Morning all! It's hard to believe, but Saturday, 3/5 marked the two year anniversary of THE low in the markets. Since then it's been up, up, up and away, with a few (VERY few) pullbacks along the way, the biggest one being from late April - the end of June last year when the S&P pulled back/corrected about 15% from 1,217 to 1,030. The S&P now stands at 1,321, up approximately 94% from those March '09 lows. A pretty amazing run that has confounded many along the way.
Since that time, it's basically been a moonshot higher with a few very shallow pullbacks and any dips being regularly bought en masse, the last semi-significant one being from 8/4 to 8/27 when the S&P drifted downward about 7% from 1,127 to 1,047. Each subsequent pullback has been shorter and shallower, with the dips being continually bought. Here's the three year chart (pretty amazing to look at):
S&P - three year chart
However, in looking at the chart and recent action lately, I'm beginning to wonder if we're not reaching an important inflection point where this rally may not only be finally tiring and petering out, but where we might see a bigger sell off and correction and possibly even very soon, marking if not THE top in this two year plus march upward, A significant top nevertheless, in the markets.
The market has recently seen volatility creep back in over the past couple of weeks, with the bulls and bears duking out. In the past, this has been a key characteristic of market tops. Take a look at some of the shorter term charts:
S&P - one week chart
S&P - one month chart
S&P - 3 month chart
S&P - six month chart
I know that calling tops, especially now, has been a sucker's game, for the most part, but what does everyone think? Where do we go from here? Is this most recent, and very short, shallow "correcton" over, with yet another push higher in offing? Or, do we go higher from here, or simply go sideways for a while?
@MAnnwich:
ReplyDeleteThe charts tell the tale.
Ol' Rock is full of bull.
I think until QEn stops, the USG wants to push the market higher. I think we've had articles that show how this is happening, with the futures (I never understood how such small money and small volume could affect the entire market so hugely the next morning, it is illogical, Mr. Spock) manipulation happening. I mean, people with only a billion can move their entire position wherever they want. You want it down today so you can buy more? Easy. Spend a billion in the futures overnight. It's really easy, just sell your treasuries to the Fed, buy your positions before the close saving a billion or so, move the futures overnight, and sell off slowly in the morning, or if the stocks stay high, well, sell by trailing stops.
I mean, the banksters did the same thing with their prop trading desks; they'd just go to the window, borrow at 0%, move the market, and sell with a 3% or more gain. Easy money.
Anyway, enough of that, I can't play a billion overnight, but it would be wonderful to know when these were happening and how it could be detected, maybe in the tick or trin or some other measure we could see before the close. Sigh.
They can't control the news, so as Dss says, you'll read it in the news (meaning you'll read the next movement in the market depends on what the newspapers feel fit to print, and/or how they see fit to spin it).
The news is good. The oil movement is temporary, dictators are dropping like flies, China's gonna have a revolution, we're pulling out of Afghanistan, unemployment is dropping like a flying monkey, earnings have never been better, soup kitchens have plenty of soup, and like the song says, "everything's coming up roses".
How can you not be full of bull?
@MAnnwich:
ReplyDeleteAnd the nonsense in the news: Oil is up to 107 "because of the fighting in Lybia" per Bloomberg talking heads.
Lybia is only 2% of the world's production. Saudi Arabia said they would backfill Lybia's shortfall which has not happened and probably won't happen.
Get ready to short oil.
ICan, set your stops tight and get ready to go the other way.
This comment has been removed by the author.
ReplyDelete@MAnnwich
ReplyDeleteI have no idea why my keyboard capitalizes your "A". Maybe it's because I use an IBM keyboard from the 80's that has touch and click, and I'm faster than the click.
I mean no disrespect.
(I had to delete the previous comment because of a typo....blame the keyboard again, my fingers have never left the ends of my hands....)
Well, my favorite short X has fallen out of it's down channel.
ReplyDeleteI will exit the short today with a very tight trailing stop.
I am ready to buy it for the next pushup.
In the news, the USG is going to levy a penalty on Chinese pipe coming in to the US.
Can't beat the news, Dss!
NFLX now looking like a good long to $230.
ReplyDeleteMomo Monday.
ReplyDeleteStocks, Pms, oil, soft commodities all green. Too many printed U$Ds.
@Rock,
Yes, oil is retreating.
ICan
@Emmy,
ReplyDeleteThat natural gas article from the linkfest. That was good to read. So Nat. gas is currently trading between $3.80 - $4. Should go higher?
ICan
More snow to blow from yesterday's storm. Rain one day, snow storm. Weird weather.
ReplyDeleteBe back later.
ICan
Good thoughts, Rock. Hard for me to disagree with your case at all. Right now anyway. No worries on the capital "A". LOL.
ReplyDeleteSLV marching to 36.
ReplyDeleteTLT bounced just as it dipped below 90. Again.
ReplyDeleteI thought this was good:
ReplyDeletehttp://www.nytimes.com/2011/03/07/opinion/07krugman.html?_r=1&hp
That SLV chart is ridiculous.
ReplyDelete@MAnnwich:
ReplyDeleteBloomie had a vignette on Silver.
It's being used more and more as an industrial metal.
I'm going to hide my sterling chest....
My little SLV nibble from a while back up over 26%. Should have added more on that pullback to ~26. I wonder if I should take profits now?
ReplyDeleteMo Mo Monday petering out a little early today? Am starting to wonder if we don't at least pause here and go sideways for a while.
ReplyDeleteThey tried this morning, unsuccessfully, it seems. Interesting development in my opinion.
ReplyDeleteMorning folks!
ReplyDelete@Greg
ReplyDeleteI couldn't agree more with your assessment of NFLX. They have broken their down channel and I agree with your observation that they are going higher.
On the psychological side, the 19% unemployed need some entertainment, and NFLX provides a legal opportunity. For the rest of us, there's eMule.
Actually, for those of us who cannot get TV programs because of either government censure or cable policy, eMule presents the only option.
Bloomberg had a vignette on how sports are being illegally broadcast over internet. Let me say that if this is so, it is so well-hidden that ol' Rock (who is pretty familiar with Internet-speak) cannot find it.
I feel that mcasting sports programs for s subscription price would bring countless $$$ to the providers from us poor schmucks who want to see the game but absolutely cannot get it. Like DVD sales have meant many billions to the movie industry, and NFLX has meant many billions as well.
Anyway, time to start to buy NFLX on any pullback.
@ICan
ReplyDeleteI thought that was a medium-term view of natural gas.
@Mannwich:
ReplyDeleteIMHO, SLV is solidly in an upchannel. My channel shows a March/End of around 37.20.
That's 5%.
Know any other upchannel to hit 5% by end of month right now?
And if you make 5% per month, well, that's 60% per year.
I could live on that.
Greece. It's baaaaaaaccckkkkk...
ReplyDeletehttp://www.calculatedriskblog.com/2011/03/greece-debt-rating-downgrade.html
Agreed Rock. I'm letting it run for now.
ReplyDeleteDumped my small nibble of DIG today for a little 5% gain, enough for dinner at the corner. ;-)
ReplyDelete@ICan:
ReplyDeleteMy and my ex-mother-in-law's oil is advancing. Sorry.
My ex-mother-in-law called me tonite and told me next time she sees me (March/E I have to go to TW) she will kiss me.
I'm getting her out of oil tonight.
@Mannwich
ReplyDeleteI think April is the timeframe when Greek bonds come due and it time to poo or get off the pot.
I am thinking that the Germans won't want to care for Greece. I'm thinking they will want to use olive oil instead.
I think in April, I will be scaling back my longs, and watching what happens to the Euro.
And I'm hoping for more float from the Chinese on the RMB.
Sure feels like the equity markets are teetering to me, or maybe this is just a breather for a bit? What propels it higher now?
ReplyDeletePicking up speed now.....
ReplyDeleteManny . . good question! We could just get a normal correction though, this isn't necessarily "The" correction. I-Man's prediction from last week, that this is just a regular run of the mill one.
Anyone seen that little poll on the front page of MarketWatch? On Gas prices?
ReplyDeleteI was surprised by the second most popular answer.
Gas broke my budget when it broke above 35 cents 36.6%
@Manny, your 11:30...Qaddafi leaving might do it.
ReplyDeleteOr a big upside to Q1 GDP - we'll have to wait a couple months for that though.
ReplyDeleteManny & Rock - Ireland is another place to watch along with Greece over the next couple months. Their new government isn't nearly as amenable to the "deals" signed by the previous government. We'll see if TPTB are able to get this new government in line quick enough to make any renegotiation work out in favor of the banks.
ReplyDeleteCorrection still in progress, it seems.
ReplyDeleteBenny needs to announce QE3. That might do it.
ReplyDeleteIt's only a one day aberration. Buy at the close for the turnaround. I think when you see Apple and the Ag's get beaten like a rented mule on the same day, you're really just seeing standard manipulation.
ReplyDeleteHigher oil prices mean more QE3? I think it all means more QE3.
ReplyDeleteManny - OR, a repeat of 2008 . . .higher oil prices being the catalyst for a double dip. Heard on the radio that if oil prices nationally get up to 4.25 and stay there for a protracted period of time we will get a double dip.
ReplyDeleteI'm still wondering though, how much of these prices moves in oil is world events and how much is extra money from QE1 and 2 sloshing around in the form of speculation.
Manny - Haha, not sure if you were referencing this article with your 1:59, if not, you're not the only one thinking along those lines.
ReplyDeleteFed must be flexible given oil prices, Lockhart says
WASHINGTON (MarketWatch) — The Federal Reserve may want to consider a third round of bond purchases if an oil shock materializes, a central bank official said Monday.
Dennis Lockhart, the president of the Atlanta Fed, said that while his first instinct is to be “very cautious” about making another round of bond purchases once the Fed’s $600 billion bond-buy program expires in June, he said he would consider them depending on oil prices.
Given the new risks from the Middle East turmoil, “I prefer a posture of flexibility as regards to policy options,” he said in a speech at the National Association for Business Economics.
That's it, Thor.
ReplyDeleteNML- New Millennium Capital(NML) - Iron ore start up in the Canadian north - Partly owned by Tata. I've highlighted this one several times. I have no position. But if someone is interested -
ReplyDelete"Tata Sets Pact to Help Develop Canadian Ore Deposits". http://online.wsj.com/
Large-scale iron ore reserves in Labrador/Quebec.
ICan
Seems they'll just about use any justification these days for more QE. Bad weather? More QE. Higher oil prices? More QE. Lower Oil prizes? More QE. Lower home prices? More QE. You get the point.......
ReplyDeleteYup, they'll continue on with the QE until the economy doesn't appear to be on constant life support. Hell, are they ever going to be able to stop? Can't go on forever, but nothing of substance has been addressed so these bubbles and crashes are going to just keep on coming.
ReplyDelete"Huda the executioner' - Libya's devil in female form". http://www.telegraph.co.uk/news/worldnews/africaandindianocean/libya/8363587
ReplyDeleteGaddafi hanged his first political opponent in a basketball stadium in Benghazi infront of thousands of school children and students...regime's version of justice.
The opponent:
A young aeronautical engineer, returned from University in America, and had three months earlier started a quiet campaign against Gaddafi's brutal rule.
And what a woman did to get Gaddafi's attention and become one of the richest in Libya.
I hope she gets her Karma.The protesters burn down her home as she fled to Tripoli to be with her saviour.
ICan
One of comments is lost
ReplyDeleteICan
Hello from Florida,
ReplyDeleteI have a minute between coming home and dinner and thought I would check in. Having a relaxing time with the family and it is really good to get away. I think I saw that the market was up then down, snow storm in the east and I am happy to be where it is warm and snow free.
Being away from the home set-up is the antidote to being too connected while on vacation. Too much trouble to pull up anything.
Nice anniversary post, Manny! Hard to believe it has been two years!
Hey Denise! Hope you're having a good time in Sunny Florida!
ReplyDelete@ICan
ReplyDeleteOy, I just looked at that NML chart. Good find there.
WHAAAA?
ReplyDeleteConsumers Ratchet Up Borrowing
Wall Street Journal - 3 hours ago
By SUDEEP REDDY Consumers added to their non-mortgage debts for the fourth straight month in January, suggesting that the US economy owes its recent acceleration in part to renewed borrowing.
Thor, if the market goes down tomorrow, do you think CNBC will blame it on Charlie Sheens firing?
ReplyDeleteGreg - If CNBC blamed the market on Charlie Sheen they would be making about as much sense as Charlie does... OH wait, that means CNBC has ALWAYS made as much sense as Chuck.
ReplyDeleteMutt
Greg - If a 200 point drop can be blamed on a two dollar rise in oil prices . . .
ReplyDeleteOl Rock's still full of bull, but on a bearish note, quite a number of the stocks I'm watching have broken their up channel. Few of the ETFs and indices have, though. Since Feb 17th, XME's forming a wedge that is very equally balanced. Looking at other wedges, it seems than unless heavily weighted to the downside, they have been trending to break upwards. Looks like the wedge will complete around Mar 16.
ReplyDeleteBullish notes:
1. From Buzz and banter, David Dispanette says Watch out for an AAPL pullback, but Scott Redler says Buy APPL now and add on pullbacks. I really admire Scott's work, he's been very helpful and accurate.
2. Barry Ritholz & Peter Greene are saying even though there's some market action downward, they are not seeing "the full move of technical breakdowns to suggest a major move lower yet".
3. The Fed bought 6.5 Billion of treasuries. There were 29 billion offered. Still lots of folks want to get into equities and out of Treasuries.
4. The $TICK was trending lower at today's end. I suspect that means a lower open, but your guess is as good as mine. Anyway, most gaps fill.
5. RTH has clearly broken out of its down channel and is trending sideways. WMT is about to break out of its downtrend, But AMZN is still solidly in its down channel.
6. Thor pointed out we're borrowing again
Bearish notes:
1. ummmmmm.....The $SPX.X indes is wedging and is weighted to the downside.
2. ummmmmm.....I guess I need to look harder.