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Jess9
21-06-2008, 11:08 PM
Closed below 12,000 on more concern about further credit crunch fallout. More volatility to come me thinks.

shasta
22-06-2008, 11:58 AM
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
22-06-2008, 12:06 PM
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
22-06-2008, 12:13 PM
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
22-06-2008, 03:51 PM
THE USD is also acting a bit indecisive too...

Jess9
23-06-2008, 06:11 PM
Well, both the ASX and NZX shugged that off, for today at least.

Hoop
25-06-2008, 11:49 PM
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
26-06-2008, 11:37 AM
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.

Packersoldkidney
27-06-2008, 12:56 AM
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.

Packersoldkidney
27-06-2008, 02:57 AM
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
27-06-2008, 05:36 AM
re Dow fall: on the upside, gold bounces nicely ; )

AMR
27-06-2008, 01:36 PM
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
27-06-2008, 01:42 PM
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
27-06-2008, 03:52 PM
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.

Jess9
05-07-2008, 10:12 AM
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.

trendy
11-07-2008, 09:26 AM
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
11-07-2008, 10:17 AM
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
11-07-2008, 10:50 AM
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
11-07-2008, 11:59 AM
FTSE and CAC taken a hit today (more than 2% down). Oil up and then DOW tomorrow...

Jess9
11-07-2008, 06:39 PM
yip - would make 4 an interesting market open on Monday, here.

AMR
12-07-2008, 06:24 AM
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
12-07-2008, 06:45 AM
The volatility this morning is pretty spectacular! Any bets on the close? I'll call 11147.

Jess9
12-07-2008, 07:21 AM
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
12-07-2008, 10:17 AM
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
12-07-2008, 11:04 AM
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
12-07-2008, 03:43 PM
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
13-07-2008, 05:54 PM
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
14-07-2008, 12:11 PM
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
14-07-2008, 08:25 PM
I agree trendy
Ben is bringing out the helicopter with Paulson flying shotgun. The end of the USD is just beginning.

Capybara
15-07-2008, 07:44 AM
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
15-07-2008, 12:43 PM
...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

trendy
16-07-2008, 07:29 AM
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
16-07-2008, 09:59 AM
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.

STRAT
22-07-2008, 09:19 AM
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
22-07-2008, 09:50 AM
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
22-07-2008, 10:40 AM
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.

Jess9
22-07-2008, 07:55 PM
FTSE down also 1.41% in early trading. Time for the next round with that big Bear?

Jess9
23-07-2008, 05:59 AM
Dow saved by oil. Gold down a little too. It will be interesting to see how the ASX fairs today then.

Jess9
24-07-2008, 06:16 AM
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
24-07-2008, 03:14 PM
hitting a key level on dow me thinks time for a down day or two before rally resumes

Jess9
25-07-2008, 05:53 AM
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
25-07-2008, 06:39 AM
2.2%, no wait 2.36% down now. The Close I guess is however what is important.

trendy
25-07-2008, 10:48 AM
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
25-07-2008, 11:43 AM
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
25-07-2008, 02:55 PM
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

dumbass
25-07-2008, 04:05 PM
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

dumbass
25-07-2008, 04:43 PM
i think your a few minutes short of the qualifying mark for beijing , malcolm

were conditions bad when you did your time ?

Lizard
25-07-2008, 06:55 PM
Can you do it Naked...?

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

Jess9
25-07-2008, 08:34 PM
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
26-07-2008, 06:19 AM
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....

Jess9
28-07-2008, 03:22 PM
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
29-07-2008, 09:03 AM
"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
30-07-2008, 11:23 PM
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
31-07-2008, 10:04 AM
LOL I haven't seen that carton in years. Sames up the current daily swings aye.

trendy
31-07-2008, 10:07 AM
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
03-08-2008, 05:59 PM
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
04-08-2008, 10:34 AM
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
04-08-2008, 12:01 PM
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
04-08-2008, 12:11 PM
The person's credit rating is destroyed...but nothing that can't be restored in 6-7yrs time.

zacman
05-08-2008, 12:42 PM
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
07-08-2008, 12:22 PM
Dow certainly looking lofty - with little good news to support it. Perfect situation for a good drop, and a little punishment.

Capybara
07-08-2008, 04:10 PM
Demand for oil drops off because the economy is faltering so the sharemarket rises... Am I missing something?

Jess9
07-08-2008, 06:06 PM
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
08-08-2008, 09:03 AM
Good job I was short the dow then...

lakedaemonian
08-08-2008, 09:56 AM
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
08-08-2008, 10:05 AM
My thoughts exactly. Go short on the bounces...

Crypto Crude
20-08-2008, 02:52 PM
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
23-08-2008, 05:00 AM
http://www.kitco.com/

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

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

trendy
15-09-2008, 09:11 AM
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
15-09-2008, 03:01 PM
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?

lakedaemonian
30-09-2008, 09:08 AM
DOW 10K not far off now...........I wish I was wrong :(

trendy
30-09-2008, 11:44 AM
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
30-09-2008, 02:08 PM
:)

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
09-10-2008, 06:05 AM
A bounce in between would be nice, maybe today?

Jess9
09-10-2008, 09:08 PM
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
10-10-2008, 11:39 AM
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
11-10-2008, 07:49 AM
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
11-10-2008, 09:06 AM
That had all the markings of government intervention. Look's like they are starting to use the $700B and buying the index.

lakedaemonian
11-10-2008, 10:22 AM
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
12-10-2008, 06:49 AM
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
13-10-2008, 07:56 AM
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
14-10-2008, 08:13 AM
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
14-10-2008, 12:25 PM
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
23-10-2008, 03:21 AM
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
23-10-2008, 07:23 AM
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
23-10-2008, 08:05 AM
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
23-10-2008, 08:08 AM
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!

STRAT
23-10-2008, 09:04 PM
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

STRAT
24-10-2008, 07:17 AM
note that you could probably substitute breakfast new 'talking heads' for taxi drivers ... ;)I was thinking that too :D

trendy
24-10-2008, 01:03 PM
Watch the following PBS video on "foreclosure alley". Sobering.

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

lakedaemonian
25-10-2008, 12:46 PM
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
30-10-2008, 06:35 AM
Oops... only 0.5% rate cut when the market wanted 1.0%... down they lurch again...:rolleyes:

peat
18-11-2008, 07:41 AM
triple bottom on the daily?

peat
19-11-2008, 07:44 AM
who knows.
but triples are more meaningful than doubles and it marks a clear line for determining risk

brettdale
21-11-2008, 09:21 AM
Down to 7552.

How low can it go????

below 7000?

Surly not?

ananda77
21-11-2008, 09:33 PM
...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

brettdale
22-11-2008, 12:02 PM
Hats off to Obama for his pick.

ananda77
22-11-2008, 01:20 PM
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
24-11-2008, 04:41 AM
...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
24-11-2008, 11:38 AM
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
25-11-2008, 07:27 AM
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!!!!

Hoop
25-11-2008, 09:21 AM
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
25-11-2008, 09:28 AM
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.

ananda77
25-11-2008, 05:37 PM
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
27-11-2008, 01:55 PM
...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
27-11-2008, 06:17 PM
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
28-11-2008, 03:53 PM
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

ananda77
02-12-2008, 07:37 PM
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
02-12-2008, 08:18 PM
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

Yossarian
12-12-2008, 06:46 PM
unlikely with the auto bailout dead... it's going to be ugly tonight.

ananda77
13-12-2008, 03:30 PM
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

ananda77
21-12-2008, 06:58 PM
...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
02-01-2009, 01:05 PM
...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

AMR
03-01-2009, 07:51 AM
-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
03-01-2009, 02:22 PM
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

airedale
06-01-2009, 03:49 PM
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
06-01-2009, 06:11 PM
...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

tricha
09-01-2009, 06:09 AM
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
09-01-2009, 01:08 PM
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
09-01-2009, 08:17 PM
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
10-01-2009, 01:04 PM
...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
13-01-2009, 07:45 AM
looks like the bear flag has well and truly broken now.

ananda77
13-01-2009, 08:09 PM
...still consolidating, trading to >83, well >82.4 support/resistance; likely to test 85-level;

Kind Regards

Hoop
14-01-2009, 09:06 AM
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
14-01-2009, 11:16 AM
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.

ananda77
15-01-2009, 07:40 AM
...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
15-01-2009, 11:15 AM
...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
15-01-2009, 12:37 PM
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
15-01-2009, 01:31 PM
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
16-01-2009, 09:28 AM
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

ananda77
16-01-2009, 11:20 AM
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
17-01-2009, 08:16 PM
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

Hoop
18-01-2009, 12:17 PM
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
18-01-2009, 06:45 PM
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
18-01-2009, 09:19 PM
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 :)

lakedaemonian
19-01-2009, 11:07 AM
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
19-01-2009, 11:41 AM
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

lakedaemonian
19-01-2009, 02:54 PM
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
20-01-2009, 04:56 PM
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
21-01-2009, 06:34 AM
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
21-01-2009, 07:12 AM
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
21-01-2009, 07:16 AM
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
21-01-2009, 07:33 AM
...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
21-01-2009, 08:17 AM
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
21-01-2009, 08:18 AM
Late rally from the PPT to take us back over?

Hoop
21-01-2009, 12:54 PM
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
21-01-2009, 05:55 PM
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
21-01-2009, 09:34 PM
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
22-01-2009, 09:29 AM
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
22-01-2009, 11:48 AM
Is this a dead cat bounce?

The fundamentals have not changed.

ananda77
22-01-2009, 05:16 PM
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
23-01-2009, 10:42 AM
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

AMR
23-01-2009, 10:46 PM
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
23-01-2009, 10:49 PM
As shown in the attachments.

Hoop
24-01-2009, 09:57 AM
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
24-01-2009, 07:53 PM
...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
25-01-2009, 10:48 AM
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
25-01-2009, 01:31 PM
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

ananda77
26-01-2009, 10:13 PM
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
27-01-2009, 11:28 AM
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
28-01-2009, 07:43 AM
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
28-01-2009, 07:51 AM
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
29-01-2009, 07:35 AM
...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

Hoop
29-01-2009, 01:31 PM
...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
29-01-2009, 04:55 PM
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
30-01-2009, 09:50 AM
...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

ananda77
31-01-2009, 08:36 AM
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
31-01-2009, 10:02 AM
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
31-01-2009, 12:08 PM
http://www.pimco.com/NR/rdonlyres/F399418E-1E67-4A61-8F02-EB1FA3168202/6902/WileECoyoteCliffSkySoft3small.gifTesting

ananda77
31-01-2009, 03:21 PM
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

graeme50
01-02-2009, 09:55 AM
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
01-02-2009, 02:26 PM
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
02-02-2009, 12:06 PM
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
02-02-2009, 08:19 PM
Is tonight the night it goes through?

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

ananda77
03-02-2009, 05:48 PM
...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
03-02-2009, 07:18 PM
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.

fungus pudding
04-02-2009, 07:56 AM
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
04-02-2009, 10:39 AM
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
04-02-2009, 07:03 PM
Worth reading:

Bernanke and Obama's Spending Schemes Could Ruin U.S. Economy

http://tinyurl.com/bxwbc2

ananda77
04-02-2009, 07:27 PM
...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
06-02-2009, 10:27 AM
...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
06-02-2009, 11:10 PM
just a hunch tonight maybe the night for a move lower in the dow heading for a retest of previous lows ,

dumbass
07-02-2009, 07:22 AM
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.

ananda77
07-02-2009, 08:24 AM
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
07-02-2009, 06:40 PM
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
08-02-2009, 11:35 AM
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
11-02-2009, 06:27 AM
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
13-02-2009, 06:35 AM
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:

O Dusty
13-02-2009, 01:14 PM
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
13-02-2009, 02:33 PM
...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

fungus pudding
13-02-2009, 03:07 PM
...for the market -a new bubble can’t be started from today’s asset-price levels- means: prepare for new market lows

Kind Regards


Or alternatively ....a new bubble can't be started.

Dr_Who
13-02-2009, 03:31 PM
.
...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

.

Great article Ananda.

The future looks scary. My guess would be the next crash will bring us into a deep depression. We cant continue to borrow and print money that we cannot possibly pay. How will America finance its debt in the future? Very scary.

The actions today is also telling the banks tomorrow that they can do whatever they want, cos the govt will always be here to bail them out.

lakedaemonian
14-02-2009, 10:49 AM
Has anyone got a link to a creditable source on what's happened to the US M3 money supply ... (I don't need to remind ya'all that the official publication of M3 stopped just before the meltdown) ... I'm now hearing two views - one says it's contracted significantly and other that says it still increasing ...

I posted this on here a couple of years ago:

http://nowandfutures.com/key_stats.html

I'm almost of the belief that we are seeing a coordinated deception operation to mask future intentions.

I have no really strong evidence to substantiate this thought other than a deception plan is a critical component of military operations.....it is what I would do, or at least ATTEMPT to do.

I'm expecting rejiggered inflation and unemployment figures...again...moving forward.

If you can't win the game...change the score of the game.

I doubt we will receive a Volker head-fake and then get punched in the face with massive interest rate increases to fix the problem....that would cure the disease but kill the patient.

I think we will see mariskova-like behavior to try and hide massive inflation and eventually some unknown but inevitable financial heart transplant that will be a game changer.

My personal financial doctrine has changed little other than the fact I am now considering selling my debt free business.....sitting even more in cash/cash-like.....but keeping the dairy farm :)

As I've stated for a couple years now....I still believe we have a long and painful road ahead of us....now I think it will be longer and filled with even more pain.

ananda77
14-02-2009, 09:52 PM
Has anyone got a link to a creditable source on what's happened to the US M3 money supply ... (I don't need to remind ya'all that the official publication of M3 stopped just before the meltdown) ... I'm now hearing two views - one says it's contracted significantly and other that says it still increasing ...

...do not have any numbers on M3, but:

...considering the process of the destruction of US$ caused by an increasing number of defaults on US$-denominated debt instruments, it would be logical to assume, that M3 would be contracting and not be expanding (no asset price inflation yet until at least 2010)

...ergo, new lows on equity markets most likely...

Kind Regards

O Dusty
17-02-2009, 09:13 PM
This bbc article has one interesting explanation for the Japanese tanking economy other than it being such an export driven economy and there is now no demand for its cars and electronics, the finance minister is a piss head and he was drunk at the recent G7 conference. I don't speak Japanese but he is wasted!


http://news.bbc.co.uk/2/hi/asia-pacific/7893924.stm

peat
18-02-2009, 06:13 AM
When i was watching Gann Globals free video reports they made a very big deal of the S+P500 breaching 797..... Now 785.
Accoring to his analysis we have started the next wave down

Dow same really, we've broken the 2009 lows and about to push through the Nov 2008 one.

:eek:

ananda77
18-02-2009, 06:48 AM
...as expected the market is well on it's way to test the 21 November low; there is a definite chance the low will hold with a consequent rally up to ~1100 for the SPX 500

...fundamentally, ONLY if a satisfactory US banking solution is found, like putting them to sleep 'Swedish' style and a reform of the CDS market will ensure, the still outstanding 30trillion nominal value of contracts can be 'neutralized' or orderly deflated;

Trading Strategy: BEARISH -short to medium-

short hedged accumulating ~858 (+);
-accumulate stocks -medium to long term- on fresh market lows

Kind Regards

O Dusty
19-02-2009, 05:17 PM
Pivotal trading period tonight with dow currently at 7556, as thought now testing Nov 08 support levels, as you say ananda we could see a double bottom and subsequent rally, if it closes below 7500 we are in for trouble bear market still having plenty of fight it it.

ananda77
19-02-2009, 07:13 PM
Pivotal trading period tonight with dow currently at 7556, as thought now testing Nov 08 support levels, as you say ananda we could see a double bottom and subsequent rally, if it closes below 7500 we are in for trouble bear market still having plenty of fight it it.

...yes, still plenty of BEAR left but:

short term, it is either bottom SPX 500 *741 (DOW *7449, possibly *7,198) and a consequent biting 'snap-back rally' or >crash< (tonight??? tomorrow??? next week???);

...if SPX 500 ~*838/*841 tops for the snap back rally, the market will make new lows in the short term

...playing it safe at present

Kind Regards





Kind Regards

ananda77
21-02-2009, 03:34 PM
...although TRADING STRATEGY reached TARGET last night, I remain bearish;

...the unsettling scenario is the persistant spread between the Dow reaching a new low and the Nasdaq as well as the SPX 500 not having broken the 21 November low just yet;

...so there could be another attempt at SPX *800 but failing this mark should get us to the low or lower

...playing it safe at present (sell stops placed strategically -yes-, buy stops -no hurry-)

Kind Regards

ananda77
22-02-2009, 12:53 PM
Not aware of any macro news that could come out to protect that SP500 mark. We're going through it this week ... The question becomes - how far? - Gut says - not much. If it's large then opportunities will surface.

...interesting that since the top in 2007, markets have been falling steadily despite all the efforts of governments and Central banks to turn the deflationary tide. That points to the fact that governments and CB's have NO POWER at all to do anything about it despite the constant BLA-BLA Artist Brainwash of the system press to the contrary

...and the latest fall in the markets lead by the fall of banking shares points again to the fact that market wants the nationalization of insolvent to the core banks despite the CROOKS' view that the banks should stay private and should be helped out endlessly by the tax payer

...SO FAR THE MARKET WINS AND MOST LIKELY WILL CONTINUE TO WIN

Favoring nationalization:

Alan Greenspan
Gordon Brown, UK PM
Senate Banking Committee Chairman Christopher Dodd
Senator Chuck Schumer
Sen. Lindsey Graham
House Speaker Nancy Pelosi
Republicans (some)
Joseph Stiglitz
Paul Krugman
Alan S. Blinder, Princeton
Nassim Taleb
Nouriel Roubini
Greg Mankiw
J. Bradford DeLong
Elizabeth Warren, TARP Oversight Panel
Dennis Gartman
Chris Whalen
Josh Rosner
Jeff Matthews
John Mauldin
Jack McHugh
Bill King
Matthew Richardson
Dylan Ratigan (CNBC, Daily Beast)
Jesse Eisinger, Conde Nast Portfolio
Martin Wolf, FT
Aaron Task (Yahoo Tech Ticker)
Paul Kedrosky (Infectious Greed, CNBC)
Nicholas Kristof (New York Times)
Mark Gongloff (WSJ)
Richard Parker (Newsweek)
Michael Hirsh (Newsweek)
David Reilly (Bloomberg)
Paul Vigna (Dow Jones)
Henry Blodget (Silicon Alley)
Willem Buiter (FT)
Adam Posen (Peterson Institute for International Economics)
Jeff Macke
Todd Harrison
Calculated Risk (Preprivatize the Banks)

Mark Thoma (Economistsview)
Karl Denninger
naked capitalism
Eddy Elfenbein (Crossing Wall Street)
Bronte Capital
Aaron Krowne Mortgage Lender Implode-O-Meter
Prieur du Plessis (investmentpostcards)
Roger Ehrenberg, Information Arbitrage
Felix Salmon
Interfluidity (Nationalize Like Real Capitalists)
Urban Digs

opposed to nationalization:

Ben Bernanke
President Obama
Tim Geithner
Lawrence H. Summers
Financial Services Committee Chairman Barney Frank
Republican Senator Jon Kyl
George Soros
Meredith Whitney, Oppenheimer
Deroy Murdock (NRO)
Larry Kudlow
James Cramer
Hale Stewart
Tyler Cowen
http://www.ritholtz.com/blog/

...if the bank insolvency problem and the CDS issues remain unresolved, the market will continue to provide the RIGHT ANSWERS...(see attachment)
http://www.atlanticadvisors.com/uploads/market-commentaries-2009-02-17-free-fallin.pdf

Kind Regards

lakedaemonian
22-02-2009, 10:49 PM
http://www.youtube.com/watch?v=TEzmU7YSXJs

Soundtrack for a meltdown

will be playing in my iPod through 2010, possibly 2011-2012......it will really complement the mass civil disturbances sure to cascade from nation to nation in the next few years.

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

dead canaries are littering the ground everwhere

patsy
23-02-2009, 12:56 PM
For those who follow the Dow Theory, Friday's close was of particular significance. The Dow has finally given a confirmation signal; both the Dow Industrial and Dow Transportation have simultaneously broken lows, which means that the major second down leg is coming.

Up until Friday, Dow Theorists were still hanging on bullish hopes - not from today on.

trader10
23-02-2009, 10:31 PM
A must to watch :

Inside the Meltdown.... 56 minutes...


http://www.pbs.org/wgbh/pages/frontline/meltdown/view/


cheers

ananda77
24-02-2009, 06:42 AM
For those who follow the Dow Theory, Friday's close was of particular significance. The Dow has finally given a confirmation signal; both the Dow Industrial and Dow Transportation have simultaneously broken lows, which means that the major second down leg is coming.

Up until Friday, Dow Theorists were still hanging on bullish hopes - not from today on.

...but was not confirmed by the Nasdaq nor the SPX 500 and trading distorted by option expiration; very critical junction this week;

-this morning:

-Dow testing support *7198 possible extension south to *7000
-SPX 500 testing *750 possible extension south to *741/*725

...if this support does not hold, market goes lower

Trading Strategy: met target on SPX 500 and on the sideline

Kind Regards

Dr_Who
24-02-2009, 06:52 AM
Dow down again this morning.

This is getting very ugly. I cant see any light at the end of this tunnel.

Doc is very bearish.

Stranger_Danger
24-02-2009, 07:37 AM
12 year lows, clear tone of capitulation. I'm on the cusp of being extremely bullish.

75%-80% cash, no debts of any sort and ready to go. Very scary environment though, confidence shot to bits and very hard to go against the herd.

However, as the currently deeply unpopular Mr Buffett says, you pay a very high price for a cheery consensus. We had an incredibly cheery consensus in 2006/2007 and, boy, has the price turned out high.

What about now, though?

AMR
24-02-2009, 08:05 AM
12 year lows, clear tone of capitulation. I'm on the cusp of being extremely bullish.

75%-80% cash, no debts of any sort and ready to go. Very scary environment though, confidence shot to bits and very hard to go against the herd.

However, as the currently deeply unpopular Mr Buffett says, you pay a very high price for a cheery consensus. We had an incredibly cheery consensus in 2006/2007 and, boy, has the price turned out high.

What about now, though?

Rob from Quantifiable edges also feels that way...

CBI Hits 7 For 1st Time Since November (http://quantifiableedges.blogspot.com/2009/02/cbi-hits-7-for-1st-time-since-november.html)


I haven’t mentioned the Capitualtive Breadth Indicator (CBI) for a while. For those unfamiliar it is a proprietary method of measuring the amount of capitulation evident in the market. You may read the intro post here (http://quantifiableedges.blogspot.com/2008/01/my-capitulative-breadth-indicator.html) or the entire series here (http://quantifiableedges.blogspot.com/search/label/CBI). Since the November lows it has been pretty much dormant except for a quick blip in January. It began to move up last week and at Friday’s close it hit 7. Long-time readers will recall that this is a level where I feel a decent bullish edge exists. Below is a chart of the CBI from the Quantifiable Edges members section.

(click to enlarge)
http://3.bp.blogspot.com/_931wANibTqw/SaKjMefpUMI/AAAAAAAABCQ/OPVaFmxydb8/s400/26chart.png (http://3.bp.blogspot.com/_931wANibTqw/SaKjMefpUMI/AAAAAAAABCQ/OPVaFmxydb8/s1600-h/26chart.png)



In the past I’ve demonstrated that it can be used as a market timing tool for swing trades. One “system” I’ve shown here on the blog is to purchase the S&P 500 when the CBI hits a certain level (7 being one of them) and then sell the S&P when it returns back to 3 or below.

Below is an updated performance report of the above “system” covering 1995-present.

http://2.bp.blogspot.com/_931wANibTqw/SaKjMIv9dZI/AAAAAAAABCI/0sgamFAjl4U/s400/2009-2-23+cbi+perf.png (http://2.bp.blogspot.com/_931wANibTqw/SaKjMIv9dZI/AAAAAAAABCI/0sgamFAjl4U/s1600-h/2009-2-23+cbi+perf.png)




I'll keep readers informed of significant changes in the CBI over the next several days until it returns to neutral.

shasta
24-02-2009, 06:11 PM
12 year lows, clear tone of capitulation. I'm on the cusp of being extremely bullish.

75%-80% cash, no debts of any sort and ready to go. Very scary environment though, confidence shot to bits and very hard to go against the herd.

However, as the currently deeply unpopular Mr Buffett says, you pay a very high price for a cheery consensus. We had an incredibly cheery consensus in 2006/2007 and, boy, has the price turned out high.

What about now, though?

Yup the final capitulation is what i'm waiting for too, as most people won't recognise the start of the new bull market, & whilst scared & out of the market will miss much of the early gains...

When everyone is bearish time to start buying "selective stocks" ;)

winner69
25-02-2009, 05:39 AM
Rob from Quantifiable edges also feels that way...

CBI Hits 7 For 1st Time Since November (http://quantifiableedges.blogspot.com/2009/02/cbi-hits-7-for-1st-time-since-november.html)


I haven’t mentioned the Capitualtive Breadth Indicator (CBI) for a while. For those unfamiliar it is a proprietary method of measuring the amount of capitulation evident in the market. You may read the intro post here (http://quantifiableedges.blogspot.com/2008/01/my-capitulative-breadth-indicator.html) or the entire series here (http://quantifiableedges.blogspot.com/search/label/CBI). Since the November lows it has been pretty much dormant except for a quick blip in January. It began to move up last week and at Friday’s close it hit 7. Long-time readers will recall that this is a level where I feel a decent bullish edge exists. Below is a chart of the CBI from the Quantifiable Edges members section.

(click to enlarge)
http://3.bp.blogspot.com/_931wANibTqw/SaKjMefpUMI/AAAAAAAABCQ/OPVaFmxydb8/s400/26chart.png (http://3.bp.blogspot.com/_931wANibTqw/SaKjMefpUMI/AAAAAAAABCQ/OPVaFmxydb8/s1600-h/26chart.png)



In the past I’ve demonstrated that it can be used as a market timing tool for swing trades. One “system” I’ve shown here on the blog is to purchase the S&P 500 when the CBI hits a certain level (7 being one of them) and then sell the S&P when it returns back to 3 or below.

Below is an updated performance report of the above “system” covering 1995-present.

http://2.bp.blogspot.com/_931wANibTqw/SaKjMIv9dZI/AAAAAAAABCI/0sgamFAjl4U/s400/2009-2-23+cbi+perf.png (http://2.bp.blogspot.com/_931wANibTqw/SaKjMIv9dZI/AAAAAAAABCI/0sgamFAjl4U/s1600-h/2009-2-23+cbi+perf.png)




I'll keep readers informed of significant changes in the CBI over the next several days until it returns to neutral.

This joker has a different view .... says 'In 1931, after the Dow broke below the 1930 lows, it was virtually non-stop to the bottom apart from minor upward jerks every six months.' ... and that is where we are now

http://www.businessspectator.com.au/bs.nsf/Article/Market-$pd20090224-PJV6S?OpenDocument&src=sph

Dr_Who
25-02-2009, 08:24 AM
This is a dead cat bounce on the Dow today.

The market is moving on Bernanke's words. Fundamentals have not changed. Banks are still rotten to the core.

ananda77
25-02-2009, 10:20 AM
This is a dead cat bounce on the Dow today.

The market is moving on Bernanke's words. Fundamentals have not changed. Banks are still rotten to the core.

...in terms of risk, it is a prudent strategy to judge wether or not the markets have bottomed by waiting, how far this rebound will take the market

...for the SPX 500, if 815 will be taken out, we would have to assume a solid bottom is in place

...otherwise it is just a 50:50 gamble...

Kind Regards

trendy
25-02-2009, 11:31 AM
This is a dead cat bounce on the Dow today.

The market is moving on Bernanke's words. Fundamentals have not changed. Banks are still rotten to the core.

Couldn't agree more. Trend is still downwards. Fundamentals are abysmal with consumer sales still heading down.

trendy
25-02-2009, 12:57 PM
Too little too late.

Just to confirm how fast global trade and major economies are collapsing read this. Japan's exports have almost halved in January. These are great depression grade statistics!

If they aren't exporting we aren't importing, no shipping required impacts ports, trains, trucking, no retail sales....

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

Japan Exports Plummet 45.7%, Deficit Widens to Record (Update1)

By Jason Clenfield

Feb. 25 (Bloomberg) -- Japan’s exports plunged 45.7 percent in January, resulting in a record trade deficit, as recessions in the U.S. and Europe smothered demand for the country’s cars and electronics.

The shortfall widened to 952.6 billion yen ($9.9 billion), the sharpest decline since 1980, the earliest year for which there is comparable data, the Finance Ministry said today in Tokyo. The January drop in overseas shipments eclipsed a record 35 percent decline set the previous month.

Gross domestic product shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, and economists predict the slump will drag into this quarter. Toyota Motor Corp., Sony Corp. and Hitachi Ltd. -- all of which forecast losses -- are firing thousands of workers, heightening the risk the recession will deepen.

“The drop in exports is unbelievably bad,” said Yasuhide Yajima, a senior economist at NLI Research Institute in Tokyo. “The pressure on companies to cut jobs and investment is rising and that will make the recession deep and protracted.”

The yen traded at 96.56 per dollar as of 9:01 a.m. in Tokyo from 96.72 before the report was published. The decline in exports was in line with economists’ predictions.

Japan’s economy, the world’s second largest, may shrink a record 4 percent in the year starting April 1, faster than this year’s projected decline of 2.9 percent, according to the median estimate of 15 economists surveyed by Bloomberg News. The worst contraction to date was fiscal 1998’s 1.5 percent drop.

Record Drops

Shipments to the U.S. and Europe dropped by records. Exports to the U.S. tumbled 52.9 percent from year earlier, and shipments to Europe fell 47.4 percent, the ministry said.

The collapse of Lehman Brothers Holdings Inc. triggered a credit crisis that erased $18 trillion from global equity markets, hobbled U.S. consumers and paralyzed world trade. The meltdown also spurred a 23 percent surge in the yen against the dollar since September, eroding earnings for Japanese exporters already struggling with weak demand.

“If the yen stays at this strong level, it’s likely the economic recession” will continue, Honda Motor Co. President Takeo Fukui said last week. Every one yen gain against the dollar cuts the automaker’s operating profit by about 18 billion yen ($190 million), according to the company.

Still, currency gains have eased recently as the outlook for Japan’s economy deteriorates. The yen has retreated 5.4 percent against the dollar in February, its worst one-month performance in almost five years. Reports showing an unprecedented 9.6 percent decline in factoryproduction and the biggest jump in the unemployment rate in 41 years have convinced some investors Japan is no longer a safe haven.

‘Deep Trouble’

“People are coming to realize that Japan is in deep trouble,” said Hiroshi Shiraishi, an economist at BNP Paribas Securities Japan Ltd. in Tokyo. “Considering what’s happening on the export side, and the implications that has for the domestic economy, the yen is clearly not a buy.”

Toyota, which is forecasting its first operating loss in seven decades, will halve production in the current quarter versus the same period last year as demand for cars in the U.S. plunges. U.S. auto sales fell 37 percent in January.

The Bank of Japan last week said it will buy corporate bonds for the first time, widening its asset-purchase program to prevent a shortage of credit from deepening the recession. Governor Masaaki Shirakawa and his colleagues lowered the bank’s overnight lending rate to 0.1 percent in December.

The government has been unable to pass a stimulus package that could help encourage domestic spending in the absence of export demand. Prime Minister Taro Aso is struggling to get approval from the opposition-led upper house to spend 10 trillion yen ($111 billion) to aid companies and households, whose sentiment is near a record low.

peat
25-02-2009, 04:48 PM
At the end of trading on Monday, Feb. 23, 2009, Robert Prechter closed the most successful trading recommendation of his 30-year career. His advice to "cover" the position came near the end of the trading day, when subscribers received the February 2009 issue of his Elliott Wave Theorist. This closed a “fully leveraged short position” he recommended to Theorist subscribers on July 17, 2007, when the S&P was at 1550. At the time of publication on Monday, Feb. 23, the S&P was trading below 750

ananda77
25-02-2009, 06:29 PM
At the end of trading on Monday, Feb. 23, 2009, Robert Prechter closed the most successful trading recommendation of his 30-year career. His advice to "cover" the position came near the end of the trading day, when subscribers received the February 2009 issue of his Elliott Wave Theorist. This closed a “fully leveraged short position” he recommended to Theorist subscribers on July 17, 2007, when the S&P was at 1550. At the time of publication on Monday, Feb. 23, the S&P was trading below 750

...yes, but the reason is NOT, Prechter expects a bull market!!!!!

Kind Regards

ananda77
27-02-2009, 08:19 AM
SP500 holding its own ... MS beating the market by a wide margin. Go MS.

...SPX500 most likely revisiting November Low, -possibly- sliding further to low *700; if *700 breaks, *640 next likely stop

...personal take is the *640 mark a bit far out in current market with quite a bullish build up happening; expecting a rally to SPX500 *1000/1100 before Bears take charge again

Trading Strategy: intraday short trades ONLY to *744 then sideline

Kind Regards

trendy
27-02-2009, 11:27 AM
Dow going to 4000 to 5000 range by year end. Big D is coming.

ollie
27-02-2009, 03:13 PM
Hey trendy, thats a big call, i'll keep my eye on your prediction.

winner69
28-02-2009, 06:43 AM
Hey trendy, thats a big call, i'll keep my eye on your prediction.

S&P500 earnings for 2009 (updated as results come through) are less than $28 which puts the S&P500 on a PE of 27.

Earnings still under pressure as the recession starts to bite. Even if earnings hold up and the S&P500 falls to its long term average of 15 than a S&P500 at 450 is not out of the question ...say 500 and thats 33% from today ... apply that to the DOW and you get Trendy's 5000 odd ... spooky eh

trendy
28-02-2009, 12:54 PM
GE cuts dividend for first time since the Great Depression (1938)!!!!

This is all Canary in the coal mine actions.

The two decade long credit mountain in the USA is collapsing right in front of us. More casualties to come. GM will go BK, SAAB is BK, Opel next, Holden will follow, then GM US next. No one is buying cars here period.

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

GE Cuts Dividend as Immelt Seeks to Safeguard AAA (Update2)
Email | Print | A A A

By Rachel Layne

Feb. 27 (Bloomberg) -- General Electric Co. cut its annual dividend for the first time since 1938 as the global recession and credit crunch sapped profit at its finance unit and threatened the company’s AAA credit rating.

The quarterly dividend was lowered 68 percent to 10 cents a share from 31 cents for this year’s second half, the Fairfield, Connecticut-based company said in a statement. The reduction will save GE, which has paid a dividend for 110 years, about $9 billion a year, the company said.

Chief Executive Officer Jeffrey Immelt had said in January GE would earn enough to support both the dividend and highest- available debt rating. Earlier this month, with no sign of an easing in the global slowdown, he said the board would review the dividend and that he could run GE with less than a top rating if analysts downgraded the debt. A downgrade may increase the cost of capital and further hurt profit at GE Capital.

“They didn’t make the current environment, they have to just survive it,” said William Batcheller, director of investment management at Butler Wick & Co. in Youngstown, Ohio, which has about $675 million under management. “You can’t blame Immelt that markets have come down like this.”

Moody’s Investors Service said after today’s dividend cut it will keep GE on review for a possible debt downgrade from Aaa, its highest level. Standard & Poor’s also kept GE’s top- notch AAA and “negative” outlook unchanged.

“The reduction in GE’s common dividend will address some of the concerns regarding the stress on GE’s cash flow,” said Moody’s analyst Richard Lane, who covers the parent company, in a statement. “Nonetheless, Moody’s is continuing its review of the ratings for possible downgrade.”

GE Shares

GE, the world’s biggest provider of aircraft leasing, jet engines, power-plant turbines, medical imaging machines and locomotives, fell 59 cents to $8.51 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have dropped 75 percent in 12 months.

The $1.24 annual dividend GE had planned for 2009 would have cost about $13.1 billion in all. The company has already paid or agreed to pay $6.2 billion for this year’s first two quarters, Chief Financial Officer Keith Sherin said Feb. 10.

In the statement, Immelt said the dividend cut is “the right precautionary action at this time to further strengthen our company for the long-term, while still providing an attractive dividend.”

Immelt also said today that, aided by the dividend change, GE doesn’t have any plans to raise additional equity. GE raised $15 billion in October from the sale of $3 billion in preferred stock to Warren Buffett’s Berkshire Hathaway Inc. and $12 billion in common stock. Buffett declined to comment about today action through assistant Carrie Kizer.

Companies Reduce Dividends

U.S. companies are reducing dividends at the fastest rate in half a century, hoarding cash and squeezing investors who depend on the payouts more than ever to boost returns. GE’s dividend has been providing a yield of about 14 percent as the shares trade at lows not seen since the mid-1990s.

GE, the only remaining original member of the Dow Jones Industrial Average, has paid a dividend to investors since 1899.

Immelt, 53, and the board are making the cut as debt ratings of both GE and its GE Capital finance arm are under review for possible downgrades. S&P and Moody’s are studying whether GE can generate the profit it needs to pay common stock holders, support the debt load and still invest as needed in its businesses.

S&P in December said GE had a 1-in-3 chance of losing its AAA designation during the next two years. Moody’s Investors Service placed GE on review in January, triggering what is typically a three-month process.

More Flexibility

The dividend cut “helps them with the rating agencies,” said Nicholas Heymann, an analyst with Sterne Agee & Leach Inc. who has a “sell” rating on the shares. “It gives them more flexibility to be able to build necessary levels of loss reserves and loss provisions at the financial subsidiary, and that in turn is a very important component of what their ratings are with the rating agencies.”

The global recession and credit crisis may make it harder for GE Capital to meet its $5 billion profit goal this year, and growth at GE’s industrial businesses also is slowing.

The average analyst estimate for GE Capital profit is about $3.6 billion, Sherin said Feb. 10. Moody’s laid out in December the criteria GE had to meet to retain its highest rating, Aaa, including the ability of the non-finance units to produce $16 billion in cash flow as Immelt had promised.

Generating Cash

Most of that cash would come from revenue tied to equipment such as jet engines and power turbines, plus $500 million from a reduced payment GE Capital makes to the parent, and about $2 billion from other sources. GE said Dec. 2 that would be more than enough to pay the dividend this year.

Moody’s wants GE Capital to earn enough to restore a larger internal payment to the parent company in 2010. If that doesn’t look like it will happen, Moody’s says GE can’t justify the Aaa.

Immelt has said that he and GE’s board consider the dividend a good way to return value to shareholders. More than 40 percent of GE’s holders of its 10.5 billion outstanding shares are individual investors.

GE had already broken its usual dividend practice in September, when it announced the board would keep the quarterly payout at 31 cents a share in 2009 -- the first year in more than three decades without a dividend boost. The company repeated its intention Dec. 16.

GE’s bonds have traded the past six years as if the company was rated below AAA, according to Moody’s implied ratings. The bonds imply GE should be ranked five steps lower at A2.

Stranger_Danger
01-03-2009, 02:40 PM
Will the Dow end the week in the 6,000's? I'd say so.

The interesting thing I find is people are talking about a "lost decade" (starting today!) where asset prices go nowhere but down and its barely worth trying to make a buck.

With the benefit of hindsight, the "lost decade" has just occurred but people didn't realise it as they were living it.

Disc : Bullish, nibbling, liking this environment much more than 2006/2007 - but still 70% cash. I missed the last bit of the boom by going into cash "too early" and suspect I'll miss some of the upside by not going large until its "too late". So be it.

Hoop
01-03-2009, 10:17 PM
Will the Dow end the week in the 6,000's? I'd say so.

The interesting thing I find is people are talking about a "lost decade" (starting today!) where asset prices go nowhere but down and its barely worth trying to make a buck.

With the benefit of hindsight, the "lost decade" has just occurred but people didn't realise it as they were living it.

Disc : Bullish, nibbling, liking this environment much more than 2006/2007 - but still 70% cash. I missed the last bit of the boom by going into cash "too early" and suspect I'll miss some of the upside by not going large until its "too late". So be it.

Interesting perception SD...also a good piece of investment discipline..especially during bear market rallies.
----------------------------------------------------------------------------------------

The Zurich Axioms rule 2 of 12 On Greed

2....Always take your profit too soon
Decide in an advance what gain you want from a venture, and when
you get it, get out.

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

Last week the DOW followers (including me) had our question answered .."Had the bear market ended and we were in Bull Market (1) phase since last November? Answer NO!!!..
....Just witnessing the Stock Market's lower low last week reinforces the belief of many and (also those that were starting to be optimistic) that now this recession is going to be possibly longer and meaner.

The TA followers now have a TA Target of 6000 for the DOW 7500-(9000-7500)...this is a substantial predicted fall if it happens,... possibly another capitulation event...so it would be prudent to be holding cash rather than shares just in case the Techies are right...rather be safe than sorry.

Like you SD I have sold up much of my holdings ..I was in the market at 80% stock just after Xmas thinking the Bear market cycle may had ended, presently I am holding 25% and reducing ..even selling down some stock that haven't triggered sell signals yet.

This lost decade assumption by commentators is typical maligned logic, assuming the future using today's reference data..... and what scares me is the fact that many people are believing it.
---------------------------------------------------------------------------------------

The Zurich Axioms rule 4 of 12 On Forecasts

4....Human behaviour cannot be predicted. Distrust anyone who claims to know the future, however dimly

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

Investors tend to develop herd mentality during abnormal events (fads, economic crisis, windfall events) with common beliefs.

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

The Zurich Axioms rule 10 of 12 On Consensus

10....Disregard the majority opinion. It is probably wrong.
Never follow speculative fads. Often, the best time to buy something is when no body else wants it.

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

With reference to using the above Axioms...never use an Axiom in isolation all 12 rules should be adhered to in making an investment decision.

trendy
02-03-2009, 04:15 AM
Great post hoop.

I'm starting to really see economic damage taking place here and expect unemployment will easily jump past 12% nationally. California is the barometer and they have already jumped to 10.1%, CA population is 36 million of the 300 Million in the USA (2007 census). The other sunbelt and rustbelt states are experiencing huge jumps in unemployment due to the housing and auto manufacturing crash in each region respectively.

winner69
03-03-2009, 06:18 AM
Got a 6 in front of it now ..... S&P holding the 700 mark (JUST)

Bears in control .... and for some time I fear

brettdale
03-03-2009, 07:12 AM
There must be a **** load of bargins out there now.

ananda77
03-03-2009, 07:47 AM
...awaiting patiently possible SPX500 *860 (May 1996 high) and *840 (= 61.8% retracement 1973 - 2007 rally)

...expecting SPX500 to rally to *1000/1100 thereafter

...however, this Bear has just started...

Kind Regards

Stranger_Danger
03-03-2009, 08:13 AM
Nah, it hasn't "just started". Nothing like it. The reality is that US stocks - in particular - haven't been healthy since the late 1990's and only vast amounts of near free money propped the market up.

We're now down, what, 60% or so?, since the highs of 2007.

That isn't "just started". However, it IS the point where the masses "just start" to worry about total crashes - ie, after things have already totally crashed.

Stranger_Danger
03-03-2009, 08:21 AM
Things can't be all bad, AIG is up nearly 10%.

Oh the irony, huh?

winner69
03-03-2009, 12:57 PM
Thought you might like this one winner how low? (http://finance.yahoo.com/tech-ticker/article/197344/How-Low-Can-the-Market-Go;_ylt=AqSXgLcXNi5CVd4gpDjbT1u7YWsA?tickers=%5Edj i,%5Egspc,%5Eixic) ...

Thanks Belg

Good old harry Blodget eh ... making a honest living now after pumping the markets up many years ago with his infamous reports .... bit ironic he mentions the S&P could go as low as 300

You and I are essentially on the same page - as the article says 'The farther stocks fall, the cheaper they get--and the higher the expected long-term return becomes.'

No question about that eh

The difference between you and me is that you are less patient then me .... you want to think its all over and now is the time be in .... my mantra is not to fight the trend but wait until it appears as if things are going to better. That way i think my long term gains will be higher than yours because i may have bought in cheaper.

I ahve no idea whetehr we are at or near the bottom. All i know is that most markets are worse today than they were last week, worse than last month and worse than last year .... and from a position of being implicitly overvalued at the moment and with all the **** going on at the moment the markets will probably be worse next week and worse next month and probably worse or no better in a years time. if i am wrong with that timing I won't have lost anything or missed out on much because i will be doing the Pheadrus thing and looking at the signs that things may have turned.

So no long term investing for me at the moment but soem day to day opportunities with a bit of play money stops one getting too bored

Keep at it Belg .... enjoy your posts .... and never forget that the further the stocks fal the cheaper they get

lakedaemonian
04-03-2009, 01:33 PM
Just reading through and trying to understand the AIG quarterly result ... i.e. lost 61 billion in just 3 months! ... While the headline number is truely scary, there are some positives (but not too many shareholders)

1. Large non-cash write-offs
2. Paying huge claims that will benefit the recipients (lets just call them "counter-parties for now but you can call them BAC, C, etc.)
3. Govt has ploughed 170 billion into the economy through AIG
4. I'd guess the govt will need to plough in another 60-100 billion even tho AIG mgt say they won't need the new 30 bill soon.
5. Expect it to be nationalised and criminals identified (but not prosecuted)
6. Appalling risk management by AIG
7. Appalling oversight by every regulatory body wordwide!

re point 6 - if AIG had indulged in just a little bit of risk management - call it insurance 101 - then they could have broken the credit bubble very early on! Truely appalling underwriting.

This sad story of appalling risk management will run and run!

Fact of the day - AIG's loss amounts to 92 percent of the $67.4 billion that Americans spent at world's largest retailer Wal-Mart Stores Inc. in the fourth quarter, which includes the holiday season. - scary!

http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6447032-5429-67777&type=sect&dcn=0000950123-09-003740

Alas, I am intimately aware of a rather substantial underwriter about to launch a product which is horribly, horribly mispriced to the downside.

After considerable and rather robust debate where basic questions regarding underwriting profitability(and absolute certainty it will be lacking), premium investment returns(approaching absolute zero), and fast rising payout costs....no valid answers were provided.......but dissenters such as myself have been publically vilified as "not being team players".

Doomed to failure...but policy holders will save a heap on the surface.....whether they get paid out or whether this insane scheme lasts the year is a different story.

Risk Management must be a foreign language. :|

dumbass
04-03-2009, 08:04 PM
it feels like sentiment is reaching an extreme which always raises the possibilty that some kind of bottom is just around the corner.
6500 has been my very long term target and now were just about there.The best fit elliot count suggests we are currently in a fifth wave, with potential for indicator divergence also price close to lower trendline.
looking at transport index it has not yet taken out bull market lows, which may be a bullish divegence from the dow index.
i think we will get clarification soon but cautiously optimistic for the trade of 2009 ,
a sharp bear market rally running many months and there normally pretty violent upswings.

frostyboy
07-03-2009, 09:16 AM
i think we need the vix to hit like 70 in a month or two for a nice big sucker rally lasting 6-9 months. dumbass my opinion is we are in wave 5 but the subwave of it is still 3 and about to start subwave 4 I hardly use elliot wave only a bit for the primary trend.

lakedaemonian
07-03-2009, 10:50 AM
More SP500 PEs

Thomson Reuters, which publishes similar analysis, estimates the trailing P/E ratio for the S&P 500 is around 11.

Those numbers are well below the valuations reached during the market low of the 2001 recession, when the ratio stopped at 19. They're also lower than the P/E ratio of 13 touched at the market bottom during the 1990-1991 recession, says Morgan Keegan, which used data compiled by Yale University's Robert Shiller for its historical research.

But widen out the lens, and P/E ratios have dropped even further in some earlier recessions. During the market low of the early 1980s recession, for example, stocks in the index were trading at a mere 8 times earnings.
By some measures, P/E ratios are near lows, though it depends how you slice it (http://finance.yahoo.com/banking-budgeting/article/106697/Stocks-look-cheap-but-they-could-get-cheaper;_ylt=AmMbsj45LdkFnKse51s.Wla7YWsA)

But IF(and a VERY likely IF) earning continue to plunge...it will push up P/Es.

While I AM looking, very closely in some cases, all I see is a bunch of accordians falling off a roof........share prices crash......P/Es shrink.......earnings crash......P/Es expand...GOTO step 1

While I think we are closer to the bottom than the top.......I still don't see the bottom yet.

lakedaemonian
07-03-2009, 11:11 AM
Just reading through and trying to understand the AIG quarterly result ... i.e. lost 61 billion in just 3 months! ... While the headline number is truely scary, there are some positives (but not too many shareholders)

1. Large non-cash write-offs
2. Paying huge claims that will benefit the recipients (lets just call them "counter-parties for now but you can call them BAC, C, etc.)
3. Govt has ploughed 170 billion into the economy through AIG
4. I'd guess the govt will need to plough in another 60-100 billion even tho AIG mgt say they won't need the new 30 bill soon.
5. Expect it to be nationalised and criminals identified (but not prosecuted)
6. Appalling risk management by AIG
7. Appalling oversight by every regulatory body wordwide!

re point 6 - if AIG had indulged in just a little bit of risk management - call it insurance 101 - then they could have broken the credit bubble very early on! Truely appalling underwriting.

This sad story of appalling risk management will run and run!

Fact of the day - AIG's loss amounts to 92 percent of the $67.4 billion that Americans spent at world's largest retailer Wal-Mart Stores Inc. in the fourth quarter, which includes the holiday season. - scary!

http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6447032-5429-67777&type=sect&dcn=0000950123-09-003740


One insane aspect of this bailout debacle is that somewhere approaching $2 trillion of bailout funds to the likes of AIGs counterparties are being kept secret.

So what are ultimately taxpayer funded/guaranteed initiatives...the taxpayers aren't allowed to know who/what/when/where/why/how is being funded.........if it wasn't so deadly serious....it would be incredibly funny.

dumbass
07-03-2009, 02:36 PM
i think we need the vix to hit like 70 in a month or two for a nice big sucker rally lasting 6-9 months. dumbass my opinion is we are in wave 5 but the subwave of it is still 3 and about to start subwave 4 I hardly use elliot wave only a bit for the primary trend.

hey frosty , good to hear someone using elliot wave, not the most popular analysis on this site.
i would like to see your count , always interested to see another perspective.
heres my hourly count , im counting that we are in a fifth wave of a fifth.
divergence on indicators and a possible ending diagonal printing.

ananda77
09-03-2009, 05:17 PM
After Friday's late hour rally it will be interesting what happens today.

...really interesting to be 100% in the know, but it would be extremely boring...

...considering Friday's trading: SPX500 opens with a rally but encountered strong selling pressure which intra day traded the SPX500 to a new low;

...the close was positive (something for the fairytale press to chirp about) but more stocks closed lower than higher by day's end

...consequently, the market could be in for a consolidating period (>675/725<) short term (couple of days) before trying to take out SPX500 *640; if *640 holds = multi-month bear rally possible and likely (considering quite a few positive divergences developing over the last few trading days)

Trading strategy: best option (safest): sideline until resolved (bottom in place); or short SPX500 *725;

Kind Regards

frostyboy
09-03-2009, 07:10 PM
this is my count i think we have started a subwave 4 now. the divergences could still be there when i think we are at end of wave 5

at the moment im looking for some more panic like eastern europe or goldman sachs before i go long

ananda77
10-03-2009, 02:01 AM
...259000 call options (US$7 m) bought on the XLI (Industrial Fund Candidates: GE, UPS, UTX, CAT) last Thursday

...rumors have it, deal is based on:

>a House Financial Services subcommittee is planning a mark-to-market meeting; current mark-to-market rules forces banks to value assets at current market prices. forces banks to report billions in write-downs; write-downs will disappear if the mark-to-market rules are eliminated or put on hold for a year

Kind Regards

Hoop
10-03-2009, 08:43 AM
The indexes which saw the old bottom break (incl Dow) recently have since lost 10%.
Most new TA targets showed a new targeted bottoms of 20% below the old bottom (now resistence level) Europe TA Targets are nearer 30% lower... Frosty you assumptions confer. NZX50 only 10% lower which makes me suspect that the NZ$ will lower again as a continuing buffer on the falling NZX50 index

...it seems we could be half way there at the moment. TA Targets DOW 6000 S&P 600 AllOrds 2850 NZX50 2350.

When the new bottom is formed I will be asking the same question again.."Is this the real bottom?".... as all my non-TA indicators are positive... the latest being triggered but not confirmed yet is the reliable copper indicator.

Dr_Who
10-03-2009, 06:19 PM
U.S. Unemployment Rate to Reach 9.4% This Year, Survey Shows :eek::eek:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWHdSE69tNtk&refer=home

lakedaemonian
10-03-2009, 06:53 PM
U.S. Unemployment Rate to Reach 9.4% This Year, Survey Shows :eek::eek:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWHdSE69tNtk&refer=home


I'll bet 2009 ends over 10% unemployment in the US.......and far closer to 20% by the end of 2010

Dr_Who
10-03-2009, 08:43 PM
I'll bet 2009 ends over 10% unemployment in the US.......and far closer to 20% by the end of 2010

If your forecast is correct, then the global economy is heading for a depression. Why would you say 20% by 2010?

lakedaemonian
10-03-2009, 10:25 PM
If your forecast is correct, then the global economy is heading for a depression. Why would you say 20% by 2010?

finance

insurance

real estate

construction

retail

leasure

tourism

...all are major employment sectors that already are, or soon will be, under extreme duress.

California already hit 10.1% in January...it's not rocket science

Hold on....the downward spiral ride is only getting started.

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

Here in NZ I'm most worried about access to overseas credit for that 30% we can't fund ourselves.....it could soon feel like living at 5000m and donating blood every other day

lakedaemonian
10-03-2009, 10:30 PM
http://www.nytimes.com/interactive/2009/03/03/us/20090303_LEONHARDT.html?hp


Keep your eyes out for politically expediant redefinitions of unemployment.....again

If the numbers don't add up...change the equation!

ananda77
11-03-2009, 07:32 AM
Timing! 20% in day on GE and MS! 50% in GE in less than a week! Just beautiful! ... Stops adjusted accordingly tho.

One notes that the yield on the 10 and 5 year treasuries hasn't dropped back as it did in Jan following Nov 20th thrashing ... methinks the smart money is getting ready to move back into stocks. The timing would be about right ... 6-9 months before the end of the recission which would make the end between sept - dec. Feels about right. A long recession by recent standards.

Time to start looking long :)

...good one...

09/03/2009 ...consequently, the market could be in for a consolidating period (>675/725<) short term (couple of days) before trying to take out SPX500 *640; if *640 holds = multi-month bear rally possible and likely (considering quite a few positive divergences developing over the last few trading days)

Trading strategy: best option (safest): sideline until resolved (bottom in place); or short SPX500 *725;

...most likely playing out within the next 24hrs

Kind Regards

ananda77
11-03-2009, 03:07 PM
Thanks A77 ... Burst my bubble why don't you. But yes - you could be right. Some brokerages must be creaming it in today. Huge volumes would suggest that Mrs Market (the market is a woman not a man!) is picking a bottom at these levels and will be happy to hold even if it drifts a bit lower. C's result is positive but the enthusiasm for C today I don't feel is justified given it's fundementals. Should be shorted tomorrow - watch out!

...OK, maybe the market will take a go at the SPX500 *640 coinciding with the option expiry sometime in March (very long nice tail trail after a very hefty downward move) and not within a 24 hr period;

...anyway as far as banks are concerned, this is still in the play:

...259000 call options (US$7 m) bought on the XLI (Industrial Fund Candidates: GE, UPS, UTX, CAT) last Thursday

...rumors have it, deal is based on:

>a House Financial Services subcommittee is planning a mark-to-market meeting; current mark-to-market rules forces banks to value assets at current market prices. forces banks to report billions in write-downs; write-downs will disappear if the mark-to-market rules are eliminated or put on hold for a year

Trading Strategy: safest >sideline till resolved or short SPX500 *725+

Kind Regards

Dr_Who
11-03-2009, 04:28 PM
Ananda, where do you get the info you just posted from?

Do you have a link, cos it is very interesting. Cheers.

frostyboy
11-03-2009, 05:58 PM
the put to call ratio at the end of monday suggested tuesdays rally.

if this is subwave 4 the spx shouldnt go above 800 and a rally to like 820 would clean out most shorts. some new traders got too bearish over the last two weeks and gave some money to the pros. hope this isnt the bottom and so i miss the multi month rally i am thinking about

ananda77
11-03-2009, 08:31 PM
Ananda, where do you get the info you just posted from?

Do you have a link, cos it is very interesting. Cheers.

Dr.Who:

...it is something some people were advocating for a while back...

(Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University. He was awarded the Legion of Honor by French President Francois Mitterrand)

September 23, 2008
Has Deregulation Sired Fascism?
By Paul Craig Roberts

Washington has been slow to recognize the current problem. A millstone around the neck of every financial institution is the mark- to-market rule, an ill-advised “reform” from a previous crisis that was blamed on fraudulent accounting that over-valued assets on the books. As a result, today institutions have to value their assets at current market value.

In the current crisis the rule has turned out to be a curse. Asset backed securities, such as collateralized mortgage obligations, faced their first market pricing in panicked circumstances. The owner of a bond backed by 1,000 mortgages doesn’t know how many of the mortgages are good and how many are bad. The uncertainty erodes the value of the bond.

If significant amounts of such untested securities are on the balance sheet, insolvency rears its ugly head. The bonds get dumped in order to realize some part of their value. Merrill Lynch sold its asset backed securities for twenty cents on the dollar, although it is unlikely that 80 percent of the instruments were worthless.

The mark to market rule, together with the suspect values of the asset backed securities and collateral debt obligations and swaps, allowed short sellers to make fortunes by driving down the share prices of the investment banks, thus worsening the crisis. With their capitalization shrinking, the investment banks could no longer borrow. The authorities took their time in halting short-selling, and short-selling is set to resume on October 3 or thereabout.

If the mark to market rule had been suspended and short-selling prohibited, the crisis would have been mitigated. Instead, the crisis intensified, provoking the US Treasury to propose to take responsibility for $700 billion more in troubled financial instruments in addition to the Fannie Mae, Freddie Mac, and AIG bailouts. Treasury guarantees are also apparently being extended to money market funds.

All of this makes sense at a certain level. But what if the $700 billion doesn’t stem the tide and another $700 billion is needed? At what point does the Treasury’s assumption of liabilities erode its own credit standing?
http://www.vdare.com/roberts/080923_deregulation.htm

THE FED
Bernanke: We need improvements to fair value rules
Crisis has 'revealed some shocking gaps' in regulatory oversight, he added

Bernanke did not provide details about what kind of changes he would like to see to mark-to-market rules. Lawmakers on Capitol Hill will be considering alternatives at a House securities Subcommittee committee hearing Thursday to examine the regulations.
Proponents of eliminating or adjusting mark-to-market rules argue that changes could help restore confidence in the overall economy by propping up the value of banks, which would expand lending again as a result. However, supporters contend that keeping the methodology intact is necessary because shareholders deserve to understand the troubled state of financial institutions.
http://www.marketwatch.com/news/story/Bernanke-We-need-improvements-fair/story.aspx?guid={D596313D-1B4A-4CE7-AEA1-3F4F79DE504D}

Kind Regards