http://blog.afraidtotrade.com/
Walking by the Priest, the boy asked “how’re things, Father?” to which the Priest replied “Looking up, my son”.
So here we are, today, looking at the SPY. Remember I drew the pennant, and said the breakout buy/sell points would be 128 and 122? Well, we hit and passed the 128, and are currently trading around 129. So we broke through. However, we see some caveats:
1. Low volume (little new money coming in so no commitment, and remember a significant percentage of the volume comes from the HVTs and HFT’s)
2. We got here way earlier than we were supposed to, in order to complete the pennant
Here’s the SPY now:
I had to go back to July, 2009 to get a similar pattern. And this pattern, we all know, resolved into Up Up and away for months.
Which brings me to the importance of the other 3 aspects of the market: the psychologicals, the fundamentals, and the structurals. As you recall, in July, 2009, we were beginning QE2 and the Fed was pumping in liquidity like mad. And, corporate profits on earnings were going up, as the corporations became leaner and meaner. And the psychologicals were down in the dumps, as were the bank balance statements and fundamental insolvency.
Isn’t that exactly where we are today? Billions being loaned/given to the ECB, Eurobanks balance sheets suck, and everybody says “oh woe is the Eurozone and therefore by contagion, oh woe is me”. And in earnings season, doesn’t it look like we’re beating expectations (again).
Looks to me like a repeat of July, 2009. Up Up and away.
Now, we may see a minor correction to bring us back into the pennant, as you can see from the “Oversold” and “Turning Down” comments on the chart above,. And here’s my favorite indicator, the SPXA50 from StockCharts.com
Which indicates we are at or near the top of the cycle range. Indicating a turndown may be in store for us. But after that, should it happen, I think things are Looking Up.
Foreign $$$ being dumped in U.S. equity markets? Or something else. Either way it's party time. No more problems.
ReplyDeleteBloomberg reported this AM that money is starting to flow out of bond funds and into equity funds. We may see bonds level out while equities start to catch up. I don't think we'll see bonds fall, because too much European and Asian money will be flowing in to support that bubble. But man! when that sucker pops, look out!
DeleteActually, this might be the Bernank's plan. Make US bonds look great to Euros, let the money flow in, sell the Euros the Fed's holding in bonds, then pop the bubble. Let those Euros pay for their problem, as well as ours. Maybe spending a few billions to give them money to buy our bonds is a good plan, not treason.
DeleteI'm with you, Rock. And far too many are expecting calamity for it to happen. Market needs to suck more greedy suckers in from the dumb money first. This could take a while though.
ReplyDelete@Mannwich:
ReplyDeleteI'm starting to stay in overnight. This weekend, I took a chance with a 10%, in RIMM and POT. I would like to see the SPY on the bottom with stochastics before I up that bet, but as you point out, it might not happen for awhile.
Kraft announces a 1600 job-cut reorganization, moving the bulk of the operations to Chicago, and the beverages to Terrytown NJ.
ReplyDeleteGuess what? Their stock popped and is rising.
I guess it's good to cut jobs. Right in line with today's post. Like I had a crystal ball.
TLT up as well. Hhhmmm, seems as if the hot money is entering both our equity AND bond markets? Just as a few of us here theorized was happening.
ReplyDeleteVigilantes!
ReplyDeleteHey guys, do you want to keep this new layout? I haven't looked into whether or not we can revert back. No preference on my end!
ReplyDeleteHeading back to LA for the rest of the week to work on the house there. Man being unemployed is time consuming!
I'm fine with it. Interesting market close today. Noticed Citigroup got smacked big-time.
ReplyDeleteThe soothsayers out there say tomorrow is the big dipper. DeMark is one, but he says that other things may have to expire. So he's giving the pullback a couple of days.
ReplyDeleteI don't believe future tellers. I believe the tape. I'm in overnight for my 10% position, like over the weekend. It did me good.
I think the next big one is likely around March 20, when Greece is due to pay back 14.4B (not sure $$ or euros)which they don't have. And the haircut talks have pretty much stalled--seems the europeans aren't exactly of one mind, after all.
This will trigger the credit default swaps, and Bloomberg says it will create a "credit event". As far as I can tell, and from what I've learned from my friends in Sing, this will simply spread the debt around a little more, not erase the debt obligation, and spread the payments to more corporations, and banks, who aren't paying now.
In other words, it could be a non-event.
HOWEVER
Look at the cycle chart, it seems the next cycle will start around April/B. March 20 is pretty close to April/B.
I'll just keep my stops tight, and overnight keep 70-90% of my powder dry.
@Thor:
I think the new look is OK. My icon lives on. Daddy would be proud.
@Thor: I put in a problem report about IE under windows 7 and Vista doesn't let people comment. You may wish to do the same. I don't think Blogger developers have very much test experience.
ReplyDeleteStocks are getting cheaper. No wonder it's so hard to make money trading....
ReplyDeletehttp://www.bloomberg.com/news/2012-01-17/market-shrinks-for-first-time-since-2009-as-u-s-buybacks-top-stock-sales.html
The way it works, with stock buybacks, given constant earnings, the EPS rises. Therefore, unless the stock price rises, the stock gets cheaper: the denominator of the P/E gets bigger. In 2011, granted, we had some winners and losers, but for the year, the s&P was flat, making all the buybacks done cheapen the stocks.
Another reason for Up Up and Away.
One more UUA observation: Last year, the ECB raised rates. That's essentially what caused Spain and Italy's debt crisis. LIBOR had been increasing steadily. There's no hope for Greece and Portugal: they will have to default or restructure, and everybody knows that. In order to prevent a "Credit Event", it is hoped this restructure is controlled, rather than a function of insurance (and who's sure there's money to pay the insurance?)
ReplyDeleteBut now, the ECB is lowering rates, and providing liquidity. Today, another 500B. LIBOR has been steadily decreasing. Hope that the central economies (France, Italy, Germany) will survive.
Hope springs positive things for our market. Today, the Euro's up, and the dollar's down.
This may actually get more money to flow into the market.
"Will see".
So should I change my monniker to "pollyanna"?
ReplyDeleteGS earnings "beat" but are 50% below last year's numbers. It's the same old game: where will you put your money? 0%? Or somebody that's making profits?
@Mannwich:
ReplyDelete2 more arrests on insider trading.
Drip, drip, drip, drip.
We'll get 'em. Patience, padawan.
Haven't seen that yet. What are the details?
ReplyDeletePart of me now thinking we at least approach new highs before it all comes apart again. Way too much vested in market being higher for it to be allowed to go down.
It's at
Deletehttp://www.reuters.com/article/2012/01/18/us-insidertrading-arrests-idUSTRE80H18920120118
I heard about it this AM. The FBI did the old sting trick: bam bam bam on the door at 0 dark hundred, forced their way in with the warrant, scared the pee-waddin' out of the entire family, and hauled dad off in cuffs.
Makes you wanna be there, doesn't it?
Hillary is being considered for president of the World Bank.
ReplyDeleteThis is BO's method of turning her out without firing her. He really can't work with anyone, can he?
Is a "double recovery" in the offing for the U.S? This wouldn't surprise me at all. Remember right before Bush got re-elected in '04? The economy in '03/early '04 was still not on sure footing but much to the dismay of W-haters, it took off (albeit it was all credit & housing-induced) again and he got re-elected. I see something similar possibly happening this year with O much to the great consternation of his haters. Possibly.
ReplyDeletehttp://www.ritholtz.com/blog/2012/01/yardeni-is-the-us-economy-on-the-verge-of-a-big-comeback/#comments
I agree. I think we may have a slow pullback over the summer, then rally into September-November.
DeleteWouldn't that suit the incumbents just right?
Interesting Rock. Looks like the tentacles of this one runs widely, but call me when a really big fish or two go down. These guys are still small fry.
ReplyDelete@MAnnwich:
Delete3 have pleaded guilty and are turning states evidence.
I don't remember if the article said that these warrants were only 7. Rumor is they have more, and are looking for more whistle blowers.
Gotcha Rock. We shall see. Perhaps I'm expecting too much but I was looking for guys like Fuld, Blankfein, and others to do down and/or have ill gotten gains clawed back via RICO.
DeleteYou know, this insider trading thing, I used to have a screener that looked for increasing volume then a pop the third or fourth day. I may have commented about it, and the insider trading which is sooooo obvious from those volume patterns: leak the news early to your friends and watch the volume rise. I could never correlate it to any kind of mathematical surety, but it sure was too common to ignore. I'm pretty sure I commented on it a couple times. It may be that the insider trading is truly rampant, and these arrests and impending prosecutions are kind of like the cop on the highway with the radar gun 3-4 days in a row---everybody slows down.
DeleteI hope not. I hope it predicts more things to come.
hey guys! Still looking into reverting the chat thingy
ReplyDeleteaha! Might be a gadget problem. . . I'm going to have to remove them one by one until I find the offending one. Apparently they made these changes last week and that there are a lot of gadgets that are going to need to be updated.
ReplyDeleteok, well I got the pages to stop freezing . . .also saw this online:
ReplyDeleteThe main Blogger issue being experienced is pages jumping straight to the comment form.Basically when you click into a post you are brought to the comment form instead of the top of the post.This is being experienced by users of the Firefox and Internet explorer browser.At the moment there is no fix for this and to stop it you need to change your comment settings from embedded to pop up.Of course when you do this you loose threaded comments.
Well, my look really changed this time. Now I get a child window when I post, rather than a blog-imbedded window.
ReplyDeleteI'm too old for this.
I have to go to the office to explain why I don't have to move to Taiwan. I'm leaving 25% in overnight.
Will see
K - here's our issue guys - this is a known problem Google is "working on it" and there is no ETA on the fix. Good to know the developers at Google are inept as they were at my last place of employment. You'd think with their ridiculous hiring process for new employees they'd have gone with a test environment first.
ReplyDeleteSo, our decision, until this fix it, is to tell folks to use either Chrome or Safari, or switch to this comment style until Google fixes the issue. . . I can make the comments either in a pop up window, or a separate page (like it's set now).
What do we wanna do? :-)
switched it back and added a disclaimer to the top of the page.
ReplyDeleteRock - Send me! I'm not sick of traveling for work yet! Just commuting for work ;-)
Hey Rock - why do you figure no criminal indictment for this now Goldman-ite? What am I missing? So until someone from one of the big TBTF's goes down, I'm letting a big zzzzzzzzzzzzzzzzzz on all of these small fry indictments. Statute of limitations is ticking too.
ReplyDeletehttp://www.rollingstone.com/politics/blogs/taibblog/everything-you-need-to-know-about-wall-street-in-one-brief-tale-20120113
I believe if it's conspiracy, thenthe statute of limitations begins on the date of the latest conspiratorial act. I believe if any have even a phone call, that's considered part of the act. Not a lawyer, but I believe that's the case.
DeleteProtest SOPA and PIPA. Wikipedia is.
ReplyDeleteStock fund money flows is positive, 11.3B. Looks like some new money is coming in.
ReplyDeleteWhere is the money going?
The short form herds list:
TAN 17% (I'm playing FSLR and TSL)
ITB GEX 5%
SLX 4%
CUZ XHB UCC 2%
I'll put up the best herds each day in the comments. Again, if there are any herds you want me to add, I will be glad to do it. The report is automatic now.
@Thor: your 12:40
ReplyDeleteThe budget's getting crunched. Yesterday's meeting was after lunch, and they used to invite me to a meeting at 11:00 so we could go to lunch (to discuss business, of course).
No free lunch.
Actually, I think I sent you the link before where we were hiring, now it's more difficult. Do you have codec experience? MPEG (hard to get because the spec is still under Phillips license)or even DivX, JPEG or motion JPEG? And Cisco assembly?
As the negotiations go onward in Greece, it becomes obvious that the hedge funds that are participating are not trading on the financial opportunities, rather they are forming the financial opportunities.
ReplyDeleteHedge funds that bought greek bonds are fighting to get the most return: invoke the insurance, and sue the Greek government and the insurance companies to pay off on the CDS's.
Hedge funds that bought greek bonds in the aftermarket for $0.30 on the dollar are saying "we'll take the haircut".
These hedge funds are TBTATL. Too Big to Allow To Live.
It is really obvious that once you get in debt, then your government is out of control of your country, and it is in the control of the individuals who own the debt.
Coming soon, to a country near you.
Totally agree, Rock. Am beginning to think the hedge funds are as bad as the TBTF's. Together they have a bomb strapped to their chest and are basically warming us they'll pull it if they're not made whole by We the Sheeple. This madness cannot go on forever, can it?
ReplyDeleteNo, it can't. The smart wealthy are saying "I volunteer to pay more tax", and "I volunteer to match every extra dollar paid by any congress incumbent in excess of their taxes". (this year, when I don't submit that foreign tax form, I'll be paying about 42% of my income in tax).(My accountant says I'm going to be fried by the IRS...."Will See".)
ReplyDeleteThese guys know what you've been saying is gonna happen, and they frankly don't want it to go down that way. It won't help anybody. Remember we redeployed the wealth in russia during the revolution, and nobody ended up with anything. I want to go watch Dr. Zhivago again.
SO! Looks like the latest Firefox update fixed most of our problems. Rock, no way to disable the new reply function in the comments section. Apparently this was an update that users had been screaming for for a long time. Nice to know we're keeping up with the times eh? Meh, "change" isn't always a good thing these days ;-)
ReplyDeleteRock - Naw, I'm definitely not a coder. I'm more support than development. We're usually the guys cursing your name when we're troubleshooting poorly written programs ;-) Not sure if I'm going to stay in support, or move more toward IT procurement, or go back to being an IT Director like I was when I was with Y&R.
ReplyDeletePS - I will try to re-add our widgets once I figure out where the hell it is that I saved the code :-P
ReplyDeleteSugar, Cotton.
ReplyDeleteSugar chart at Peter L Brandt(if anyone is trading).
Looking at UIS. P/E around 6. Like ICan says, do your own dilligence. How *do* you spell dilligence?
ReplyDeleteAfter doing some screens, it looks to me like some longer term opportunities are not only in the solars, but the energy stocks and some retailers seem quite depressed. Also the miners (gold, energy miners as well).
ReplyDeleteRetailers I'm watching: TIF (back to where I originally invested, I think I'm going back to this one in my investment account) PSMT COST FDO TGT
Yeah, I know TIF guided lower. But they serve coffee. Actually, I went to a bike shop in Topango, and they served steak bar-be-cue. Could be a coming wave--make your customers feel good by feeding them. I like that wave. I used to go to the bars during happy hour to eat dinner, but they stopped serving finger food. So I stopped too.
Energies I'm watching:
ANR PTEN UPL NRGY CHK CLD
@Rock: your 6:38
ReplyDeleteWhere did your rock go? it was posted only 27 minutes before your previous comment.....
Blogger must not be fixed yet......
@Rock:
ReplyDeleteOh, it's back!
@Thor: Your 5:52
ReplyDeleteOuch!
Looking at today's relative strength numbers, I see a significant downturn in the numbers of herds which are above the S%P. To me, this means the market is relaxing, allowing some of the losers to catch up. Also, there seems to be no great swing to the negative side, the numbers of herds below 0 isn't increasing.
ReplyDeleteHere's the best:
SLV UCC 4%
SMH IGV 3%
KCE DIG XRT OIH SLX CUZ 2%
Here's the worst:
GDX -6%
TAN -5% (remember TAN was one of the best just a little while ago!)
SKF -3%
XLU IDU SMN IRET USO XBI XME -2%
The other thing to notice is the large discrepancy between the miners (GDX -6%) and GLD (0%). I think I commented on this before. What does it mean? I think the advance in GLD has led any price action in GDX. In other words, I think GDX is likely to rise. Have a look at AEM and NEM.
the average volume on UPL is way up since Jan 11th. It doesn't report until FEB 16. I wonder if there isn't some special knowledge about it.....
ReplyDeleteCobra has 'weekend watering' too.
ReplyDeleteSome chartlogy.
Chinese new year - year of the Dragon.
ReplyDeleteYes, Happy new year everyone!
ReplyDeleteTo start off your day, here's the list of relative strength herds:
ReplyDeleteFirst, the best:
SLV 5%
$SOX.X, $DJTCNS $DJTINN 4% (I know these aren't tradable, but the indexes are interesting)
$DJTATO UCC DIG SMH IGV 3%
KLE CUZ OIH XRT SLX 2%
ANd the worst:
GDX TAN -6%
SKF -5%
SMN -3%
SLU IDU USO XBI XME IHE DBA IRET -2%
There is a big divergence between GDX and GLD. This bears watching. If GLD goes up, GDX is likely to springboard off the GLD trade. You see SLV is one of the best performers, so silver miners may be participating. I'm just logically extending that to gold and gold miners.
ReplyDeleteNew post is available.
ReplyDelete