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Guest post submitted by John Bougearel of Structural Logic
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Going parabolic again. This definitely looks sustainable in a worsening economy.
I think the market would take a deep dive when Zero Hedge says something very bullish.
engage people on the reality of the bubble-licious oligarchy-controlled economy while the stock market keeps
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A&E called for you, 'ned'. seems they're developing a reality show focused on those who derive erotic pleasure from obsessive spaaming. you're a lock for seasons 1 through 17.
and Vise Versa, surely
Quantitative easing will bury you're desire to apply fundamental measures which held sway in days of yore.
We've got oxidizer feeding the turbojet. We've yet to see the twinkle of stars.
gabbledegook?
Very interesting and enlightening piece. I found the 18 mos item educational. Thanks TD.
LoL!!! Ya i'm gonna short this thing because of the golden balls formation. Face it.. there is nothing to bring this market lower. No one darers sell or short. How many times have shorts been decimated. Every single up move is preceeded by a big downspike. In all reality we prob see 1120.... 50% fib level. I will (think) about shorting up there. Good luck shorting here!
Golden balls formation...Face it.....Nice, I guess you and Bawney Fwank have some things in common, huh...haha...although I am going to have to agree with you...GS and boys are going to gun this market up until it is impossible to do so...what is going to change to make it impossible....hell if I know...maybe some revolutionary action from those getting fleeced...yep that will probably do it.
Looks more like a golden labia formation to me but what do I know.
Silver is indeed king. Gold is just the foreign minister.
"Looks more like a golden labia formation to me but what do I know."
I've been the labia on more times than I'd like to remember during this run.
pessimistic bears....oxymoron?
Jumbo shrimp is an oxymoron. Optimistic bears is an oxymoron. I'm an optimistic bear....but I believe this rally will end...and you gotta ride the loco-mo-mo train just a little bit longer.
Anyone who believes that prop desks only make money going long and that the market will be endlessly saved by the Fed needs to reassess their inner bear:
And you may ask yourself
What is that beautiful house?
And you may ask yourself
Where does that highway go?
And you may ask yourself
Am I right? ...am I wrong?
And you may tell yourself
My god!...what have I done?
Letting the days go by/let the water hold me down
Letting the days go by/water flowing underground
Into the blue again/after the moneys gone
Once in a lifetime/water flowing underground
Major cycle top in early Sep. If I'm wrong, I'm wrong, but I have studied cycles for 10 years and been trading since 1987. Cycles are my thing. Sep 4th or 8th should start either the next wave down or at least a 2 month trouncing.
That's a pretty garbled report. Sounds kinda like bullshit science. Looks like the bears are reaching a bit... that can't be a good sign... and I'm a bear.
Are you saying that you can't predict the future based on 40 year old charts?
I'm trying to figure out who would be short this market.
Technicians: NO
Fundamental Analysts: Probably not, market remains low relative to almost any comparison period over the past 15 years.
Contrarians. God no. Everything I can find to read on the web suggests that the average guy on the street hates this market. Just read the comments to any financial news site.
Short term traders: YUP. These guys are getting their head handed to them every day, and driving the market ever higher as they cover.
Does it make sense to look for a point at which to short? Perhaps, but I haven't a clue where this point is, and neither does anyone else (although I think DOW 10,000) might be a good place to start looking.
Short at the appearence of a significant geopolitical 'external event'.
In other words, go short when the black swan gets sucked into the engine. You will know its time because the media will reach saturation coverage and the plane will start shaking.
"Fundamental Analysts: Probably not, market remains low relative to almost any comparison period over the past 15 years."
Care to elaborate? The only fundamentals I care about are earnings and cash flow, and current valuations are at RECORD HIGHS compared to earnings and cash flow, unless of course you ignore everything that suggests that the economy has contracted by more than 20% (Baltic dry, factory utilization, lending measures, etc) .
Fundamentals won't tell me when to short. They will tell me what is likely to occur at some point because it ALWAYS happens the same way. The market can ignore reality on the ground, but someday soon there will be no greater fool and then these things we call equities will have to be valued the only way they can, that is, by cash flow and earnings.
That day will probably come over a weekend or at least at night so that the bagholders have no way of exiting the market. I'm betting a Monday. I'm also betting soon, although a market this unmoored from reality can certainly become more unmoored, for what it's worth.
Look at the Chinese market - it collapses every time they threaten to turn off the cheap money spigot.
You short when Bernanke quits printing money, if ever. Not before. As long as he is printing 25B a week to buy MBS, you would have to be a masochist to short this market.
My guess is he keeps buying MBS for the next 2 years, well into 2011. He has no choice, there is not much market for Fannie and Freddie paper beyond the Fed. He needs to own practically that entire market. He has about $2T of purchases to go before he gets a controlling stake in it (about $5T total market, he has 750B now).
We could easily see S&P at 1500 by early next year. And oil at $200.
agreed on the last sentence: and 200$ oil is the scariest part of it. meanwhile, the rest of the world could care less because they don't use dollars. we are fucked...
"sp 1500 by early next year and oil at $200."
never..oil and oil alone will suck out between an additional (from current prices) half to three quarters of trillion dollars in the us economy at that price...that does even include the cost of other commodities...what do you think pushed the clunker over the cliff the first time around?.....bernake could always give each man woman and child $10000 to make up for it...oil could be at $200 within 12-18 months but the sp and americans will suffer
I expect Bernanke to monetize roughly 2.5T - 3T of agency MBS before he is done. So far he has only monetized 750B. He has a long way to go. That is a lot of new money that will find its way to the financial markets.
This is what you need to understand - it doesn't matter what $200 oil will do to the economy. Equities are no more trading on fundamentals today then they were in 1999 when Greenspan created all that new Y2K cash.
So fucking what if the underlying economy takes a beating from $200 oil? It is getting the shit kicked out of it today, and equities are trading at 140PE. So they trade at 1400PE, what is the difference? If there is enough money sloshing around in the financial markets, it needs to find a home.
S&P 1500 easily by this time next year, by the end of next year, 2000 is possible. $3t is a lot of new money that needs a parking place.
easily?!! Hahahaha keep believing. Equities will not be
the parking place. We will let the market
Speak for itself. And 2000 sp?? Absurd
easily?!! Hahahaha keep believing. Equities will not be
the parking place. We will let the market
Speak for itself. And 2000 sp?? Absurd
Ghostface,
Of course you are dead on about the big picture. The stock market is highly sensitive to accomodative policies. And, it will proceed higher on balance while the fiscal and monetary stimulus works its way into the stock market. After all, ,money makes the mare go. All bull mkts require lots of liquidity. take that away and the cyclical bull in equities will die and the bear market will resume in earnest.
However, markets never display linear behavior as they move up and down. They dance their way from point A to point B. Rather, their behavior is nuanced. They dance to the music of economic announcements and soundbites that either inspires or depresses them. Along the way, punters are invited to join the dance or sit on the sidelines. There are times when it is advantageous to take a break and just sit on the sidelines until you feel the earth move under your feet inspiring you to get up and risk another dance with Mr. Market.
If you never take a break and sit a dance or two out, you have to dance with Mr. Market through all his moods, good and bad. And that is not always fun
Oil is a negative feedback loop. As the price increases, useage drops which drops prices. The interesting thing about this most recent run up in oil is that nobody has said, "It will hurt the budding growth!" I recall hearing this quite frequently several months ago. Now that we're at year's highs, not a peep.
Wrong on fundamental analysts. The fundamentals of this market are horrible. What is the PE on a trailing and forward basis? 1000?
Look at what is happening in China - the market is like a casino, totally dependent on cheap money. The same thing happening here, on a smaller scale.
And Bernanke has promised to print another $500B in the next four months. $125B a month hitting the financial markets.
Only a fucking idiot would be short in the face of that.
This doesn't stop until the dollar collapses. And by collapse I mean relative to commodities, like $200 oil, not relative to other bullshit fiat currencies.
Plus 1) we have the bonus fact that any worldwide weakness gives us a replay of the 'flight to safety' play that strengthens the USD.
2) While the US economy has any life in it at all, the USD and treasuries are being supported pretty strongly by domestic savers...
lankfein ever read reports, especially by Morgensen, about insider deals between him and Paulson becoming more
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"Does it make sense to look for a point at which to short? Perhaps, but I haven't a clue where this point is, and neither does anyone else (although I think DOW 10,000) might be a good place to start looking."
You think 10,000 I think closer to 11,000
I think you should do more research because you have no idea what you're talking about.
I agree with TaroASSo,
the time to short this market is when ZH begins to post bullish stories.
Picking a top?
Certainly a fools game.
3 FDIC failures so far...not a bad start.....
What a bunch of crap. Here are all the numbers you need to know:
The Fed has created about $1T since January buying MBS, Agency Debt, and Treasuries. Most of that buying has occured since March.
In the next four months, they have already told you they will create another $500B buying MBS, agency debt, and the remainder of their Treasury target.
That is another $125B a month of new money created. All that money has to go somewhere.
What the fuck don't you people understand?
Buy oil, it is not too late.
Monday is going to be a bad day...
The closer to September the more risk the bull will incur.
Agree - 300 at least next week
Jeff Cooper:
From the January high to the June high is 23 weeks.
From the March low to the August peak(so far), 23 weeks.
Run up from crash low in 1929 to the top of the mother of all relief rallies? 23 weeks.
From the corrective low in the third week of May in 1987 it was 23 weeks until the third week of October 1987.
23... I saw that movie
It's the Daniel Code. Walk backwards in a circle 23 times while whistling Dixie and adding 23 weeks to Daniel's birthday. Any Daniel will do.
Anon,
Interesting cycle stuff. I like it. Too bad, Cooper has difficulty counting. It was 21-22 weeks from the jan high to the June high. And its 24 weeks from the March low to this weeks highs. But we can forgive Cooper for being unable to count. But can it account for the bullish soundbites that will be coming in weeks 26-28.
My point is this: Cycles are irrelevant unless they are inline with the context of the market. A market will never peak or trough until it is finished discounting whatever is cyclically driving the market higher or lower. The funny thing about folks who study time cycles, they never understand a hoot about the cyclical drivers of market behavior. It's almost annoying, and even more so when they can't even count correctly.
good point
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Monday is the start of week 24....
So everyone excited?
Long live Jeff Cooper
Btw, Bernanke is a dick
Sorry for the Anon Post - on a different computer and don't remember my password.
My 2 cents on when to go short.
Vol is so high, it almost doesn't matter. You just have to take profits when offered, and defined stops otherwise.
Take today, for example. A very good case for op-ex melt up could be made (whether you wear a tin foil hat or not).
With the ^NDX hitting hard resistance at 1640, and the SPX at a new high, and oil at a (recent) high, I just like the odds of a sell-off on Monday. Or even a key reversal day.
I also mitigate risk by shorting Ultra ETFs (in small positions). These things will go to zero pretty fast with the VIX over 20, even if the market stays flat.
Remeber, it's still a casino, so don't bet it all at once.
AKA Clark
23 weeks.....oh yeah, try to make logical rules to explain something that is essentially random. Have you ever heard that one about all those coincidences between Lincoln and Kennedy? I mean, they COULD be related, but I would rather plunk all my money down in a Texas Hold 'Em tournament where at least there is some skill involved then make investments based on that kind of analysis...
Actually the more commonly used long-term moving average is the 20-month, which translates to the 80-week moving average, which for the $SPX is around 1038 and which is where in this area prices will come to a halt.
Now you have this moving average which will be formidable resistance and several faster moving averages running up behind this advance, and what you have then is a congestion of moving averages together.
And any seasoned trader/technician knows that when you get a congestion of several significant moving averages in one price area, prices will break from what has become a consolidation (and look for a pattern if prices don't immediately reverse), and it is from such an area where you can most likely expect to see an explosive move - and the best chance for a sharp drop, since weekly charts are signaling quite overbought AND some weakening momentum in some sectors.
Also watch the $NYHL - it produced a strong peak on 1 August but has not (since) gotten near this level despite the $SPX hitting new highs.
BTW Jeff Cooper is overpriced and overrated, unless you like scalping with 10-minute charts.
bbt
Why is a commonly used average preferable? Let the sheeple/lemmings be. It is desirable that they all be looking at the same thing and on the same page. Fwiw, I like using moving averages in the equity markets that align with quarterly and annual earnings reports. It fits with the cycle of the stock market. Hence 18 months is really 6 quarters.
Hi John,
I see your FA rationale for the 18-months, but I use EMA, and if you compare an 18-month SMA (which is, I'm assuming, what you use) to a 20-month EMA (what I use), you will see that at the moment they are around the same price - 1053/1054.
Take the $SPX way back on a monthly and apply both; you will see that the EMA will signal turns more quickly even though it is 2 months longer.
So when I said 'commonly-used', it is based on conclusions from constant observation and testing as well as other TA dynamics regarding commonly used MA parameters, so I meant no disrespect.
Why are peopel stil insistant on shorting is beyond me. they are only helping propelling the market higher,due to repeated short squeeze. This is not going to drop anytime soon,thanx to your tax dollars. Does anyone here know how much in reality the FED has given the banks(formerly IBs)to prop up the market?and what about what TD mentions as to state street not lending shares to short?for any of the people who are outside the circle,shorting is a lost battle. And it is all according to a plan. and as the FED said back in DEC(we will do what it takes to stabilize the market),every thing is going just as planned.
Call me AnonymousZero. I'm posting late but I hope for ideas.
From the above posts and observations by others, it appears that some believe the stock market operates by traditional rules of price discovery - that it is still a free market. Yet others think the massive loans, or giveaways, to the credit system by Bernanke & Co. have greatly modified the way the market works, making it more of a no-brainer "up-machine." So that stupid makes money, smart doesn't. That is, despite ominous fundamentals, bulls thrive, bears dive. Perhaps, as per ghostfaceinvestah, this rig is a new normal? Or at least a combination of free market and rigged backstopping? If we assume for a moment that this is so, then institutional investors and traders seem to be driving prices up due to massive gov't credit infusions to their companies.
Is this perception faulty? If so, why?
Free markets for free men is a double oxymoron. Neither exist. This is not a new normal. The Fed was created in 1913 precisely to create mkt stability, end bank runs, stop stock market panics etc. And see how well the Fed has been doing its job since inception. They always lose control. Case in point, I cite the Great Depression of the 30's, stagflation of the 70's and a revisitation of the Great Depression in the new millenium.
It is really a matter of discerning when and where the Fed and our policymakers will lose control again. For the time being they have arrested the misbehavior of the market that they helped bring about themselves, and will again.
well folks, today was interesting considering what I wrote yesterday. You can't see it, but the S&P was up against long term trend line resistance from the market peak following down until now and it had never broken this resistance line. so if you were going to short the market yesterday was the perfect entry time, and looking at the signals the bond market was giving the market was due for a nice fall. But, with all the enhanced liquidity provided by Ben and his buying back treasuries, and buying banks toxic assets, and unlimited funds at the discount window he orchestrated a classic short squeeze by speaking to the public about how great things are. Of course he had a bit of help with his friends at Goldman. While things are getting better he keeps extending all of these crazy programs for a few more months. can somebody explain this double talk? Yes folks he's keeping all the things that help wall street, hedge funds heads, private equity, etc and of
course hurting your savings and putting the feds a balance sheet at risk. Of course the markets love him. wouldn't you love a guy who is willing to destroy his own country to ensure you get your bonus!!!!
FYI-
Goldman Sachs gave Obama 4x McCain in 2008. About 1 mill. Goldman was the 2nd highest contributor to Obama. 'Nuff
--- On Thu, 8/20/09, wrote:
> > Date: Thursday, August 20, 2009, 5:23 PM
> Well folks, big ben is at it again.
> he sold treasuries last week and is now buying them back
> driving down yeilds and ensuring banks make a profit at your
> tax payer expense. these are being put into the market and
> the dollar is down. when playing with the market this is
> what you have to keep in mind. as I say future inflation.
> under normal circumstances these would not happen at all.
> they are totally oppostite to the usual patterns. yield go
> down with risk aversion, but the markets are going up and
> dollar down. It can only be fed manipulation once more. yes ben
> continues to be your friend (not). If there aren't
> manipulations the treasurues signal a big drop in the
> market. the level of interst rates on the 20 years is below
> when the market was at 880. You figure things out because I
> can't.
>
from the ft today:
foreclosure crisis grips US as jobless rate climbs more than 1/8 of us mortgage borrowers were behind on payments or facing forclosure. the highest since records began in 1972.
Notice how his doesn't make the news. that is why you have to stop looking at the news for market direction. the market moves, and the news that arrives is is determined by someone to justify the move.
These computations are known to the the traders in the big firms. They KNOW how people react to such levels. I for one will not be surprised if they back off momentarily at these kind of levels, let some weakness be created and once again spring a bear trap. Such levels have to be viewed in the context of the broad macro environment. The ONE truth of today's markets is there is money sloshing around in the system. The policy makers all over the world are gunning for a quick fix to deep systemic problems whose real resolution will only occur over an extended period of time. The quick fix is the wealth effect which acts as a narcotic. In such times unless and until one starts seeing a some sort of evidence to suggest a change in the stance of large players (who act on behalf of the powers to be) it is best to follow the trend rather than try to anticipate changes in trend.
ghostface has it right.....all this arithmetic/chartshit, etc means nothing...this country is presently under the "perfect storm" control of a gaggle of ignorant(pols)/inexperienced(BB)/unscrupulous(IBs) people who together are going to drive it off a very steep cliff at a very high rate of speed....there is no one to stop it...best to step aside, hunker down and save your powder best way you can....come back when it is time to pick up the shattered pieces...sad to say, hate that it's that way, but that's the way it is.....