S&P 950...Not So Fast
The better than expected GDP numbers threw a slight monkey wrench in the trading plan (for you traders out there). I was expecting a gap down open that would break through the 1040 pivot. The plan was to buy into that gap with a stop under the morning intraday low. The market did break slightly below 1040 (1039.70) so in theory if one was quick they could have jumped in right there. I doubt anyone was that quick, so I suspect almost no one caught the exact low. Perfect timing isn't critical though if this is a daily cycle bottom, as we should have at least 2 to 3 weeks of upside ahead of us. I'm assuming the market doesn’t drop back down to test the lows on next Fridays jobs report.
I really doubt it will. I think the jobs report has probably lost its ability to move the market at this point. Until we start to roll over into the next recession we are probably going to continue to see mildly positive jobs numbers for now. When we start seeing 200,000 and 300,000 jobs being lost again then we can look for the monthly jobs report to start affecting the stock market. Until then I think it’s not going to have much effect on stocks. With that in mind I really doubt the market will be coming back down next week in order to bottom on the employment data.
Now before everyone gets all excited let me point out that today was in fact an outside day and as such we don't officially have a swing low yet. We can't have a daily cycle bottom until the market forms a swing low. That being said, today was a 90% up volume day. That is a panic buying day and this late in a daily cycle that usually means smart money has recognized a bottom and is rushing to get back in the market.
I realize almost everyone is now convinced the bull is dead and we've started back down in the next leg of the secular bear market. Now maybe we have and maybe we haven't. I'm reserving judgment until I see the last two of my bear market signs come to pass. Namely the 200 day moving average has to turn down and we must get a Dow theory sell signal (BOTH the industrials and transports must close below the July lows). Neither one of those things has happened yet. Until they do we are in no man's land. As a matter of fact, according to strict Dow Theory the primary trend is assumed to still be in force until a sell signal is given. Since we obviously don't have that, and aren't really even very close to it yet, I'm going to abide by the rules and assume the cyclical bull is still alive.
Next I'm going to point out we don't even have a confirmed down trend yet. So far the market is still making higher highs and higher lows. That is the definition of an uptrend. In order to reverse that the market would have to break below the July low or it will have to bounce out of this daily cycle bottom, stall out, and then move back below Friday's low (I'm taking some liberties here and assuming Friday did in fact mark the cycle bottom.)
Now let me show you what no one is seeing. And when no one sees it that makes it all the more likely to play out. Of course we do still have the inverse head and shoulders pattern in play. That one actually has been spotted by a few hopeful bulls, but it's certainly not mainstream yet like the regular head and shoulders top was and still is.
The real pattern, and one I put a lot more faith in than a head and shoulders top or bottom is the 1-2-3 reversal that is in play.
Notice how the initial rally into the August top broke the down trend line. That was #1. Now we are in the process of #2 testing the lows. As long as today's bottom holds that test is going to be successful. The final piece in the puzzle is a move above the August highs. If that occurs we will have a confirmed trend reversal and the April highs will then be in jeopardy of being surpassed. I know that seems impossible at this point but I would point out that everyone assumed we were back in a bear market in mid '04 arised when the Fed cranked up the printing presses into the elections and the market broke out to new highs. I forget, what is happening this year? Oh that's right, mid-term elections. Hmm…
There is also a yearly and 3 year cycle low coming due in the dollar (more on that in the dollar section of the report). Suffice it to say there will be plenty of liquidity the next several months.More in the weekend report for subscribers...
August 27, 2010
Here are links to articles on Minyanville.Com. The first is titled '
The Great Deleveraging Lie', by Jim Quinn. I quote the article below.
"Total credit market debt peaked at $52.9 trillion in the first quarter of 2009. It's
currently at $52.1 trillion. The "great de-leveraging" of the United States has chopped
our total debt by 1.5%. Move along. Nothing to see here. Time to go to the mall. Can
anyone in their right mind look at this chart and think this financial crisis is over?"
The second is titled '
We're All in a Race to the Bottom', by Mr. Practical. I quote the article below.
"This illustrates the unwinding of risk, or in better terms, the fear of inflation,
which is prevalent given the Fed's implied threat of further monetization (QE2). The
government can't print enough money to make up for the destruction of it (foreclosures,
bankruptcies). Not even close. It can talk about QE2 all it wants, but that's just buying
treasuries and keeping already non-existent treasury rates near zero. It's essentially
printing money and buying US treasury debt through dealers, which is making them tons
of money on the "carry trade" at taxpayers' expense but gets stuck on the Fed's balance
sheet as excess bank reserves and only increases the monetary base (currency and
reserves from banks at the Fed) with no multiplier effect (demand deposits being lent
out on a fractional basis). To free up bank reserves, the Fed has to buy risky paper
from the banks that's mis-marked; only that would free up banks to lower some of
their lending standards (what a freak cure/objective). Ben Bernanke talks a good
talk, but does he really have the nerve or the stupidity to buy trillions more in
bad assets from insolvent banks?"
The third is titled '
Where Is the V-Shaped Recovery?', by John Mauldin. I quote the article below.
"Our suspicions have been confirmed -- the recession never ended. Macroeconomic Advisers
produces a monthly US real GDP series and it shows that the peak was in April, as we
expected, with both May and June down 0.4% in the worst back-to-back performance since
the economy was crying Uncle! back in the depths of despair in September-October 2008.
The quarterly data show that Q2 stands at a +1.1% annual rate (so look for a steep
downward revision for last quarter) and the “build in” for Q3 is -1.5% at an annual
rate. Depending on the data flow through the July-September period, it looks like
we could see a -0.5% to -1% annualized pace for the current quarter. Most
economists have cut their forecasts but are still in a +2.5% to +3.5% range. What
is truly amazing is that despite all the fiscal, monetary, and bailout stimulus,
the level of real economy activity, as per the MA monthly data, is still 2.5%
below the prior peak. To put this fact into context, the entire peak-to-trough
contraction in the 2001 recession was 1.3%! That is incredible."
August 24, 2010
Tobby Connor sends along this posting:
WHY THE DOLLAR IS KEY
Stocks:
The move to a lower low on Friday puts the odds squarely in the 'one more leg down'
camp. Ive noticed a couple of patterns emerging in the stock market. The first one
is the tendency for a market cycle to bottom on an anticipated news event. The last
two intermediate cycle lows bottomed on or one day prior to a jobs report.
The second is the tendency for a cycle to bottom only after a fake out earlier in the cycle.
I've been expecting a short daily cycle to balance out the extremely long cycle into
the May flash crash (62 days trough to trough). But it doesn't look like we are going
to get one. Every cycle has either run late into the timing band or stretched long.
So from here on out I won't be looking for anymore short cycles (which probably
guarantees the next one will be).
So if we factor in the fake out principle and news driven bottom theory we are probably
looking at the current daily cycle bottoming next week, possibly Friday (day 40) on the
GDP revision. Lately the daily cycles have tended to run between 35 and 45 days with 39
or 40 being the norm.
I think we all realize the revision is going to be bad and common sense would suggest the
market should go down. However the market is already in the process of discounting a bad
number and has been for 10 days now. I suspect this is going to be one of those sell the
rumor buy the news type events. And I expect it is going to catch the bears leaning heavily
in the wrong direction expecting the market to act rationally and continue down.
When the market starts to rally out of that cycle bottom we could see a pretty aggressive
move as shorts panic and have to cover. I actually expect this will quickly drive the market
above the 1130 resistance level. Then it will just be a question of when sentiment reaches
bullish extremes as to whether the market can test the April highs. If we start to see large
negative money flows (a sign institutional traders are exiting) prior to bettering the April
high then there is a good chance the cyclical bull is on its last legs.
Dollar:
I'm going to spend a good bit of time today on the dollar because it is going to be the key t
o what I envision unfolding the next few months.
I'm going to start off with the largest 3 year cycle and then work backwards.
The last four major 3 year cycles have all run 3 to 3 1/2 years in length. The current
cycle is 2 years and 6 months old. Now there is a chance the 3 year cycle could bottom
this fall as the current intermediate cycle bottoms. However that cycle is due to bottom
in November or early December. That would leave the 3 year cycle a bit short. For that
reason I expect the current cycle to run at least one more intermediate cycle into the
March June time frame. This is a big reason why I think the C-wave in gold may have two
legs up instead of just one.
Next let's back down to the next smaller cycle the yearly cycle.
I've marked the last two yearly cycles in blue (notice how they are making lower lows). The
last two yearly cycle lows occurred in December. The current intermediate dollar cycle should
bottom in late November or early December. That skews the odds heavily in favor of the next
intermediate cycle low not only marking an intermediate bottom but also forming a higher degree
yearly cycle bottom in the same end of the year time frame as the last two yearly cycles.
After the aggressive collapse we've seen in the dollar over the last couple of months there
seems to be little question the dollar has begun working its way down into that yearly cycle
low. The only question now is how long before the current intermediate cycle (which began on
August 8th) tops. I suspect it will be fairly quickly. As a matter of fact I think the current
daily cycle will most likely be the last right translated daily cycle imbedded within the
current intermediate cycle.
My best guess as to how far the correction drops would be at least 50% of the recent rally.
Most daily cycles do tend to give back at least 50%.
A 50% retracement would take gold slightly below $1200. If you remember I was expecting smart
money to push gold below the May pivot as the intermediate cycle bottomed last month. I
explained at the time how big players routinely run stops to trigger heavy volume sell offs
that allow them to take large positions into a very liquid environment. With the benefit of
hindsight we know this is exactly what happened.
Now I don't think gold will be dropping anywhere close to $1155 during this correction, but
I do think there are probably plenty of stops to be run below the psychological $1200 level.
So I think we can probably look for gold drop below that briefly as smart money again runs
the stops in order to panic retail traders into puking up their shares. My suggestion would
be for anyone looking to enter or add to positions to do so as gold breaks through $1200.
Let me remind everyone that gold is the single strongest trending market on the board today.
It is the only asset still in a secular bull market with unimpaired fundamentals. I did my
best last month to convince traders and investors to buy the intermediate cycle low. I
suspect many were unable to do so. Those intermediate cycle lows are the single best buying
opportunities one gets in bull markets and they only come around once every 5-6 months.
The approaching smaller daily cycle low will be the next best opportunity to get long or add to
positions in the one remaining secular bull market. If you missed the last one in July I suggest
you not make the same mistake twice.
Once this daily cycle tops, which I expect it to do next week, or early the week after, there is
a very good chance that will also mark the top of this intermediate cycle. As Ive illustrated on
the chart, I then expect every daily cycle after that to be left translated (tops in less than 10
days), and each to move below the prior cycle low (failed cycle) until the dollar puts in the
yearly cycle low later this winter.
It's been my contention for some time that the only way stocks can rally is if the Fed continues
to debase the currency. Remember this is an election year so I think we can pretty much bank
on the dollar moving down into the yearly cycle low right on schedule, possibly with extreme
prejudice as Ben desperately tries to keep asset prices inflated into the elections.
But as I've been saying for a long time it simply isnt possible to print prosperity. I'll
tell you what else is impossible to control - where the liquidity lands.
Ben would love for all that free money to create jobs, but as we know that just ain't gonna
happen. The next best thing would be for all that liquidity to levitate the stock market. And
I think it will to some extent, but there are already problems starting to surface with this
plan. Not surprisingly they are the same problems that popped up in
'08 as Ben tried to stop the real estate bubble and credit markets from collapsing. I'm sure
you've noticed the problem by now. That's right, liquidity is leaking out of the stock market
and flowing into the commodity markets.
It's readily apparent in the above chart that stocks are already struggling as more and more
liquidity leaks into commodities. The CRB however is having no trouble what-so-ever responding
to the Fed's printing press. It is rising in lock step with the declining dollar. The fact that
the fundamentals are impaired in most commodities just goes to show how much liquidity the Fed
is actually dumping on the world.
I expect this pattern to continue and accelerate as the dollar moves into the yearly cycle low.
I have no doubt we will continue to see a weaker and weaker response from the stock market
leading to more and more panic printing by the Fed causing commodities prices to rise and rise.
Commodities are already trying to tell Ben to shut down the presses. As this continues they
will soon be screaming for the Fed to shut off the money spigot. I really don't expect Ben to
hear though. He was deaf to what his monetary policy caused in '08 ($147 oil and the collapse
of the economy) and I expect he will not heed the warning signs this time either. Which, of
course, just means he will get the same result as last time. Eventually his monetary policy
will spike commodity prices, especially oil and probably food, through the roof which will
destroy the economy all over again.
Gold:
I've been looking for a swing high to possibly mark the top of the current daily cycle. Gold
formed a swing on Friday that I think probably marked a short term top. If gold is now on its
way down into the daily cycle low then I tend to think it will probably bottom along with the
stock market sometime next week or early the following week.
My best guess as to how far the correction drops would be at least 50% of the recent rally. Most
daily cycles do tend to give back at least 50%.
A 50% retracement would take gold slightly below $1200. If you remember I was expecting smart
money to push gold below the May pivot as the intermediate cycle bottomed last month. I explained
at the time how big players routinely run stops to trigger heavy volume sell offs that allow them
to take large positions into a very liquid environment. With the benefit of hindsight we know this
is exactly what happened.
Now I don't think gold will be dropping anywhere close to $1155 during this correction, but I do
think there are probably plenty of stops to be run below the psychological $1200 level. So I think
we can probably look for gold drop below that briefly as smart money again runs the stops in order
to panic retail traders into puking up their shares. My suggestion would be for anyone looking to
enter or add to positions to do so as gold breaks through $1200.
Lest I forget let me remind everyone that gold is the single strongest trending market on the
board today. It is the only asset still in a secular bull market with unimpaired fundamentals.
I did my best last month to convince traders and investors to buy the intermediate cycle low. I
suspect many were unable to do so. Those intermediate cycle lows are the single best buying
opportunities one gets in bull markets and they only come around once every 5-6 months.
The approaching smaller daily cycle low will be the next best opportunity to get long or add to
positions in the one remaining secular bull market. If you missed the last one in July I suggest
you not make the same mistake twice.
August 22, 2010
Red and White D sends this link to
'Four Deformations of the Apocalypse'. It is written by David Stockman, who by his own admission, is
one of the architects of the financial mess we are in. I quote the article below.
"If there were such a thing as Chapter 11 for politicians, the Republican push to extend
the unaffordable Bush tax cuts would amount to a bankruptcy filing. The nations public debt -
if honestly reckoned to include municipal bonds and the $7 trillion of new deficits baked
into the cake through 2015 will soon reach $18 trillion. Thats a Greece-scale 120 percent
of gross domestic product, and fairly screams out for austerity and sacrifice. It is therefore
unseemly for the Senate minority leader, Mitch McConnell, to insist that the nations wealthiest
taxpayers be spared even a three-percentage-point rate increase.
More fundamentally, Mr. McConnells stand puts the lie to the Republican pretense that its
new monetarist and supply-side doctrines are rooted in its traditional financial philosophy.
Republicans used to believe that prosperity depended upon the regular balancing of accounts - in
government, in international trade, on the ledgers of central banks and in the financial affairs
of private households and businesses, too. But the new catechism, as practiced by Republican
policymakers for decades now, has amounted to little more than money printing and deficit finance -
vulgar Keynesianism robed in the ideological vestments of the prosperous classes.
...It may be true that governments, because they intervene in foreign exchange markets, have never
completely allowed their currencies to float freely. But that does not absolve Friedmans $8
trillion error. Once relieved of the discipline of defending a fixed value for their currencies,
politicians the world over were free to cheapen their money and disregard their neighbors.
...The fourth destructive change has been the hollowing out of the larger American economy.
Having lived beyond our means for decades by borrowing heavily from abroad, we have steadily
sent jobs and production offshore. In the past decade, the number of high-value jobs in goods
production and in service categories like trade, transportation, information technology and the
professions has shrunk by 12 percent, to 68 million from 77 million. The only reason we have not
experienced a severe reduction in nonfarm payrolls since 2000 is that there has been a gain in
low-paying, often part-time positions in places like bars, hotels and nursing homes."
Here is a note from Rich Kolon:
"Bender,
Some people think the Hindenburg market will go ice cold. But I think there is something that
will delay stocks from becoming Slurpees.
http://www.reuters.com/article/idUSN1617811920100816
The GM IPO is simply to TOO BIG TO FAIL. The banksters are not going to ruin it for the US
government, who owns 61% of the stock.
So I predict no Hindenburg crash, because 20 billion dollars must get raised, and the
banksters need to appease the politicians for the all the loopholes they put into Finreg.
Rich"
Vegas sends this link to
'Special report: Flipping, flopping and booming mortgage fraud', by Nick Carey on Yahoo.Com.
It is a phenomena that occurs when you have Uncle Sugar picking up the tab for absolutely everything
at which the banksters fail.
Finally, here is a link to
'Weekly Unemployment Claims Exceed Expectations', by Mike Mish Shedlock on Minyanville.Com.
I quote the article below.
"There has been no lasting improvement since November 14, 2009, more than nine months ago.
To be consistent with an economy adding jobs coming out of a recession, the number of claims
needs to fall to the 400,000 level.
At some point employers will be as lean as they can get (and still stay in business). Yet, that
doesn't mean businesses are about to go on a big hiring boom. Indeed, unless consumer spending
picks up, they won't."
August 15, 2010
My main computer blew its power supply out. So I have not been posting lately. I am posting
this with my limited backup machine. Here is
a post sent by John Townsend, written by Sam Kirtley, titled
'U.S. Dollar To Fade As Gold Heads Higher', originally on SKOptionsTrading.Com.
One of the key technical signals we were looking for in anticipation of a new major rally in
gold was a close above the 50 day moving average. Well last week gold delivered that signal,
twice.
Whilst we still need to see a close above $1220 to confirm this move, we are now very confident
that a major rally in gold prices will begin in earnest in the next couple of weeks.
Last week we wrote how we were expecting a rebound in the US Dollar from oversold conditions.
Sure enough, the rebound in the USD did eventuate, with the index rising from 80 to almost
83 in a matter of days.
However we had thought that this rebound in the US dollar would cause gold prices to fall
slightly, but this did not happen, instead we saw gold prices increasing with the USD.
This recent positive correlation between the USD and gold has caught our attention, since
over the past few years the two have tended to have been negatively correlated, with gold
moving inversely to the USD with some leverage factor.
Simply by putting together some crude charts of gold versus the US dollar over the course
of this gold bull market it become clear that although the relationship is largely inverse,
there are periods where the two move together.
We do not claim to be specialists in the field of market cycles, however it appears to us
that after roughly four years of moving inversely, gold and the USD then began to move
together for roughly seven months, before moving inversely again for another four years.
They have now been moving together to approximately eight months, so if the pattern
described above were to continue then one would expect the US dollar and gold to begin
moving inversely to each other very soon, and for this negative relationship to continue
for four or so years to come.
Since we are bearish on the USD and bullish on gold over the next few years, this crude
cyclical analysis fits with our current outlook.
In conclusion although the inverse relationship between gold and the USD does not always
hold, this has not affected our gold price forecasts. We think gold will make a new all
time high before the end of the year, and probably challenge $1300.
....................
Ben Smith sends this note:
"Hindenburg Omen triggered today........no sure thing, but worth watching.
Hindenburg Omen:
It is a set of conditions, and rules that when all are met, greatly increases the odds
of a large sell-off, or crash of the markets. In fact no crashes in the last 22 years
have happened, that did not first have a confirmed signal of a Hindenburg Omen. Just
because all the conditions have been might, and it becomes a confirmed Hindenburg Omen
does not guarantee a crash, only greatly increases the chances of a severe market
correction ahead. Another way to think about it is without a confirmed Hindenburg Omen
in place, Bulls can sleep a little better at night knowing that most likely they will
not awaken to the market down 10%. In fact the odds of a crash based upon the history
since 1985 is 27% chance after two or more signals were confirmed. The best way to
think about it is under normal conditions, there can be large number of stocks, setting
new 52 week highs, or a large number setting 52 week lows, but not both.
Things become
out of balance when large numbers of stocks are setting new highs, and lows at the same
time. Having one sector soaring, and another setting new lows is not good in the balance
of a healthy market. The traditional definition of a Hindenburg Omen is that the daily
number of NYSE New 52 Week Highs and the Daily number of New 52 Week Lows must both be
so high as to have the lesser of the two be greater than 2.2 percent of total NYSE issues
traded that day. And that has been updated to include two more sets of conditions to
filter out false readings; 1-That the daily number of NYSE new 52 Week Highs and the daily
number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues
traded that day. 2-That the smaller of these numbers is greater than 75. (this is not a
rule but a function of the 2.2% of the total issues) ( as of 7-12-2010, 69 issues are all
that is required for the 2.2% rule!!) 3-That the NYSE 10 Week moving average is rising.
4-That the McClellan Oscillator is negative on that same day. 5-That new 52 Week Highs
cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows
to be more than double new 52 Week Highs). This condition is absolutely mandatory.
Whenever theres a Hindenburg Omen, there are too many new highs and new lows at the
same time means an internal inconsistency in the market therefore is not a good sign."
Here is a link to 'Death Cross Confirmed, Gold and Silver Good
Bets During Crisis', by Jeb Handwerger on Minyanville.com.
.......................
Here is a series of related notes (I have modified my own slightly) between a reader
new to this site, myself, and Rich Kolon.
"Dear Bender,
I've been reading Ney's books. Can you please direct me to a short synopsis of your
trading philosophy or strategy?
Thank you,"
"Dear Reader,
I have read enough, and invested enough that I no longer believe that any one strategy
works 100 percent of the time. So I tap dance a lot. I pick and choose what I think will
work best for the next 3, 6, 12 months out. Here are a few ideas, though, that might
help you survive and prosper.
Many things are different now than from when Ney was trading. Volume is just incredible.
Computers allow some to place trades just nanoseconds from each other. This new computer
world is much more difficult to regulate.
The 800 pound gorilla in the room is the Fed (treasury) and the FED (FOMC). Ney would
never have envisioned a world where the biggest banks could be so big that they could
demand bailouts from the Fed and the FED, or else their failure would bring down the
whole U.S. financial structure. Ney would never have envisioned a program like TARP. He
would never have dreamed of a bailout for GM, where the taxpayers would become default
shareholders and the bondholders would get screwed out of their capital. He would never
have envisioned a world where the FED would become THE buyer of treasury notes. Ney would
never have forseen a world where the FED would regularly (once a month) intervene in the
stock markets, buying and selling shares at will.
The fact that the 800 pound gorilla has demonstrated that he will act in and upon the
marketplace should make us all take those potential actions of the Fed and the FED into
account before we invest. But this may not be an easy thing to do. The reason that this
may be a difficult thing to do is this:
Even if we can anticipate how the Fed and FED might react to a given set of circumstances,
and we can make a fair judgement on the Gorilla's will to act, we can not always predict
how effective the Gorilla's actions will be. I, for one, think Bernanke is in for some
surprises here. As I have kept telling my readers, this is a Depression. It is going to
last at least a decade. And I share Mike Mish Shedlock's opinion that keeping interest
rates far too low for far too long is how we got here in the first place. The cure for
what ails the economy can not possibly be more of the thing that caused the malady in the
first place.
In certain aspects the Gorilla is powerless to effect a positive outcome (for every action
there is an equal and opposite reaction). Every time the Gorilla takes an action to solve
a problem, it creates a new one.
If one thinks in those terms, then, what is the most effective theme or themes for investing
over the next years?
I think we have to take a multiprong approach.
1. Resources, basic commodities are going to be even more important in coming years than
they are to us now. If you accept that idea, then you must become interested in things like
gold, oil, natural gas, farm products, seed developers, fertilizer companies, etc. Even in
a Depression, there will be a lot of money to be made in basic stuff like this. An effective
portfolio is going to have to be heavy in these things.
2. While we suffer the emerging BRIC economies may boom right along. An effective portfolio
is going to have to have exposure to developing economies. In this aspect Rich Kolon is
further down the road than am I.
3. Our own conditions will worsen before they get better. I fully expect a stock market
dump sometime between now and next April. I just don't know about the timing. Some money
is to be made from playing the fall of the stocks. But one will have to be nimble.
4. Nimbleness will be a real asset going forward. Though resources and emerging markets may
be a long term winner. Over short periods of time, holding any stocks in any thing could be
a terrible idea...the source of great pain. Be nimble, particularly when protecting your
capital. Ney always said: 'he who sells and runs away lives to buy another day.'
5. How will the Boomers retiring affect the markets? Are drugs and bioengineering a good
idea...particularly if the Gorilla gets even more involved in health care?
6. Is tech actually slowing down now? Or are some tech companies that are big in innovative
consumer goods, like Apple, always going to be a great investment idea?
7. The Gorilla is not the only government around. How are state and municipalities doing?
How is their downfall going to affect the general economy?
8. And 'sin' stocks like alcohol and tobacco companies, are they completely immune to
Depression. Are there certain stocks in those areas that will be good no matter what?
9. I think that Movies and entertaiment will thrive in a bad economy. But how to play that?
10. I think there are innovative companies doing great things right now that are going to
be just fine...but which ones are they?
Fred Jacquot, the Bender"
"I would add to this discussion of Ney concepts that he had the idea that the main stream
media is often used by the pros to enable them to take a counterposition to the news. This
concept is still viable. A predictable public can be exploited this way.
For example, when CNBC recently focused on the wheat crisis in Russia, wheat futures soon
after dropped limit down. So did my wheat stocks. That does not mean that long term ideas
can't work. Just that short term trading opportunities may work counter to the long term theme.
I still maintain positions that meet my long term themes.
Rich"
August 5, 2010
Rich Kolon sends this link to
'Food Stamp Usage Hits 18 Sequential Record High At 40.8 Million'
by Tyler Durden on ZeroHedge.Com. I quote the artice below.
"Not much commentary needed here as boston.com says it all: "The number of Americans
who are receiving food stamps rose to a record 40.8 million in May as the jobless rate
hovered near a 27-year high, the government reported yesterday. Recipients of
Supplemental Nutrition Assistance Program subsidies for food purchases jumped 19
percent from a year earlier and increased 0.9 percent from April, the US Department of
Agriculture said in a statement on its website. Participation has set records for 18
straight months. An average of 40.5 million people, more than an eighth of the
population, will get food stamps each month in the year that began Oct. 1, according to
White House estimates. The figure is projected to rise to 43.3 million in 2011." But who
cares: can someone please tell these ungrateful sods their stocks are up like 70% since
the Fed became the market in March 2009."
But, we're in a Recovery, not a Depression, right?
Rich Kolon also sent this note:
This was followed up by a note from Ben Smith:
I found this article today...........looks to me like a "NEED TO KNOW" when navigating these waters.
Raising the Red Flags on Commodity ETFs.
Business Week, which was taken over by Bloomberg only a few months ago, is infamous in the
investment world as the publication that ran its notorious 'Death of Equities'
cover in 1982. That was right at the absolute bottom of a two decade bear market,
when the Dow was trading at the 600 handle. But they do raise some appropriate
red flags here."
I took a look at the other side of this and found this article.
Five Things BusinessWeek Didn't Tell You About Commodity ETFs
August 3, 2010
Rich Kolon sends this note.
"Bender,
This article on ZeroHedge by Phoenix Capital Research demonstrates that
the Federal Reserve dramatically increases their assets every option expiration week.
http://www.zerohedge.com/article/i-thought-quantitative-easing-ended
The raw data for each week is listed in Table 10 for each week in this Fed web page
http://federalreserve.gov/releases/h41/
As an update, during the July 15th, 2010 week of options expiration, the Fed added over $8 billion in assets.
You can see it here:
http://federalreserve.gov/releases/h41/20100715/
Just look for Total Assets in table 10, column Change Since July 7.
This is blatant evidence that the Federal Reserve Board is conducting asset buying
activity during a week of considerable financial derivative trading every month.
Some call that market manipulation.
And the Fed does not want to be audited?
So either the Fed props up stocks during those weeks, or they provide prop money
to say ... other banks ... or trading firms ... in exchange for dubious assets, and
these other recipients in turn prop up call options temporarily.
And who gets hurt by this? Everybody not trading with them. You know, people without
HFT computers, for example.
Rich"
Ben Smith sends this link to 'Guest Post: HFT Bot-Versus-Bot', by Scott Olsen.
Here is a link to 'The Road to Recovery: Are We There Yet?', by John Mauldin
on Minyanville.Com. I quote the article below.
"From Daily Reckoning:
'Lenders are accelerating foreclosures as borrowers fall behind in mortgage
payments after the worst housing crash since the Great Depression. A record
269,962 US homes were seized in the second quarter, according to RealtyTrac
Inc. Foreclosures probably will top 1 million this year, the Irvine,
California-based data company said in a July 15 report.'
...We're both concerned about an unwelcome bout of deflation stemming from
lack of final demand (as opposed to falling prices from increased productivity).
Look at the graph below. Notice that prior to the beginning of the last
recession inflation was running at a 4% clip and actually rose to above 5%
before falling to a minus 2% and then rising to almost 3%. Since the
beginning of the year, as the economy has softened, inflation has been
steadily falling and is now at 1%. If the economy continues to falter,
one would suspect that inflation could fall even lower.
If the economy were to tip into a recession with inflation so very low (or
even near zero at the end of the year), the results could be very toxic.
As Paul's colleague and my friend Mohamed El-Erian writes, wes of a variety that hasn't
been tried for a very long time. Frankly, we cannot be sure of the unintended
consequences."
Tech shares have been mostly up lately...and that's not good against the backdrop of
lean and mean. It means corporations are going to get leaner and meaner in the future. Those
computers are going to replace people (consumers). Got it?
And what shares were getting hammered this morning in the markets? J.C. Penney, Dean Foods, Clorox,
Procter and Gamble. It seems discretionary spending is weak....hmmmm.
.................
I have always been a fan of Richard Dreyfuss. Red and White D sends us this link to
a recent speech he gave. Try it. You'll like it.
Email
the
