I know we're all anxiously awaiting this mornings open, and frankly I'm exhausted, so I'm going to take the cheap way out and throw up yet another open thread. Business is about to enter our slow season so hopefully I'll have more time soon for more interesting posts!
Some pretty good comments and links from yesterday, folks. Thanks!
ReplyDeleteOn May 31, for the S&P500, the number of stocks above their 50 day MA was 319. On June 1, it fell to 235, a 16.8% decline. (actually a 23% decline of the 319 number, but 16% of the total 500).
The Spy was down only 2.25%.
So a 2% change in price moved 15% of the stocks below their 50 day MA. To me, that says the distribution of individual stock prices is substantially close to the 50 day MA.
I'm sorry I can't get the unweighted numbers, which may be different. But I think not very much different.
I would guess that the algos use the 20 and 50 and 200 day averages to adjust their strategy. I would guess a break in price to the downside of those MA's will cause sell probabilities to increase.
I believe the momentum to the downside will continue until the distribution of stocks moves to the point where there are many fewer individual stocks breaking their 50 day MA. Looking at the Stockcharts.com $SPXA50, that number (based on history of a rising market, not a flat market) looks to be around 150, more or less.
I got out my old advanced engineering mathaematics book and looked up how to solve this one. Bassically, it looks like 3 more days of 2% price falls to reach that 150 point. We should hit the 150 number about Monday. That assumes a standard bell curve distribution of the 500, and a linear price drop. This was only a second-order solution, the true solution would take into account the redistribution of the stocks along the bell curve with each day or hours' price point change. To do that, I'd have to re-learn fortran. Ha.
If there is a pop on the open, I am reentering my shorts. I suspect there will be a pop because I'll bet dollars to donuts that the Plunger Team has been summoned to the fray. And they work in the wee hours of the night.
It will be interesting to see how this plays out. If we do get the down days and the 150 number is reached Monday, I'd certainly be looking for a Turn-Around Tuesday.
You know, Thor, a great post would be a listing of all the 4LA's.
Like TPTF = Too Powerful to F__k.
"Systemic Fraud in China?" http://www.barelkarsan.com
ReplyDeleteLFT is a billion dollar Chinese company trading on NYSE. It claims to have cash balance of over $400 million.
Deloitte Touche Tohmatsu were their auditors for the past 6 years.
This year they found out there was no cash in the bank, atleast not the amount company claimed.
In India, Satyam computers - claimed to have $billion in cash - went bankrupt - now part of Mahindrasatyam.
Can you trust auditors? Enron anyone?
ICan
PM (the stock), you've had quite a run there. Another side effect of QE?
ReplyDeleteI meant the yield-seeking for the above.
ReplyDeleteGoldman subpeonaed again. More theater or something different? I'm starting to think the public outcry is going to ultimately bring this criminal enterprise down. Gonna take time though. Ultimately this firm is going to destroy itself.
ReplyDeletehttp://www.zerohedge.com/article/here-we-go-again-goldman-subpoenaed
@I Can: Tough to trust anyone within the system when the pull is too strong to either be on the take or be on the outside looking in (with no job).
ReplyDeleteDss said
ReplyDelete"Worst sectors today, down more than 2%:
XLF
XME
XLB
VNQ
XHB
XLI"
If you, like me, wish to short, don't short strength. Never short AAPL, it will rip your face off.
This um, correction, began 5/2.
In XLF, the performance is:
JPM -10.8%
GS -10%
WFC -08.6%
BRK.B -6.4%
C -12%
BAC -11%
AXP +1%
USB -4.5%
MET -9.2%
MS -12%
Conclusion: Short MS, C, BAC. Don't short American Express or US Bankcorp.
I'll do XME later, busy now.
I think I'm really starting to buy into the whole "Obama is Herbert Hoover" argument whereby the crash of '08/'09 was merely a precurser to the real crash later on.
ReplyDeleteNice work, Boner! Bailouts and tax cuts for the uber-rich, the giant middle finger for everyone else. How long will people continue to blame themselves and simply take it over and over again?
ReplyDeletehttp://www.huffingtonpost.com/2011/06/02/john-boehner-fights-foreclosure-relief_n_870048.html
By the way, the HELOC offers are back. At least for us, anyway. Let the good times roll again! New flat screen TV and a vacation coming right up!
ReplyDeleteEmail from Wells today.....
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Morning folks! Rock, I don't think we'll get 2% down days till Monday, betcha today will be flat waiting for tomorrow's payroll numbers.
ReplyDelete@Thor: Probably right but will a bad number be bad or good? And vice versa?
ReplyDeleteRock - If you relearned Fortran, you could get a job as a J2EE Developer at Thor's Company.
ReplyDeletePeople still do use Fortran don't they :p
Mutt
From that article about Boner:
ReplyDeleteBoehner's job as House Speaker includes partisan duties beyond Ohio's eighth district, a southwestern swath of the state that encompasses six counties from the Cincinnati suburbs to sparsely populated farmland. Boehner is also tasked with leading the GOP’s Congressional agenda and spearheading a host of corporate fundraising efforts critical to the party's campaign operations. As foreclosures have steadily ravaged the eighth district, Boehner has raked in millions of dollars in campaign cash from the financial sector.
And Boehner consistently votes with Wall Street on major policy issues. He voted in favor of the bank bailout in 2008, and opposed financial reform legislation in 2009 and 2010, even as he socialized with such major financiers as JPMorgan Chase CEO Jamie Dimon in an effort to raise campaign cash.
Over the course of his career, Boehner has raised $4,261,340 from the finance, insurance and real estate industries, according to data from the Center for Responsive Politics. In the first quarter of 2011 alone, after Boehner became Speaker of the House, his fundraising operations secured $638,742 from the same sector for his campaign, his political action committee and then the Republican Party, according to data compiled by Paul Blumenthal of the Sunlight Foundation.
Manny - yet he keeps getting re-elected, does he ever even face any competition? Where are the viable alternative parties?
ReplyDeleteROck - is it too late to take back what I said about a flat day? :-/
ReplyDeleteYet another sign of the impending apocalypse. This truly says it all about our culture today (is even over the top for greg - LOL):
ReplyDeletehttp://www.ritholtz.com/blog/2011/06/most-photographed-nyc-attraction-5th-ave-apple-store/
Whoa, just tuned back into the market. More to the downside, it looks like. Yikers. Getting dicey.
ReplyDelete@Manny, I have one shot in HD, 16:9 aspect ratio hanging in my living room, or as I call it, the iRoom.
ReplyDeleteI also had one done in black and white, think film noir meets Raymond Chandler, with the George Orwell quote underneath...
"During times of universal deceit, telling the truth becomes a revolutionary act."
It helps to keep me calm.
Manny - yes, it's always nice to be proven wrong within less than an hour . . .oh well, ya win some ya lose some!
ReplyDeleteWhat's the next level of support on the S&P?
ReplyDeleteWheat up again. They can now blame that on the weather somewhere in this solar system. Maybe sunflares? Actually most softs are up. People need to eat.
ReplyDeleteLOL
ICan
@Jeff(12:11)
ReplyDeleteCobras' interaday thread has some day traders' charts. one guy, "umpel" is good with charts. 1318, 1302, 1286 are his numbers(fibo numbers if you take 1369 as high). Most charts I saw today, 1305 is support.
ICan
Loonie is down.
ReplyDeleteTLT getting clobbered. The trend is still up. Am tempted to nibble on it again but will probably hold off.
ReplyDeleteJust had a thought - I'll bet that wackadoo Palin or some other well known media whore or celebrity rich person (maybe Bloomberg) runs for prez as a thirdy party candidate next year. Mark it down. You heard it here first. LOL.
ReplyDeleteWhich is going to throw a whole big monkey wrench into the outcome.
ReplyDeleteBad news is that bad news is bad again - Art Cashin - businessinsider.com
ReplyDeleteBut I think "they" will spin the slow down in China( bailout of their local govts.) as good news. China will print more money.
ICan
re supports on the SP500: my 2 cents.
ReplyDeleteI'm still relying on the same supports as posted in my thread from March.
Next one should be 1303 (almost reached today).
Then we have the 1294 line, 1280 and 1261.
1313 may be our resistance from now on. We'll see.
Manny - what gives with all these tornado's in Mass? Is that normal?
ReplyDeleteICan - Exactly! Was thinking the same thing last week - that finally bad news is bad again. I wonder how much up that is the ending of QE2? People knowing that the government might not be there to backstop equities. . .
ReplyDeleteHah - got to love these predictions.
ReplyDeleteJames Altucher offers a 10-point plan for getting the Dow industrials from the 12,000s to 20,000.
Dow 20,000, here we come
A day after the Dow's worst day since mid-2010, James Altucher says the market merely needs a day or two before blasting off ... toward Dow 20,000.
Let's see how this last hour goes . . . .
ReplyDeleteNot normal at all, Thor. Weird stuff.
ReplyDeleteAltucher is a bull-tard talking his own book. 'Nuff said.
Manny - good to know, I hadn't heard of him before!
ReplyDeleteGreat article from The Economist.
ReplyDeletehttp://www.economist.com/node/18775426
ast December an agreement between Barack Obama and the Republicans to extend George Bush’s tax cuts and enact new ones led to forecasts of 3% to 4% growth this year. But the new consensus rate of 2.6%, for a recovery now two years old, is barely above America’s long-term potential and scarcely enough to bring unemployment down. To be sure, the post-crisis imperative for banks and households to reduce their debt meant a V-shaped rebound was never on the cards. Even so, this is a terrible performance.
Economists have found themselves repeatedly making excuses. First it was the snowstorms. Then it was Japan’s earthquake, tsunami and nuclear disaster which crimped the supply of parts to car assembly plants in America. Then, as the snow melted, floods ravaged Arkansas, Mississippi, Missouri and Tennessee, and tornadoes battered Alabama and Missouri. America has suffered five incidents of extreme weather this year, each inflicting at least $1 billion in damage.
@Thor:
ReplyDeleteRE: flat day: yesterday's big drop simply put us at the bottom of the S&P downchannel, so today's action is causing the channel number to go up a tiny bit. Still in the downchannel.
I doubt we'll see 2% down days by Monday as well. But when we hit 150 stocks above their 50 day, I still think there will be a pop.
There is a whole lot of positioning going on by the agencies right now so tomorrows job numbers will be reported as "less worse than expected", which will of course boost the market upward.
I reentered all my shorts after the pop, and am again green to go today. But, except for RIMM who is being put out of business by AAPL, I will exit them before the end of the day. Expecting at least some fabrication of numbers.
The math just doesn't work for a SPY rise. The earnings expectations are just too high. We've got lower government spending meaning fewer jobs, we've got poor consumer outlook, and poor consumer retail spending, and we're asking the emerging markets to pull the world out of the recession. And the final straw is the Euro is stronger than the Bucky! Nonsense.
I'm looking for a turnover and drop in price on CPX. Their daily charts look like a lower high, and the relative strength is dropping. It seems to be establishing a downchannel. Also the business they're in, with the less worse than expected job numbers, and middle-retail numbers down, the business CPX provides is likely to tank. No buyers means no need to start design/manufacturing.
ReplyDeleteRock - agree on all points. I think 2012 is the year we really start to see the effects of all this cutting of public employees and budgets.
ReplyDeleteAgain, I'm not arguing that this is not something that needs to be done, just that I don't think we're going to be able to get away with cutting so much, so quickly, from every facet of government across the country, without some serious headwinds to the economy.
Or should that have been "without serious hurricane force headwinds to the economy"?
ReplyDeleteRomney is 64. Sorry to say he's too old to be president. It just gets too tired in here, at the end of the day.
ReplyDeleteWe need young guys like John Kennedy and Obama. They have enough energy to do the job. I'm not saying either did a great job, but they have the energy to do it.
Hillary may be too old too.
If true, file this under the "what goes around, comes around" category. LOL.
ReplyDeletehttp://www.zerohedge.com/article/john-paulson-could-lose-650-million-latest-alleged-chinese-fraud
Moody's is threating to downgrade C and BAC.
ReplyDeleteA lot of their reserves are government bonds, at a 0% discount rate. That makes their reserves over-reported at best, and less than required at worst.
If they have extensive greek debt, they're toast.
Both C and BAC are up today. They are firmly in their down-channel, so they might make a decent short. They've both showed weakness since May 2.
Groupon GRPN S1 is on Edgar.
ReplyDeleteRemember my post about what happens when a MSM-touted company goes IPO.
GRPN has never made money. But did that ever stop the IPO pop?
@Rock: Actually "making money" (read: profits) is so 1950. I'm actually quite amazed at just how long failing, but well funded, rather large companies can limp along (often with ridiculous stock prices) without making any real profits whatsoever.
ReplyDeleteDo large public companies with big-time continually access to our casino, I mean, capital markets, actually need to make a real profit anymore? Is the CEO and executive (and Wall Street and insider) game simply to keep kicking the can and asset strip mining the company by paying yourselves money until these places cave in on themselves? Is that the game now? Or has it always been the game?
ReplyDeleteGroupon files for IPO
By Hayley Tsukayama
Groupon filed for its initial public offering Thursday after weeks of speculation that the company was ready to go public.
In its filing with the Securities and Exchange Commission, the daily deals site reported selling 28.1 million Groupons in the first quarter of 2011.
Groupon revealed that has increased its revenue from $3.3 million in the second quarter of 2009 to $644.7 million in the first quarter of 2011. But it’s still not a profitable business, having lost $146.5 million in its first quarter.
The deal is being underwritten by Morgan Stanley, Goldman Sachs and Credit Suisse. The company’s proposed stock ticker symbol is GRPN. The company expects to raise as much as $750 million from its IPO.
Many will be watching Groupon closely after social network LinkedIn’s huge first day of trading, which raised the company’s value to nearly $9 billion. Game company Zynga and Facebook are expected to file for their IPOs in the next two years.
Shares of LinkedIn climbed as high as $122 after its initial public offering, prompting some to say that the tech industry is on the verge of a new tech bubble. Linkedin shares are currently priced at around $80 per share.
Rock (3:40) - "over-reported at best, and less than required at worst" Is there much of a diffence?
ReplyDeletePersonally I can not STAND BoA and would not cry one trear if they go under, but alas, they are too big to fail
That a rediculous term, how on earth can something become to big to fail?
Mutt
Mannwich, Rock, anyone (4:41) - "Shares of LinkedIn climbed as high as $122 after its initial public offering, prompting some to say that the tech industry is on the verge of a new tech bubble. Linkedin shares are currently priced at around $80 per share."
ReplyDeleteDoes that mean it is a good idea to short a company that makes a huge pop on their IPO?
Mutt
Manny - like we keep sayin' Bubble! So strange to see it in exactly the same place we had it 10 years ago, are people really this stupid today?
ReplyDeleteWolfie - Just read a great Stratfor article on France and the upcoming summer. Didn't realize you guys were having your hottest Spring in a hundred years. Summer might be very deadly in your neck of the woods. How many people died in France last time there was a big heat wave?
ReplyDelete@Thor: Um, do I really have to answer that question? Isn't the proof in the putting, as they say?
ReplyDeleteGreed makes people do some really stupid things. And when it takes over a culture, that's pretty much all she wrote..
ReplyDeleteGovernment shutdown looming here in Minny. Fun stuff. This is truly a slow motion train wreck awaiting the country. We might not have to wait until '12 for the circus to start. But we must never, EVER, EVER raise taxes on those most fortunate in our society to ensure our communities don't fall apart. It's truly incredible to watch this thing unfold.
ReplyDeletehttp://www.startribune.com/politics/statelocal/123064123.html
Manny - it has to snap back though, the culture, I can't believe we'll be like this forever, or that we'll continue down this destructive path.
ReplyDeleteGreg and Ican if you are around, and Wolfie too. Do you guys have this level of cultural angst in your countries?
More on the three ring circus that is the U.S. of A.
ReplyDeletehttp://www.nakedcapitalism.com/2011/06/guest-post-congressional-research-service-confirms-big-banks-borrowed-cash-for-next-to-nothing-then-lent-it-back-to-the-federal-government-at-much-higher-rates.html
Manny - and it's you and me who pays for that. Jesus
ReplyDeleteAnd many others. But we can never, EVER, EVER raise taxes on these people under any circumstance. Have I mentioned this before? LOL.
ReplyDeleteGood article
ReplyDeletehttp://finance.fortune.cnn.com/2011/06/02/the-feds-summer-of-discontent/
Good one, Thor. I do think they'll do more QE, whatever they end up naming it, but will likely wait for the economic (and likely market) dip first to do so. It's just a matter of time. Way too much is invested now for them to turn back or stop. They are basically trapped since we won't see any more fiscal stimulus from a clueless Congress (and weak president).
ReplyDeleteThis is very good:
ReplyDeleteGeithner and Goldman: Thick as Thieves
http://www.truthdig.com/report/item/geithner_and_goldman_thick_as_thieves_20110531/
I read that today,excellent article! You watch, he'll go straight from Obama to Goldman Sachs, with a nice big signing bonus.
ReplyDeleteoh no, this is not going to end well at all :-)
ReplyDeleteMannwich - From our point of view it really is amazing how slowly things to be unfolding, but if we go back through history in most cases, it has taken several years for things good or bad to happen.
ReplyDeleteMutt
@Mutt:
ReplyDeleteYes, I agree it was a good idea to short LNKD. I tried.
My broker, TDAmeritrade, said that the LNKD shares had not been deployed far engough and would be several months before they became borrowable in order to short them.
He also said that the cost to borrow them when they become available would be very high, and I'd have to be very careful with the costs on that one.
Basically, it is not free to borrow the stock when you short. There is a charge. Sometimes it's a percentage of the current value of the stock.
@Mutt:
ReplyDelete"Over reported" means the value assigned on paper is higher than the actual value after transaction.
"Less than required" means that when the asset is converted, there's not enough money to provide the correct reserve percentage, or in the event of a bank run, not enough to cover the deposits.
The EU provided capital to many banks in Greece and Ireland because they were afraid of bank runs, when the reserves would be "less than required".
"over reported" is not so bad unless there's a bank run, and they need to use the reserves. Then it becomes "less than required", and that's how banks fail. When they're not too big, of course.
@MAnnwich:
ReplyDelete"so 1950".
Careful, buddy. You're hittin pretty close to home, there.
Rock - That makes sense on why IPO stocks would not be shortable, but leads to a lot of other questions.
ReplyDeleteSo I will need to roll up my sleeve and do some checking.
But it would seem that for LNKD to go from 120 to 80 per share so quickly, someone somewhere has figured out how to make money off of it.
Thanks for answering my question though.
Mutt
@Thor:
ReplyDeletefrom your link: "it is not clear we can get substantial improvments in payrolls without some additional inflation risks. That view got support Wednesday from Pimco's Mohamed ElErian".
It is clear neither of these boys have had to work for a living in an evnironment that has 2000 applicatnts for every job posting.
I wish I could scream at them how their idocy is showing. It is idiotic to think that with 2000 people after your job, no matter what inflation does, it is assinine to think that your salary may be adjusted upwards.
No matter what inflation does, there is not going to be any "improvments in payrolls" until most of the people get back to work.
It sure shows they never had to work for a living.
@Mutt:
ReplyDeleteThe underwriters can save shares for themselves. Then when it goes up, they can sell. So if you have an account with the underwriters, you may be able to short the stock, while they keep it.
In the case of LNKD, the underwriters decided to sell. Bloomberg, I think it was Margaret Brennan, said something like "I'll bet they're kicking themselves now" when the stock was at 120.