``consultative role'' overseeing the companies' capital requirements. The Fed said in a separate statement that the New York Fed was approved to make direct loans to Fannie Mae and Freddie Mac at the discount rate, currently 2.25 percent, charged to commercial banks.

Echoes of Rubin

The last Treasury secretary to make a statement from the steps of the department was Robert Rubin, who sought to calm investors after the Dow Jones Industrial Average fell 554 points on Oct. 27, 1997.

Debt sold by Fannie Mae and Freddie Mac ``is held by financial institutions around the world,'' Paulson said today. ``Its continued strength is important to maintaining confidence and stability in our financial system and our financial markets.''

Paulson sought to ease concerns that taxpayers would foot the bill for a bailout. ``Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer,'' he said.

Freddie Mac shares tumbled 47 percent in New York Stock Exchange composite trading last week and Washington-based Fannie Mae lost 45 percent of its value, forcing Paulson two days ago to issue a statement of support for the companies in their ``current form.''

Capital Raised

The companies have already raised $20 billion to cover losses amid the highest delinquency rates in at least 29 years. Freddie Mac said earlier this month it planned to sell $5.5 billion of equity after it reports earnings next month.

The cost to protect against a default on the companies' subordinated debt jumped last week. Credit-default swaps linked to Freddie's bonds rose to 251 basis points last week, while contracts on Fannie's increased to 246 basis points, according to CMA Datavision. On July 4, both were at 177 basis point and they started the year at 77. A basis point is 0.01 percentage point.

Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline, the opposite.

Credit Ratings

Senior debt of both companies trades as if they were rated A3 instead of Aaa by Moody's Investors Service, according to data from the rankings firm's credit strategy group.

Five years ago, Fannie Mae and Freddie Mac paid about 45 basis points more than yields on 10-year Treasuries to borrow, while other corporations paid an average of 119 basis points, the Merrill Lynch & Co. U.S. Corporate Master index shows. Last week, the yield on Freddie Mac's $1 billion of 4.5 percent notes maturing in 2013 rose as high as 102 basis points more than Treasuries, according to data compiled by Bloomberg.

[peat]

I agree trendy
Ben is bringing out the helicopter with Paulson flying shotgun. The end of the USD is just beginning.

[Capybara]

I agree, the DOW seems to be finding a little support around the 11000 mark but with a lot of earnings reports this week that will probably be not that flash, I think it will fall further.
I just don't think anybody has got any good news left out there to bolster confidence in the market.
Bit of a quagmire the US finds itself in, print more money to prop everything up, which lowers it's value even further, and so the oil producers need more worthless US dollars for their black gold.
I was fairly sceptical about the oil price, however if there is no good news out of the US I think we will see $150 oil by the end of the week... Gold will continue its rapid climb...

[ananda77]

...at this point in time it's prudent to be out of the market unless you feel the need for some cardiac work-out; in that case a bit of day-trading will do...the easier way of course is to be invested precious...

...in case the Fedheads will come up with more fairy tale stuff about their ability to control/solve the crisis, look for a spike down in US markets on fairy tale announcements -the down spike in the US markets commonly in tune with the VIX spiking up to 40+- before going into the market intermediate

...medium to long, it's a complete "on the brink" situation with huge up-or down side...and before the direction becomes clear (no hurry in the meantime), it's just plain suicidal to think one way or the other as a given; however,

!!!!BE WARNED!!!! THE ODDS (GENERAL EXPECTATIONS) ARE CRASH and a fairly good indication of it happening for sure, is the NASDAQ100 falling through 1724 confirmed (oil, oil, oil)

Kind Regards

[malcolm]

the us mkts are all over the place 10870 now bouncing may be dead cat bounce-- oil plunge down to $ 135 p/b now riseing what a time

[trendy]

We have a full fledged panic starting here. They are going to ban naked short-selling, which by the way is already illegal but never enforced.....due to the fox guading the hen house...GS..

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPE.Apdv7m2E&refer=home

They are also going to print a few more hundred billions dollars and give those to use again for more stimulas.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5P_x5HfhQA0&refer=home

Are Weighing More Tax Rebates, Pelosi Says (Update1)

By Laura Litvan

July 15 (Bloomberg) -- House Democrats are weighing plans for another round of tax rebates as part of a legislative package to boost the economy this fall, House Speaker Nancy Pelosi said.

``We will be proceeding with another stimulus package, and we once again hope we will work in a bipartisan way,'' she said after House Democratic leaders met with a group of economists to discuss the spreading housing crisis and rising energy prices.

Pelosi and other House Democrats said a second stimulus package would probably include more spending for roads and other infrastructure, expanded unemployment benefits, home-heating assistance for low-income families and some aid for states struggling with budget deficits.

Plans for the stimulus legislation are taking shape as Democrats are also racing to approve the Bush administration's proposed rescue plan for Fannie Mae and Freddie Mac by early next week.

``This is a serious situation,'' said former Treasury Secretary Larry Summers, who attended the meeting with Democrats. ``We are in much more danger of responding inefficiently than in responding excessively.''

In February, Congress sent Bush a $168 billion economic stimulus measure that included tax rebates to 111 million households beginning in May. Rebate checks in the legislation were as high as $600 for individuals.

Pelosi said Democrats will need to work with President George W. Bush to determine the timing of a second stimulus package. Bush said today he would prefer to wait to see how the earlier rebates affect the economy.

`Rolling Financial Crises'

``We're always open minded to things, but we'll see how this one works,'' he said.

Alan Blinder, a former vice chairman of the Federal Reserve and a Princeton University economist, said the U.S. is experiencing a series of ``rolling financial crises'' and that the impact of the earlier round of tax rebates has been ``swallowed up'' by rising energy prices.

``The U.S. economy is in a recession that is probably getting worse,'' said Alan Sinai, chief global economist at Decision Economics Inc., who, like Blinder, attended the meeting with Democrats.

[lakedaemonian]

I've been clearly in the "doom and gloom" camp for approximately a year now based on my post history, and while I prefer to NOT fan the flames further, and continue to hope the bottom isn't as far down as I think it may wind up, there are a few things to consider going forward:

*Off Balance sheet antics have NOT yet been fully disclosed by many of the remaining big players...HOW can anyone make an investment based on such stupidity? "Here's our assets, here's our liabilities, and we have a big, big secret behind door number 3......how many shares do you want?"

*Pension Funds with hundreds of billions of risky market exposure, chasing the extra return like NZ Mom & Dad going after the extra 0.5% with failed finance company debentures, with expectations of far above average returns going forward to pay for excessive pension entitlements, are at risk of detonating like the death star and taking many, many American retirees with them.....it could make the 24 finance companies in 24 months(approximate) here in NZ looks like sunshine and rainbows.

*Derivatives........their growth seems almost parabolic.......I understand basic derivatives and their very useful hedging roles in insurance and business......but complex derivatives? I have absolutely no idea.....and I doubt more than a few do......Warren Buffett called them Weapons of Mass Destruction for a reason....it reminds me of those conversations everyone has in life where a complex topic is being covered that is FAR over the heads of the audience, but everyone is too afraid to say, "I don't understand because I'm afraid I'll look stupid." I'm stupid and many derivatives scare me enough to want to buy a bunker and some guns.

I think of them as Neutron Derivatives........they will kill off everything....but leave a lot of empty building ni their wake.

[malcolm]

looking at many major company results in dow and s@p500 has been surprising -positive including some banks- worst to come from the SKELETON CUPBOARD-- or all over????

[STRAT]

looking at many major company results in dow and s@p500 has been surprising -positive including some banks- worst to come from the SKELETON CUPBOARD-- or all over????Starting to look like a bounce eh?

Im holding my breath but not all that confident :D

Phaedrus, would love some thoughts from you.

The next week will be interesting eh fellas?



and ladies ( sorry Liz :o)

[Hoop]

Yeah I was eyeing up that up movement and asking myself are we seeing an early conception of the next bear market rally...

...you know the old saying the early bird catches the worm....and all that:)

However after watcing CNBC this morning I will reserve my judgement...

....WOW ...it has turned totally ulgy in the NASDAQ after hours trading (http://dynamic.nasdaq.com/dynamic/nasdaq100_indicator_after.stm) currently down 2.46% Apple down 11% on a not that bad profit report. Texas instruments taking a hiding as well (-11%). Elsewhere away from the NASDAQ, The after hours in the financials American Express is being whipped (-11%).Freddie Mac (-3.6%)
Can view the list here (http://www.marketwatch.com/tools/stockresearch/screener/afterhours.asp)

Odds on, tommorrow may not be a good day for Uncle Sam.:(

[Lizard]

I reckon the Dow still has quite a lot more to lose. At a general level, another 12 months of down and another 3000 points knocked off seems quite conceivable.

[malcolm]

but after reading details in your post including after hours trading its very ugly it is just GAMBLING.

[Jess9]

FTSE down also 1.41% in early trading. Time for the next round with that big Bear?

[Jess9]

Dow saved by oil. Gold down a little too. It will be interesting to see how the ASX fairs today then.

[malcolm]

OIL TO GO UP TONITE----DOW TO GO DOWN:confused::confused:

[Jess9]

Ouch, gold and oil hits again - wall street balances out, flat. Sucker punch coming for DOW? DOW now at 11,600; more than a 600 pt rise from recent low...

[dumbass]

hitting a key level on dow me thinks time for a down day or two before rally resumes

[Jess9]

Good call. If the Dow closes over 2% (down) the movement might gain legs and roll on tomorrow - if worry turns to fear. Malcolm's negative earnings results are in. The question and I guess the obvious driver for any "next Dow sell-off" will be how large/un-expected are such down grades.

[Jess9]

2.2%, no wait 2.36% down now. The Close I guess is however what is important.

[trendy]

DOW update. Last few days short squeeze over. Trend is now back down. The SEC naked short sell rules are now baked into the market. Worse to come as the foreclosure tsunami is 100ft high and 1/2 mile from shore......we won't be able to outrun this monster wave. Many will drown.

[dumbass]

i would tend to disagree

this rally has not run high enough to generate the bullish sentiment needed for

the next leg lower

last nights drop into a pivot support should allow rally to get back on track

im picking early august before market turns for a run to new lows

[Xerof]

Hey DA,

could be right - looks wave 4-ish at a glance, but NAB might have put the cat amongst the pigeons with their 90% writedown of US CDO portfolio...

I think this guy has hit the button:

The National Australia Bank's decision to write off 90 per cent of its US conduit loans will have dramatic repercussions around the world. Wall Street will be deeply shocked when they understand the repercussions of what NAB has done. It is clear global banks have nowhere near provided for their exposures to US housing loans which in the words of John Stewart are experiencing a “meltdown”.

We are now way beyond sub-prime. NAB says that it is suffering a 55 per cent loss on American housing loans – an event that has never happened in the history of a developed country in recent memory. This is an unprecedented event and means that the cost of bailing out the US financial system is now far beyond the highest estimates. A US recession is now locked in, but more alarmingly, 55 per cent loan losses point to the possibility of a depression.

http://www.businessspectator.com.au/bs.nsf/Article/NAB-will-shock-Wall-Street-GV4M7?OpenDocument&src=sph


55% is ballpark - the secondary market here is trading at abt 65 cents in the dollar


Sorry to bring fundamentals into the frame

[malcolm]

Hey DA,

could be right - looks wave 4-ish at a glance, but NAB might have put the cat amongst the pigeons with their 90% writedown of US CDO portfolio...

I think this guy has hit the button:

The National Australia Bank's decision to write off 90 per cent of its US conduit loans will have dramatic repercussions around the world. Wall Street will be deeply shocked when they understand the repercussions of what NAB has done. It is clear global banks have nowhere near provided for their exposures to US housing loans which in the words of John Stewart are experiencing a “meltdown”.

We are now way beyond sub-prime. NAB says that it is suffering a 55 per cent loss on American housing loans – an event that has never happened in the history of a developed country in recent memory. This is an unprecedented event and means that the cost of bailing out the US financial system is now far beyond the highest estimates. A US recession is now locked in, but more alarmingly, 55 per cent loan losses point to the possibility of a depression.

http://www.businessspectator.com.au/bs.nsf/Article/NAB-will-shock-Wall-Street-GV4M7?OpenDocument&src=sph


55% is ballpark - the secondary market here is trading at abt 65 cents in the dollar


Sorry to bring fundamentals into the frame

so the effects of USA- careless lending program over the last 3 to 5 yrs is catching like AIDS and generally their is no cure for that illness cost of borrowing is only going to be more expensive

[dumbass]

hi xerof , how is it going in the states along way from havelock north

and did you set up the "Fund of Funds"

i reckon the key to that statement is

"when they understand the repercussions "

still possibilty of an irrational rally to greater heights in fact i think its a high probability

before they work it out

[malcolm]

DOW update. Last few days short squeeze over. Trend is now back down. The SEC naked short sell rules are now baked into the market. Worse to come as the foreclosure tsunami is 100ft high and 1/2 mile from shore......we won't be able to outrun this monster wave. Many will drown.

i can run 400mtrs in 3min-28 seconds--

[dumbass]

i think your a few minutes short of the qualifying mark for beijing , malcolm

were conditions bad when you did your time ?

[absolut-advance]

My Wife wants to Know....

Can you do it Naked... or would that effect aerodynamics?


i can run 400mtrs in 3min-28 seconds--

[Lizard]

Can you do it Naked...?

Only with CFD's these days...:p

[Jess9]

Thanks Xerof, the full read is rather chilling. Just on that, sounds like a next wave of sell-offs is approaching quickly then. As others note, be interesting to see how quickly the Dow reacts. I guess it really hits the fan when the 1st US bank does an NAB and comes clean. If they are in the same position, it must be soon. Thanks again for the heads up!

[Xerof]

Friday closed with a whimper, although Financials are the only sector in the red (with an hour to go)

DA, actually I leave for Godzone tomorrow. With no Visa, I have to get out of here every 90 days for at least 10.

I saw Qantas had a bit of a mare flight out of HK this morning - I'll make sure I bolt myself to my sleeper....

[malcolm]

i think your a few minutes short of the qualifying mark for beijing , malcolm

were conditions bad when you did your time ?

it was estimated i had tail wind of near gail force 78k/m p/hour it did to be truthfull helped PS I HAD A G STRING ON Pps i see LEHMAN BROS IN SH-T NOW

[Jess9]

ASX taking a hard hit - the banks, it seems. One assumes Wall Street/US banks and therefore the Dow are likely to be next, unless of coarse they have already been 100% honest to date ; )

[trendy]

"Holy atomic pile, Batman!" - Robin

Budget has blown out by 53% or $59B and we need another $171B this quarter alone.

Seriously though at the macro level the economy has a massive problem ahead of it. The US will have to increase taxation, cut government expenditure drastically and will also need to raise treasury rates to attract foreign investment. Sorry to say but 2009 will be even worse for the economy, pay back for years of loose spending in the good times.



http://www.bloomberg.com/apps/news?...rYns&refer=home

U.S. Borrowing to Rise to $171 Billion This Quarter (Update1)

By John Brinsley and Rebecca Christie

July 28 (Bloomberg) -- The U.S. Treasury predicted it would borrow 53 percent more this quarter than initially forecast as increases in spending and sluggish economic growth swell the budget deficit.

Borrowing needs will rise to $171 billion in the three months to Sept. 30, $59 billion more than predicted in April, the Treasury said in a statement in Washington. That total, if realized, would be the second-largest ever after a record $244 billion was borrowed in the first three months of this year.

After improving for three straight years, the U.S. budget is deteriorating as a slowing economy hurts tax revenue and spending increases. The Bush administration, which entered office in 2001 with a $127 billion budget surplus, earlier today predicted the next president faces a record deficit totaling $482 billion in 2009.

``The economic slowdown and increased expenditures associated with slower growth and with the stimulus has had an effect on the federal budget,'' Phillip Swagel, the Treasury's assistant secretary for economic policy, said in a statement.

In the final three months of the year, the Treasury said borrowing would reach $142 billion.

The Treasury predicted three months ago it would pay down $35 billion in marketable debt in the April-June quarter and have a cash balance June 30 of $45 billion. While the government often runs a surplus in the second quarter as individuals pay annual income taxes by the April 15 deadline, that didn't happen this year.

Tax Rebates

The Treasury said the reasons for more borrowing were the $168 billion fiscal stimulus program enacted earlier this year, the redemption of $151 billion in securities by the Federal Reserve, and a decline in debt issued by state and local governments.

``Treasury is going to have revisit their borrowing needs,'' said Joseph Brusuelas, chief economist at Merk Investments LLC in Palo Alto, California. ``They are definitely going to have to borrow more.''

Today, the department said it borrowed $13 billion in the second quarter and the cash balance at the end of the period was $53 billion. ``The increase in borrowing was primarily the result of lower receipts, higher outlays, redemptions of portfolio holdings by the Federal Reserve System and adjustments to cash balances,'' the Treasury said.

Lower Forecasts

Three months ago, the department predicted a cash balance of $45 billion Sept. 30 -- the last month of the government's fiscal year -- and today left that estimate unchanged. The cash balance will be $40 billion on Dec. 31, the Treasury said.

The department estimated total marketable borrowing in fiscal 2008 would total $555 billion. So far this fiscal year, the Fed has redeemed $151 billion in U.S. government securities from its System Open Market Account, which the Treasury said were excluded from the marketable borrowing estimates.

In a series of charts accompanying the announcement, the Treasury said ``credit market conditions and ongoing liquidity initiatives add uncertainty to borrowing requirements.'' In addition, ``volatility in projected receipts and outlays as well as reduced non-marketable debt issuance could also lead to increased near-term marketable financing needs.''

The White House earlier this year said the budget shortfall would rise to $389 billion for fiscal 2008 from $163 billion in 2007 and $482 billion in 2009.

Debt Issuance

Before Treasury's announcement, analysts were already predicting the government would need to brace for more red ink. The borrowing needs are likely to show the first signs of the shortfall to come, said Louis Crandall, chief economist at Wrightson ICAP LLC, a Jersey City, New Jersey-based research firm.

``Those will be very large,'' Crandall said. ``I'm looking for $165 billion in the current quarter and something not much smaller in the October to December quarter.''

The Treasury's borrowing forecast comes two days before details on the size of the Treasury's quarterly refunding of longer-term debt. The department will announce July 30 the amount of 10- and 30-year debt it plans to auction next week, and any other changes to financing plans.

The U.S. will likely sell $16 billion in 10-year notes and $9 billion in 30-year bonds in August, according to the median estimate of five economists.

Bond dealers also are watching to see if the Treasury indicates plans to bring back the three-year note or increase the number of 10 year note auctions. The department announced in May 2007 that it was suspending sales of three-year notes, when tax receipts were rising and the deficit was shrinking.

Rising Deficit

Even if there are no changes this quarter, there may be a borrowing expansion in the months ahead.

``We do not believe the Treasury needs to reintroduce the three-year or seven-year note at this time, and think that there is still room for increases in short-term debt issuance in fiscal year 2009,'' said Lehman Brothers economist Zach Pandl, in an interview before today's announcement. ``However, the medium-term budget outlook is deteriorating quickly, and risks to our supply forecasts are likely to the upside.''

[Hoop]

Wall St down 2%..... next day up 2%

Are you confused about this irrational bear market behaviour..........????

Perhaps this explains what really happened :D:D

Kevin Kallaugher, a.k.a. KAL
http://www.kaltoons.com/walters.html

[trendy]

LOL I haven't seen that carton in years. Sames up the current daily swings aye.

[trendy]

Don't believe that is getting better here. It is actually going to get worse and the FED are preparing for it.

They have extended the lending programs for the 4th time in 5 months and increased it to any crappy loans that the banks have.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a24FlvmuaNp0&refer=home

``The U.S. is pulling out all the stops here to make sure we don't have a terrible downturn or a collapse in the financial system,'' said Allen Sinai, chief global economist at Decision Economics in Boston. ``There isn't anything else the Federal Reserve can do but to keep pumping liquidity into the system.''


http://www.federalreserve.gov/newsevents/press/monetary/20080730a.htm

The Federal Reserve today announced several steps to enhance the effectiveness of its existing liquidity facilities, including the introduction of longer terms to maturity in its Term Auction Facility. In association with this change, the European Central Bank and the Swiss National Bank are adapting the maturity of their operations.

Federal Reserve Actions
Actions taken by the Federal Reserve include:

* Extension of the Primary Dealer Credit Facility (PDCF) and the Term Securities Lending Facility (TSLF) through January 30, 2009.
* The introduction of auctions of options on $50 billion of draws on the TSLF.
* The introduction of 84-day Term Auction Facility (TAF) loans as a complement to 28-day TAF loans.
* An increase in the Federal Reserve's swap line with the European Central Bank to $55 billion from $50 billion.

These actions are described in detail below.

Extension of the PDCF and TSLF
In light of continued fragile circumstances in financial markets, the Board has extended the PDCF through January 30, 2009, and the Board and the Federal Open Market Committee (FOMC) have extended the TSLF through that same date. These facilities would be withdrawn should the Board determine that conditions in financial markets are no longer unusual and exigent.

The PDCF provides discount window loans to primary dealers, collateralized by investment-grade securities. The interest rate charged is the primary credit rate (discount rate) of the Federal Reserve Bank of New York. Under the TSLF, the Federal Reserve Bank of New York conducts weekly auctions of 28-day loans of Treasury securities to primary dealers. Loans under the TSLF are collateralized by a range of government and private securities.

Auctions of TSLF Options
The FOMC has authorized the Federal Reserve Bank of New York to auction options for primary dealers to borrow Treasury securities from the TSLF. The Federal Reserve intends to offer such options for exercise in advance of periods that are typically characterized by elevated stress in financial markets, such as quarter ends. Under the options program, up to $50 billion of draws on the TSLF using options may be outstanding at any time. This amount is in addition to the $200 billion of Treasury securities that may be offered through the regular TSLF auctions. Draws on the TSLF through exercise of these options may be collateralized by the full range of TSLF Schedule 2 collateral. (Schedule 2 collateral includes Treasury securities, federal agency debt securities, mortgage-backed securities issued or guaranteed by federal agencies, and AAA/Aaa-rated private-label residential mortgage-backed, commercial mortgage-backed, and asset-backed securities.) Additional details of this program will be announced once consultations with the primary dealer community have been completed.

Eighty-four-day Term Auction Facility Loans
Beginning on August 11, the Federal Reserve will auction 84-day TAF loans while continuing to auction 28-day TAF funds. Specifically, the Federal Reserve will conduct biweekly TAF auctions, alternating between auctions of $75 billion of 28-day credit and auctions of $25 billion of 84-day credit. Currently, the Federal Reserve auctions $75 billion of 28-day funds every two weeks. During a transition period, the amount of 28-day credit being auctioned will be reduced to keep the amount of TAF credit outstanding at $150 billion. A schedule of TAF auctions and applicable terms and conditions can be found at http://www.federalreserve.gov/.

Under the TAF, the Federal Reserve auctions term funds to depository institutions, secured by a wide variety of collateral. All depository institutions that are judged to be in generally sound financial condition by their local Reserve Bank are eligible to participate in TAF auctions.

Increase in Swap Line with European Central Bank
The European Central Bank (ECB) and the Swiss National Bank (SNB) have informed the Federal Reserve that, in association with the lengthening of the maturity of the Federal Reserve's TAF loans, these central banks will also make 84-day funds, as well as 28-day funds, available at their dollar auctions. The FOMC has authorized an increase in its dollar swap line with the ECB to $55 billion from $50 billion in order to accommodate a temporary increase in the ECB’s dollar auctions as the ECB shifts some of its auctions to 84-day terms. The size of the SNB’s swap line remains at $12 billion. These swap lines are authorized through January 30, 2009.

[Jess9]

Per RNZ this morning. Californians who CAN AFFORD to pay their mortgages are now seriously also considering walking away from rising interest costs and negative equity. This apparently is an emerging NEW pattern - as Californian law prevent banks seeking redress for any amount over the sale proceeds of the re-possessed house. This is often several hundred K less than what is still owed. If this mindset spreads, I wonder if more and larger write-downs are coming... next dow trigger?

[trendy]

Jess9...Yeah I read that article here - may have been in the WSJ.

Basically, folks with good credit are doing the numbers and saying I have so much negative equity in my home now due to the collapse in prices from the subprime fall out why should I keep paying the mortgage. They basically hand their home back to the bank and have no further debt obligation. Yes, they take a hit on their credit rating for a year or two but at least can start to build equity up again.

We are talking about white collar folks doing this, there is concern if this trend catches on the banks will be buried in foreclosures. Even now some folks haven't paid their mortgages in 12 months and the banks still haven't called them. The banks are now pushing out the period for declaring foreclosures from 120 to 180 days, anything so the bank doesn't have to recognize the bad debt on the books. It won't be long and 365 days of no payment will be OK.

There is discussion to change the foreclosure law so that the owner always has a future obligation of the debt if they go into foreclosure.

[peat]

amazing! America seems to have mastered the concept of gain with no risk. sweet I'll borrow against my equity in a rising market and walk away when it goes sour.

me scratches head
thinks - there must be a catch.

[AMR]

The person's credit rating is destroyed...but nothing that can't be restored in 6-7yrs time.

[zacman]

Trendy says :
There is discussion to change the foreclosure law so that the owner always has a future obligation of the debt if they go into foreclosure.[/QUOTE]


Trendy, are you saying that there is no personal covenant/liability attaching to US mortgages ?

zacman

[Jess9]

Dow certainly looking lofty - with little good news to support it. Perfect situation for a good drop, and a little punishment.

[Capybara]

Demand for oil drops off because the economy is faltering so the sharemarket rises... Am I missing something?

[Jess9]

Only if your not cashed up.

US housing slump discussed on RNZ at 6.55pm, about half way through and greater loss in value now expected. Freddy or Fanny have posted losses 3 times greater than analysts expectations.

[Capybara]

Good job I was short the dow then...

[lakedaemonian]

My opinion is that the recent bounce in the Dow is due to the short-term drop in energy prices.

I can actually see the Dow continue it's dead cat bounce in an inverse relationship with any further energy price drops.

But when energy price turn north again it's my opinion that the Dow will revert to a long, slow, and excrutiating downward spiral of stagnation.

With the exception of the very rare equity in the bunch(a la Microsoft which listed in 86 prior to the 87 hit), I wouldn't think about touching anything in the Dow or the index itself for years.

Commodities are the new equities and the new reserve currencies! :)

[Capybara]

My thoughts exactly. Go short on the bounces...

[Shrewd Crude]

http://www.lowrisk.com/image/dow87weekly.gif


This weekly chart gives a great overview. You can see that the crash took the market back down to levels last seen a year before, in October 1996. You can also see the start of the recovery, as the Dow started to move higher in a choppy style.



http://www.lowrisk.com/image/dow87daily.gif
This daily chart gives a great feel for how quickly the Crash came after the market top in late August, and just how precipitous the decline was. You can also see how the Dow retested the October lows in early December.
http://www.lowrisk.com/image/dow87hourly.gif

This hourly chart shows the market deteriorating right into October 19th, and how the selling intensified on the19th right into the close.








http://mutualfunds.about.com/library/graphics/1929crash.jpg


The 1987 sharemarket crash, and 1929 crashes are well worth studying...
The single most important factor of these two crashes (and why this time is different is evident)....
If you look at the two charts you will notice that the Markets crash is at the peak, or very close to it...
This time around the markets have had a soft landing through government intervention which diverted a big crash, but has put us in a steady downtrend... which is so much more important...
We are lucky...at this stage (unless when have a big rally up to 13,000 on the DOW) id say there wont be a crash... just a bear market down trending to 10k on the DOW and perhaps below...
its good to see the markets down a hundie points...
:cool:
.^sc

[Laxmi]

http://www.kitco.com/

http://www.bloomberg.com/energy/

http://finance.yahoo.com/currency/convert?from=NZD&to=USD&amt=1&t=3m

[trendy]

Warning - word on the street here is that Lehman's will declare themselves bankrupt tonight. Bank of America looking to buy Merrill Lynch now.

[brettdale]

Yep people are having kittens over on some USA boards, they are expecting a massive drop tomorrow on the dow. Im guessing that will effect the asx and the nzx also?

[absolut-advance]

New York Times....This is also the front page story on its print edition.

"September 28, 2008
Breakthrough Reached in Negotiations on Bailout
By DAVID M. HERSZENHORN and CARL HULSE

WASHINGTON — Congressional leaders and the Bush administration reached a tentative agreement early Sunday on what may become the largest financial bailout in American history, authorizing the Treasury to purchase $700 billion in troubled debt from ailing firms in an extraordinary intervention to prevent widespread economic collapse.

Officials said that Congressional staff members would work through the night to finalize the language of the agreement and draft a bill, and that the bill probably would be brought to the House floor on Monday.

The bill includes pay limits for some executives whose firms seek help, aides said. And it requires the government to use its new role as owner of distressed mortgage-backed securities to make more aggressive efforts to prevent home foreclosures. In some cases, the government would receive an equity stake in companies that seek aid, allowing taxpayers to profit should the rescue plan work and the private firms flourish in the months and years ahead.

The White House also agreed to strict oversight of the program by a Congressional panel and conflict-of-interest rules for firms hired by the Treasury to help run the program. As they approached a final deal, both sides appeared to have given up a number of contentious proposals, including a change in the bankruptcy laws sought by some Democrats to give judges the authority to modify the terms of first mortgages.

Congressional leaders and Treasury Secretary Henry M. Paulson Jr. emerged from behind closed doors at 12:30 a.m. Sunday after two days of marathon meetings.

“We have made great progress toward a deal, which will work and be effective in the marketplace,” Mr. Paulson said at a news conference in Statuary Hall in the Capitol.

A senior administration official who participated in the talks said the deal was effectively done. “I know of no unresolved open issues for principals,” the official said.

In the final hours of negotiations, Democratic lawmakers were carrying pages of the bill by hand, back and forth from Speaker Nancy Pelosi’s office, where the Democrats were encamped, to Mr. Paulson and other Republicans in the offices of Representative John A. Boehner of Ohio, the House minority leader.

At the same time, a series of phone calls was taking place, including conversations between Ms. Pelosi and President Bush; between Mr. Paulson and the two presidential candidates, Senator John McCain and Senator Barack Obama; and between the candidates and top lawmakers.

In announcing a tentative agreement, lawmakers and the administration achieved their goal of sending a reassuring message ahead of Monday’s opening of the Asian financial markets. Lawmakers were also eager to adjourn and return home for the fall campaign season.

Officials said they had agreed to include a proposal by House Republicans for an alternative that gives the Treasury authority to issue government insurance for troubled financial instruments as a way of reducing the amount of taxpayer money spent up front on the rescue effort. Mr. Paulson had expressed little interest in that plan, but final details were not immediately available.

The day’s intense effort followed a tumultuous week, including a contentious meeting at the White House with President Bush and the two presidential candidates.

But their work is hardly over. Even before finalizing the accord with the White House, Congressional leaders who want the bailout to pass with solid bipartisan support had begun to anxiously court votes, mindful of the difficulty they could face in a high-stakes election year. Public opinion polls show the bailout plan to be deeply unpopular. Conservative Republicans have denounced the plan as an affront to free market capitalism, while some liberal Democrats criticize it as a giveaway to Wall Street.

Aides described a tense meeting on Saturday that included Senator Max Baucus, Democrat of Montana, shouting at Mr. Paulson about executive pay caps. Outside, stunned tourists visiting the Capitol watched as camera operators shoved one another to get footage of lawmakers talking outside of the meeting room. At one point, when too much information was leaking out, staff members’ BlackBerrys were confiscated and collected in a trash bin.

While Congressional Republicans sent only their chief negotiators, Representative Roy Blunt of Missouri and Senator Judd Gregg of New Hampshire, at least nine Democrats with competing priorities piled into the meeting, surprising the Republicans but apparently not unsettling them.

The centerpiece of the rescue effort is a plan for the government to buy up to $700 billion in troubled assets from financial firms as a way to free their balance sheets of bad debts and to help restore a healthy flow of credit through the economy. It could become the largest government bailout in the nation’s history.

The two presidential nominees were active from the sidelines. Senator John McCain of Arizona, the Republican nominee, telephoned Congressional Republicans to sound them out on the bailout, and Senator Barack Obama of Illinois, the Democratic nominee, was getting regular updates by phone from Mr. Paulson and top lawmakers.

But with conservative Republicans denouncing the plan as an affront to free market capitalism and some liberal Democrats criticizing it as a giveaway to Wall Street, both parties were anxiously starting to court votes, particularly in the House, where angry Republicans nearly scotched a deal that had been in the works for days.

Republicans, under pressure from Democrats to deliver 70 to 100 votes from their side, were scouring the ranks and focusing on the two dozen Republicans who were retiring this year.

“It is a good number,” said Representative Ray LaHood of Illinois, one of the Republicans leaving Congress this year.

Mr. LaHood said he had suggested to the leadership that they convene the departing members to get them to make the case to wavering Republicans.

Both parties were also scouring the political map to identify lawmakers who face little or no opposition for re-election in November, knowing they would be more willing to vote yes."

extract only..The article continues

[absolut-advance]

U.S. House Rejects $700 Billion Financial-Rescue Plan (Update2)
By Alison Vekshin and Laura Litvan
Sept. 29 (Bloomberg) -- The U.S. House rejected a $700 billion financial-rescue plan intended to restore confidence in the nation's banking system, dealing a blow to government efforts to contain a lending crisis.
The House rejected by a vote of 228 to 205 the measure to authorize the biggest government intervention in the markets since the Great Depression.
The Dow Jones Industrial Average fell 554 points, or almost 5 percent to 10,589, at 2:32 p.m. New York time.
``The American people rejected this bailout and now Congress did likewise,'' said Republican Representative Mike Pence of Indiana.
The legislation would have given Treasury Secretary Henry Paulson broad authority to buy troubled assets from financial companies.
``I'm very disappointed,'' said House Financial Services Committee Chairman Barney Frank. ``The Republicans killed this.'' He said there would not be another vote on the issue today.
President George W. Bush, who personally lobbied lawmakers to support the measure today, will consult with congressional leaders ``to determine the next step,'' said spokesman Tony Fratto.
`Disappointed'
``Obviously we are very disappointed in the outcome,'' Fratto said. ``There is no question the country is facing a diffcult crisis that needs to be addressed.''
Bush earlier today said it's needed to ``help keep the crisis in our financial system from spreading throughout our economy.''
Federal Reserve Chairman Ben S. Bernanke warned of ``grave threats'' to the financial system if Congress rejected the plan.
Opponents said the measure was too risky and too costly.
``I fear that ultimately it may not work,'' said Representative Jeb Hensarling, a Texas Republican, a leader of the opposition. The plan may put the U.S. on the ``slippery slope to socialism,'' he said.
Lawmakers were reluctant to support the measure a month before congressional elections because some voters viewed it as ``bailing out Wall Street,'' Frank said.
Flow of Credit
The final plan considered by the House would have given Paulson an immediate $250 billion to buy bad loans from financial companies, with the rest to be doled out in stages.
Representative Adam Putnam of Florida, the No. 3 Republican, said House Speaker Nancy Pelosi's ``speech cost us votes'' because it set a ``partisan tone.''
In her speech before the vote, Pelosi, a California Democrat, said the Bush administration's policies were ``built on budgetary recklessness, on an anything-goes mentality, with no regulation, no supervision and no discipline in the system.''
The compromise legislation reached yesterday included a proposal by House Republicans, whose objections scuttled an earlier agreement in principle, which provides for government insurance for mortgage-backed securities. The plan included a bipartisan oversight board to monitor to purchase and sale of assets, and imposed limits on the compensation of executives at participating companies.
Paulson and Bernanke proposed the rescue plan to revive lending and restore the flow of credit to the U.S. economy. Opposition to their Sept. 20 proposal for almost unfettered authority to purchase assets has been strongest in the House, particularly among Republicans who balked at its cost and pressed for more taxpayer protections.
House Republican leaders today, in speeches on the House floor, urged their colleagues to support a bipartisan House and Senate compromise crafted over several days.
Still, lingering opposition from many Republicans prompted Democratic leaders, including House Speaker Nancy Pelosi and Majority Whip James Clyburn, to circulate among Democrats on the House floor this morning to seek more support.

[lakedaemonian]

DOW 10K not far off now...........I wish I was wrong :(

[trendy]

I believe the Dow heading to 8k and then will turn. 8k is the support level on the long-term linear growth charts. Last 10 years of exponential growth are over. We will not pull out of recession until 2010 at the earliest.

Guys you wouldn't believe the level of personal debt Americans hold. It makes Kiwi's personal debt levels look like a drop in the ocean.

We know some people earning US$300k who are maxed out on all credit lines....it takes years of easy and low cost credit to get a culture in this position.

It's all coming home to roost now.

[yogi-in-oz]

:)

Hi folks,

Posted 08072008:

http://forum.incrediblecharts.com/messages/8/1634477.html

"2909-07102008 ... DOW likely to be strongly negative here"

... as per post above, DOW negativity takes its cue, right on time ..... :)

-----

... and to add a little more for the next couple of months:-

DOW ..... if you think it is bad now, just wait until Jupiter gets
in on the act, 17-27102008 !~! (New Moon 28102008)

And more negative time cycles, just in time for the US elections:

..... be watching for the Saturn/Uranus opposition,
as it becomes exact and is triggered yet again, by:

Venus 03112008
Sun 11112008 (Full moon 13112008)
Jupiter 03-19112008

have a great day

paul

:)

=====

[Jess9]

A bounce in between would be nice, maybe today?

[Jess9]

Euro markets out of the block and up 3%+. If the Mighty RBNZ also announces its .75-1.00% rate cut tomorrow, we may get a double whammy bounce and see the NZX finish the week rather nicely : )

[trendy]

I believe the Dow heading to 8k and then will turn. 8k is the support level on the long-term linear growth charts. Last 10 years of exponential growth are over. We will not pull out of recession until 2010 at the earliest.

Guys you wouldn't believe the level of personal debt Americans hold. It makes Kiwi's personal debt levels look like a drop in the ocean.

We know some people earning US$300k who are maxed out on all credit lines....it takes years of easy and low cost credit to get a culture in this position.

It's all coming home to roost now.

Not far now to 8000.....but will be 2010 at the earliest before we pull out of recession. Trust me everyone has stopped spending their discretionary income.

[Financially dependant]

I just watch the DOW jump up 750 points in 45 minutes!

Someone must have said somethig???

Bounced off 8000 but jump off 8100 to 8850 and still open. should make an interesting candle.

[trendy]

That had all the markings of government intervention. Look's like they are starting to use the $700B and buying the index.

[lakedaemonian]

That had all the markings of government intervention. Look's like they are starting to use the $700B and buying the index.

Presidential Workign Group/Plunge Protection Team?

Beyond mere coincidence that a world-class slaughter ends on a high note after one of the worst weeks in financial history, in my opinion

[Xerof]

As tempting as it may be to cite "the Invisible Hand" as the reason for the late rally, don't be tempted.....the stock market is their least concern right now....credit markets must be thawed urgently. If the credit freeze starts to feed through to the corporate sector, there will be no stock market - it would take very little time for companies to collapse if debtors stopped paying their Accounts Payable, especially if the Receiver cannot borrow credit to fill the gap, which is highly possible given the Bank situation.

If corporate creditors stop paying their bills, others quickly do the same, and the money flow in the Corporate sector comes to a complete standstill.

You can see why the focus is on restoring interbank money markets.....


In my view the 1000 pip decline on Friday was continued hedge fund forced liquidation - the 850 pip rally was real money entering the market from the sidelines, in anticipation of G7, G20 coming up with the goods over the weekend

Monday will tell us if Fridays action was a (imperfect) key day reversal........the last half hour spoiled the perfect set-up

[trendy]

Anecdotal evidence of massive private investor selling via 401k and IRA accounts - . People are exchanging assets in their accounts from equity to treasury money market. This is further increasing demand on short dated treasury hence next to zero yields on 3 month t bills. Treasury is having to issue more treasury bills to meet demand.

http://www.bloomberg.com/apps/news?pid=20601213&sid=aTB_zifIPxIM&refer=home

[Xerof]

In my view the 1000 pip decline on Friday was continued hedge fund forced liquidation - the 850 pip rally was real money entering the market from the sidelines, in anticipation of G7, G20 coming up with the goods over the weekend

Monday will tell us if Fridays action was a (imperfect) key day reversal........the last half hour spoiled the perfect set-up

DOW up 936 piparoonies......think we have a bottom in place guys and gals

[trendy]

Don't bet on it just yet. Deep recession coming market will grind down...even if gov spend $1trillion on injecting capital into banks.

[drillfix]

Why is it, everytime the DOW drops xHundred amount of points they come out with a headline:

Stocks slump on recession fears

I mean, we already, have already , constantly already know this , All the time and its like a groundhog day everyday over there with the same news which obviously is not good, but the Norm is becoming the same story each time over and over.

To me, it is lack of Journalism or words to write about so they just repeat what the obvious is.

[winner69]

Why is it, everytime the DOW drops xHundred amount of points they come out with a headline:

Stocks slump on recession fears

I mean, we already, have already , constantly already know this , All the time and its like a groundhog day everyday over there with the same news which obviously is not good, but the Norm is becoming the same story each time over and over.

To me, it is lack of Journalism or words to write about so they just repeat what the obvious is.

its the realisation that the current 'crisis' is more than subprime and the credit crisis .... its the realisation that fundamantally the us and other economies are stuffed and that earnings will be down ...... can't be many say ..... in denial last week so when the dow falls again thats the reason ..... recession fears went away last week now back in existence .... you and i might know it but most don't yet drillfix so dont be surprised when yiou read the same headline next week as well

[lakedaemonian]

its the realisation that the current 'crisis' is more than subprime and the credit crisis .... its the realisation that fundamantally the us and other economies are stuffed and that earnings will be down ...... can't be many say ..... in denial last week so when the dow falls again thats the reason ..... recession fears went away last week now back in existence .... you and i might know it but most don't yet drillfix so dont be surprised when yiou read the same headline next week as well

I've been as clear as I can about how I think things will continue to unfold.

The markets and the economy will continue to spiral downward.....regardless of what the empty headed "experts" would have us believe on CNBS...er CNBC

Wait until layoffs/redundancies/unemployment figures sky(relatively speaking, many 1st world countries have near 20,30,40 year low unemployment using newer skewed to the positive statistics)

Wait until the US private/public pension underfunding/insolvency problem rears it's ugly head.

In my opinion, the US and to a lesser extent the global economy, is in a "flat spin".

Market drops accelerate

Bailouts accelerate in frequency and scale

Bankruptcy/Insolvency/Receiverships will accelerate in frequency and scale

Redundancies/Unemployment will accelerate in frequency and scale

Leading to forced liquidations of personal/corporate assets

Until we either hit the ground(complete financial implosion which I strongly doubt) or regain control via reinflation and aerodynamic lift from the denser air and far more appealing low altitude valuations.

Allowing us to once again achieve stable flight and SLOWLY climb to cruising altitude.

Personally, I think we've only seen the first few spin rotations.....there's lots more nauseating spinning and screaming, and screaming and spinning before we get low enough for the reinflation rudder and the screaming bargain ailerons to bite.

Just my personal 0.02c.....hopefully I haven't offended any pilots or aviation fans.

[dumbass]

Why is it, everytime the DOW drops xHundred amount of points they come out with a headline:

Stocks slump on recession fears

I mean, we already, have already , constantly already know this , All the time and its like a groundhog day everyday over there with the same news which obviously is not good, but the Norm is becoming the same story each time over and over.

To me, it is lack of Journalism or words to write about so they just repeat what the obvious is.

try this one

Bush blames the Economic down turn on the President of the US

Dumb SOB and **** for brains W. Bubba Bush ,blames all this **** on Dick Chaney, he says.

He told the FWWE news that all was OK until that SOB (Chaney), decided to do some crazy deals with his Buddies(ENRON & OTHERS), or Homies as he calls them.

He washes his hands of any blame,he claims extreme stupidity and utter ignorance mixed with his mongoloid communication skills plus his desire to be the worst President ever in History, for all that has happened, in this past 84-86 month.

In a related note,Laura Bush declare her Husband an embarrassment to the mongoloids of the world, when compared to them,and also a useless moron with an peanut shell for brain.

She added that even in bed he his clueless and if it was not for all those very handsome and virile Secret Service Guys, that screwed her with gusto all this YEARS she would of killed his stupid ass, she added.



or

Dow Drops 666; McCain Claims Obama is the Anti-Christ!

[belgarion]

Dow's most recent bottom was 10/10/08 at 8,335

Today was the next(?) lowest bottom 8,519.

At some stage the doom and gloom merchants will have to shut up and realise that both the credit crisis and the recession are already priced into the market.

Tommorrow will be fun ... Will it be that day?

edited: Straits Times and Hang Seng both opened lower and then climbed back, Nikkie almost did the same. Europe markets just opended and looking confused.

[STRAT]

its the realisation that the current 'crisis' is more than subprime and the credit crisis .... its the realisation that fundamantally the us and other economies are stuffed and that earnings will be down ...... can't be many say ..... in denial last week so when the dow falls again thats the reason ..... recession fears went away last week now back in existence .... you and i might know it but most don't yet drillfix so dont be surprised when yiou read the same headline next week as wellNow that the impending recession headlines have reached morning TV and talk back radio this might be a good sign the bottom is close even if its not going to turn as soon as Belg would have us believe :D

[belgarion]

Now that the impending recession headlines have reached morning TV and talk back radio this might be a good sign the bottom is close even if its not going to turn as soon as Belg would have us believe :D

Recession vs Credit crunch (CC). It depends on which came first doesn't it?

Is Winner saying it was the CC that caused the crash and now the recession? I'm saying the recession came first (we've been hearing the talking heads say it for months before they even mentioned the CC) and the CC came next as the recession started to severly constrain cash flows. Now the talking heads are reminding everyone about the recession just to keep fear flowing. Personally I think the market, which always moves months in advance of the talking heads, has priced both in and we're at or near the bottom.

Its the reverse of the taxi driver share tips -

1) when taxi drivers are share experts and are tipping shares - sell

... conversely ...

2) when taxi drivers are share experts and are pitching doom and gloom - buy

note that you could probably substitute breakfast new 'talking heads' for taxi drivers ... ;)

[underDOG]

edited: Straits Times and Hang Seng both opened lower and then climbed back, Nikkie almost did the same. Europe markets just opended and looking confused.

good luck with Nikkie opening lower and climbing back - more fun you

but I do think the Nikkei is one of the most undervalued indexes right now given that Japanese companies have been very prudent the last 5 years especially, getting their books in order.

They are in better shape than ever.

[STRAT]

note that you could probably substitute breakfast new 'talking heads' for taxi drivers ... ;)I was thinking that too :D

[trendy]

Watch the following PBS video on "foreclosure alley". Sobering.

http://www.kcet.org/socal/2008/09/foreclosure-alley.html

[belgarion]

Still in cash overseas (but doing a bit of very short term trading!) but watching ...

Dow - Is it double bottom time? Or was it just a bear-rally...
http://finance.yahoo.com/q/ta?s=%5EDJI&t=3m&l=on&z=l&q=l&p=m20,m50,m100,b&a=ss,vm,r14&c=

FTE - looking like a simlar question ...
http://finance.yahoo.com/q/ta?s=%5Eftse&t=3m&l=on&z=l&q=l&p=m20%2Cm50%2Cm100%2Cb&a=ss%2Cvm%2Cr14&c=

US ... Question answered in the next couple of weeks - suspect the Obama presidency will create a boost.

Another crash like last night's in Europe will probably see me the enter FTSE with a plan to spread buying over 3-6 months.

Seems to be consensus amoung global economists that 2nd half of 2009 the ship will stop floundering and start steaming again ... (My brokers in both Europe and US are hounding me to enter ... but they were 3 months ago too!)

[belgarion]

good luck with Nikkie opening lower and climbing back - more fun you

but I do think the Nikkei is one of the most undervalued indexes right now given that Japanese companies have been very prudent the last 5 years especially, getting their books in order.

http://finance.yahoo.com/q/ta?s=%5En225&t=3m&l=on&z=l&q=l&p=m20%2Cm50%2Cm100%2Cb&a=ss%2Cvm%2Cr14&c=

Holy heck - almost 10% in a day! ... And worse, way past what would be a double-bottom. Probably be a big bounce when it re-opens. ;)

[lakedaemonian]

Still in cash overseas (but doing a bit of very short term trading!) but watching ...

Dow - Is it double bottom time? Or was it just a bear-rally...
http://finance.yahoo.com/q/ta?s=%5EDJI&t=3m&l=on&z=l&q=l&p=m20,m50,m100,b&a=ss,vm,r14&c=

FTE - looking like a simlar question ...
http://finance.yahoo.com/q/ta?s=%5Eftse&t=3m&l=on&z=l&q=l&p=m20%2Cm50%2Cm100%2Cb&a=ss%2Cvm%2Cr14&c=

US ... Question answered in the next couple of weeks - suspect the Obama presidency will create a boost.

Another crash like last night's in Europe will probably see me the enter FTSE with a plan to spread buying over 3-6 months.

Seems to be consensus amoung global economists that 2nd half of 2009 the ship will stop floundering and start steaming again ... (My brokers in both Europe and US are hounding me to enter ... but they were 3 months ago too!)

I think any "Obama Effect" will be temporary at best.

Trading opportunities sure, investing opportunities, no.....I'm clearly putting my money where my mouth is and staying away

There will be no (relatively speaking) quick and easy "Morning in America"...this is going to take YEARS to even BEGIN to fix.

And in the meantime......consumer spending related corporate earnings will spiral downwards which will push up P/Es, push down share prices.

And that's all BEFORE the pending public/private pension disaster rears it's ugly head.

Any company sailing in such stormy seas will also have to deal with wind in their face, rather than wind at their back......with likely long-term net withdrawals due to demographics/hardship.

"Stuff" may not offer dividends, but "stuff" will likely weather this storm better than other options once inflation kicks off again.

[Lizard]

Oops... only 0.5% rate cut when the market wanted 1.0%... down they lurch again...:rolleyes:

[peat]

triple bottom on the daily?

[belgarion]

triple bottom on the daily?

Lining up for a serious rally?

[peat]

who knows.
but triples are more meaningful than doubles and it marks a clear line for determining risk

[belgarion]

Bugger. New lows for the broader S&P500 ... DOW trying to breach ... Tomorrow will be fun ...

[brettdale]

Down to 7552.

How low can it go????

below 7000?

Surly not?

[belgarion]

LOL ... Tomorrow was fun ... Mainly to those of a masochistic persuation !!!

[belgarion]

Down to 7552.

How low can it go????

below 7000?

Surely not?

Surely so ;) ... Many are predicting the lows of 2001/2002 will be surpassed. I.e. DOW 6500 and S&P500 650 ... Personally I see about a 50/50 chance of these levels being reached. Still 100% cash in US, China and Europe but day trading the rumours and innuendo :)

[ananda77]

...most likely, a short, devastating intraday capitulation spike down to 6700 for the DJI and 670 for the SP500 still ahead and not too far into the future;

Kind Regards

[belgarion]

One intra day spike? I guessing quite a few ... This going to bed at 7:00 pm and waking up at 3:00 am is beginning to get on my nerves. Still, trading from your laptop while sitting on the toilet makes for some interesting thought processes ... ;) ... (was that too much information? :) )

[brettdale]

Hats off to Obama for his pick.

[ananda77]

One intra day spike? I guessing quite a few ... This going to bed at 7:00 pm and waking up at 3:00 am is beginning to get on my nerves. Still, trading from your laptop while sitting on the toilet makes for some interesting thought processes ... ;) ... (was that too much information? :) )

...yes, one intraday spike...

...because if it turns out that way as THE FLOOR, it is only a floor of some serious kind, if the market consequently makes a higher high and a higher low (today the market made a lower low before a bit of a rally, therefore what we saw on Thursday was not the floor);

...and I think, given the serious state of market oversoldness, that in case of a floor, the higher low will be some 15 - 30 (%) higher than the previous low; and I do not want to miss out on the potential 15 - 30 (%) off the floor;

...ergo, fully invested now, but with a capital hedge

...otherwise the market will seriously crash in oversold territory

Kind Regards

[trendy]

...yes, one intraday spike...

...because if it turns out that way as THE FLOOR, it is only a floor of some serious kind, if the market consequently makes a higher high and a higher low (today the market made a lower low before a bit of a rally, therefore what we saw on Thursday was not the floor);

...and I think, given the serious state of market oversoldness, that in case of a floor, the higher low will be some 15 - 30 (%) higher than the previous low; and I do not want to miss out on the potential 15 - 30 (%) off the floor;

...ergo, fully invested now, but with a capital hedge

...otherwise the market will seriously crash in oversold territory

Kind Regards

I beg too differ as this is not going to be a clearly defined V bottom, we are in for a multi-year grind downwards and at best slow flat lining before trending back up. Bottom is not in.

More bad news to come in this deflationary environment. Bank lending here has slowed/stopped as they desperately try to hoard cash to protect balance sheet. Citigroup is another catastrophe that other banks will be redoubling efforts to avoid. Banks are so in need of cash they are now offering i-rates of greater than 4% for retail term deposits at a time when the FED is giving cash away at near 1%. Credit is evaporating for many businesses.

The FED is using everything they have to try and inflate the economy but unless credit can flow to the consumer it is as good as useless.

[ananda77]

I beg too differ as this is not going to be a clearly defined V bottom, we are in for a multi-year grind downwards and at best slow flat lining before trending back up. Bottom is not in.

More bad news to come in this deflationary environment. Bank lending here has slowed/stopped as they desperately try to hoard cash to protect balance sheet. Citigroup is another catastrophe that other banks will be redoubling efforts to avoid. Banks are so in need of cash they are now offering i-rates of greater than 4% for retail term deposits at a time when the FED is giving cash away at near 1%. Credit is evaporating for many businesses.

The FED is using everything they have to try and inflate the economy but unless credit can flow to the consumer it is as good as useless.

Trendy:

...basically agree with your sentiment, more bad news, more crunch, more market down momentum, etc, etc, but stick to my floor outline nevertheless, if we finally see THE FLOOR.

...at current levels (Friday's intraday low/SP 500) the market has priced in a 'recession', but it looks like the world is going to get a 'severe one', possibly most severe. Consequently, trading levels down to 600 or even 500 are possible, even likely.

Kind Regards

[SCHUMACHER]

good to see copper recover following a big dip last week............copper up approx 7% following a string of positives coming out of the US.....Obama anouncing his economic team and GOVT backing CITIBANK and gaining preference shares .............now all we need to do is get the banks to lend back out to the market to help stimulate the economy .....Obama also talking about creating 2.5 million jobs in relation to roading ,infastructure, schools and alternative fuels, so thats good for base metals in general

China uses 25% of all total copper produced and it looks like the chinese governments will also inject money into their economy.........

so today all in all we may see the beginning of a "short term bear rally" and hopefully we may see a "short squeeze" rally which means the shorters will have to buy back the shares that they loaned then sold the market down with.

I enjoy seeing the shorters suffer.....as they are responsible for excessively overselling the market..............

sould get a good bounce today ........GOLD up to $820 COPPER up 7% DOW up 300 points(currently with 1. 1/2 hours to go)............all good signs for a fat bear RALLY!!!!

[belgarion]

DOW and SP500 up over 11% in last two trading days ... But still not enough to break through steeply declining 20 day EMAs ... Hey, but looking on the bright side - they climbed above the steeply declining 10 day ema :)

Keeping the power dry...

[Hoop]

good to see copper recover following a big dip last week............copper up approx 7% following a string of positives coming out of the US.....Obama anouncing his economic team and GOVT backing CITIBANK and gaining preference shares .............now all we need to do is get the banks to lend back out to the market to help stimulate the economy .....Obama also talking about creating 2.5 million jobs in relation to roading ,infastructure, schools and alternative fuels, so thats good for base metals in general

China uses 25% of all total copper produced and it looks like the chinese governments will also inject money into their economy.........

so today all in all we may see the beginning of a "short term bear rally" and hopefully we may see a "short squeeze" rally which means the shorters will have to buy back the shares that they loaned then sold the market down with.

I enjoy seeing the shorters suffer.....as they are responsible for excessively overselling the market..............

sould get a good bounce today ........GOLD up to $820 COPPER up 7% DOW up 300 points(currently with 1. 1/2 hours to go)............all good signs for a fat bear RALLY!!!!

Yeah, it could even be a big fat 30+% bear market rally.:)

Mentioning copper rally in the same breath as DOW bear market rally..some rules apply with the interrelation with the two.

Russell Napier's bear market studies has proved there is a highly significant correlation (over 90%) between the bottom of copper prices and the bottom of the Dow. (Other commodity prices have a lower significance correlation factor)

Spot Copper bottom precedes (1month or less) or coincides with DOW bottom.

For bottom pickers, they should all be watching copper as well as other indicators.

See my posts at http://www.sharetrader.co.nz/showthread.php?t=5171&page=10 for the copper charts as well as other Bear market reactive indicators.


Even with spot copper rising to 1.66, it is still in a medium (and primary) downtrend
(Note .. this downtrend is weakening significantly).

SCHUMACHER is correct in the assumption that if the DOW rallies now it would be another Bear Market rally..but I must add this qualifying point ...."as long as the copper prices remains within its downtrending channel".


If Spot Copper keeps rising from today and if it breaks out of its downtrend there is a good chance it would have bottomed therefore the DOW has or will also bottom and the resulting rally would not be a technical bear market rally but a Bull market (1) rally. Both types of rallies are similar in nature, they are equally as dangerous to the unwary investors capital as both types of rally end with severe pull backs ..the bear market rally back to form a lower bottom and the Bull Market (1) rally back to maybe be severe enough to test but not break the previous bottom and create fear that the Bear market is still alive when in actual fact its technically not.

As with all phase changes relying on Equity market index data alone, it could be months later before the majority (including copper watchers) realise, or convinced that a bear market phase had ended.

Copper + Dow theory being reliable indicators helps assess earlier the situation (phase changes) with the aid or hinderance of other lesser reliable indicators.

Good Luck

[Hoop]

DOW and SP500 up over 11% in last two trading days ... But still not enough to break through steeply declining 20 day EMAs ... Hey, but looking on the bright side - they climbed above the steeply declining 10 day ema :)

Keeping the power dry...

A problem with V shaped retracements (bottoms?)..eh Belgarion

If ? it is a fat 30% bear? market rally its nearly half gone gone already...frustrating times.

[belgarion]

True Hoop ... But with i-rates as they are (a'fallin' steeply), there's little point keeping the money in the bank ... will be back in slected stocks in the US and Europe before Christmas methinks ... whether we're at the bottom or not.

[ananda77]

True Hoop ... But with i-rates as they are (a'fallin' steeply), there's little point keeping the money in the bank ... will be back in slected stocks in the US and Europe before Christmas methinks ... whether we're at the bottom or not.

...nearly 100% cash again this evening, now short in the market and accumulating...it is a funny game...

Kind Regards

[AMR]

...nearly 100% cash again this evening, now short in the market and accumulating...it is a funny game...

Kind Regards

Ananda what do you think...is this a fake out or a break out?

[ananda77]

Ananda what do you think...is this a fake out or a break out?

AMR:
...short - medium term:

*markets seem to try a bottoming process
*institutions still net distributive
*liquidity inflows improving but still in negative territory

...if market fundamentals start improving over the short to medium term, markets could bear rally through to year end;

...long term:

FDIC Quarterly Banking Profile
ALL INSTITUTIONS PERFORMANCE
THIRD QUARTER 2008
http://www2.fdic.gov/qbp/2008sep/qbpall.html#2

...I do not think that the financial sector bottom is in after reading this report (look at the expanding charge-offs) and therefore, I do not think a general market bottom is in...

...my strategy remains unchanged:

*in the market with core holding
*capital hedged but now 'short biased accumulating'

Kind Regards

[frostyboy]

somethings that have caught my attention today which if we have a down day next session in the US and i guess we will i will put in a small buy.

We are at resistance on the BKX should bounce off that and "Trader Vic’s 4-Day Rule" suggests that will be

volume is light on this holiday week, did the stocks rise cause of light volume.
previously action aournd the 2002 lows shows we are near a support and volume was picking up

my scenarios have never play out as expected

[belgarion]

Now it's official ... US is in Recession ... If memory serves, isn't it time to buy when it becomes official?

[ananda77]

Now it's official ... US is in Recession ... If memory serves, isn't it time to buy when it becomes official?

...those were the days belgarion, when the official announcement of a recession signaled the end of a bear party;

...but these days, as long as the CDS time bomb is ticking away and ready to explode soon, the world financial system remains extremely unstable;

Kind Regards

[frostyboy]

i didnt go long cause it didnt go down on friday as i thought, but i never expected such a sell off

signs of a bottom http://en.wikipedia.org/wiki/Stock_market_bottom

these shouldnt be to hard to spot without to much effort, waiting for it is though, for me trying to pick a time when it will turn around is probably costly and should just continue waiting for the signs prob best to think of it as watching and not waiting

my most reliable one is looking at the number of stocks and sectors making new lows and how far the stocks current price is in relation to its recent new low, as is just the opposite with a top

[belgarion]

Looks like the short sellers tried hard for the now regular Thursday sell off but were met by buying enthusiasm in the last hours of trading resulting in them bailing well before the close. If I'm correct - another good sign. See what happens tomorrow.

[belgarion]

Today (being thursday) showed the same pattern as the last few weeks. Will Friday bounce (like the last few weeks)?

[Yossarian]

unlikely with the auto bailout dead... it's going to be ugly tonight.

[ananda77]

8 really, really scary predictions
Dow 4,000. Food shortages. A bubble in Treasury notes. Fortune spoke to eight of
the market's sharpest thinkers and what they had to say about the future is
frightening.
http://money.cnn.com/galleries/2008/fortune/0812/gallery.market_gurus.fortune/index.html

...my startegy has not changed for this market:

-long- shares (again) at earning multiples <9/yield 8.2 (net)
...of course -GOLD, The TOP Safety Play FOREVER-
-dynamic hedging 'short biased accumulating'

Kind Regards

[belgarion]

well well. DOW opened down and then straightlined to finish in positive territory. There a joke going around that this Friday optimism is being caused by traders certainty that the market won't go down for the next two days ...

[belgarion]

Today (being thursday) showed the same pattern as the last few weeks. Will Friday bounce (like the last few weeks)?

This thursday/friday behaviour is becoming an "established" pattern ... Will friday follow with a nice upswing?

[ananda77]

...nice retrace on the SP 500 towards last weekend, maybe ending at ~850 early next week, then rebounding to 1040, before heading deep south...

-long- shares at earning multiples <9/yield 8.2 (net)
...of course -GOLD, The TOP Safety Play FOREVER-
-dynamic hedging: 'neutral' to 963 then 'short biased accumulating'

[ananda77]

...nice retrace on the SP 500 towards last weekend, maybe ending at ~850 early next week, then rebounding to 1040, before heading deep south...

-long- shares at earning multiples <9/yield 8.2 (net)
...of course -GOLD, The TOP Safety Play FOREVER-
-dynamic hedging: 'neutral' to 963 then 'short biased accumulating'

-long- shares 'core holding'
...of course -GOLD, The TOP Safety Play FOREVER-
-dynamic hedging: short + 'accumulating from 973'; sell stops <850 'biased accumulating'

Kind Regards

[belgarion]

Ditto. (But no gold.) - Accumulating, financials bias .... but very worried about USD.

[AMR]

-long- shares 'core holding'
...of course -GOLD, The TOP Safety Play FOREVER-
-dynamic hedging: short + 'accumulating from 973'; sell stops <850 'biased accumulating'

Kind Regards

Ananda what's this "dynamic hedging" you are talking about? Are you using put options or something similar?

[ananda77]

AMR:

...usually use a variety of US indices like the SP500 or the Russell2000 to hedge my share holding;

...dynamic hedging for me means usually to design a hedge (in theory and see it in action on paper first) which is ideal = neutral; then work/change in a bias (risk) according to MARKET FUNDAMENTALS!!!!; for example, you may work additional long leverage for your shares into a short biased hedge;
...market turns are more likely at certain points (usually support/resistance points in a longer time frame) which provide exit strategies

Kind Regards

[belgarion]

DOW & SP500 - 20 and 50 MA converged. 10 year treasury rate heading up from lows. ... Bought some builders ... (probably too early but it wasted in the bank or tbills)

[airedale]

http://i474.photobucket.com/albums/rr105/airedale99/DowJones.png

The records show that the first 5 days of the year...then so goes the year.
In 31 of the past 36 years the Dow's first five days of trading have predicted whether the market finished higher or lower for the year.
Thursday will be the fifth day of trading on the US markets, so we should know on Friday morning.

[ananda77]

...in the daily time frame, November 20th. marked the floor and this current rally could extent all the way up to:

-DOW ~10000
-SP 500 ~1100

...however, very much! doubt! that without further consolidation between ~850 and ~935_~950_~960_~973 (take your pick), this present rally will go 'head on' all the way to the top; furthermore:

...without confirmation of the 20th. November floor on a longer weekly time frame (at the VERY MINIMUM!!!! and ABSOLUTELY ESSENTIAL!!!!), this present rally remains in the category 'bear_sucker's_head_fake;

-it definitely is not a new BOOM-BOOM BULL MARKET;

Kind Regards

[belgarion]

concur ... I think we'll see Nov 20 lows tested again once companies start reporting - nothing like hard numbers to shake investors up. Last quarter of 2008 was abismal for many as sales for many just stopped. Trading each dead cat bounce after the bad results and then going long once a subsequent trend is established will be the name of the game. Alas - sleep deprevation looks a certainty for earley 2009.

[tricha]

concur ... I think we'll see Nov 20 lows tested again once companies start reporting - nothing like hard numbers to shake investors up. Last quarter of 2008 was abismal for many as sales for many just stopped. Trading each dead cat bounce after the bad results and then going long once a subsequent trend is established will be the name of the game. Alas - sleep deprevation looks a certainty for earley 2009.


18 monthes into recession and it looks all up hill from here for 2009, there is no light at the end of this tunnel, 6 months from now change the R to a Big D :confused:

Copper Falls for Second Day on Concern About U.S. Recession
Email (?Subject=Bloomberg%20news:%20%20Copper Falls for Second Day on Concern About U.S. Recession &body=%20Copper Falls for Second Day on Concern About U.S. Recession %0D%0A%0D%0A%20http%3A//www.bloomberg.com/apps/news%3Fpid%3Demail_en%26refer=commodities%26sid%3D arD12O4jXnMU) | Print (http://www.bloomberg.com/apps/news?pid=20601012&sid=a0icitJ82Ri4&refer=commodities#) | A (http://www.bloomberg.com/apps/news?pid=20601012&sid=a0icitJ82Ri4&refer=commodities#) A (http://www.bloomberg.com/apps/news?pid=20601012&sid=a0icitJ82Ri4&refer=commodities#) A (http://www.bloomberg.com/apps/news?pid=20601012&sid=a0icitJ82Ri4&refer=commodities#)


By Claudia Carpenter
Jan. 8 (Bloomberg) -- Copper and nickel slid for a second day in London as reports showed the U.S. recession may be deepening, curbing demand for industrial metals further.
Copper has dropped more than 60 percent since the beginning of July as a worsening housing market in the U.S. crimped demand for the metal used in pipes and wiring. U.S. crude oil inventories (http://www.bloomberg.com/apps/quote?ticker=DOESCRUD%3AIND) jumped more than expected to the highest since May, and companies pared 693,000 jobs in December, also exceeding economists’ forecasts, reports showed yesterday.
“Fairly poor data for U.S. employment and the latest U.S. inventory data reaffirm weakness in the economy,” said Dan Smith (http://search.bloomberg.com/search?q=Dan%0ASmith&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), an analyst at Standard Chartered Plc in London.
Copper for delivery in three months fell $90, or 2.7 percent, to $3,250 a metric ton as of 1:54 p.m. on the London Metal Exchange. It declined 1.5 percent yesterday and was a record $8,940 on July 2. The Comex March-delivery copper contract fell 2.1 percent to $1.4795 a pound.
LS-Nikko Copper Inc., operator of the world’s third-largest copper refiner and smelter, plans to cut this year’s output by 10 percent on falling demand.
Nickel, which is used in stainless steel, declined $650, or 5.3 percent, to $11,650 a ton. Nippon Yakin Kogyo Co., a Japanese stainless steel producer, said it will suspend production at its plant in Kawasaki, near Tokyo, for three days a month as it cuts output by 60 percent from first-half levels.
Nickel jumped as much as 13 percent this year and copper climbed to a one-month high on speculation government spending programs will revive economies, spurring consumption of homes, cars and other items that contain industrial metals.
Opportunity to Sell
Buying by index funds that helped support nickel prices as they rebalance their holdings provided an opportunity for other investors to sell inventory, Smith said. Nickel may drop to less than $10,000 a ton in the next few weeks, he said.
The UBS Bloomberg CMCI (http://www.bloomberg.com/apps/quote?ticker=CMCIPI3M%3AIND) Index of 26 commodities dropped 4.2 percent yesterday, the first drop this year. It was down another 1.1 percent today.
“Improvement in sentiment disappeared fairly quickly,” Smith said.
The number of Americans getting unemployment benefit rose to 4.6 million last week, the most since 1982, the Labor Department said in Washington today. First-time filers fell by 24,000 to 467,000. Jobless claims were projected to rise to 545,000, economists said in a Bloomberg News survey.
Tin fell $250 to $11,350 a ton, zinc dropped $27 to $1,263 a ton and aluminum declined $39 to $1,555 a ton. Lead increased $11 to $1,151 a ton.
To contact the reporter on this story: Claudia Carpenter (http://search.bloomberg.com/search?q=Claudia+Carpenter&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1) in London at ccarpenter2@bloomberg.net (ccarpenter2@bloomberg.net) or ccarpenter2@bloomberg.net
Last Updated: January 8, 2009 09:21 EST

[airedale]

http://i474.photobucket.com/albums/rr105/airedale99/DowJones.png

The records show that the first 5 days of the year...then so goes the year.
In 31 of the past 36 years the Dow's first five days of trading have predicted whether the market finished higher or lower for the year.
Thursday will be the fifth day of trading on the US markets, so we should know on Friday morning.

Well after the first five trading days on the Dow, the crystal ball gives a negative forecast for 2009.
It closed at 8,776 on 31/12/08 and closed this morning NZ time at 8,742.
Just 34 points short of the target.http://i474.photobucket.com/albums/rr105/airedale99/DowJonesafterfivedaystrading.png

[Hoop]

Hoop sees an ascending triangle. This is often a strong bullish sign....but can be bearish in a downtrend ..
The other indicators are mostly bullish (rising above zero and trending upwards)) William% at 50
Therefore good chance the DOW index will break upwards out of the ascending triangle. Watch to see if resistance is broken (orange line 9080) if that happens the next big resistance is 9500
Conversely if the DOW index respects the 9080 orange line resistance level and drops to break the 8400 support that could spell the end to this latest market rally*

*Note Hoop did not mention bear market rally just a market rally
Hoop not sure if the current market is still a bear Market or the first phase of a new Bull market. Testing the Nov 2008 bottom or slight lowering below the old bottom but in general terms respecting the old low(bottom) will indicate that a new bull has already been born....only time will tell....



Todays index close 8743 not marked on the chart

http://i458.photobucket.com/albums/qq306/Hoop_1/djiaa_us07jul08_to_13mar09.png

[ananda77]

...again, a nice retrace over the last few days; although the SPX 500 stuck to the 910 level (until Friday trading in the US), further upside remained unconfirmed by the DOW and consequently:

...getting used to the 'stuffed up' market logic, markets used the ??GOOD NEWS??? (only 524000 - problem over) to drive indexes down, possibly for a re-test of at least ~850, maybe even a re-test of the 20th November low;

...if the 20th. November low confirms, then the current rally will hit it's target zone of DOW ~10000 and SP500 ~1100;

...after that it's the hell out of there...

Kind Regards

[peat]

looks like the bear flag has well and truly broken now.

[ananda77]

...still consolidating, trading to >83, well >82.4 support/resistance; likely to test 85-level;

Kind Regards

[Hoop]

Hoop sees an ascending triangle. This is often a strong bullish sign....but can be bearish in a downtrend ..
The other indicators are mostly bullish (rising above zero and trending upwards)) William% at 50
Therefore good chance the DOW index will break upwards out of the ascending triangle. Watch to see if resistance is broken (orange line 9080) if that happens the next big resistance is 9500
Conversely if the DOW index respects the 9080 orange line resistance level and drops to break the 8400 support that could spell the end to this latest market rally*

*Note Hoop did not mention bear market rally just a market rally
Hoop not sure if the current market is still a bear Market or the first phase of a new Bull market. Testing the Nov 2008 bottom or slight lowering below the old bottom but in general terms respecting the old low(bottom) will indicate that a new bull has already been born....only time will tell....



Todays index close 8743 not marked on the chart

http://i458.photobucket.com/albums/qq306/Hoop_1/djiaa_us07jul08_to_13mar09.png
Dow respected the 8400 support line during intraday trading today....

...maybe just maybe it may bounce back up from here.....
...if not :(

[airedale]

http://i474.photobucket.com/albums/rr105/airedale99/DOWJONES.png

The Dow appears to be forming a Stage 1 base. Watch for the 50 day MA to start flattening before [hopefully] rising.

[belgarion]

airedale, hoop, ananda77 ... a critical juncture, n'est pas? ... My pick is consolidation at these levels but with a small chance of a sustained rally.

I note that many are saying that the big C simply won't exist in a year or two. If the big C has any further major issues then all bets are off. Also - a couple of other big financials are sitting on 'less than encouraging provision data' that we should see soon in formal terms. Some of the fin companies already have this new data priced in (or at least I hope the market has priced it in) but at least one that I'm considering shorting doesn't.

Reinsurance market plays anyone? ;)

[ananda77]

...test of 20th November low coming up;

-little bounces up along the way will matter little and are no more then shorting points

...based on fundamentals, personally doubt 20th November low will hold, but before the market goes lower, we could see a rally to DOW 10000, SP 500 1100;

Kind Regards

[Hoop]

...test of 20th November low coming up;

-little bounces up along the way will matter little and are no more then shorting points

...based on fundamentals, personally doubt 20th November low will hold, but before the market goes lower, we could see a rally to DOW 10000, SP 500 1100;

Kind Regards

Ananda
Your post says to me that you think we are still in a bear market......You may be right.

Time could be near to see a testing of the lows.

**If 7450 (7449.4 Intraday low) gets cleaned out it will prove a bear market is still operating.
**If say a new low just under the old low e.g 7400 there will still be doubt.
**If the old lows are respected this time there is a good chance that it would prove that a Bull Market (1) is operating.


The significance in wanting to know whether a bear market has ended, is that it gives a marker as to how long the recession will last...usually the equities will start rising halfway (Av 58%) through a recession so if 20 Nov is the low point, add 8 months e.g July2009 and the USA should start to see an economic upturn.
Without this (and other) markers, people can only speculate the length of this recession
Theorey has it that the longer the duration of an equity bear market the longer the wait for the economic upturn with more economic damage occurring with an increasing lag time effect for recovery mode.

It is usually the second half of any recession that the causality count increases with the associated increasingly bad and very gloomy media news.... paradoxically... occurring at a time when the equity market has already found a bottom and is trying to find a way upwards.


Subject to the name Bull market ...Bull market phase 1 is not a fun place for investors if fact it can be a frustrating time, many investors come in only to be cleaned out by an unexpected company failure or get trapped with lagging stocks.


However before the lows get tested there are still some resistance levels that the selling pressure has to be strong enough to force itself through. these are the orange lines at 8150 and 8000. The top of the 3 middle orange lines (8400) has been breached

http://i458.photobucket.com/albums/qq306/Hoop_1/ScreenShot008-1.jpg

http://s458.photobucket.com/albums/qq306/Hoop_1/?action=view&current=ScreenShot008-1.jpg
http://s458.photobucket.com/albums/qq306/Hoop_1/?action=view&current=ScreenShot008-1.jpg&t=1231971370221

[Dr_Who]

There's more data coming out of the US.

If the data shows bad news, then it is all over. I feel like shorting the Dow and/or Aussie market.

I just have to drink a few beers to get enough courage to short at these levels... LOL :cool:

[ananda77]

There's more data coming out of the US.

If the data shows bad news, then it is all over. I feel like shorting the Dow and/or Aussie market.

I just have to drink a few beers to get enough courage to short at these levels... LOL :cool:

...for the very short term (like tomorrow's trading in the US), it is most likely that the Dow will briefly test ~8000 and the SP 500 ~816 (sort of a shake out) before a mini-rally starts again; -a good shorting opportunity accumulating at ~8400, ~8700 and possibly ~9000 (hopefully, but very much doubt the 9000 level)-

...it is most unlikely that the Dow and the SP 500 will immediately test the 20th. November low, more likely is, the 20th November test and if successful, the subsequent rally to Dow ~10000 and SP 500 ~1100 will coincide with the change in the US Government next week;


...after that, the bears will take charge once more or the bears will continue the party, if the 20th November test fails;

Kind Regards

[Hoop]

The Selling pressure could not crack that 8000 resistance line but gave it a good test (intraday 7997) before bouncing back to end the day fractionally higher at 8212 (+12).
Todays action may have settled a few nerves.
A wee rally from here ? as Ananda suggests....or a retest

[belgarion]

INTC did well ... Nothing like getting the 'bad' news out way before the others ... and not once but twice ... Given the life expectancy of chips 3-5 years before you need to start worrying, they'll be good in two years. Also - there are good cost saving drivers to keeping your tin up to date (if you have the cash!) using the additional power and virtualisation to reduce licensing and op costs. ... In NZ CFO have basically frozen h/w purchases from Sep 2008 ... They can't do this for too long. Non-PC type chips (e.g. mobile phones) are gaining as OS and framework developers rapidly enhance the ease of developing s/w on these platforms. ...

BAC ... Bounce back coming if rumours of more govt funding is true (which it probably is). ... JPM doesn't look to bad either.

[ananda77]

GEAB N°30 is available! Global systemic crisis – New tipping-point in March 2009: 'When the world becomes aware that this crisis is worse than the 1930s crisis'
- Public announcement GEAB N°30 (December 16, 2008) -
http://www.leap2020.eu/GEAB-N-30-is-available!-Global-systemic-crisis-New-tipping-point-in-March-2009-When-the-world-becomes-aware-that-this_a2567.html

...after short cover at 816 for SPX 500, first 'SPX 500 shorting target' hit at 851 on bounce;
...next SPX 500 shorting target at ~880, if oversold rally continues tonight;

Kind Regards

[ananda77]

Bernanke's Design Flaw and Why Depression Has Become INEVITABLE...

THE GREAT EXPERIMENT
Quarterly Review and Outlook - Fourth Quarter 2008
http://www.hoisingtonmgt.com/pdf/HIM2008Q4NP.pdf

Trading:

Option Expiration:

-funds profit from increased 'Premiums' on options due to high market volatility and
-let options expire worthless by selling underlying securities into market on expiration day
-consequently, SPX 500 stuck in 850 range for the session

...in the very short term, it is most likely, that the oversold rally will continue to Dow ~8400 and SP 500 ~880

Trading Strategy remains unchanged...

Kind Regards

[belgarion]

http://biz.yahoo.com/ap/090116/economy.html

Many seem worried about persistant defaltion hitting the US. And rightly so! Methinks a very qick fix for this problem would be for the oil producers to slash supply.

If not - Obama could make himself very popular indeed by increasing US gas taxes. ;) Counter intuitive that one ... Think about it.

[Hoop]

Whats the difference between 7000 and 8000?

A long term reason why 7449 intraday bottom on the 20th Nov is a vital support point.

Actually its a very strong support band rather than a line (7100-7600) The band is well established, tested and retested over the years therefore I assume it would need an extraordinary event (disaster) and probably panic selling to breach it.

The only market phase that this (7100-7500) band breach could occur in (if at all) would be in a secular Bear cycle (super-cycle) phase. It just happens that the DOW has been in a Secular Bear Cycle phase since 2001.

Overall gambling with the odds one would assume it will once again (20th Nov) bounce upwards off this band (retest is possible).






http://i458.photobucket.com/albums/qq306/Hoop_1/15yearDOW.png

[ananda77]

HOOP:

...fair enough, but one thing one MUST remember when looking at charts:

corrections into opposite directions happen in overbought/oversold territory but, in the same way that a bubble extends to its extreme despite extreme overbought territory,

THE CRASH happens despite EXTREME OVERSOLD TERRITORY

and

ARE WE NOT WITNESS TO EXTRAORDINARY EVENTS NOW???

-and because many people are still not aware of the real seriousness of the situation and still continue to believe in miracles, remains the best indicator that we are still far from a possible market floor...

Kind Regards

Belgarion: could you explain your previous post??? the only sense I can make of it is that the illusion of rising prices will get us out of this mess?????

[AMR]

Colby's encycolpedia of technical indicators states that naive testing of stochastics (overbought/oversold indicator) gives profitable buy signals around 70% of the time. However being a counter-trend indicator you get massive drawdowns (-36% in 1988). The major DOWN move we had in October was one of these times where oversold markets became even more oversold.

Conclusion is that picking bottoms is like picking up pennies in front of a steamroller :)

[belgarion]

Conclusion is that picking bottoms is like picking up pennies in front of a steamroller :)

Sounds like me. :D ... being quick and nimble, and only picking up the gold pennies, is the key to success! :D

[lakedaemonian]

Sounds like me. :D ... being quick and nibble, and only picking up the gold pennies, is the key to success! :D

Just make sure they are the ones farthest away from the steamroller.....and that your shoelaces are well tied to avoid tripping.

Unfortunately, the demise of the originator of the pennies/steamroller quote does not represent the best of omens.

[Hoop]

Colby's encycolpedia of technical indicators states that naive testing of stochastics (overbought/oversold indicator) gives profitable buy signals around 70% of the time. However being a counter-trend indicator you get massive drawdowns (-36% in 1988). The major DOWN move we had in October was one of these times where oversold markets became even more oversold.

Conclusion is that picking bottoms is like picking up pennies in front of a steamroller :)

AMR + Others

Bottom picking is impossible to predict 80% 90% even 100% of the time.

However one can increase their chances of getting it right by looking at past trends and comparing with the now, and by using all the tools available to do so....Remember it ain't an investment crime to use investment tools to try during bearish times...doing your homework pays off.


My Homework, through research in learning investment theory and using TA tools earn't me a small profit and a small increase in Capital gain in 2008.

Being nimble, keep to strict self discipline, not listen to the Herd, not being greedy, quickly dispose of souring stocks, wait patiently for those rare gems to appear, buy at the beginning of sucker rallies and sell before the top and being happy to laboriously pick up the pennies and forget trying for the big bucks was the way to go during the worst year since 1931.

I have shared about 5% of my efforts to shartrader readers...something which I don't have to.


Steam roller? :p.. ha...no contest

[belgarion]

Just make sure they are the ones farthest away from the steamroller.....and that your shoelaces are well tied to avoid tripping.

Unfortunately, the demise of the originator of the pennies/steamroller quote does not represent the best of omens.

Demise?

More on Nassim_Taleb ... http://en.wikipedia.org/wiki/Nassim_Taleb

[lakedaemonian]

Demise?

More on Nassim_Taleb ... http://en.wikipedia.org/wiki/Nassim_Taleb

Whoops! My bad......I thought it was one of the rocket scientists at LTCM that came up with the quote...rather than Taleb creating the quote but with LTCM as the target of the quote.

[airedale]

Is the OZ market drifting today without a lead from the Dow.
Two day weekend, then
Martin L King day...Monday
Inauguration Day....Tuesday
Then perhaps the Obamarama Rally on Thursday our time:)
Cash in your chips on Friday our time:D

[Dr_Who]

Here comes the 8k test for the Dow.

I think the Dow will go below 8k on the lack of investor confidence. Who knows how low the Dow will go if it breaches the 8k support.

[Stranger_Danger]

That was some Obama rally, huh?

There were apparently 1 million people on the streets of Washington for the Obama inauguration. Early reports are that only 50% of these were homeless, the rest came for the show.

[airedale]

Good morning, Doc, you may be right. One of the most colouful comments I have seen about the 8,000 level is that " it is like standing at the edge of the abyss". If it falls from there who knows how far it may fall.

[ananda77]

...still consolidating, trading to >83, well >82.4 support/resistance; likely to test 85-level;

Kind Regards

USD broke through the 85-level, up 1.2% to clear 86;
-deepening recession/depression
-precious metals up

Kind Regards

[Dr_Who]

Dow 7940 as we speak. If it closes below this, game over! ouch we come. If only I had a short on the Dow, again I was not brave enough.

I really dont see any light at the end of the tunnel.

[Stranger_Danger]

Late rally from the PPT to take us back over?

[belgarion]

Methinks it's time to dust of the USD/GBP chequebook and get ready to spend, spend, spend. ;) ... To use the abyss metaphor ... ready to bass jump in!

[Hoop]

My post #171 (15 Jan 2009) showed a poor quality chart of the TA break down of the DOW when it broke 8200 pointing to a possible downturn.

With rather strong support bands around the 8150 and 8000 there was a good chance that the DOW might bounce upwards off these supports...However hindsight has proven that the selling pressure was stronger than the supports.

Now with very little resistance between the 8000 old support band (new resistance) and the bottom, any much less selling pressure could quickly send the DOW down to retest the bottom (7449 intraday 20th Nov). It would need selling pressure to totally disappear tomorrow for the DOW to bounce up and create a weak 7950 support line. Much more buying pressure is now needed than a fortnight ago to propel the DOW higher because the DOW has the old broken supports of 8000 8150 and 8400 as strong resistance bands now.

Note the squeezing up of the Bollinger bands (purple lines) a week ago indicating a trend change and the start of them widening with the resulting downtrend


Ananda...traders on the Wall st floor today were quoted as saying that the 818 support break (your 816 was spot on) of the S&P 500 today has triggered another wave of selling.

Things are now a lot more gloomer than a couple of weeks ago (TA wise).

The question now being asked is ...are we still in a bear market with this 9 month USA recession still not yet half way through? A break below the Equity market bottom (20 Nov) will send analysts re-predicting a early 2010 economic recovery as apposed to the mid/late 2009 period recited at the moment

Below is my post #171 chart updated but without today's drop/support break (7949). All the middle orange 3 support lines have been breached and are now resistance lines.

Chances of a new bottom forming have increased since last week.

http://i458.photobucket.com/albums/qq306/Hoop_1/DOW20012009-1.png

[ananda77]

Hoop:

...we are definitely not in a bull phase now... and a long way away from a long term upside reversal to a bull market

Kind Regards

[Hoop]

Hoop:

...we are definitely not in a bull phase now... and a long way away from a long term upside reversal to a bull market

Kind Regards

Ananda... How can you be so sure!!...You may be right of course.... but you may also be wrong [we may already be in Bull market (phase 1)]......no-one can be 100% sure...because no-one can pick this bottom of the this market accurately 100% of the time. You are using what information you gather, analysing it to forecast a prediction, that is all.....unless you have a time machine at home, you have no accurate future figures to reference with. You may be good at analysing and forecasting, but there is a good chance you may be wrong.

To illustrate my point see the 15 year DOW chart below which contains 3 1/2? market cycles 2 Bulls 1 Bear and the latest incomplete? cycle
The 3 (4?) yellow arrows point to the situation after the cycle change from Bull to bear and from Bear to Bull...you notice there is little change from end of Bull to start of Bear and likewise from bear to Bull...

http://i458.photobucket.com/albums/qq306/Hoop_1/DOWlongterm20012009.png


At these points (yellow arrows) the investor is not guilty of denial, its just that the market cycle change which has just happened, can be too hard to identify at that time of its occurrence. It is easy in hindsight and Analysts/Historians use this hindsight to accurately record the start and finish of each of these cycles to the exact day. The problem we have this time (as it always is) Ananda, is, you and I + all others have no future figures to establish the exact date of an end of this current Bear Cycle. We can only give it a guess using current happenings + events signals from previous Bear cycles and with caution, as some of those historic event signals may not work this time..who knows??...

PS.... Just look at Sharetrader posts around Nov-Dec 2007...very few believed we were in a bear market, and put forward very logical explainations that the Bull was still alive...yet in reality we were in Bear market cycle (phase 1) at that time and most investors did not know it.

PS 2..Major event changes and the lag effect theory

[Hoop]

Just to add some info to my above post which I wrote then deleted yesterday before posting (to save being a long-winded post + create confusion)

Without future sight a bear market is deemed over when:

...from a TA point of view...when the primary downtrend line is broken (around 11700 on the DOW at this moment or resistance line on an inverted head and shoulder pattern usually around the same level in this case at 11150 or an alternative "suitable" downtrend line in this case the 8 month downtrend line around the 10000 mark presently may qualify. (as time goes by these downtrend line figures become lower).

...The Coppock indicator rising back above zero

...from the official point of view it is 20% higher than the bottom value (closing price I suspect ) so somewhere around 9200 mark.

I guess this is what Ananda is referring in the post... quote "...we are definitely not in a bull phase now... and a long way away from a long term upside reversal to a bull market.."

[Dr_Who]

Is this a dead cat bounce?

The fundamentals have not changed.

[ananda77]

Hoop:

...according to my long-term market model (see attachment), we are dealing with a market low, followed by attempts of a bottoming process, which is unfinished business up to date;

...and according to the long term market model, we are quite a long way away from an upside reversal;

...fundamentally, Central Banks need to come up with a satisfactory answer to the bank insolvency disaster FAST FAST FAST like yesterday (not buying or guaranteeing toxic assets but putting banks into receivership and fixing the CDS market) otherwise

...liquidity inflows including foreign into the US market keep melting away and institutions will extent their distribution of core holdings; if they changed their mind about fair value of core holdings and start selling when the 20th November low is tested, we will have a major crash on hand;

...remember: THE CRASH happens in extreme oversold territory;

Kind Regards

[Hoop]

Hoop:

...according to my long-term market model (see attachment), we are dealing with a market low, followed by attempts of a bottoming process, which is unfinished business up to date;

...and according to the long term market model, we are quite a long way away from an upside reversal;

...fundamentally, Central Banks need to come up with a satisfactory answer to the bank insolvency disaster FAST FAST FAST like yesterday (not buying or guaranteeing toxic assets but putting banks into receivership and fixing the CDS market) otherwise

...liquidity inflows including foreign into the US market keep melting away and institutions will extent their distribution of core holdings; if they changed their mind about fair value of core holdings and start selling when the 20th November low is tested, we will have a major crash on hand;

...remember: THE CRASH happens in extreme oversold territory;

Kind Regards

As always another interesting post Ananda

Your S&P chart shows that respected very long trend line as did mine with the respected long term support line for the DOW. Naturally if either one breaks down it will cause a selling panic and a possible another round of capitulation (crash).

As most trading these days is based around TA indicators any break below a very long term trend/support line will trigger a huge computerised selling event ...yes a possible crash..a breaking of a primary trend/support line has the makings of a mass panic sell off.. yes...agree a crash can occur at anytime (random event theory) and yes.. paradoxically, a crash event seem to occur more often during an perceived "undervalued"/oversold territory period......

However I'm a little more optimistic than you that these supports will hold....or if broken a new bottom formed not far below the old one.

My reasons are outlined in full here Post #149 (http://www.sharetrader.co.nz/showthread.php?t=5171&page=10) and an update #154

[belgarion]

Hoop:
...remember: THE CRASH happens in extreme oversold territory;


Hoop, ananada,

Some great thoughts coming from you both. Hope other ST'ers are reading and learning.

Ananada, would it therefore follow that if crashes come from extreme oversold positions, e.g. as I believe we have presently, then the backback from the crash is relative quick. I.e. if you're not going to hit with a margin call then buying now could be construed as not that risky?

[belgarion]

However I'm a little more optimistic than you that these supports will hold....or if broken a new bottom formed not far below the old one.



At a macro economic level I've been getting more and more concerned as each month drifts by and the macro level number continue to deteriorate.

The primary reason is that the 'thrifty' behaviours being learnt by consumers, particlarly american ones, may become ingrained and they'll start living within their means. This would take years to undo and may never. We could be stuck with a steadily declining market for quite a while (5 years plus) as the 'new thifty consumer world' re-balances supply to far lower demand.

Scary prospect - But unlikley? Has it happened before? Certainly we live in a unique period of history where information travels at an order or magnitude faster than at any other time in history. This factor alone means we could be in uncharted territory.

Currently I'm thinking about 50/50 chance of being at the bottom vs. further stepwise declines. (This is down from 75/25 about a month ago.)

[AMR]

The fundamentalist in me is surprised at the very very rapid decline in earnings projections. Sony for instance had to turn last week's project profit into a projected loss this week after a further downgrade in October.

I was reading Twigg's trading diary and he mentioned the Dow holding support at 8000 but he did not do an SP500 analysis, which shows a negative divergence? If you look closely at the Dow it appears to bounce off 8000 as support, but if you look closely at the SP500 it appears to have broken through 850 and then bounced off as RESISTANCE?

[AMR]

As shown in the attachments.

[Hoop]

The fundamentalist in me is surprised at the very very rapid decline in earnings projections. Sony for instance had to turn last week's project profit into a projected loss this week after a further downgrade in October.

I was reading Twigg's trading diary and he mentioned the Dow holding support at 8000 but he did not do an SP500 analysis, which shows a negative divergence? If you look closely at the Dow it appears to bounce off 8000 as support, but if you look closely at the SP500 it appears to have broken through 850 and then bounced off as RESISTANCE?

AMR
yeah I too noticed what Colin Twiggs said about the DOW

I have found that the 8150 (approximate 8130 - 8180 band) old support line, now resistence line is becoming more important. At a quck glance it seems the DOW is (sort of) in a trading pattern between the 8000 - 9000 range


Also remember (as you did AMR) Ananda's post referring to the S&P500's 816 and it did break....it sets off those red light warning bells in your head doesn't it.

Edit:.... AMR ..that orange support line in your last chart is a 7882 line not a 8000 line (the caption box referring to intraday respect of that line). If you drag up that orange line to 8000 it tells a different story and if you drag it up to the 8150 which I was referring to in my post it looks similar to the S&P chart (don't you think?)

[ananda77]

...fighting between Bulls and Bears continues and no doubt, attempts of a bottoming process remain ongoing;
comparing daily no. of stocks shifting between being strong versus daily no. of stocks shifting between being weak in strength makes for 'stealth upside building' since last October, but overall the difference still in negative territory

...the outcome still completely open;

...on the SPX 500, respecting the 804 level tonight and closing >816 suggests a rally to test 858 as most likely next week; however, resistance at 858 will be considerable

-liquidity inflows incl. foreign negative
-distribution of institutional core holdings only easing slightly
-VIX above resistance

...fundamentally:

-liquidity does not solve insolvency problems = ineffective monetary stimulus
-public debt wave –inflation risk –rising interest rate risk = ineffective fiscal stimulus
-Central Banks/Governments -NOT buying or guaranteeing toxic assets -shut down insolvent banks
-reform CDS market (= under pressure from JPM, C, BoA, GS, one way the new US administration may show it's commitment to political/economical 'CHANGE')

Trading Strategy: BEARISH -short to medium-
-slightly short hedged >816 -to short hedged + short hedged accumulating ~858 (+)
-accumulate stocks -medium to long term-

Kind Regards

[winner69]

The DOW is a load of old crock anyway the way it is structured '

The first bit of this article is interesting
http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2009/01/24/here-comes-tarp-3-and-4.aspx

So even if Citii , GM, Bank of America and Alcoa opened tomorrow at ZERO it would impact the Dow by only 157 points

Interesting the unwritten law that go under $10 and you are out tof the DOW .... impagine the impact on the US ego if Citi and GM weren't in the DOW ... funny eh

If course if they chnaged the stocks in the DOW it would go up.

Even though not that perfect either that is why i use the S&P500 as the proxy for the US market .... and that is on a PE in excess of 20 as well

So still more pain I am afraid

[Hoop]

The DOW is a load of old crock anyway the way it is structured '

The first bit of this article is interesting
http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2009/01/24/here-comes-tarp-3-and-4.aspx

So even if Citii , GM, Bank of America and Alcoa opened tomorrow at ZERO it would impact the Dow by only 157 points

Interesting the unwritten law that go under $10 and you are out tof the DOW .... impagine the impact on the US ego if Citi and GM weren't in the DOW ... funny eh

If course if they chnaged the stocks in the DOW it would go up.

Even though not that perfect either that is why i use the S&P500 as the proxy for the US market .... and that is on a PE in excess of 20 as well

So still more pain I am afraid

"......and that is on a PE in excess of 20 as well

So still more pain I am afraid" A rather pessimistic outlook from you Winner;)


I won't show the image as it's copyright protected but the link is shown below but firstly.....
For ST readers without a clear understanding of Secular Cycles before you see the chart read the 3 Notes below
---------------------------------------------------------------------------------------------

Note 1: The DOW is presently 8 years into a secular Bear market cycle (2000- ?)

----------------------------------------------------------------------------------------------

Note 2: It is the P/E Ratio figures not index figures which governs the secular cycle.
Rough guideline : years of rising P/E = secular Bull Market cycle
years of falling P/E = secular Bear Market cycle

------------------------------------------------------------------------------------------------

Note 3: you will have to click on the link below to bring up the chart otherwise this post will not make sense

------------------------------------------------------------------------------------------------

The link http://www.crestmontresearch.com/pdfs/Stock%20Living%20Through.pdf


Note the very similar situation in 1974 as to today scenario:-

* Capitulation 8 years into a secular Bear cycle
* Falling P\E Ratios each year (the trait of a secular Bear cycle)
* Note that within two years after the 1974 capulation the DOW index nearly doubled (annualised out at +38%) but the (annualised) P/E ratio still fell.



This is not an aberration event because during secular bear cycles there are years of big index increases (a bull market within the secular bear super cycle). Long duration secular bear cycles have roughly 50 /50 ratio of years of index increases/decreases.

Some large +% gains examples during secular bear cycles (annualised %)

1904 +42% 1905 +38% 1907 +47% 1915 +82%
1938 +25%
1976 +38% (example mention above)
2003 +25% 2006 +16%

In all the above examples these rises produced little to no increase to the P/E Ratio but those bull events probably paradoxically helped to prolong the life of the Secular Bear and its associated criteria of the cycles' period of falling av P/Es

[belgarion]

More on what Winner is saying:

http://en.wikipedia.org/wiki/Dow_Jones_Average#Criticism

http://en.wikipedia.org/wiki/S%26P_500

W69, concur that the DJI has faults but it does track the S&P very closely ... strange that. Any ideas why?

[belgarion]

Iraq's oil exports raise in December (http://biz.yahoo.com/ap/090125/ml_iraq_oil_exports.html) ... reluctant to post this on any other thread as the radicals will spin any such thinking processes into oblivian with their dogma. .... My view? ... If oil supply stays plentiful and constant ... Wayhey!

[ananda77]

In an interview published in Monday's edition of the U.K. newspaper Metro:

Jim Rogers: "US Car Industry Should Be Allowed To Fail"

"Anybody who fails should be allowed to fail," Rogers said, "Capitalism without bankruptcy is like Christianity without Hell -it doesn't work otherwise."

-YEAH RIGHT-

Kind Regards

[Hoop]

Iraq's oil exports raise in December (http://biz.yahoo.com/ap/090125/ml_iraq_oil_exports.html) ... reluctant to post this on any other thread as the radicals will spin any such thinking processes into oblivian with their dogma. .... My view? ... If oil supply stays plentiful and constant ... Wayhey!

Oh ..yes!!!!

Ditto for other commodities.
Low prices great for Commodity user companies, many of which investors have't woken up yet to as they are side-tracked with the doom and gloom news.

[Hoop]

Iraq's oil exports raise in December (http://biz.yahoo.com/ap/090125/ml_iraq_oil_exports.html) ... reluctant to post this on any other thread as the radicals will spin any such thinking processes into oblivian with their dogma. .... My view? ... If oil supply stays plentiful and constant ... Wayhey!

Just another addition to my above post.
Art Hogan (Jeffries & Company chief Market Strategist) interview this morning The last 30 seconds of Audio he reckons that the Energy price drop is net positive to Companies and this has not yet been realised by investors and so it has not yet been factored into the Equity Markets.

http://www.marketwatch.com/tvradio/player.asp?guid={b182634f-5f1c-4a7c-b088-a89ebbc61ccb} (http://www.marketwatch.com/tvradio/player.asp?guid=%7Bb182634f-5f1c-4a7c-b088-a89ebbc61ccb%7D) (audio link approx 4 mins)

[ananda77]

SPX 500 consolidation below 858 = peak 16-01-2009; ...preparing for the break-out...

...accumulated bank charge offs for 2009 estimated of $1 trillion vs. $1.5 trillion in Tier 1 Risk Based Capital at all US banks today
...2/3 to 3/4 of that loss number comes from the top 4 - Citigroup, Bank of America, JPMorganChase and Wells Fargo
http://us1.institutionalriskanalytics.com/pub/IRAstory.asp?tag=337

...restructuring, receivership and a new start???

...expecting -AT LEAST- revisit of 20th November Low if a banking solution appears in the near future

Kind Regards

[ananda77]

...expecting -AT LEAST- revisit of 20th November Low in the near future

...the timing of this rally sucks without having tested the 20th November Low first

Kind Regards

[belgarion]

...the timing of this rally sucks without having tested the 20th November Low first

Kind Regards

LOL ... Yip it does. The market isn't obeying the rules!

[Hoop]

...expecting -AT LEAST- revisit of 20th November Low in the near future

...the timing of this rally sucks without having tested the 20th November Low first

Kind Regards

It seems the (out of favour by some investors) DOW obeyed the "rules" :)

Referring to my chart posted earlier the DOW had broken through the two of the 3 orange supports (8400 , 8150) but the selling pressure was not strong enough to break through the 3rd support so it bounced back up from that 3rd orange support (8000) to now test the 8400 orange line which is now a resistance line). It failed to break that 8400 line today......maybe tomorrow?

If the DOW fails to break through 8400 resistance ...maybe Ananda may see her S&P 500 low retested....who knows. At the moment the DOW is caught within this cluster 8000 8150 8400 bands with not enough pressure to break free out of this cluster....a bit like being caught in a spider's web, much effort is needed to break free.

$US40billion of available money is now unavailable being sucked out by the treasury bond placement just recently...this should reduce buying pressure and should be a -ve factor to the Equity market

Remember the Equity market is driven by the availability of money and the psyche of those Equity Investors with that money..the market is not driven by the economy but by those investors.

Edit: - figures such as 8000 are rounded not exact so treat as a band not an exact thin line.

[ananda77]

It seems the (out of favour by some investors) DOW obeyed the "rules" :)

Referring to my chart posted earlier the DOW had broken through the two of the 3 orange supports (8400 , 8150) but the selling pressure was not strong enough to break through the 3rd support so it bounced back up from that 3rd orange support (8000) to now test the 8400 orange line which is now a resistance line). It failed to break that 8400 line today......maybe tomorrow?

...yes we were warned and the rally did not come as a surprise

...interesting though, the SPX 500 closed at !!874!! 1 POINT BELOW the 50% January retrace at 875 (January sell-off from 944 to 804)

...close by = 888 the December SPX 500 Open (monthly)

...the 50% January Dow retrace = 8500

...failure below this ceiling will get us closer to the 20th November test

bottom line for me:

...unless the Fed and the Government stop bank bail-outs, 'bad banks', or guaranteeing the bank's toxic assets which sucks the lifeblood out of the world economy, any rally is most likely to be corrective...

Kind Regards

[ananda77]

...complete lack of follow through action to break above SPX 500 Wednesday High 878, slicing through support 858, 851 with a Close 845

...most likely, any further market action to the upside capped by 878 or to be more positive 888

...feels a lot more like test of the 20th November Low coming up in the near future;

Trading Strategy: BEARISH -short to medium-
-slightly short hedged >816 -to short hedged + short hedged accumulating ~858 (+)
-accumulate stocks -medium to long term- (that is, if you still have FAITH in the system)

Kind Regards

[belgarion]

-accumulate stocks -medium to long term- (that is, if you still have FAITH in the system)

LOL ... My faith is being sorely tested but I continue have some ... Thanks a77 et al.

[ananda77]

LOL ...My faith is being sorely tested but I continue have some ... Thanks a77 et al.

...isn't it funny, how THE ELITE cries out for HELP (see Attachment) while they, w/o remorse, suck the life blood out of the world economy -TRICKLE DOWN AT ITS BEST-

BEEP BEEP!
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2009/IO+Feb+2009+Gross+Beep+Beep.htm

...since:

It would take only $1 trillion or so – or simply to let "the market" work its magic in the context of renewed debtor-oriented bankruptcy laws – to cure the debt problem. But that obviously is not what the government aims to solve at all. It simply wants to make creditors whole – creditors who are, after all, the largest political campaign contributors and lobbyists these days.

Obama’s New Bank Giveaway
Is this administration’s bank policy Bush-3 – or Clinton-5 or Reagan 8?
by Michael Hudson
http://www.globalresearch.ca/index.php?context=va&aid=12092

Kind Regards

[Hoop]

LOL ... My faith is being sorely tested but I continue have some ... Thanks a77 et al.

Belg, hang in there discipline wise.

Remember the old saying "The bear market doesn't scare you out, it wears you out."

[Mick100]

http://www.pimco.com/NR/rdonlyres/F399418E-1E67-4A61-8F02-EB1FA3168202/6902/WileECoyoteCliffSkySoft3small.gifTesting

[ananda77]

Belg, hang in there discipline wise.

Remember the old saying "The bear market doesn't scare you out, it wears you out."


-no market low/market high is solid enough long term without having been challenged-

...it should be fairly clear by now that, testing the 21 November '08 Low will most likely coincide with the announcement of a comprehensive bank rescue plan within the next couple of weeks;

...on a psychological level, institutions in 'stealth equity accumulation' since October 2008, will want to approach the test from a base of strength in order to avoid failure and miss the chance to drive the market to resistance (-sure Hoop will have the exact data available-) by the end of the first 6 months of 2009;
this would provide the foundation for further market upside towards the end of 2009 and beyond;

...however, in case of a continuous worsening flow of economic data = status quo continues, at best, the market will remain in a trading range for some extended period of time or will seek a new low by middle of 2009;

...still... something's missing... the utter desperation of a TRUE BEAR MARKET LOW

Kind Regards

[belgarion]

...still... something's missing... the utter desperation of a TRUE BEAR MARKET LOW


Brilliant a77 ... Your daily wrapup with others is making this a must read thread ... and you have a way with words that I find most uplifting and makes me chuckle.

I feel this way too... i.e. something IS missing ... but then the i-net with its ability to share information at lightspeed is a brand new phenominem that may mean the old rules may not apply.


Belg, hang in there discipline wise.

Remember the old saying "The bear market doesn't scare you out, it wears you out."


Hoop, I'm sticking to my plan ... and are going to use a77's name for it: 'stealth equity accumulation' ... i.e. spend a set amount each week and each month as information comes to the market ... I'll be out of readies by about August/Sept ... If the thump comes in this time frame then I'll be more agressive ... If the thump comes after that I may be struggling ... But as Hoop et al have pointed out ... the last thump is short lived and if I can weather it ... I'll be fine ... If not ... (There won't be a not - there's stuff called 'insurance' ;))

[graeme50]

I have done very well on the US market during the crash and right through to today. I see a huge upside there ON CERTAIN STOCKS. I have a US broking account as well as a NEW Broking account. I don't play the New Zealand market because there are better opportunities in US. The key is to follow the Obama policies.

[ananda77]

Belgarion:

...thanks for your kind words

...personally started accumulating various investments (equities and bonds mostly) ON 10th October 2008 and apart from tapping into credit lines, am fully invested now and did NOT sell ONE share I owned previous to the Crash (probably a bit stubborn this);

...throughout history, people DID loose all of their wealth because of a total break down of established social, economical, and political structures on a national as well as global level;

!!who knows, there are enough extreme tendencies within our global system to spark such a break down!!

...but who cares, owing a roof over ones head with a plot to grow ones own food guarantees survival (during the worst times) and some gold (for a new start up after) is all what is needed; -owing anything else does not make much sense- WHY FEAR???

...during any other periods, serious disruptions in the established fabric of life have proofed to be temporary and anyone panicking, inevitable transferred wealth to (insert the appropriate here .........);

US set for ‘big bang’ financial clean-up
ByKrishna Guha in Washington
Published: January 30 2009 23:31
http://www.ft.com/cms/s/0/15f37800-ef05-11dd-bbb5-0000779fd2ac.html

Kind Regards

[Dr_Who]

Looks like the Dow can again test the 8k support.

There is a big downside risk it will go below 8k.

Anyone going short?

[AMR]

Is tonight the night it goes through?

Looks a bit like a descending triangle breakout to the downside if it does.

[belgarion]

http://finance.yahoo.com/news/Consumer-spending-and-incomes-apf-14222129.html

There you have it ... US consumers saving money ... (How dare they ;) )

[ananda77]

...attempts to break the SPX500 support at 804 stopped at 809 and the SPX 500 closed almost unchanged at 825

...although the Dow had a red day and intra-day traded down to below support at 7909, the index still Closed above 7909 at 7937

...there remains a bit of strenghth around these levels and the market could well go for another mini rally towards the latest cap on the SPX 500 = 844/851 before taking the 804 out to test the 21 November Low of 741

...interesting: the Institutional Index of Core Holdings is testing the 2002 long term support, while at the same time, institutions increased their distribution of Core holdings since last week Thursday;
market liquidity in negative contraction space

Trading Strategy: BEARISH -short to medium-
-slightly short hedged >816 -to short hedged + short hedged accumulating ~858 (+)
-accumulate stocks -medium to long term- (that is, if you still have FAITH in the system)

Kind Regards

[patsy]

Belg & a77

By reading your Dow posts, I gather you'll surely enjoy the podcasts from here:

www.financialsense.com

There are four podcasts released every Saturday, with the last two under the title "Big Picture." Check them out.

[belgarion]

Home sales in the US beginning to increase in Dec/Jan ... No news yet whether prices are stabilising ... fingers crossed ... a bottom in the USD house market would certainly be positive for stocks.

[fungus pudding]

Home sales in the US beginning to increase in Dec/Jan ... No news yet whether prices are stabilising ... fingers crossed ... a bottom in the USD house market would certainly be positive for stocks.


Sure would - but it aint the bottom of the housing market yet. Not by a long way (timewise).

[Dr_Who]

Sure would - but it aint the bottom of the housing market yet. Not by a long way (timewise).

I agree with respect to the US. It maybe a dead cat bounce. There will be alot of pain to come out of the US market before any real gains. All the figures coming out of Asia and Europe are still horrible and the US is no different.

[patsy]

Worth reading:

Bernanke and Obama's Spending Schemes Could Ruin U.S. Economy

http://tinyurl.com/bxwbc2

[ananda77]

...no point going on about numbers as the markets are at a very critical point, under real stress...

...the support/resistance of the 'Institutional Index of Core Holding' is converging; the direction of the break-out highly dependent on Tarp 1,2,3,4,5,6,7,8,9,10,11,12,13,14... outcome and a comprehensive banking solution; unfortunately, a real banking solution may be nearly impossible because politically unsupported, consequently, we may see more of solutions like:

8.5 trillion Try = Near Zero result

Bad Banks, Insurance Wraps and Other Fanciful Notions

...As with the muddled thinking on asset valuations we heard last year from Fed Chairman Ben Bernanke, this new plan supposes that there is a "happy medium," some compromise that awaits taxpayers in the US (and the UK too) in terms of buying bad assets from already insolvent banks without requiring the purifying step of insolvency and restructuring.

Indeed everyone from our usually sagacious friends at BreakingViews to the Financial Times to US Economic lider maximo, Larry Summers, seem to be coming under the nonsensical notion that there is some alternative to restructuring for the large money center banks in the US and Europe. The editors of the FT in particular seem to forget that their continued existence as a business comes from a healthy, private financial market, not the politically-conflicted statist paradise envisioned by Geithner, Bernanke and their masters at Goldman Sachs (NYSE:GS).
http://us1.institutionalriskanalytics.com/pub/IRAstory.asp?tag=338

Trading Strategy: BEARISH -short to medium-
-slightly short hedged >816 -to short hedged + short hedged accumulating ~858 (+)
-accumulate stocks -medium to long term-

Kind Regards

...looks like the rally failed below SPX500 853/855 and a test of 804 in the process; a Close below SPX500 804 = test of 21 November Low

Kind Regards

[ananda77]

...High volatility as 'Institutional Index of Core Holdings' critically close to apex and break-out;

...so far, 'Institutional Index' held 2002 support

...again, SPX 500 failed below 853/855 after 820 supported

...Dow intra day traded down below 1867 before recovering

Trading Strategy: BEARISH -short to medium-
-slightly short hedged >816 -to short hedged + short hedged accumulating ~858 (+); SPX 500 STOP: 880 (Close > or = 880)
-accumulate stocks -medium to long term-

Kind Regards

[dumbass]

just a hunch tonight maybe the night for a move lower in the dow heading for a retest of previous lows ,

[dumbass]

i was picking SP500 848 pivot to be big resisitance and to take the market lower, a close above 848 is a bullish sign for a market maybe attempting a rally.
currently at 865.

[belgarion]

MS ... is looking good for those with a stomach for a bit of risk ... hold

[ananda77]

Monday/Tuesday: -sell the fact day- after testing SPX 500 878 (915?)

Trading Strategy: BEARISH -short to medium-
-slightly short hedged >816 -to short hedged + short hedged accumulating ~858 (+); SPX 500 STOP: 880 (Close > or = 880)
-accumulate stocks -medium to long term-

Kind Regards

[winner69]

This article suggests that the S&P trading at about 29 current earnings estimates but really is trading at something like 57 times expected earnings ...... ouch

No reason to get too excited .... even if the glass is half full

http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2009/02/06/further-thoughts-on-the-continuing-crisis.aspx

Those Wild and Crazy Analysts

I have been writing about analyst earnings forecasts for some time. Earnings forecasts just keep dropping. I talked with the very interesting and gentlemanly Howard Silverblat from Standard & Poors, who is in charge of assembling the data for the S&P earnings. When I went to the web site, I noticed that "core" earnings were not on the spreadsheet. Core earnings take into account pension fund commitments and other items that sometimes do not make it into reported or operating earnings. During the last bear market, core earnings were a lot lower than reported earnings, as companies adjusted their pension commitments to make things look better than they were. I was wondering if we would see the same thing happening now.

I asked Howard about that, and he said they were having some issues in calculating them but expected the core earnings numbers to be back up in a month or so. And he quoted sources that suggested S&P companies were underfunded by $250 billion in their defined-benefit pension plans. Late last year, the Bush administration waived the requirement that companies fund their pensions to at least 92% of needed capital. It is now down to 80%. That leaves companies some room to play with on their balance sheets.

I commented on how bad earnings were last quarter. The web site shows earnings were a negative $3.14 a share, the first time they have ever been negative for a quarter. Ever! That was with 65% of companies reporting. He commented that it was worse than that. They don't have it up yet, but with 78% of companies reporting, losses are now a staggering -$8.56 a share. And it could get worse. The write-offs this quarter are just huge.



As he wrote, companies are not only throwing in the kitchen sink, but the refrigerator, washer, and anything else they can find as they seek to write off everything they can, to get it over with and start the new year fresh. They need to do a kitchen remodel, but there is no financing available.

So, how does that affect total earnings for 2008? The table above shows analyst projections from March of 2007 through today. Notice how they kept falling over time. They are now down 70% from what was expected two years ago. Earnings for 2008 are a paltry $29.57 and dropping. The S&P 500 closed at 868.60. That makes the P/E (price to earnings) ratio 29.4. (I use a decimal to show I have a sense of humor.)

So, what are they projecting for 2009? Let's take a look. Notice that they too have been falling over time.



If the S&P 500 were to close where it is today, and using the estimates for the first two quarters of 2009, the P/E ratio would be 36.4 on July 1.

But what if earnings merely fall to where they were in the last recession, or about 55-60% of where the projections are today? That would drop the 12-month trailing earnings for the four quarters ending June 30 to $15.90 and result in a nose-bleed P/E of 54.7 by the middle of the year.

If earnings don't come in dramatically better for the first quarter as opposed to last quarter, we could be setting up for a nasty summer bear market. Even in the bear market of 2001-2, the P/E did not get above 47. Which, by the way, at a 47 multiple would correspond to a range for the S&P of either 1111 if the earnings come in as projected or 731 if they come in at the lower range.

I see nothing on the horizon which suggests the economy is going to get manifestly stronger in the next two quarters. The real risk is that earnings come in weak for both quarters and investors simply despair this summer, throwing in the towel and bringing about a vicious bear market. I would seriously consider hedging any long positions you have before earnings season this next April. If they come in stronger, then we will see.

[ananda77]

This article suggests that the S&P trading at about 29 current earnings estimates but really is trading at something like 57 times expected earnings ...... ouch

No reason to get too excited .... even if the glass is half full

...further confirmation that equity prices are NOT EVEN NEAR HISTORICALLY NORMAL LEVELS (see attachment) despite the rantings of currently dry-docked institutional investors to the contrary!!!

...this is still very much THE BEAR... and asset price deflation will not stop until the last bit of hot air is squeezed out of the bubble... no matter what the GOV-FREAKS are churning around in their 'leaky syndrome brains'...

Trading Strategy: BEARISH -short to medium-

short hedged accumulating ~858 (+);
-accumulate stocks -medium to long term- on fresh market lows

Hussman: There is No Substitute for Mortgage Debt Restructuring

...From a valuation standpoint, I do believe that the stock market remains undervalued (though still far from the deep undervaluation we observed in say, 1974 or 1982). Accordingly, I do expect that long-term investors are likely to achieve reasonably good returns in the area of 10% annual total returns over the next 7-10 years. However, we have to be well aware of the tendency for weak markets to overshoot on the downside, so we continue to be unable to rule out even the 600 level on the S&P 500 as a possible (though not an expected or predicted) outcome.
http://www.hussmanfunds.com/wmc/wmc090209.htm

Kind Regards

[Dr_Who]

HOLY SHIAT! Game over!

Geithner Says Bank-Rescue Plans May Reach $2 Trillion

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEzPekVa3eEE&refer=home

[Dr_Who]

The DOW just broken through the support level. LEts see if will bounce back or not. It can be a painful week ahead guys. Hold on tight. :eek:

[belgarion]

Agree its not looking good Dr. ... But for the last few months Thursday has frequently been the big sell off day only to be followed by a rebound Friday. S&P hanging in there above 800. Dow seems to have too many distressed heavywieghts.

[O Dusty]

Agree its not looking good Dr. ... But for the last few months Thursday has frequently been the big sell off day only to be followed by a rebound Friday. S&P hanging in there above 800. Dow seems to have too many distressed heavywieghts.

Yeah should Dow finish this week sub 8000 then next week we could see retesting of the Dow's Dec 08 low of 7500. The lack of detail and huge sums involved with Obama's package seems to be creating more sceptisism than confidence.

[ananda77]

...The Treasury’s newest Financial Stability Plan (Bailout 2.0) is only the first step. It aims at putting in place enough new bank-lending capacity to start inflating prices on credit all over again. But a new bubble can’t be started from today’s asset-price levels. How can the $10 to $20 trillion capital-gain run-up of the Greenspan years been repeated in an economy that is “all loaned up”?

...read on and find out>>>

Bubble Economy 2.0: The Financial Recovery Plan from Hell
by Michael Hudson
http://www.globalresearch.ca/index.php?context=va&aid=12265

...for the market -a new bubble can’t be started from today’s asset-price levels- means: prepare for new market lows

...SPX 500 -804 missed; market recovered due to short term oversold and traded into 835 – 851 range; does the market have the strength to maybe testing and taking out market cap -878 (??) -doubtful-; failing again = test of November 21st. low AT LEAST;

...anyway, institutional selling in up trend as well as buying in uptrend alternating, which points to either sector rotation and setting up new hedges or both;

Trading Strategy: BEARISH -short to medium-

short hedged accumulating ~858 (+);
-accumulate stocks -medium to long term- on fresh market lows


Kind Regards