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The Final Ascent For Now
Submitted by Nic Lenoir of ICAP
Picking up where we left off last night, we have been consolidating before the next, and this time, at least in the near term, last push higher in US equities. A break above 1,106.75 should take us to 1,115/1,1120. Meanwhile we have established a short-term support at 1,101 which can be observed as a stop for fast money longs. 1,095.50 remains the support which if broken confirms we will retest 1,082 before 1,033/1,012. This last support zone is the make or break. If we go through then we are on our way 943 and 875. I remain bearish in the medium term as I am still not convinced that we can print our way out of the debt bubble burst and use hyperinflation instead of deflation to solve our problems.
Good luck trading,
Nic
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The best approach here if at all possible is...to make sure the system is resilient in case an asset-price bubble bursts.' Large price misalignments are 'not obvious to me.' -B.S. Bernanke, the Oracle of Eccles 'I’m scared and leaders should look out.' - Donald Tsang, chief executive of Hong KongMarket is 'not massively overvalued.' - Janet Yellen, High Priestess
The American rate stance and falling dollar has led to 'massive' speculation. - Liu Mingkang, chairman of the China Banking Regulatory Commission
It's wise to beware of 'false positives' when assessing potential asset bubbles. - Donald Kohn, High Priest
'It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose.” -Lou Jiwei, the chairman of the CIC, China’s sovereign wealth fund
'How long can this go on?' - Lee Dorsey
'Keep on with the force don't stop.Don't stop 'til you get enough.' -Michael Jackson
'The truths you hold to be most dear are lies told to you by liars.' -Anonymous Monetarist
'Dude.' -Jeff Lebowski
'For 'tis the sport to have the enginer. Hoist with his own petar, an't shall go hard.' - William Shakespeare
'Frak the frakkin frakkers.' -Kara Thrace
Well DONE sir!
Y'know ifin ever Bernanke has to fall on the sword or is given the boot we're getting Yellen, I'd bet a wheelbarrow of fiatcos on it.
My favorite piece on Yellen come from the venerable 'It's a zip-a-dee-doo-dah recovery' Mr. Grant...
By Jim GrantGrant's Interest Rate Observer
December 2, 2005
Former Fed governor Laurence H. Meyer, in a 2003 talk at the Federal Reserve Bank of St. Louis, described a telltale exchange on the subject of how to define[price/financial] stability. The scene was Meyer's first FOMC meeting, in July 1996, and governor Janet Yellen was making the case for inflation targeting; she said she would aim for 2%. Greenspan replied that the Federal Reserve had a mandate to foster stable prices, not rising ones. To which Yellen rejoined that the Fed also had a mandate to promote full employment. To hear her tell it, a small positive rate of currency depreciation is a necessary lubricant for economic growth (not so, according to a survey of 133 economists over 50 years, produced in 2002 by Stanley Fischer et al.)
"Janet then seized the initiative", Meyer related,"asking the chairman how he would define price stability. Greenspan tried to get away with his vague definition; 'Price stability is the state in which expected changes in the general price level do not effectively alter business or household decisions.' But Yellen pressed him and asked him if he could put a number on that. Remarkably, the chairman agreed, and said he preferred zero inflation, correctly measured. Janet asked him if he could settle for 2% incorrectly measured."
Meyer finished his story;
During a go-around on the topic, only a few Committee members preferred a target of zero, and the consensus was very strong for a 2% target. The chairman ended up summarizing the discussions 'an agreement for 2%' but he cautioned members not to reveal that such a discussion took place.
This is some gooooooood stuff AM.
"MARK IT ZERO, DUDE"
Get rich or try dying
To QE, or not to QE: that is the question:
Whether 'tis nobler in the markets to suffer
The slings and arrows of outrageous fortune,
Or to halt QE against a sea of troubles,
And by opposing end the rally?
To short: to buy;
No more; and by buy to say we end
The heart-burn of the thousand little trades
That this office is heir to, 'tis a consummation
Devoutly to be wish'd.
Bravo
I have a potporri of working theories about the market, none of which I'm terribly beholden to. Since March I've been of the mind that once gold and the S&P hit 1100 then we would reverse into the deflationary down 1% every day for years mode. It would seem that that thesis has been debunked now that we're sitting over 1100 though I'm loathe to toss out a framework that has served me so well since ze bottom.
The other working thesis is that we'll take the GS-BS express up to 1200-1250 but the absolute speculative orgy and fundamental disconnects that would take us there set us up perfectly for an '87 style market crash. Keep in mind that 25% off of 1250 takes us only back to 940. My historical basis for that thesis ain't the 87 crash actually, its Argentina's experience with booms and busts.
After Argentina's '98 market crash they tried to devalue their way to prosperity and got a pretty asymptotic rise out of that manuever. However it did set them up for another mini-crash as their peso bounced around.
No real meat here I know, but if anything it helps focus me own mind to put a couple of thoughts out there when these macro-themed posts come up.
Seems that the endgame is a choice between to two extemal points. Risking in precious metals, and derisking in short duration treasuries.
These existential situations the powers that be set up for mere mortals is like waiting for Godot.
"Risking in precious metals" is an oxymoron. Waiting for a dollar rally is akin to waiting for Godot, in fact.
A nice new summary of Gold Price Suppression
http://www.fofoa.blogspot.com/
Correction: looking at me bloomie charts again a couple of things about argentina
1) the pop and drop in question was 99 not 98
2) the peso was pegged to the dollar till 2002
So I must go back and re-find what I read about that period in Argentina's markets that reminded me of today. Again, thats (largely) why I write stuff on these forums. Forces meself to check facts and re-visit my previsous assumptions. :-P
Has you going 'round in circles, methinks.
But Nic we need an event to precipitate a meaningful decline and all bases are covered.
Interest rate hikes need to be rumored or a significant run up in USD for a small (needed) correction to segfault.
When's that going to happen?
As soon as I close my sell shorts.
My personal experience with hyperinflation is that it destroys lives and solves nothing. I have a morbid fear of it (remembering me and my parents live through one and all our wealth evaporate, aside from real estate) and maybe naively I am buying commodities wherever I can pick them. Good luck to you. This recent macro dynamic is no joke and I am very concerned about my family. Geep up the great forum and dicussion.
All this predicting of tops and bottoms is tiresome. There's a top and a bottom somewhere in every single day. Just trade. If its a major top or bottom, you will have a bigger run.
You need to break the habit of reading things you find tiresome.
To all the ZH noobs:
Just do the opposite of whatever Nic "dollar rally" Lenoir over here says and you'll be fine.
Thanks Dad but I learned a long time ago that guys who feel a need to give advice to message boards "for our own good" have deep psychological imbalances. Guys who have ties to fictional Wall Street studs, well, I'm not even gonna go there. No offense, and thanks for caring, but seriously, hoss......
Last night he said "Don't sodomize GG with a baseball bat".
Sounds like you're lonely.
Wow. It's kind of like watching an inverse death spiral. SI
Even though I barely trade manually or with any kind of directional bias , I still enjoy the daily recap, in a momo world its nice to have something you can count on
Golden ratio retrace of 10/6( 1.67 rounded) * March 9 09 bottom of 666.79 = 1113.54 ( This was hit yesterday)
This is the key that is being technically used as the "blue horse shoe" tipping point that ended the rally.
Hyperinflation does not set in until desperation sets in. Desperation sets in not with a rising market due to a falling dollar but with a completely decimated market that a 80% drop from here and a continued inflation of private sector job losses.
The unveiling of the Pyramid/Ponzi zero sum game that our modern "economic" reality is built upon is a gradual process.
The Debt is slowly being monetized but it has not been repudiated yet. Once the debt is repudiated a choice must be made of either printing non usury based fiat money to pay back the debt to the those that created something in exchange for it or complete repudiation which creates chaos since the Chinese(and the rest of the people who "worked" for the debt) are not going to be happy holding a bag of worthless dollars.
The usurious thin air/credit creators are not going to be happy when their power is removed either but their problem is that they financed a War machine in the process of the accumulation of their ultimately worthless thin air printed empire has no clothes machination.
Their threats against sovereign states are ultimately hollow since some of the sovereign states under their bondage have people working on some special technologies that lead all the way to the 27 security clearances above that of the POTUS.
The self professed Masters of the Universe have not mastered the basic understanding of you make it, you break it, you own it.
They thought that they were the Puppet masters when in reality they are merely the master puppets and the true puppeteer does not have nor need a mountain of thin air created and usury extorted units.
These words have a high probability of falling on deaf ears to all Golden Calf/Bull Market worshiping 4D units.
fUny1.blogspot.com
looks like the sharks are just circling the dollar today, waiting till it falls... as usual so they can gobble up any indices shorts that dare enter their feeding ground
I used to pay alot of attention to Bill Fleckenstein. He's a very smart guy. I lost 700K betting against the market. After app. five yeras Bill was right! The problem is that I was dead.
Tyler is bright, too. Be careful where you go with the advice of premature bears.
Yes, I know, I was stupid.
Predominant new emotion. I don't give a shit. Everything
trades by appointment. Surreal and all fiction.
I'm sure this guy means well, but I looked and don't see him on the Forbes 400. It's my understanding that great traders don't pick tops, at least not by going all in - Not Bernard Baruch, not Jesse Livermore, in fact, not anyone legendary enough to have a book written about him, at least not that I'm aware of. .
Elliotwave is a great theory, it just can't be efficiently put into algorithmic form and doesn't backtest well at all, and only pretends to work with revisionist "alternative counts". Whenever I see a 5 wave count, I discount the author.
We will get a top, and somebody besides me will pick it. God Bless them. Staying with a trade is much harder and much more profitable than having the "holy grail". As long as picking a top is a crowded trade(as evidenced by endless short coverign rallies), I think I'll stay long, thank you.
Methinks Nic keeps raising his upward and downward targets every day. Pretty soon he'll tell us when the S&P breaks 2,000, it will retrace all the way back to 1,900. As for him "not convinced that we can print our way out of the debt bubble," Uncle Ben just put in an order for 1 zillion metric tons of paper and 2 gazillion barrels of ink.
Looking at the $SPX:$GOLD ratio, as a trader I might actually buy it now. It has bounced off support of .95 and the move down from 1.1 has looked corrective. Hard call but the maniacal sell gold, buy spy play might be good here.
Theoretically, we may be reaching a global peak in equity growth by 2020, barring cold fusion and space travel/colonization.
As technology continues to strip out productive employment and monetize resources on a capex basis, population growth can become the damnation of globalization. Expect plague to deal with such things (as cold and hard as it is).
Africa, the lost continent, may finally become the agro-central hemispheric portion of global produce, leaving subsidies in the dust and farmers across America looking to build hemp farms to make up the difference in output units to compete with China. Mars is starting to look a lot like Christmas.
Hyperinflation is coming and so are the ten foot elves.
http://open.salon.com/blog/dean_petkanas/2009/03/21/supercalifragilistic_hyperinflationary_doses