Yesterdays session appeared to be under the influence of Washington. The market stayed put and made no attempts at rallying until the final hour. Why, you might ask? Because as we entered the final hour of trading there wasn't a government official to be found speaking about current events on tv. Yes it's true, it appeared the markets were frightened by the mere possibility that one of theses guys could say something that could rock or world once again.
So we rallied. Up to about 150 points. But that all came tumbling down when it was announced that the President would make a statement right before the closing bell.
The markets opened lower yesterday for several reasons. Horrible Existing Home Sales numbers, government officials making statements on tv, and of course the Presidents lack luster speech. It appears now that Washington is looking to use this financial crisis as a means to launch programs that would have never been considered at any other time. One politician to another, "Remember that great idea I had years ago? This could be the time to implement it...we just need funding for it."
The Chicago Solution To The Mortgage Crisis is a proposal that has peaked some interest as of late. The proposal is to buy a pool of mortgages from a bank at $.60 on the dollar and sell them to mortgage owners for that same $.60 on the dollar. In the event the home owner passes then the mortgage will be auctioned.
It's pretty interesting. You can read more about it, just google it.
We are sitting on a severely twisted spring which is ready to uncoil. If it does we can see a very large bear market rally. Every indicator I pay attention to is pointing towards oversold conditions and are in extreme positions. There is a Fibonacci retracement to 61%, relative strength indicators showing a large leg to the upside, and what appears to be a reverse head and shoulders formation forming. For those of you who know something of this formation, you'll agree it's a big, very large deal!
Let's not forget, however, that we did get a Dow Sell Theory last week and that the markets have behaved far too weak these past couple of days to be too confident in a rally.
The markets can see some upside as a matter of fact huge upsides. The bulls can make themselves the leader here, they just need to go out and do it now.
Thursday, February 26, 2009
Wednesday, February 25, 2009
Recession Ends Late 2009
Fed Chief Bernanke hinted that the recession could end by the end of this year. As a result the markets rallied. It wasn't anything to get gleeful about, all we did was gain what we lost on Monday. But it was a rally. As far as the recession ending this year...many fear he's sliding down a slope of hope. Then again he's the Fed Chief.
The rally got some legs after the Fed Chief ended his speech. Many attribute it to an "all clear" you sometimes hear in war. We escaped with the Fed Chief saying nothing terrible about our current status.
The reduced threat of nationalizing banks added to the rally as well. We witnessed the financial sector leading the charge.
So where can we go from here. The oversold conditions have given us yesterdays rally to build on. We may experience a bunch of "back and fills" as the days go on. What many are hoping for is the relief rally that usually is experienced at the tail end of a severe oversold condition like we experienced.
Bernanke makes his way to the House today to complete his testimony. Everything has to be exact in his speech. Any comments that don't match yesterdays testimony could hurt the markets. Many will be looking to the Q&A session afterwards to get a better grip on the Fed Chiefs testimony.
Consumer confidence yesterday was a surprising 25, well below estimates. We await the housing data. Expectations indicate an upside surprise due to an increase in foreclosure purchases.
Personally I think it's time to rally. The ultimate stimulus package is back, Tiger Woods.
The rally got some legs after the Fed Chief ended his speech. Many attribute it to an "all clear" you sometimes hear in war. We escaped with the Fed Chief saying nothing terrible about our current status.
The reduced threat of nationalizing banks added to the rally as well. We witnessed the financial sector leading the charge.
So where can we go from here. The oversold conditions have given us yesterdays rally to build on. We may experience a bunch of "back and fills" as the days go on. What many are hoping for is the relief rally that usually is experienced at the tail end of a severe oversold condition like we experienced.
Bernanke makes his way to the House today to complete his testimony. Everything has to be exact in his speech. Any comments that don't match yesterdays testimony could hurt the markets. Many will be looking to the Q&A session afterwards to get a better grip on the Fed Chiefs testimony.
Consumer confidence yesterday was a surprising 25, well below estimates. We await the housing data. Expectations indicate an upside surprise due to an increase in foreclosure purchases.
Personally I think it's time to rally. The ultimate stimulus package is back, Tiger Woods.
Tuesday, February 24, 2009
That Was Vicious
Pre opening bell futures were indicating a rally and indeed we did move up at the open. We rallied 4 times through out the session as a matter of fact. Nothing with enough zeal to lift eyebrows, however. The reason for this show in slight confidence had to deal with information that the government would not look to nationalize wounded banks just partner with them to help them out further.
When CNBC released news late in the session that AIG would be going back to the government for financial help, the markets lost it the confidence. CNBC also mentioned that AIG would lose $60 billion for the quarter which is stunning. This sent traders into an almost panic like mode and vertically down we went.
We went straight down, violating lows set in 2002. After we breached those lows we quickly tested and then violated the 1997 lows. It appeared the only thing that stopped the market from going any lower was the close.
The week ahead suggests to look something like the following:
Tuesday:
BOJ Minutes
Chain Store Survey
President Semi State of the Union
(9:00) Case-Shiller Home Prices -18%
(10:00) Consumer Confidence 35.0
Richmond Fed -49
Bernanke/Senate Banking
(11:30) Dallas Fed's Fisher
(1:00) Two Year Note Auction
(5:00) ABC/Washington Post Confidence Index
Wednesday:
Ash Wednesday
(7:00) Mortgage Data
(10:00) Bernanke House Banking
Existing Home Re-sales Unch.
(10:35) Crude Inventories N.A.
(1:00) Five Year Auction
Thursday:
President Obama Budget Outline
(8:30) Initial Claims Unch.
Durable Goods -2.5%
(10:00) New Home Sales -1.8%
(10:35) Natural Gas Invent. N.A.
(4:30) All the M's
(8:30) GDP -5.4%
Chicago PM Report 31
Consumer Sent. 54
All information will be looked at closely with Bernanke and the Presidents agenda at the forefront followed by the housing data, treasury auction, and GDP.
This is rather severe. We need to find that bottom and if we do we get a rather strong rally. I had indicated in earlier posts that a rally, in the event we get down to 1997 level, would be fierce. We are extremely over sold with almost every technical indicator I look at suggesting this.
I read this earlier that going back to 1930, there have been 24 instances when the S&P was down for six straight days and hit a 52 week low (ala yesterday). The bad news is that in 18 of those 24 cases, the selling continued into the seventh day.
When CNBC released news late in the session that AIG would be going back to the government for financial help, the markets lost it the confidence. CNBC also mentioned that AIG would lose $60 billion for the quarter which is stunning. This sent traders into an almost panic like mode and vertically down we went.
We went straight down, violating lows set in 2002. After we breached those lows we quickly tested and then violated the 1997 lows. It appeared the only thing that stopped the market from going any lower was the close.
The week ahead suggests to look something like the following:
Tuesday:
BOJ Minutes
Chain Store Survey
President Semi State of the Union
(9:00) Case-Shiller Home Prices -18%
(10:00) Consumer Confidence 35.0
Richmond Fed -49
Bernanke/Senate Banking
(11:30) Dallas Fed's Fisher
(1:00) Two Year Note Auction
(5:00) ABC/Washington Post Confidence Index
Wednesday:
Ash Wednesday
(7:00) Mortgage Data
(10:00) Bernanke House Banking
Existing Home Re-sales Unch.
(10:35) Crude Inventories N.A.
(1:00) Five Year Auction
Thursday:
President Obama Budget Outline
(8:30) Initial Claims Unch.
Durable Goods -2.5%
(10:00) New Home Sales -1.8%
(10:35) Natural Gas Invent. N.A.
(4:30) All the M's
(8:30) GDP -5.4%
Chicago PM Report 31
Consumer Sent. 54
All information will be looked at closely with Bernanke and the Presidents agenda at the forefront followed by the housing data, treasury auction, and GDP.
This is rather severe. We need to find that bottom and if we do we get a rather strong rally. I had indicated in earlier posts that a rally, in the event we get down to 1997 level, would be fierce. We are extremely over sold with almost every technical indicator I look at suggesting this.
I read this earlier that going back to 1930, there have been 24 instances when the S&P was down for six straight days and hit a 52 week low (ala yesterday). The bad news is that in 18 of those 24 cases, the selling continued into the seventh day.
Friday, February 20, 2009
The Dow Sell Theory...
...is in effect. Yesterdays closing of 7467 on the Dow breached the November mark of 7552 which triggers what many experts have been calling The Dow Sell Theory effect. Without going too far into the theory, just understand that there are 3 options the market has at this point:
1) We test these lows and possibly see a bear market rally.
2) The bears take control and we see a new leg down.
3) We break November lows and test the 2002 low of 7286 or even the 1997 low of 7161. If this happens we can experience a massive rally, bigger than a typical bear market rally!
Many say that we are currently in a long stretch of a bottoming phase. They argue that October lows seen thousands of stocks (Vince Farrell says 93% of them) were at their lows. In November, when we went lower, only 650 plus stock made new lows. Past history has indicated that this is typical of a market making an attempt at "bottoming" or "finding the bottom". Similar to when you're in the pool in the deep end and your trying to touch the bottom with your toes. The good news is that once you touch the bottom of the pool with your toes you can push off, sometimes rather sharply with some umph added to it.
We'll see if that's what the markets are trying for here.
Option expiration of course is adding to all the volatility.
What is interesting to watch, however, is how the "Us versus Them" is becoming newsworthy. Washington/Congress has been on a PR campaign of sorts lately illustrating almost a bad vs good marketing ad. They discuss fat cash corporate bonuses and in the same sentence mention bailout money. They talk about Wall St. versus Main St. They set corporate CEO's up on a stool and bash them to death on national TV while making themselves appear as saviors. These guys better stop pointing fingers soon because they're creating a line that doesn't need to be created, especially if we all want to get out of thing somewhat ok.
The Dow Sell Theory is in effect. Let's see what happens next.
1) We test these lows and possibly see a bear market rally.
2) The bears take control and we see a new leg down.
3) We break November lows and test the 2002 low of 7286 or even the 1997 low of 7161. If this happens we can experience a massive rally, bigger than a typical bear market rally!
Many say that we are currently in a long stretch of a bottoming phase. They argue that October lows seen thousands of stocks (Vince Farrell says 93% of them) were at their lows. In November, when we went lower, only 650 plus stock made new lows. Past history has indicated that this is typical of a market making an attempt at "bottoming" or "finding the bottom". Similar to when you're in the pool in the deep end and your trying to touch the bottom with your toes. The good news is that once you touch the bottom of the pool with your toes you can push off, sometimes rather sharply with some umph added to it.
We'll see if that's what the markets are trying for here.
Option expiration of course is adding to all the volatility.
What is interesting to watch, however, is how the "Us versus Them" is becoming newsworthy. Washington/Congress has been on a PR campaign of sorts lately illustrating almost a bad vs good marketing ad. They discuss fat cash corporate bonuses and in the same sentence mention bailout money. They talk about Wall St. versus Main St. They set corporate CEO's up on a stool and bash them to death on national TV while making themselves appear as saviors. These guys better stop pointing fingers soon because they're creating a line that doesn't need to be created, especially if we all want to get out of thing somewhat ok.
The Dow Sell Theory is in effect. Let's see what happens next.
Tuesday, February 17, 2009
From A Long Hiatus
I've been away for a while as this blog indicates. I have had extensive dealings involving the company I am committed to right now. It's been pretty fabulous!
I've been keeping an eye on our markets as well as global markets, however. I'll leave my opinions on the macro side for casual conversation during an adult beverage for it may be too much to stomach in this type of forum. We'll just keep it to the day to day melodrama that is "As The World Truly Turns.
So here's what went on yesterday:
The University of Michigan Confidence Survey was released on Friday and it was plenty lower than estimated. The markets traded through out the day, prior to its release, rather mixed. After the release we experienced a decision made in unison and down we went.
We did try to rally, however. There was hope that we would experience short covering as rumors of a potential Obama mortgage subsidy program with slated release of Wed the 18th circulated. The shorts didn't budge and they held on to their positions expecting worse to come.
Art Cashin reported that "...he had spoke to a very savvy commodity trader about his concerns about stocks being weak, treasuries being weak, and the dollar trading somewhat dicily. His training and experience in the markets told him this was not an advantageous combo. He said that combination heightened his concerns about the days ahead."
Here's what the calendar looks like this week:
Tuesday:
Automaker Proposals Due
(8:30) New York Fed Index -22.5
(9:00) Treasury Intl Cap Flows N.A.
(1:00) St. Louis Fed’s Bullard Speaks
NAHB Housing Index
(5:00) ABC/Washington Post Conf. Index N.A.
Wednesday:
President Obama Speaks
BOE Minutes
Chain Store Surveys
(7:00) Mtge Data N.A.
(8:30) Housing Starts 525K
Building Permits N.A.
Import Prices -1.0%
Export Prices N.A.
(9:00) Cleveland Fed’s Pianalto Speaks
(9:15) Ind. Production -1.5%
Cap. Util. 72.5%
(12:30) Chairman Bernanke Speaks
(1:30) Chicago Fed’s Evans Speaks
(2:00) FOMC Minutes
Thursday:
BOJ Opines
President Obama to Canada
(8:30) Initial Claims +10K
PPI 0.2%
PPI (Core)
(10:00) Philly Fed Index -25.5
Leading Indic. 0.0%
(10:35) Natural Gas Invent. N.A.
(11:00) Crude Invent. N.A.
(1:15) Atlanta’s Fed Lockhart Speaks
(4:30) All The M’s
Friday:
(8:30) CPI 0.3%
CPI (Core)
The headlines this week will come from Washington but we may see the markets react/respond to continues automaker proposals.
This week is a crucial week. The markets have been trending lower and it apperas that we may test the 800 support level or maybe worse, break through it.
I will leave todays post with a comment made by then Fed Chief, Alan Greenspan in 2005:
Yet history cautions that people experiencing long periods of relative stability are prone to excess. We must thus remain vigilant against complacency, especially since several important economic challenges confront policymakers in the years ahead.
The guy had a crystal ball it seems.
Keep a low key profile. No need to play the game if you don't have to.
I've been keeping an eye on our markets as well as global markets, however. I'll leave my opinions on the macro side for casual conversation during an adult beverage for it may be too much to stomach in this type of forum. We'll just keep it to the day to day melodrama that is "As The World Truly Turns.
So here's what went on yesterday:
The University of Michigan Confidence Survey was released on Friday and it was plenty lower than estimated. The markets traded through out the day, prior to its release, rather mixed. After the release we experienced a decision made in unison and down we went.
We did try to rally, however. There was hope that we would experience short covering as rumors of a potential Obama mortgage subsidy program with slated release of Wed the 18th circulated. The shorts didn't budge and they held on to their positions expecting worse to come.
Art Cashin reported that "...he had spoke to a very savvy commodity trader about his concerns about stocks being weak, treasuries being weak, and the dollar trading somewhat dicily. His training and experience in the markets told him this was not an advantageous combo. He said that combination heightened his concerns about the days ahead."
Here's what the calendar looks like this week:
Tuesday:
Automaker Proposals Due
(8:30) New York Fed Index -22.5
(9:00) Treasury Intl Cap Flows N.A.
(1:00) St. Louis Fed’s Bullard Speaks
NAHB Housing Index
(5:00) ABC/Washington Post Conf. Index N.A.
Wednesday:
President Obama Speaks
BOE Minutes
Chain Store Surveys
(7:00) Mtge Data N.A.
(8:30) Housing Starts 525K
Building Permits N.A.
Import Prices -1.0%
Export Prices N.A.
(9:00) Cleveland Fed’s Pianalto Speaks
(9:15) Ind. Production -1.5%
Cap. Util. 72.5%
(12:30) Chairman Bernanke Speaks
(1:30) Chicago Fed’s Evans Speaks
(2:00) FOMC Minutes
Thursday:
BOJ Opines
President Obama to Canada
(8:30) Initial Claims +10K
PPI 0.2%
PPI (Core)
(10:00) Philly Fed Index -25.5
Leading Indic. 0.0%
(10:35) Natural Gas Invent. N.A.
(11:00) Crude Invent. N.A.
(1:15) Atlanta’s Fed Lockhart Speaks
(4:30) All The M’s
Friday:
(8:30) CPI 0.3%
CPI (Core)
The headlines this week will come from Washington but we may see the markets react/respond to continues automaker proposals.
This week is a crucial week. The markets have been trending lower and it apperas that we may test the 800 support level or maybe worse, break through it.
I will leave todays post with a comment made by then Fed Chief, Alan Greenspan in 2005:
Yet history cautions that people experiencing long periods of relative stability are prone to excess. We must thus remain vigilant against complacency, especially since several important economic challenges confront policymakers in the years ahead.
The guy had a crystal ball it seems.
Keep a low key profile. No need to play the game if you don't have to.
Monday, October 27, 2008
It All Seems Familiar
The markets opened down 500 points on Friday in conjunction with the global markets. Prior to the U.S. opening, Asian and European markets were down 10% or more. Global currency markets were bordering on chaos. When we did open, the markets experienced a dry up of buyers rather than a wave a sellers. Many media heads were expecting our markets to sell off rather large due to what was happening with Asian and European markets. We did in fact open down but not on heavy selling just on a lack of buying.
Through out the world traders were looking to shore up their portfolio buy owning currency. They were looking for the strongest currency to own which is why we saw a spike in the Yen. Global companies have been adversely affected by the credit crisis with emerging markets being hit very hard. Emerging markets lack the sophistication the G12 nations have when it comes to their banking systems. Because of this traders in these emerging markets have delved into currency strategies to assist them with battling their credit crisis. We actually witnessed a "global margin call" in the currency markets on Friday as a result.
Getting all the central banks to coordinate is one thing. Coordination of global banking is another. If currency markets are now being involved then it could get dicey even more so.
In skimming through the WSJ I found this article on Calpers.
The nation's largest public pension fund said it intends to tap California public employers for more money if its heavy investment losses don't reverse, a sign that more financial pain could be in store for state and local governments.
The California Public Employees' Retirement System, known as Calpers, said its assets have declined by more than 20%, or at least $48 billion, from the end of June through Oct. 10.
Unless returns improve, Calpers is poised to impose an estimated increase in employer contributions of 2% to 4% of payroll starting in July 2010 for about two-thirds of its state-employer members, and in July 2011 for the remaining third. Any decision will be made after Calpers knows its returns for the fiscal year. The average employer contribution rate for public agencies including cities and counties is 13% of payroll in the current fiscal year, Calpers said.
Pretty messy.
In Michigan, state heads are saying that they are not able to meet unemployment claims which in turn could force them to raise the levies on businesses to help them make those payments. Of course doing that would continue to hurt companies try to get out this rut and could even possibly speed up their deaths. That wouldn't be good.
Hey it's late October and we've historically not done so well during this time of the year. History repeating? Maybe. Let's just keep an eye out for currency markets and cross our fingers that they wont be that big of deal.
Through out the world traders were looking to shore up their portfolio buy owning currency. They were looking for the strongest currency to own which is why we saw a spike in the Yen. Global companies have been adversely affected by the credit crisis with emerging markets being hit very hard. Emerging markets lack the sophistication the G12 nations have when it comes to their banking systems. Because of this traders in these emerging markets have delved into currency strategies to assist them with battling their credit crisis. We actually witnessed a "global margin call" in the currency markets on Friday as a result.
Getting all the central banks to coordinate is one thing. Coordination of global banking is another. If currency markets are now being involved then it could get dicey even more so.
In skimming through the WSJ I found this article on Calpers.
The nation's largest public pension fund said it intends to tap California public employers for more money if its heavy investment losses don't reverse, a sign that more financial pain could be in store for state and local governments.
The California Public Employees' Retirement System, known as Calpers, said its assets have declined by more than 20%, or at least $48 billion, from the end of June through Oct. 10.
Unless returns improve, Calpers is poised to impose an estimated increase in employer contributions of 2% to 4% of payroll starting in July 2010 for about two-thirds of its state-employer members, and in July 2011 for the remaining third. Any decision will be made after Calpers knows its returns for the fiscal year. The average employer contribution rate for public agencies including cities and counties is 13% of payroll in the current fiscal year, Calpers said.
Pretty messy.
In Michigan, state heads are saying that they are not able to meet unemployment claims which in turn could force them to raise the levies on businesses to help them make those payments. Of course doing that would continue to hurt companies try to get out this rut and could even possibly speed up their deaths. That wouldn't be good.
Hey it's late October and we've historically not done so well during this time of the year. History repeating? Maybe. Let's just keep an eye out for currency markets and cross our fingers that they wont be that big of deal.
Friday, October 17, 2008
It May Be A Good Day To Stay Away
80 million option contracts expire today! This can cause some "this doesn't make sense" type trading through out the day today.
Yesterday, the markets got a spring in its step when rumors hit the floor that a Yahoo/Microsoft deal was likely to brew once again. This brought the Nasdaq into higher areas and subsequently the rest of the equity markets. Heading into the final hour we heard that the TED spread was softening up, albeit very little. Pair this with buy programs kicking in and the markets kicked into temporary overdrive.
So what caused the buy programs? Oversold technical indicators traders felt, as well as funds buying up some "good" deals. Traders also mentioned that indexers were a big reason for the last hour rally. Indexers typically have to readjust their funds to simulate the percentage positions of their respective index. For instance, Joe's the fund manager of his company's S&P index fund. This fund has to "look" like the actually S&P index internally. He must own everything that is in the S&P index along with making sure the percentage weighting is the same. Obviously, this past month has been pretty hard on good ol father S&P. The index didn't resemble it's look from the prior quarter so Joe being the great fund manager that he is has to make the adjustments. Got it?
Some things to look at and be very cautious with...
The markets are in the midst of resembling a technical formation that would suggest weakness to come. If this weakness comes we could possibly get a severe down day. Given what has happened and what is continuing to happen this down day could be catastrophic. It could also provide us with a once in a lifetime opportunity as well. Technical guys, do you see what I'm seeing?
Lehman debt maybe settled next week, at least that what we hear. May be a rather large event actually.
Come on in honey, it's time for dinner! You can go out and play with your friends tomorrow. Just don't leave the porch.
Yesterday, the markets got a spring in its step when rumors hit the floor that a Yahoo/Microsoft deal was likely to brew once again. This brought the Nasdaq into higher areas and subsequently the rest of the equity markets. Heading into the final hour we heard that the TED spread was softening up, albeit very little. Pair this with buy programs kicking in and the markets kicked into temporary overdrive.
So what caused the buy programs? Oversold technical indicators traders felt, as well as funds buying up some "good" deals. Traders also mentioned that indexers were a big reason for the last hour rally. Indexers typically have to readjust their funds to simulate the percentage positions of their respective index. For instance, Joe's the fund manager of his company's S&P index fund. This fund has to "look" like the actually S&P index internally. He must own everything that is in the S&P index along with making sure the percentage weighting is the same. Obviously, this past month has been pretty hard on good ol father S&P. The index didn't resemble it's look from the prior quarter so Joe being the great fund manager that he is has to make the adjustments. Got it?
Some things to look at and be very cautious with...
The markets are in the midst of resembling a technical formation that would suggest weakness to come. If this weakness comes we could possibly get a severe down day. Given what has happened and what is continuing to happen this down day could be catastrophic. It could also provide us with a once in a lifetime opportunity as well. Technical guys, do you see what I'm seeing?
Lehman debt maybe settled next week, at least that what we hear. May be a rather large event actually.
Come on in honey, it's time for dinner! You can go out and play with your friends tomorrow. Just don't leave the porch.
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