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5 Things To Ponder: "Buy" or "Run"
Submitted by Lance Roberts of STA Wealth Management,
This past week investors took a blow from a sharp selloff in the financial markets. I have spilled quite a bit of ink in recent months discussing the probabilities of such as corrective event as the Federal Reserve’s current liquidity operation came to a conclusion this month.
Now that the correction has occurred, at least to some degree, the question that must be answered is simply: “Is it over?”
That is the basis of this weekend’s reading list which is a compilation of reads that debate this point. The bulls remain wildly bullish, believing that this is simply a “dip” in the ongoing “bull market.” The more pessimistic crowd sees the opposite.
As I have stated previously, it is inherently important to consider both arguments to reduce the cognitive biases that lead to emotionally poor investment decisions.
Is the correction over? Maybe. Or this could be a “sucker’s rally” before a deeper decline. A big concern at the moment, as stated above, is the conclusion of the Federal Reserve’s ongoing liquidity intervention program. The liquidity pushed into the markets by the Fed has been the driver behind the markets unbridled advance since its inception in 2012. The same thing occurred in 2011, which led to a topping process as QE2 was coming to an end.
"While no two periods are ever the same what is important is the current defense of 1850 level on the S&P 500 so far. A rally from this level, which fails to attain a new high, suggests that the market will complete an important topping process in the months ahead."
I don’t have the answer, but this is what I will be “pondering” over the weekend.
1) 5 Reasons Why Stocks Are Falling by Steve Forbes via Forbes
- The U.S. Senate
- Misbehavior By The Fed
- Profit Picture Is Getting Blurry
- World Economies Are A Mess
- World Security Is Worsening
- The Yield Curve May Not Invert Prior to a Recession
- Stock Prices Appear to Be Issuing Economic Warnings
- The Signal of the Bond Markets Might Be a Precursor to Slowing Growth
- The Signal of the Oil Markets Is Negative
- Expanding Geopolitical Risks Raise Risks
- Growing Health Concerns Could Dent Economic Growth
- The Growing Dominance of the U.S. Could Have a Negative Twist
He concludes with a bullish view:
“At any rate, trying to time the market is a fool’s game. Ride the storm. After 2016, the U.S. will experience a Reaganesque revival. Markets will go up before then in anticipation of a better era ahead.”
Also Read: Could The Liquidity Crisis Be Back by Izabella Kaminska via FT
2) Does Wall Street Know Something We Don’t by Neil Irwin via NYT
“Things are looking better, that is, unless you turn your eye to Wall Street. There, the stock market’s main gauge, the Standard & Poor’s 500-stock index, fell 0.8 percent on Wednesday after a wild ride during the day. It is off 7.4 percent since mid-September.
Moreover, longer-term interest rates are down sharply, which normally signals pessimism in the bond market about the nation’s economic future. A measure of expected volatility hit its highest level since 2011 on Wednesday, signaling that more manic days could lie ahead.
This apparent contradiction — and how it is resolved — points to the basic question for the United States economy and for Federal Reserve policy makers right now. How powerful is that underlying economic strength? And will the recent market volatility prove ultimately inconsequential, or does it presage harder times ahead for a nation still trying to muddle its way out of a downturn that technically ended more than five years ago?”
Also Read: It’s Beginning To Look A Lot Like 2011 via GaveKal Capital Blog
3) If The Bull Market Has A Savior, This Is It by Christopher Hyzy via MarketWatch
“Five years into an often uneven recovery, and with stocks more volatile, are the American economy and financial markets running low on gas?
No. In fact, the U.S. is in the early stages of an extended business cycle and a secular bull market for stocks that could last another two decades.
Compared with previous cycles, this new phase could be longer and more favorable to equities, the U.S. in general, and specific investment themes. Why? Because this is the beginning of a global recycling of growth. The gigantic scale of this transition should lead to a far longer business cycle than is typical, one centered on and driven by changes in the U.S. — including a manufacturing renaissance, coupled with greater energy independence and enhanced technological independence.”
Also Read: Bulls May Be Losing Control Of The Market by Anthony Mirhaydari via CBS MoneyWatch
4) 7 Reasons A Recession Is More Likely Than You Think by Doug Kass via TheStreet.com
“I would argue that it is different this time and the risks of recession have increased.”
- The Yield Curve May Not Invert Prior to a Recession
- Stock Prices Appear to Be Issuing Economic Warnings
- The Signal of the Bond Markets Might Be a Precursor to Slowing Growth
- The Signal of the Oil Markets Is Negative
- Expanding Geopolitical Risks Raise Risks
- Growing Health Concerns Could Dent Economic Growth
- The Growing Dominance of the U.S. Could Have a Negative Twist
Also Read: The Easy Money Stock Market Is Over by Barry Ritholtz via Bloomberg
5) The Potential For 10-years Of Negative Returns by Shawn Langlois via MarketWatch
“At the same time, the number of hedging measures is mounting in the option pits. The CBOE put/call ratio just hit the fourth-highest level of all time at 1.53. Higher than it was during the Lehman Bros. implosion. Meaning, money is pouring into bearish equity bets. The temptation is to read that as a buy-the-fear signal. Think again.
Ryan Detrick, who always comes up with the goods, numbers-wise, found that average returns when that ratio tops 1.5, as it has this week, are rather dismal. Six months following the signal, the S&P has dropped 2.4%. That’s not the meltdown some doomsdayers are talking about — heck, stocks are down 6% since last month — but it’s still noteworthy.”
Also Read: Don’t Buy Into A Rebound Rally by David Weidner via MarketWatch
Also Read: 10 Signs The Selling Is Over by Jeff Cox via CNBC
Also Read: What A Correction Feel’s Like by Jared Dillian via ZeroHedge
“Everyone has a plan until they get punched in the face.” – Mike Tyson
Have a great weekend.
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the old rules no longer apply, and everything is rigged.
Sell. Buy land, seeds, antibiotics, ammo, silver and gold.
It would be inconvenient for some powerful and wealthy people were the public to start panicking.
Supposing the problem isn't completely intractable, the plebes screaming to their Congressmen to fix… And if the problem is truly intractable?
Well, you want to be in the lifeboat paddling away from the ship before anyone's discovered that we just hit an iceberg.
So again, you don't want to inform the public… as you keep paddling away. By Anonymous, at “Life itself”
The S&P didn't make it back to 1905 at week-end... So, watch out below...
Bite me ear...
Bitchez
The Fed should slow down on tapering and keep QE going on minimal life support right now to keep the stock market from crashing BUT raise interest rates gradually NOW. It's tightening and easing concurrently but softens the transition out of QE.
options traders = full retard
Like my old drill sargeant said:
"All I wanna see are elbows and a$$holes!"
that wasn't a drill sargeant, Zap.
You were raped.
Is it over? No, that was just the tip.
Ponder this as well. And hope many more mining companies do the same.
Tue Oct 14, 2014:
Produces 3.5 Million Silver Eqv. Ounces in Q3; Postpones the Sale of 934K Silver Ounces of Inventory
First Majestic Silver Corp. (“First Majestic” or the “Company”) is pleased to announce that total production at its five operating silver mines in Mexico for the third quarter ending September 30, 2014 reached 3,523,536 equivalent ounces of silver, representing a 5% increase compared to the same quarter in 2013.
Total silver production for the quarter consisted of 2,680,439 ounces of silver, relatively unchanged compared to the same quarter in 2013. In addition, 9,703,792 pounds of lead and 3,222,877 pounds of zinc were produced, representing an increase of 14% and 44%, respectively, compared to the same quarter of the previous year. Also produced were 2,781 ounces of gold, representing a 5% decrease compared to the third quarter of 2013.
…..Silver prices declined 19% in the third quarter representing the second largest quarterly decline since the financial crisis in 2008. As a result of this weakness, the Company decided to temporarily suspend silver sales in an attempt to maximize future profits. This suspension of sales will result in lower revenues and earnings for the third quarter, however, it is likely that these inventories of unsold ounces will instead be sold in the fourth quarter. As of September 30, 2014, approximately 934,000 ounces of silver were held in inventory.
100 million ounces of silver are projected for use by solar energy in 2015
http://en.wikipedia.org/wiki/Silver#Solar_energy
Seems really unlikely when aluminum is so much cheaper and very nearly as good, especially with appropriate coatings, used almost exclusively in astronomy. Silver oxydizes way too easily.
You would have to address your point to the Silver Institute, I guess.
https://www.silverinstitute.org/site/silver-in-technology/silver-in-green/energy-reduction-windows/
Cruise ship with quarantined Ebola couple returning to Texas after Mexico does not give 'clearance'
http://wtfrly.com/2014/10/17/cruise-ship-quarantined-ebola-couple-return...
why does every other country in the world seem to care more about their citizens than the usa?
Well because they say that given enough time, Americans always do the right thing. They just try everything else first, this is everything else.
http://www.washingtonexaminer.com/watchdog-obama-to-bring-non-american-e...
If you liked your rule of law you can reminisce about your rule of law...
Because those who would be in a position to care in America are not American but Khazarian? That could be why...
Because we are loaded up with Marxist engineered guilt, particularly white guilt, and absolutely paralyzed by bullying lawyers (ACLU...cough...), non-judgmentalism, in your face, arrogant "minority" racism, and political correctness.
Abe's diarrea with high frequency ebola should do the job.
Mini pukes everywhere.
ATF involved in Friday Ferguson shooting at apartment complex
What's Steve Forbes smoking?
another Lance post where not a word on the treasury market ... guess he doesn't want to talk about his 10yr @4% in 2015 call
Is the correction over? Maybe. Or this could be a “sucker’s rally”before a deeper decline.
we'll only know in hindsight.
But i've never been a fan of the markets will "vaporize" overnight. Think it will be the usual (like last time) of a see saw downwards move that could take months to play out.
Everyone remembers october 2008 as horrible for markets, but there was one day (TARP passage?) where the Dow went up almost 1000 points ... things were far from over ... though i'm sure Cramer had an on air orgasm (time for the mind bleach)
The thing I like about the New Zerohedge:
A lot of the photos accompanying their Very Scary / Sarky columns look like they came straight outa KWN.
Like this one with the Asteroid hitting Earth
Legend Warns The World Is Now Facing Enormous Dangers - King World News
RUN
"SIX REASONS TO PANIC: As a rule, one should not panic at whatever crisis has momentarily fixed the attention of cable news producers. But the Ebola outbreak in West Africa, which has migrated to both Europe and America, may be the exception that proves the rule. There are at least six reasons that a controlled, informed panic might be in order....As Dr. Philip K. Russell, a virologist who oversaw Ebola research while heading the U.S. Army’s Medical Research and Development Command, explained to the Los Angeles Times last week:
"I see the reasons to dampen down public fears. But scientifically, we’re in the middle of the first experiment of multiple, serial passages of Ebola virus in man....God knows what this virus is going to look like. I don’t."
"We have arrived at a moment with our elite institutions where it is impossible to distinguish incompetence from willful misdirection. This can only compound an already dangerous situation."
http://www.weeklystandard.com/articles/six-reasons-panic_816387.html
If the h&s on the first chart plays out, we're in for a Santa rally.
I've come to hate the word "maybe" when a professional money manager throws it around.
there are no bulls and there are no bears, there are only stock market investors who buy their stocks at the company store (they used to call CIA the company, now it means everything). when you buy stocks at the company store you can be sure the price will be high, like the old company store in the coal mining towns. you pay a lot more than you should but next week that stock costs even more, so you're glad you bought it. periodically the owners shut down the mine and close the store. the miners go to town to shop where they find out that groceries, or in this case stocks are really a lot cheaper than what they were paying at the company store, the miners say from now on we shop here, but they haven't enough money to stock up, pardon the pun. when the mine reopens the mining company closes the gate at night. so once they go back to work buying from the expensive company store is their only choice. there is no way for the miners to profit from this, the company talked them into putting some money into a retirement fund, buying stock at company store prices every month. when the miners take their company store stock to the bankers in town he gives them less money than they paid. the workers have never figured it out, the owners figured out how to do the work with machines, and save a lot of money. with no work the miners move into town, where things (groceries and stocks) are much less expensive. but not so fast, the miners are doing very well without the workers, and they now run the entire state, and yes perhaps the entire country it is said, with their same successful business model. those miners which have no jobs, are given money to buy things at the inflated price charged at any of the company stores. it keeps them in control of valuations, which are always high it seems, and growing higher, until one day.
all boredoms amused/ all anxieties tranquilized
It depends on the EU . See
https://www.academia.edu/8816411/Rogue_Swan_EU_disintegration
Buy 30% stocks, buy 30 % gold, and stay 30% cash, and you got all covered.
my crystall ball says buy suckas; in it 2 win it
Are you pondering what I'm pondering, Pinky?
https://www.youtube.com/watch?v=v-xrnIXQ3iQ
Buy.
Sell.
Hold.
Run.
Jump you fuckers.
shits gonna get real in 2017, this is just a 'correction'
2022 looks particularly challenging....then 2222 it all collapses.
The Growing Dominance of the U.S.
LMAO