Well here we are, an entire world region on fire and checking the S&P it moved a whole one percent down.
Sometimes conventional wisdom doesn't apply because for the life of me, how is it posible that panic didn't set in?
We can think that Tunisia and Egipt are not big players on the world stage but now we have Iran doing sightseeing (tourism) in the Mediterranean plus Libya who provides 10% of oil to Europe in a pickle. So capitals hate uncertainty, and the situation is certainly up in the air. So why the market is reacting so mildish?
Not using tv entitles me to not have a clue, but from an astrological point of view, is due to the lack of strong negative forces at play now.Mild in the US equity markets, of course other situations and places are on fire at the same time.
At the beginning of the month I mentioned that if Jan 29-Feb3 fail to correct the market could mantain the direction for the month. It didn't move a lot but didn't fall either.Then I found a position around Feb 13 that could start a correction but nope, not strong at all just consolidation.
I know that my common sense wants to find a correction because is not possible for this to keep going, so I start checking secondary elements with the intention to see if something can bring the market down at least 6-8% and I found something interesting that appeared past Friday, not too strong but unusual.
I was checking comparable effects when stronger forces are absent along the past century and they show an increased volatility...but to the upside, most of the time.
The end of the session finished going up again and Sunday it made a triple top in the one hour chart, so I thoght maybe something to the downside here...
But the drop being small today kept me thinking if world events can alter mild astrological situations for the US equity market. Honestly don't know if that's posible or the market will behave mildly going up and down but not that much.
Yeah with the Middle east on fire! not very logic indeed.
By the end of next week more strong alignments start gathering for a 10-12 day period that can produce the starting point of a strong up move.
Could be possible that kind of up move without scaring people first with a sharp down move? Everything could happen but a...correction...should...appear...for...that up move...to happen; this of course if I use my common sense.
If I exclude it, what astrology tells me is...relax chap, this could go down a little maybe 2-3% exaggerating and without even realizing it the next push should be almost here.
I remove slowly the paperbag from my mouth and smile at it.
Dan
Alibaba Shares Tumble After Fraud Leads to CEO Departure
ReplyDelete"Alibaba.com Ltd. shares fell the most in more than a year after the company said an internal probe found more than 2,300 vendors used its website to defraud global buyers, prompting the chief executive officer to quit.
Some Alibaba employees were responsible for allowing sellers to create bogus storefronts, China’s biggest electronic- commerce company said yesterday. CEO David Wei and Chief Operating Officer Elvis Lee, who weren’t accused of wrongdoing, resigned to take responsibility for the "systemic breakdown" of integrity, it said."
I have a very revolutionary idea. I know it will be hated on this blog, but just to let you know, I've put a position paper up to my management and their management and if upper management wants to read it they can.
ReplyDeleteMake hacking a capitol crime.
Or, pay hackers to attack US enemies.
Make it black or white.
Put people like me out of business. Please.
Hacking can (as has been demonstrated) topple governments.
Hacking can (as has been demonstrated) place agents in mortal peril.
So the people who do it effectively are dangerous to society to the point of causing death and anarchy. These people are clearly guilty of capitol offense.
Thks Dan. Some rationality just around the corner...?
ReplyDeleteI think one way to play the Middle East crisis, is through shorting tourism companies with assets in these countries.
Eg, Club Med, a French company with resorts in Tunisia, Egypt, and probably other arab neighbours, is down some 11% for the last 2 weeks.
Of course, in theory they are insured against such losses, but I remember an insurance company mentioning that current unrests may be outside the scope of their contracts.
Nice post, Dan. The elephant in the room, me-thinks (well, one of many), are home prices, which continue their downward descent and are fast approaching Q1 09 lows.
ReplyDeletehttp://www.calculatedriskblog.com/2011/02/case-shiller-national-home-prices-are.html
@Rock, your comment 8:57: hopefully others understand what you mean, but with all respect, it all sounds like Hofferish to me.
ReplyDeleteMannwich (10:17) - I saw that this morning, But if we are experiencing the first true unrest in the Middle east in our life time (Well people like Rock are old enuff to remember better)
ReplyDeleteIf oil is being pushed to over $90 a barrel and we have no economic growth.
Do you really think lower home prices are going to have an effect on this market?
At this point in our history I think all we have is a bunch of Pigmy Pachyderm
Mutt
Morning all! Damn, look at oil
ReplyDelete@Dan,
ReplyDeleteThanks for the post.
@Emmy,
The 'Mad dog' is back on T.V.
"Flatulent dictators and the FED". Macro-man blog.
"Best Fiber Optics Stocks to Watch". http:www.tradermike.net
ICan
Diggin' DIG right now.
ReplyDeleteLooks like housing has caught a lot of people on the wrong side AGAIN:
ReplyDeletehttp://www.calculatedriskblog.com/2011/02/real-house-prices-fall-to-2000-levels.html
Manny - That's pretty scary. It'll be decades before those losses in housing are recovered.
ReplyDeleteDenise is out of town FYI - don't think she has internet where she's at yet.
ReplyDeleteSome of these losses may never be recovered, Thor. See Japan.
ReplyDeleteLooks like our correction is finally upon us. Maybe I finally got this one right.
ReplyDeleteTLT looking stout.
ReplyDeleteGood morning everyone.
ReplyDeleteHorrible news from New Zealand. We were in Christchurch one year ago and it is (was) one of the most pretty small cities in the whole world.
Sad to recognize some of the buildings that were so beautiful and historic now in ruin. I heard from fellow travelers and they are as sad as we are due to the loss of life and destruction.
We were unable to go on a side trip to the ocean because of the earthquake in Chili and unfortunately, New Zealand got the brunt of it yesterday.
@Emmy,
ReplyDeleteHow much of China's miracle growth is an illusion?
@Rock,
ReplyDeleteWho needs hackers when the US security is so lax that even a lowly Private First Class Bradley E. Manning can download all the secrets he wants?
@Denise: My wife, whose been there as well, said the same thing this morning.
ReplyDeleteThe VIX was signaling last week that a sell off was near. It looks serious enough to stick at least for a few days.
ReplyDeleteManny,
ReplyDeleteSo sad. It was a very English looking town with the small river Avon running through it, and where many of the first settlers came.
Wish I had nibbled on VXX. Looks like some of us were a bit early on that one but it's going off now.
ReplyDeleteHuge volumes on the ES this morning. But to put this into perspective, we have only given back last week's gains so far.
ReplyDeleteThe 1316.00 area is a place of support.
@Manny,
ReplyDeleteAs I noted Friday, when the VIX does not confirm the new highs it is time to get defensive.
Great call, Denise.
ReplyDeleteThanks, Manny,
ReplyDeleteI noticed the extra volume that was going into the VXX and VXZ last week. Despite the fact that they do not track well, people still trade them.
Ema(20) 1316
ReplyDeleteEma(500) 1285
Ema(200) 1195
Emmy,
ReplyDeleteGreat link fest!
@dss
ReplyDeleteNot my linkfest.
Emmy,
ReplyDeleteI know, I am just getting around to reading the weekend's posts and comments.
Ahh, my apologies.
ReplyDeleteCorn, Wheat and Soybeans limit down.
ReplyDeleteIs Barnes and Noble next?
ReplyDeleteBarnes and Noble falls after dividend cut
The market is trying to hold Dow 12200. A break below there and we will be close to -200 down.
ReplyDeleteLe rouge vous va si bien!
ReplyDelete(Red fits you so well)
Nice analysis Dan, I'm with ya...
ReplyDeleteNAZ down almost 70. DIG now down too.
ReplyDeleteDid someone finally turn off the perpetual motion buy program?
ReplyDeleteWow, when was the last big down day even remotely close to this one? August?
ReplyDeleteManny - MONTHS!
ReplyDeleteSnap back tomorrow though, I'll bet you a quarter ;-)
I-Man - your avatar pic is beautiful - did you take that? Looks like HDR.
ReplyDeleteI dunno, Thor, although you might be right. Dip buyers will come in at SOME point though and push this thing higher ONE LAST time, I think, before it all comes apart again. I'm in that camp as well.
ReplyDeleteManny - you're throwing off my mojo - you and I are usually in the same camp on these things ;-)
ReplyDeleteC down 4.48%.
ReplyDelete@dss,
ReplyDeleteNext support 1285?
Turnaround Tuesday?
ICan
@ICan,
ReplyDeleteSPX next support in the 1276 area. We have not broken the 20 ema on the daily.
So far today it has been a trend day down which is followed usually by a consolidation day, however, there is also a chance of another trend day down.
Lots of people will bail if this thing goes down overnight.
There is some support at the 1310 level ES.
ReplyDeleteSo far the decline has been orderly.
@dss,
ReplyDeleteThanks.
@Rock,
Cobra nailed it again. Weakend post -"Could see red aday or two but hardly this is the top".
Especially, comment by "Uempel" -'1316/1313 is crucial'. That was 11 hours ago.
ICan
Volume at year's highest.
ReplyDeletehttp://www.zerohedge.com/article/volume-surges-years-highest-20-dma-support-about-be-tested
Damn - look what oil did today. This latest move is going to push gas over $4.00 bucks a gallon here. I just paid $3.59 on Friday.
ReplyDeleteManny-DSS
ReplyDeleteNice call past week.
Rock Thanks
Finally hints that there is developing the conditions for the chance of potentially create the setup to help producing the environment to advance the posibility of preparing the characteristics that may under favorable circumstances originate some correction.
Dan
"9:39pm: Business leaders appear to be ready and waiting to move into a post-Gaddafi Libya. George Kanaan, CEO of the Arab Bankers Association in London, says reform will be "hugely positive" for the country - unlike Egypt, which already had a fairly open and "liberal" economy, change in Libya will encourage massive outside investment. he'll be appearing on Al Jazeera soon. Watch here."
ReplyDeleteAl Jazeera
@Emmy,
ReplyDeleteWhich could explain why there has been no panic with the unrest in those countries. They are looking past the revolution and seeing huge profits.
This is the peace and quasi-democracy dividend that has not been discussed very much.
Emmie - We all know how that's going to end now don't we? I can hear the IMF and the rest of the corporate Plutocracy salivating from LA.
ReplyDeleteAnd these poor people think they're about to be free.
We broke lots of channels on the metals, many on the coals, but SLX held it's channel.
ReplyDeleteLooking at the techs, AAPL really pooed the bed.
Thank goodness for stops. Actually, I've been short for a few days on CENX X CMG and AAPL.
I'm looking at volume, and it seems that for about 50% of the ones that fell out of channel, the daily volumes are increasing. This may mean that the price action is being confirmed and this may be a trend reversal.
I looked at the market from another viewpoint. I took the S&P apart, and in the metals, steels coals and techs, a general conclusion is that the stocks that (until today) were rising in those categories belonged to the S&P, but the stocks that were not listed in the S$P that are in my watch charts were declining. This is not a hard and fast rule, but after looking at a bunch of tickers, that seems to generally be the case.
In my opinion, this means that new money is going into the index, and pushing the index higher. With the sell volume trend going higher in the individual names, over the last few days, it may be a "flight to safety". That is, people may be removing money from individual stocks and spreading their risk onto the index they know will be going up. (I think the index is down today because of the weight AAPL brings, and I think the AAPL declining is due to Steve's health). The index is still in-channel, but very close to the bottom (buying opportunity?).
It may also be that I pick shitty stocks for my watch lists.
I think we might see 100 oil again within the next couple of days. How high can that go before it chokes off the "recovery"?
ReplyDeleteOh - and let's not forget that we're pretty likely to have a government shut down in about two weeks.
ReplyDelete. . . .and the increase in oil prices is eventually going to be passed down into the developing world in the form of higher food prices.
ReplyDeleteCan we thread the eye of this needle?