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Federated's David Tice Is Not A Fan Of Bernanke-Manufactured, Free Money Driven, Bear Market Bounces, Sees "Huge" Potential For Decline

Submitted by Tyler Durden on 03/19/2010 14:34 -0400

Federated Investors' David Tice has a thing or two to say about the rally - "We've been the beneficiary of a massive credit bubble that we've not yet worked off the excesses... This secular bear market will not bottom until we get back until we get back below book value." In a portion of the interview not caught by the Bloomberg clip below, Tice says that the decline potential for the market is "huge." Don't tell that to the algos whose one and only program for the past month and a half is Buy.The.Dips.

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Fri, 03/19/2010 - 14:39 | 270409 godfader

David "S&P 500 is headed 50% lower" Tice. He said we will fall apart at 800, 900 and 1000. Now he's still singing the same tune? They should put his photo is right next to "broken clock" in the dictionary.

Fri, 03/19/2010 - 15:26 | 270457 VegasBD

http://www.youtube.com/watch?v=nWyygiyPbdA

He called it here.

"The economy is going to enter a recession and when it does its gonna cascade onto itself"

"We feel the markets can lose 50-60%" (DOW was over 13k at that time)

Fri, 03/19/2010 - 15:31 | 270462 godfader

http://www.youtube.com/watch?v=FA8K76eGsyw&feature=player_embedded

May 2009, Tice "SP500 going to 400". He is a broken clock, his standard line has been "We are sure we're headed for a 50-60% correction". He says that every time, like a broken clock. Why anybody would pay attention to a lunatic like that is beyond me.

Fri, 03/19/2010 - 15:56 | 270489 faustian bargain

You know there's something wrong with the world, when the ones who fail to predict what the insane Fed/Wall Street complex will do next are called lunatics.

Fri, 03/19/2010 - 18:49 | 270604 wake the roach

You know there's something wrong with the world, when the ones who fail to predict what the insane Fed/Wall Street complex will do next are called lunatics.

Amen ;-)

Sat, 03/20/2010 - 06:55 | 270831 MarketTruth

Morpheus : Do you believe in fate, Neo?

Neo : No.

Morpheus : Why?

Neo : Because I don't like the idea that I'm not in control of my own life.

Morpheus : I know exactly what you mean. Let me tell you why you're here. You're here because you know something. What you know, you can't explain. But you feel it. You've felt it your entire life. That there's something wrong with the world. You don't know what it is, but it's there... like a splinter in you're mind, driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?

Neo : The Matrix?

Morpheus : Do you want to know what it is?

Sat, 03/20/2010 - 12:02 | 270903 Hulk

Morpheus and Neo need to get NETFLIX

Instead of thinking about the Matrix, they can just watch it and put their minds to rest

/sarcasm off

Sat, 03/20/2010 - 12:59 | 270921 Attitude_Check

So you're calling him an idiot for not predicting the completely insane, illegal, foolish, and long-term destructive FED "stupidly loose" monetary policy? That's the only reason that the the market hasn't crashed -- yet. Of course now when it does it will be deeper and more destructive than otherwise.

I'm suprised you are willing to expose your own foolishness so openly on this forum -- or are you paid to?

Fri, 03/19/2010 - 15:53 | 270487 Ripped Chunk

It is early yet. People want things to happen quickly (ie. when they themselves expect it to) but usually they don't. QE has not really ended yet so keep that in mind.

Fri, 03/19/2010 - 16:22 | 270511 perchprism

Godfader, you're an irritating son of a bitch. Why don't you troll somewhere else?

Fri, 03/19/2010 - 21:12 | 270676 Crime of the Century

If this was anywhere but ZH, I would think he was looking for love.

"male cheerleader seeks greater fool. must love pain"

Sat, 03/20/2010 - 03:51 | 270804 Master Bates

George W. Bush was a male cheerleader in high school. Then, he became a cheerleader for the war.

Sat, 03/20/2010 - 08:23 | 270842 Crime of the Century

Then he became a cheerleader for Sec. 8 mortgage payments... yeah, I get your point.

Fri, 03/19/2010 - 17:57 | 270566 Pound Of Flesh

The conditions have not changed so why should his opinion. If it were not for accounting changes for financials from mark to market to mark to fantasy there wouldn't have been a bounce ; but are the problems fixed, nope. I cringed at what Tice had to say all the way up as I was 200% long. That was then this is now. He was right but by the blessings of accounting changes he was wrong for the time being.

Sat, 03/20/2010 - 03:53 | 270805 Master Bates

More of the same old...

It seems like people here make excuses for people every time that they are wrong, as long as the wrong is based on the market "going to go down tomorrow" or "gold going to 2000 next week."

Fri, 03/19/2010 - 19:07 | 270613 Mark Beck

Well how do we work through the injected liquidity? One manifestation of this injection is the excess bank reserves at the FED. So why don't the banks extend long term credit, even to one another?

It can be summed up in one word: TRUST.

We have reached a point where we can no longer gauge risk based on financial statements or price discover on assets. Abuse of Structured Finance, accounting games and the predesposition for fraud on all levels of fianance, private and public, have created the perfect no real growth scenario. Regardless if you subscribe to Keynes or Hayek. Both would have required that trust in a fair market place be a prerequisite, an economic cornerstone, if you will.

But the violation of trust we have today transcends markets, it can be seen in instances at all levels of government, the FED and our political system.

In addition, if you add the irresponsible fiscal and monetary policies to the mix, we get financially speaking, a world of hurt.

----------

So on one level we see a massive transfer of bad debt from the private sector (Banks) to the Public (FED, Treasury, GSEs). Much of this debt should have been written off and not subsidized through debasement of the currency. But, the question the CBO should be looking into is what is the capacity of the "public" to finance massive bad debt? What happens when the poeple can no longer pay? When will you know? What sign posts are there along the way?

Let me repeat this; What happens when the debtor can no longer pay?

How is it that, everyone talks about the importance of education in Government, while at the same time closing schools, laying off teachers, and raising tuition beyond the reach of the average family without resporting to loans?

I would submit that this is one of those sign posts. It is a warning sign.

----------

Perhaps Tice is looking beyond his traditional pricing process and moving more into effects caused by our macro-economic quicksand.

Mark Beck

Sat, 03/20/2010 - 03:07 | 270795 jeff montanye

very well done. particularly the hayek to keynes emphasis on trust in price. that is the chink (the size of the pacific) in the fed's armor. the banks can't lend to anyone outside of too big to fail (and maybe not inside either) because they know the accounting statements are lies but they don't know what's true.

Sat, 03/20/2010 - 12:50 | 270914 milbank

Mark Beck, I appreciate your points but, I would submit we have an even longer way to go. Think of the structure of English society Charles Dickens wrote about and then bring it into the 21st century. In preserving the top of the U.S.'s economic pyramid, the U.S. will deteriorate to that societal level with the caste system of pre-20th century England where it will be impossible to rise beyond the state in which you were born for most citizens and most citizens will not be in a middle class state. In fact, I submit that like pre-20th century England, there will be no middle class to speak of. You're either up there or down there. The government, via the Federal Reserve, broke the compact of our free-market system that made movement by industrious citizens possible when they rescued the TBTF and "the system" via the taxpayer in 2008 at the expense of the free-market compact. Now, there is no turning back and the service on this ever growing "rescue" will enslave the masses and force this societal change we will deteriorate into. Simply put, The American Experiment is over. It isn't happening overnight but, it is happening and there is no turning back at this point.

Fri, 03/19/2010 - 14:50 | 270420 omi

Someone clearly cannot tell the difference between a bull market and a bear market bounce.

Fri, 03/19/2010 - 14:52 | 270422 Dirtt

Helicopter Ben?

More like a thousand helicopters is putting ice on Tice. He may not be getting the S&P right but the rest will be history some day.

Fri, 03/19/2010 - 14:53 | 270424 Ben Graham Redux

The folks at Prudent Bear are first rate. Despite being a bear fund, they've done fairly well for clients. Recently, they had limited exposure to financials right around the time they popped to the upside. Doug Noland is a great weekly read.

Fri, 03/19/2010 - 15:01 | 270435 InsanePonziClown

friend used to work there for years, agree, they have done well, and federated ain't chopped liver, he use to tell me all kinds of stories about tice all the time, he's an olden goldie

Fri, 03/19/2010 - 14:54 | 270426 fox

It obvious this market is overvalued -- doesnt mean it will decline. It been overvalued for 20 years. "The market can stay irrational longer than you can stay solvent." - keynes

Fri, 03/19/2010 - 14:55 | 270429 fuggetaboutit

why does it matter that he said it at 800, 900 and 1000? book value on the S&P is around 450 last i checked and that is probably still inflated with intangible fluff that has no value but still being carried as though it does. in 2007 ppl were bearish from 1400 "all the way" to 1550, did that make it incorrect? fed balance sheet was released ysty and it is $2.31 trillion - that is a new peak, the fed is carrying more crap around now than it was in december 2008 when they were in mad scramble mode. i dont know who this guy tice is, maybe his argument isnt logical , but lets judge the negative case when the fed balance sheet isnt at its all time peak, shall we?

Sat, 03/20/2010 - 03:55 | 270806 Master Bates

Book value isn't 450. Are you on dope again?

Sat, 03/20/2010 - 19:02 | 271042 dnarby

It is if you assume a 5% dividend yield.

http://www.decisionpoint.com/TAC/SWENLIN.html

Fri, 03/19/2010 - 15:03 | 270438 InsanePonziClown

his fund is over 15 years old he has been doing this a long time

Fri, 03/19/2010 - 15:03 | 270439 goldisok

Tice was correct on all major points. You may question his short-term timing, however it is beyond any disputes that his understanding of macroeconomics and major secular trends is impeccable. I respect him and his opinion. I believe everyone should at least pay a close attention to his words if they don’t want to get burned at the end.

Fri, 03/19/2010 - 17:18 | 270545 Takingbets

We must have rogue government agents trolling this site junking any negative market comments they don't like.

Sat, 03/20/2010 - 03:56 | 270807 Master Bates

Or people wearing tin foil hats angry when anybody disagrees with their tin foil predictions...

Fri, 03/19/2010 - 15:06 | 270442 goldisok

Fri, 03/19/2010 - 15:33 | 270465 godfader

Short term timing? Are you kidding me? This guy called for Dow 3000 in 2003, right before one of the biggest rallies in market history. Tice has no timing whatsoever. When was the last time he was bullish on stocks? Never. He just repeats his 50% crash predictions all the time.

Fri, 03/19/2010 - 15:42 | 270473 goldisok

I completely understand your point. However I am convinced that the market would have reached Tice's target if the FED's would not have artificially inflated the bubble again. Tice cannot include in his analysis the market manipulation. His analysis is based on fundamentals and free markets. All manipulations eventually end badly and all bubbles go bust. I really liked a comment once made by an independent financial analyst David Roche. He said that the FED is very naïve if it thinks that it can do anything gradually and achieve a gradual effect. He said that all bubbles burst violently and when FED says that it can gradually deflate a bubble it certainly deludes itself. Roche said that attempting to control the bursting of a financial bubble is as ridiculous and futile as attempting to control our fart once it goes off.

Fri, 03/19/2010 - 16:20 | 270507 bulldung

Metaphor too funny for me, cannot breathe

Fri, 03/19/2010 - 17:05 | 270537 Lionhead

I can testify regarding your last sentence. Absolutely impossible to control! It's just a natural occurrence.... ;)

Sat, 03/20/2010 - 12:55 | 270918 milbank

Even though the odds of this are nil to none, I sure hope when he used his fart analogy it was while being interviewed by Maria Fartaroma on CNBC.

Sat, 03/20/2010 - 19:04 | 271043 dnarby

+10 for bestest phinancial metafhor evar!

Sat, 03/20/2010 - 13:10 | 270922 Attitude_Check

Didn't the DOW rally after the Greenspan "stupid liquidity" stunt, where he even said he was rolling the dice on the US economy?

The only hit against Tice is he isn't bullish enough on FED lunacy, and kleptocracy masquerading as monetary policy.

Fri, 03/19/2010 - 15:17 | 270453 Lionhead

When the mania subsides, the decline will eventually come. Newton’s Third Law of Motion: "Every action has an equal and opposite reaction." The laws of nature haven't been repealed so far in human history. The FED will have their day. Manias always end in devaluation, deleveraging, & liquidation.

Fri, 03/19/2010 - 15:24 | 270459 goldisok

You are correct. Manias always end up very bad. All FED experts like to make smart comments when the mania is raging. But when the bubble goes bust then they publish a semi-smart paper just like Greenspan did yesterday and try to convince everyone that they did not see it coming and even if they saw - there is nothing they could do about it. These "establishment experts" are a pathetic bunch. However Tice was telling about these problems back in 2001. Now who is smarter Greenspan or Tice? I say Tice ...

Fri, 03/19/2010 - 15:44 | 270476 crosey

When bad comes, it will be good.

There are over 2,000 biblical references to money. More than any other specific earthbound issue. There are also many references to the pitfalls of debt and surety.

When considering our repeated mismanagement of credit, perhaps those biblical cats were right.

Fri, 03/19/2010 - 16:08 | 270499 Lord Peter Pipsqueak

David Tyce has missed one salient point in his "the market is going to crash" mantra,and that is Benny has a printing press and if the market drops a couple of hundred points he is damn well gonna use it,planned distribution by helicopters, but B52's to be used in case of extreme emergency.How does he think we have just had a 75% rally?

If they just let the market crash,the debt monkeys and banks would be done for,but by trying to "save" the market and the economy and everything else, means everyones life savings,pensions money and purchasing power is going to be destroyed.Makes the New World Order conspiracists arguments seem almost believable.

If the market does drop more than a couple of hundred points,it will be because the Wall St banks will be reminding Congress who is in charge,and they better had back off with any proposed new legislation or come up with further TARP 2,3,4,5 monies pretty damn quick.

Fri, 03/19/2010 - 22:21 | 270715 leftcoastfool

I think you give the Fed too much credit (no pun intended!). Yes, they can push the market up indefinitely in our current extremely-low volume environment. But currently things are looking a lot like 1987... they've already driven most of the shorts out of equities so we're not seeing the absurdly high short-squeeze driven advances that we had been seeing almost weekly just a few months ago. Now we just have to endure the immoral daily slow melt-up of our low-volume algo-driven "market". We're at the point where, for all practical purposes, there are NO buyers out there except the manipulators. That's the perfect set-up for an actual crash, ala 1987. So, should that occur we'd see the S&P fall around 30% (in the neighborhood of 350 points) in one or two trading days -- FAR too fast for Benny's printing presses to have any dampening effect (short-term). Trading halts would only serve to amplify the panic. That would certainly put an end to the sickeningly monotonous bullshit that we have to endure daily at present, and might actually move the markets towards more "normal" mechanics once the panic wore off...

Sat, 03/20/2010 - 03:59 | 270808 Master Bates

You must have missed the 10%ish correction that ended a month ago. That was more than 200 points.

Sat, 03/20/2010 - 19:07 | 271045 dnarby

Yeah, and that was on relatively minor instititutional selling, indicating there's NO FUCKING SUPPORT in this BS hot air pump monkey market.

You're beginning to get on my nerves.

Sun, 03/21/2010 - 18:00 | 271638 jmc8888

Don't forget we only got out of 1987 with Greenspan's new wonderful toy called, wait for it.....DERIVATIVES!!!!

Yes this was what they used to get us out of the 87 crash.

Except this is now 2010, there is no new thing called derivatives, and derivatives are in the quadrillions.

In other words, when the 1987 type crash happens, there ain't no turning back.

If we want to cut another 25 trillion check we should realize that won't cut it this time, it would have to be bigger and would reap even less benefits than we got from the first fiasco.

Nope, we're finally going to feel the crash associated with this 40 year fiasco called floating rate, outsource, derivative economy. It's over. Instead of fixing the problem the first time in the 60's, we just kept going down the wrong path. We had trilateral commission, Reagan trickle down economic revolution, derivatives, housing bubbles, sub-prime, crap.com @ 1 billion dollars a share, and the bailouts. Each time we tried to save the monetarists from their folly. Each time America just got deeper in the folly.

Next time, it's all over. Bye-bye Inter-alpha banks. The queen can't stay afloat even when what assets her banks lie about and her own bailout dollars are getting 30 percent return? Yeah, she's broke, and thus all the leverage, all the derivatives floating around, and basically all debt will become worthless.

"LaRouche proposes a 0.1% transaction tax on derivatives, and proposes emergency measures to restore the physical economy. "The derivatives bubble, by the very nature of these transactions, is a financial bubble in the tradition of the more primitive, more rudimentary, and far less dangerous bubbles of the 18th Century, such as the John Law bubble in France, and the South Sea island bubble in England in the same period of time. This is the John Law bubble gone mad. The vulnerability to the entire financial system, the chaos and destruction of actual physical processes of production, distribution, employment, and so forth is incalculable in potential, and therefore this thing must be brought under control promptly."

Now I pulled that quote for a reason, because it wasn't from yesterday, it was from MARCH 1993.

How about this one

1987

May 26: Lyndon LaRouche warns that "an October crash would be very probable" unless government policies are changed.

Oct. 19: Stock market suffers largest loss in history, as Dow Industrial Average drops 508 points, or 22.6%

It's not hard to see. We used derivatives to recycle debt back into money which we then used to loan out like freshly minted and real money. Except it wasn't. We only got out of the 1987 crash because we changed debt via derivatives into liquid money. A 30 year mortgage didn't need to be paid off (or its monthly inflows), you could pretend, and loan out the money on those mortgages without them needing to be repaid.

So again, the next crash, we will face two things

1. We already used the derivatives boondoggle, you can't use it again

2. We already used the transference from private to public debt, and we (and the world) can't afford any more.

Not to mention all the real economy that's been shuttered and entire easy money industries that replaced it.

We are in one horrible place. Most of the people that know this, still don't realize how deep it goes. Tice knows a little, and as people have showed, he's been off timing wise.

Imagine being LaRouche and warning about this for OVER 2 DECADES. Yet, he's the crazy one right? Or is the crazy, the one that believes LaRouche is an idiot and would rather do 'god's work' for Blankenfien.

Sun, 03/21/2010 - 13:40 | 271460 fuggetaboutit

Lord whatever and such - this is the silliest line of logic and history is so plain on its silliness. Did the Fed just attain this printing press? Ofcourse not - yet for the last decade equities have returned nothing and are down a lot from their peak and in the case of the nasdaq down a ton from their peak - if the fed can somehow perennially prevent asset prices from going down, then why do they ever go down? why did the fed "allow" home prices to go down 40%? asset prices are where they are right now for two basic and interconnected reasons:

1. the fed balance sheet is at a new all time nominal high (again, think about that - fed balance sheet bigger now vs when the crisis supposedly started)

2. the explicit governmental policies aimed at reducing savings rates has worked to 100% perfection (dont save, buy a car; dont save, buy a house; dont save, buy a washing machine - this is the depth of the "thinking" behind government policy - do more of the same and hope that buys whoever enough time to figure something else out) - savings rate has gone from 3% to 6% back to 3% since the crisis "bottomed"

From here tho, what is possibly next? Fed balance sheet doubles again? Savings rate goes from 3% to 0%? There is not infinite capacity for "printing money" because there are consequences, and that is the lesson asset markets have learned the hard way multilple times over the last decade and yet, totally amazingly, are falling for the exact same trick once again and the sheer fact that ppl think somehow assets only travel in one direction because the Fed or anyone else wants them to is proof positive that this is inning 8 or 9 of this delusion.

Also note barrons cover this weekend guarantees no double dip - so now best i can tell, 100% of economists (plus barrons) are convinced recovery is real and sustainable (0% of whom saw the crisis coming), 100% of wall street strategists say stocks, bonds and commodities ALL go up this year (the same % who said all 3 would end 2008 higher), 100% of technicians say market is looking all clear to go higher, mutual fund cash is all time low and the investment "strategy" underlying all this is "the fed has a printing press".......?

Fri, 03/19/2010 - 16:14 | 270503 igarciao

Someone is getting fired right now. Having the S&P 500 close the week al 1159.90 instead of 1160.00+???? "You got yourself outta here!"

Or was 1159.90 the target??? So that it is a "sale price" to be promoted over the weekend?

Fri, 03/19/2010 - 16:16 | 270506 delacroix

the only reference to jesus acting in anger, was when the money changers, had taken over the temple.

Fri, 03/19/2010 - 16:35 | 270520 merehuman

how do you fight pirates once they have control of the country? I certainly will not trade with them. What would happen if we all quit looking for profit?

I have never wanted more than i earned.

Fri, 03/19/2010 - 18:23 | 270572 deadhead

we are in a secular bear market.

we have a major systemic bank crises that is international in scope. (not that many in history as compared to other crises).

A number of countries have serious sovereign external debt problems (history is loaded with 'em)

the US has a crippling sovereign domestic debt issue (unfunded liabilities primarily)

the US has never had the States as broke as they are from my read of US history.

the US has had several consumer debt crises, none of which come close to comparison to what we are experiencing now.

the US central bank is debasing the currency (history is rife with examples of this, probably the oldest game in the book.)

unemployment speaks for itself and don't buy the lagging indicator until one knows that it has, in fact, hit bottom.

this will play out like the Great Depression, more or less. we are just getting started.

if you disagree with any of the above postulations or aren't sure, i would suggest that you at least review the history on what happens after a major bank crises erupts. here's a hint for you: our last bank crises, the S&L matter in the late 80s/early 90s, is not even close to a "major" bank crises.

Fri, 03/19/2010 - 18:59 | 270610 Rainman

DH....I've just started reading " Lords of Finance " and finished reading "House of Morgan" last year.

The international scope of our present situation is eerily similar to GD I......even the bear market rally we see now orchestrated by the puppeteers.

You're right, this is not a garden variety cyclical recession.

I think sovereign defaults will finally overwhelm the system and the debt purge will then begin in earnest.

Fri, 03/19/2010 - 19:53 | 270638 deadhead

this is not a garden variety cyclical recession.

There is absolutely NO question about this, none whatsoever. those that think it is analogous to the last several recessions are predisposed to a rather short historical timeline.

try "this time is different" by rogoff (he's gotten alot of ink lately on the sovereign debt matter) and rinehart (sp?)... an excellent historical take on bank crises, sovereign debt (nothing about consumer debt). it is very, very dry reading but an astounding collection of historical data to support some of the findings.

what i find interesting and they didn't seem to mention this, is that we currently have a confluence of the major items i discussed in my post above occurring at the same time....i'm not sure this has happened previously when you throw in consumer debt, clearly at an outrageous all time high.

Fri, 03/19/2010 - 21:05 | 270670 Crime of the Century

Oh mannnn - I just received the book from B&N based on your earlier recommendation. Now you tell me it's dry? I like to read before bed, but dry reading is a sure soporific. Guess I'll have to give up my morning ZH with my coffee. Doh!

Fri, 03/19/2010 - 22:12 | 270710 deadhead

it is very dry. one of those books where you gotta re-read some paragraphs (at least i did). painfully dry.

one just has to decide if they are the type that reads the fine print or not. as for me, i was fortunate to have people teach me a very long time ago to always read the fine print and to read the fine print first!

enjoy the book, it's got good stuff in it to think about.

Fri, 03/19/2010 - 22:11 | 270709 BlackSea

"Lords of Finance" is written from a Keynesian perspective. Good book though for all the detail in it. Completely omits the part where Montagu Norman was mis-reporting the flows in/out of the Bank of England (as reported here in ZH a few weeks back: http://www.zerohedge.com/article/exclusive-bank-england-engaged-flagrant-gold-manipulation-interwar-period-new-york-fed-does-).

When you get to the end, the author's conclusion is that fiat money saved the world.

But if you think about it, it's the people that owned hard assets that made it unscathed.

Fri, 03/19/2010 - 19:53 | 270641 Howard_Beale

Excellent points one and all, DH.

The Depression had a great bear market rally. This time is no different except it is much larger in time scale.

The "crash of 1929" took 2 months. 2007-2009 crash took 16 months. The bear market rally in 1929-30 was 5 months. Then the decline began again. We're at a year in this bear rally and we may have a month or at most 2 more (May is an extreme cycle for a top).

Nice charts here:

http://trading-stock-market.blogspot.com/2009/06/stock-market-crash-1929.html

So lets keep things in perspective. Bear market rallies have a function, no matter how they are manufactured or what you believe. They give people a much needed break from the pain. I'm more of a technician than a fundamentalist but just about every good bear out there called for Dow 10,500 last March as a target for retracement and S&P 1160. So what if we go a bit higher...but it's looking a bit tired now.

The Fed will not be able to stop the carnage.

Fri, 03/19/2010 - 20:05 | 270645 deadhead

I could not agree more Howard....the spx is just over a 50% retrace, not abnormal at all. I i've studied those charts quite a bit as well as the underlying pieces of the puzzle (i really rely on history quite a bit because humans have not changed one iota in centuries: same shit, different decade).

take a look at an spx weekly chart with a focus on july to oct 2007 when the Fed was "containing the crises"......it's almost eerie..... july hit an all time high, corrected down just like we have witnessed since february, then hit a new high in Oct, and the downdraft started (looks to me like an almost perfect elliot wave 5 down). when i look at the bear market rally since march 09, all i can keep coming up with is a zig zag corrective move.

agree that the Fed can't stop or control the carnage. one thing i would add is that the US gov't has pretty much run out of ammo. i would likely never say the same about the fed cuz those pinheads might just keep printing but there are certainly reactions to those actions....gonna be interesting.

Fri, 03/19/2010 - 21:00 | 270656 Howard_Beale

Spot on in the Elliott Wave analysis, DH. Another really interesting guy is Peter Eliades in terms of cycles. I put up his stuff with attribution but have pulled it since I do not want to violate any copyright laws. Gmail.

Fri, 03/19/2010 - 22:14 | 270712 deadhead

you bet!

Sat, 03/20/2010 - 04:01 | 270809 Master Bates

I believe that the S&P target is 1220, or the 61.8 fib.

I've been saying this on my blog for some time.

Sat, 03/20/2010 - 19:11 | 271046 dnarby

...Then what?

Fri, 03/19/2010 - 23:18 | 270730 yabs

god fader
you are abvioulsy in the sane camp then are you?
the ones who believe that bailouts and printing money is all that is needed rather than clearing debts the correct way?

Fri, 03/19/2010 - 23:25 | 270735 yabs

I believe that they can only manipulate in a low volume environment. Once real ;panic selliong starts they cannot control it
the only thing is if they are the only main buyers who will sell to get this volume up?
thats the problem I have woth the crash scenario
we all know this all smoke and mirrors
every major bank is insolvent

Sat, 03/20/2010 - 03:01 | 270793 Grand Supercycle

EURO has now resumed it's downtrend on the daily chart. Weekly chart remains bearish.

Opposite for USD index of course.

Equity markets can't ignore this for long.

Weekly DOW / SP500 charts have been giving bearish warnings for months now.

http://www.zerohedge.com/forum/latest-market-outlook-0

Sat, 03/20/2010 - 04:03 | 270810 Master Bates

Yada yada, market unsustainable, going to crash anyday now, gold bitches, etc, etc.

Dollar target = 89.

Sat, 03/20/2010 - 09:02 | 270847 Crime of the Century

Dollar target = 89

At this point they can defend the dollar system, or the dollar itself, but not both. For in defending the dollar system, they have to resume/continue printing, because sovereigns, states, and locals are dying on the vine. What is the fair value of a bankrupt system? The saving of the system will be dollar bearish in no uncertain terms. You took the blue pill.

Sat, 03/20/2010 - 13:18 | 270927 Attitude_Check

Is there anyway to automatically filter out moronic postings here in ZH-land?

Sat, 03/20/2010 - 04:38 | 270815 rawsienna

The Fed has learned nothing from its past mistakes. I guess you would have to recognize a past mistake before you can learn from it but that is another story. The initial response -ZIRP, QE, etc - was fine but once the system is stabilized, they need to be less predictable. The problem is not low rates but rather, the extended period language and their obsession with transparency. It kills volatility (good during the panic stage) and encourages a unhealthy search for yield at any price (bad now). The resulting misallocation of capital sows the seeds for the next bubble/crash/deflation. Let the rates markets price in rate hikes and let people who speculate incorrectly lose money if they are wrong. Same is true when they are raising rates (did we not learn that earlier in the decade - think "connundrum") .

Sat, 03/20/2010 - 09:12 | 270851 Crime of the Century

The problem is not low rates but rather, the extended period language and their obsession with transparency

The "obsession with transparency" line was good for a coffee/nose moment. Our Fed? As far as the extended period statements, Hoenig agrees with you on that point, as he demonstrated by voting against the language. However, when your banking system is MtM insolvent, why bother trying to be coy. The banks need to hear the message loud and clear... "Make as much carry trade money as you can as fast as you can. We will keep the music playing".

Sat, 03/20/2010 - 10:38 | 270870 rawsienna

Yes.. It is a wealth transfer from savers to banks and senior bank employees. THat is bad enough but we are now at the stage where people can really get hurt as they buy risky assets in search for return. When REITs trade at multiples of book and dividend yields in the low 3% range you know there is a problem -

Sat, 03/20/2010 - 08:57 | 270846 HEHEHE

Tice is absolutely correct. The current market doesn't reflect economic reality. It reflects government created liquidity, government spending, government assumption of private debts and government encouraged accounting gimmicks hiding real losses. Until the system is emptied of the cr*p assets the downside risk is always greater and the higher the market climbs the fall will be even more dramatic. People who don't understand this basic truth will end up losing their shirts; unless they work for one of the gubmint chosen market participants. Those people don't have anything to worry about, they have your tax dollars to cushion their fall.

A government spending spree does not equal and economic recovery. It has never worked in the past. It will not work now. It never will work in the future. Look at history. Oh I forgot it's different this time, just like housing never declines.

Sat, 03/20/2010 - 10:30 | 270868 chindit13

There are times to bunt, times to hit to the opposite field, and times to just make contact to drive in a run.

There are also times to swing for the fence. We might be about there.

A no volume rally, near record low fund cash levels, overly optimistic price levels, complacency, algo-driven trading, a winding down of the gov programs that have supported the rally, and a total failure to address any of the problems that created the collapse in the first place, suggest that one cannot rule out a 1987-style rout. A greater than 23% one day decline is a possibility one can easily envision, given all of the afrementioned factors. Using the "history rhymes" meme, all these factors combine to match what Portfolio Insurance was in '87, which was a disaster waiting to happen.

Two weeks before the 1987 crash, I recall someone entering the option pit offering a thousand far out of the money puts at a cost of $25 per. They were so far out of the money that no risk takers lifted them. I remember having an odd feeling that it might be the best opportunity I had ever come across, but I decided not to take any of them.

Two weeks later the same options traded at a value of $25000 per.

With the VIX hovering near 17, puts today are cheap. It doesn't cost much to take a flyer. In fact, it might be well worth doing it every month for the next several. Maybe circuit breakers and a desperate Fed could cushion a fall and get in the way of a two week, 100,000% return, but the risk-reward is not too bad.

(Usual Disclaimer)

Sat, 03/20/2010 - 11:23 | 270890 leftcoastfool

I'm with you, brother...

Sat, 03/20/2010 - 13:20 | 270928 rubearish10

Ditto brother! We're gonna wake up one morning to "no bids" and we gap down hard. Then PPT and other dip buyers come on and it gets hammered over and over until they scare them away similar to what's happened with "shorts" during this entire run-up. The major distinction is the fact that a major downturn is justified for many of those reasons you mention. Tice nails it too! Load up on those cheapies because "some" of them might very well make up for all losses and net you some worth while and beneficial value.

Sat, 03/20/2010 - 22:21 | 271105 Whats that smell

If the gov't quit meddling Monday, his

prognostication

would be true Wednesday?

Wed, 04/14/2010 - 08:13 | 299718 mark456

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Federated's David Tice Is Not A Fan Of Bernanke-Manufactured, Free Money Driven, Bear Market Bounces, Sees "Huge" Potential For Decline

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