Wednesday, May 19, 2010
5/20/10 Surrealistic Pillow
When the truth is found to be lies
And all the joy within you dies
It's a surrealistic trading environment, for sure. Those 3x ETFs are a trip. I've found it beneficial to wait for what appears to be an extreme in price action, then take the other side and walk away for 15-30 minutes. Any less than 15 minutes, and you'll need an iron will to keep from being thrown off. Any longer than 30 minutes, and any gains have dissipated.
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2nd- I liked your comment about how trades have been resolving themselves. Good point.
ReplyDeletePRPFX: An 'All-Weather' Fund? newSubmitted by 2nd_ave (4419 comments) on Wed, 05/19/2010 - 20:27 #63249
ReplyDeletehttp://www.marketwatch.com/story/a-portfolio-for-a...
The basket that Browne recommended was equally divided between stocks, long-term Treasury bonds, gold and Treasury bills. In his 1987 book, he reported that, over the prior 17 years, back to 1970, this portfolio had produced as 12.0% annualized return. This was better than a buy-and-hold in either stocks or bonds, though behind gold.
As Browne wrote, "the gain is remarkable when you consider that the portfolio required virtually no attention by its owner. No attempt was made to outguess the future; no speculative decisions were made or needed."
Browne's approach in the decades since has continued to perform as advertised. Consider the Permanent Portfolio fund (PRPFX), which was created in large part out of Browne's work. Its current target allocations are 25% in gold and silver, 35% in U.S. Treasurys, 15% in aggressive growth stocks, 15% in real-estate and natural resource stocks, and 10% in Swiss-franc denominated assets.
This fund over the last 15 years (through Apr. 30) has produced an 8.2% annualized return, which is remarkable given that stocks, gold and bonds did not, individually, do as well: The Wilshire 5000 index gained 7.9% over the same period, the Shearson Lehman Treasury Index produced a 6.3% annualized return, and gold bullion rose at a 7.7% annualized pace.
In fact, the Permanent Portfolio fund has done better over the last 15 years than 74% of the investment advisers I track.
fwiw, I think we rally from here into OPEX.
ReplyDeleteNext foray into shorts will probably be into Friday's close and/or Monday...
2nd - If so, I'm gonna miss my ass-kicking dearly.
ReplyDeleteDo a 5 month chart of $SPX with EMA's of 20 and 63. Is that a black swan or what? Maybe just a turkey dribbling drivel from the beak.
ReplyDeleteTrying to understand what's going on
ReplyDeleteSubmitted by teamonfuego (2077 comments) on Wed, 05/19/2010 - 22:06 #63252
OK, I've now seen about 5 different reports from economies/companies in the past week that have basically said that things are actually improving world wide:
HPQ
CSCO
GE
Japan economy
Samsung
Singapore
Shit even Spain reported better than expected economic growth. GE's CEO and HPQ's CEO both said that Europe is going better than expected. Either they're all wrong or maybe, just maybe, the hedge fund industry is in the midst of deleveraging and it is causing the market to go down. All we hear is negative news from institutional investors, who most likely took bearish stances or are sitting in cash waiting for the market to go down further. I suspect in a short amount of time this will be seen as a buying opportunity. I'm beginning to think that this will all blow over and the real downturn won't be coming at this point in time, not yet...
Just thinking out loud. I'm still about 40% long, 60% cash in all of my accounts combined.
Best I can tell, the German chancellor's little speech a couple days ago wasn't very inspiring wehn she confirmed the Euro was in deep trouble, then on top of that they banned naked short selling select stocks.
ReplyDeletePersonally, I suspect they want a lower Euro. I picked up on this a couple weeks ago when an official kind of just smirked when asked by the press about the Euro.
It won't last forever, I suspect it's an over reaction but it could kick off a nasty chain of events with unintended consequences...
Futures crapping the bed. People are ignoring any earnings/economic reports and continuing to get rid of risk...scanning the news I see:
ReplyDelete*Perry Ellis raises FY 2010 guidance to $1.45 to $1.60 from $1.25 to $1.40
*Children's Place raises FY 2010 guidance to $3.05 to $3.15 from $2.90 to $3.10
*Bon Ton Stores sees FY 2010 EPS of $0.80 to $1.60 vs $0.88 consensus
*Dollar Tree reports $0.91 EPS vs. $0.84 consensus
We'll see how this all turns out but I continue to think this is a time to be adding to longs...keep in mind yesterday's news: HPQ sees STRENGTH in Europe, GE says Europe is strong and is expecting growth in EPS vs consensus of flat EPS in q2...
Any of you POTASH fans (from MOS):
ReplyDelete"Following the well documented drop in potash demand last year, we have seen a sharp rebound this spring season and expect continued strength through the remainder of this year...We expect to operate our plants at high operating rates during the 2010/11 fertilizer year to meet projected demand...We are now nearing the end of the North American spring season with demand back to near normal levels. This information is from a company slide presentation."
I'm putting my money on a gap down open with green close, but being 40% long, rest in cash, I guess I'm "hoping" more than betting this :)
ReplyDeleteI'll be travelling today so I gladly won't be around to watch the madness. Good luck everyone!
By the way, I took my furniture business off the market. Business has picked up so much recently that our asking price is too low. Always a good thing!
Looks too much like 1987 for me
ReplyDeleteNo one (including me) expected a gap down this morning. So naturally we should have expected one.
ReplyDeleteIf the market wants to crash, it will happen at the worst possible time.
Can't rule one out today- but since I'm able to accept the possibility of a crash, it probably won't occur.
But then, the complacency of thinking it probably won't occur leads me to think the odds of one are high.
Et cetera...
FYI - The prior larger corrections in this bull run lasted 10 days (October/November) and 13 days (January/February). They were 3 months apart. Three months after the Jan/Feb correction we have a April/May correction that is now in its 18th day. According to Jeffrey Saut of Raymond James, corrections usually last 17 to 23 days at most.
ReplyDeleteWell it's official, the Eurozone has a very serious STD (Sustained Trade Deficit).
ReplyDeleteJobless claims worse than expected...???
ReplyDeleteLandry-
ReplyDeleteRandom Thoughts:
The indices continue to slide out of a Gatekeeper pattern.
Gold remains in an uptrend but it too has been hit hard as of late.
Most sectors look like the market itself--forming First Thrusts, Gatekeeper, and/or Bowtie type patterns.
Once again, considering the above, now's the time to brush up on your trend transition patterns (shameless plug, see my 10 Best book).
WTF happened to your PAL, shark?
ReplyDeleteFYI - For Fibonacci folks, Shanghai has retraced 50% of its 2009 gains.
ReplyDeleteI witnessed PAL trade @ $3.15 a bit ago, no doubt having contracted the Eurozone STD.
ReplyDelete3.15? I saw a bid print @ 3.11.
ReplyDeleteNeedless to say, I'm going to stay on the sidelines and wait for an entry either way...
ReplyDeleteSo PAL does hit 3.11...
ReplyDeleteHey guys, let me know when we've hit bottom...
ReplyDeleteThe Smell of Capital Preservation in the Morning/ Cash is King newSubmitted by 2nd_ave (4420 comments) on Thu, 05/20/2010 - 09:20 #63269
ReplyDeleteCash used to be the ultimate high for most of us in a down-trending market.
The advent of inverse/leveraged inverse ETFs which, unlike outright shorts, are allowed in retirement accounts, has taken the edge off that high.
However, I'm still convinced that restricting 3x funds to an intraday holding period pays off in the long run. On gap-down mornings like this, I'm left behind- and no way would I chase prices. On the other hand, staying in cash has allowed me to avoid larger losses than the gains I'm foregoing this week.
Cash can be the equivalent of talking softly and carrying a big stick. It allows you to retain your composure/confidence in a volatile market, and affords plenty of firepower when you decide to take action.
Ok, I'm predicting that today marks a bottom in the markets. With the VIX now at 41 and the markets down 10% and most earnings numbers still coming in strong and expected to continuing being strong, I think this is a bottom.
ReplyDeleteI moved a bit of my trading account into SPY at $109.60, bringing my buy in average between this account and my long term account in the S&P to 1,110.
tof- That takes real nerve, man. I couldn't do that while embarking on a vacation...
ReplyDeleteMining Tax ‘Contagion’ Set to Spread From Australia
ReplyDelete" May 20 (Bloomberg) -- Australia’s planned 40 percent tax on mining profits has set a benchmark for other countries weighing higher levies, reducing earnings forecasts for BHP Billiton Ltd. and Rio Tinto Group and the attraction of mining stocks.
“It could create what the miners are now describing at a global level as a type of tax contagion,” said Tom Price, commodities analyst with UBS AG in Sydney, in an interview. “They might levy a new tax at the miners in Brazil. Canada is another mineral province and South Africa.” "
http://www.bloomberg.com/apps/news?pid=20601087&sid=aNq.RVsYVZLg&pos=4
For what its worth, here are some strong ones on my list:
ReplyDeleteGCI
V
FXE
CTHR
GLD
2nd - I still have about 40% cash and will use it to average down should we crash. I doubt we will though but who knows. I think that longer term the markets should go higher so I'm trying to use this weakness to build longer term positions...
ReplyDelete2nd - Look at the volume today already...Spike in VIX, spike down in price, spike in volume...I don't know man...that tells me its a time to buy.
ReplyDeleteFido's having technical issues. I tried buying TZA @ 7.14 a couple of minutes ago, and kept getting a message that I had insufficient funds, since it was pricing the ETF 9-10x higher than the actual price.
ReplyDeleteBad day to have computer issues. It looks to me like credit is the name of the game today. As far as I can tell, anyone with debt issues are getting hit the hardest.
ReplyDelete2nd- Schwab is having issues also.
ReplyDeleteI'm finding a few issues that are into last Thurs. low.
ReplyDeletePAL @ 3.05...
ReplyDeleteFTWR @ 4.00 is interesting as hell.
ReplyDeletePAL off @ 3.04...Yeah, I know it's only a penny, but that broke S2.
ReplyDeleteHa!..Great timing Mark :)
ReplyDeleteFuck if I know:)
ReplyDeleteIf a guy is standing in a darkened parking lot hitting you in the face and torso, do you stand there asking a bunch of questions or do you just run like hell?
Wow...HK opened at 17.50.
ReplyDeleteUNG @ 7.08
ReplyDeleteMining Tax ‘Contagion’ Set to Spread From Australia
ReplyDelete" May 20 (Bloomberg) -- Australia’s planned 40 percent tax on mining profits has set a benchmark for other countries weighing higher levies, reducing earnings forecasts for BHP Billiton Ltd. and Rio Tinto Group and the attraction of mining stocks.
“It could create what the miners are now describing at a global level as a type of tax contagion,” said Tom Price, commodities analyst with UBS AG in Sydney, in an interview. “They might levy a new tax at the miners in Brazil. Canada is another mineral province and South Africa.” "
http://www.bloomberg.com/apps/news?pid=20601087&sid=aNq.RVsYVZLg&pos=4
2 pin heads on CNBC are talking up Sugar....I'm doomed!!!
ReplyDeleteBidding FTWR @ 4.00...Fuck it.
ReplyDeleteGMO still hasn't probed it's gap....
ReplyDeleteDCI @ $42.04
ReplyDeleteYou pull out your switch blade and you cut the fucker up.
ReplyDeleteGive him an STD.
ReplyDeleteTrue, but my metaphor does not allow for you to respond in such a manner.
ReplyDeleteDid any of you guys play TZA lately?
Are there any longs looking good or is it just too scary?
See, the above comment would be torpedoed on other blogs. Here, you get real life answers to real life questions.
ReplyDeleteReminds of those old financial ads- 'Real questions. Real answers.' Unfortunately, it was just a marketing gimmick.
I think PAL may slice right thru the 200 day and go down in a very disorderly fashion into the low-mid 2's.
ReplyDeleteHoping it will, anyway:)
PAL - I'd buy some then.
ReplyDeleteI bought a little AUY.
ReplyDeleteWell I suppose it depends on the situation, if the mugging attempt occurs in an alley, you can toss him in the dumpster. If on the train:
ReplyDelete"Man found dead on Metro train:
May 20, 2010 - 9:37am
ROCKVILLE, Md. (AP) -
Metro had previously said that the man now identified as Van Houter had boarded the train in Rockville around 10:15 a.m. Monday. An operator found him lying on the floor of a rail car around 3 p.m. when the train was being prepared for afternoon service."
By Tracee Wilkins
ReplyDeleteNBCWashington.com
updated 1 hour, 27 minutes ago
A body found at a Prince William County recycling center came from Newport News, Va., but investigators still do not know how it happened.
The man's body was found at about 10 p.m. Wednesday at the Canusa Hershman Recycling Center in the 7900 block of Notes Drive in Manassas, according to Prince William County Police.
Police said they don't know if the man was transported to the facility or died there. Newport News police are now handling the investigation.
Europe reconsidering rescue package, may cancel?
ReplyDeleteYou know, we may end up with some unreal entries on the long side, if we're patient.
ReplyDeleteWhat's the matter CP? You seem to be posting weird shit, LOL. Yeah, we are fucked bigtime. IMO, when this run or the dollar ends, they crash it like they crashed the Euro. We are in 100 times worse shape than Greece, and I heard China was bitching about it last night, and would guess that is a threat to unload or at least not buy any more US paper, which of course will start a run on it.
ReplyDelete"You know, we may end up with some unreal entries on the long side, if we're patient."
ReplyDeleteThis is just little drops of blood on the side walk from a bloody nose. I want to see blood to my ankles. Maybe from a switch blade.
Robear
I think we are back to the deleverage trade again, 2nd. If that's true, we could wind up in a scenario like 1987 where all the joe six packs dump their mutual fund holdings over the weekend, creating a vacuum on Monday.
ReplyDeleteDe-leverage is very euphemistic terminology.
ReplyDeleteAnother way to put it would be "credit bust", or credit-ring-destruction.
What's happened is, fugazy debt is becoming the mortal enemy of fiat currency. There aren't enough people paying previous loans plus interest in order to facilitate new lending etc. They aren't paying said principle and interest due to the fact that THERE ISN'T ENOUGH MONEY IN THE general economy and perhaps in all the world to do so.
I don't think it will be only Joe six pack. It will be Harry Hedge fund manager and Marvin the Mutual fund manager. They need to protect performance.
ReplyDeleteBob
Cheapy, I suspect there'll be another round of printing, maybe several if things keep going like this.
ReplyDeleteChina was buying additional US debt just yesterday, wonder if they'll buy EU debt as well?
Assuming no defaults, China will have sewed up the financial future of the globe for nearly eternity.
So what does China really want/need? Energy, natural resources and technology.
Beauty is in the eye of the beholder newSubmitted by 2nd_ave (4421 comments) on Thu, 05/20/2010 - 13:06 #63300
ReplyDeleteIf you're short, it's a no-brainer.
If you're in cash, it's the sight of longs coming into the AZ.
If you're long, it's ugly.
What does China want?
ReplyDeleteMa Yaohai, 53, was sentenced on Thursday to three-and-a-half years in prison for being a member clubs that practiced group sex and partner swapping. In private, Ma Yaohai, 53, led a life that became intolerable to Chinese authorities: For the last six years, he was a member of informal swingers clubs that practiced group sex and partner swapping. In online chat rooms, his handle was Roaring Virile Fire. He organized and engaged in at least 18 orgies, most of them in the two-bedroom apartment in Nanjing where he lived with his mother, according to prosecutors.
On Thursday, a court sentenced Mr. Ma to three-and-a-half years in prison, a severe penalty for a crime that the Chinese government calls “crowd licentiousness.” Mr. Ma, now China’s most famous swinger, remains defiant and plans to appeal, saying his sex life is his own business, not subject to the law as long as he causes no social disturbance, according to his lawyer, Yao Yong’an.
“Privacy needs to be protected,” Mr. Yao said in an interview.
The case of Mr. Ma, who was arrested last August and went on trial last month, has drawn attention across China not only for its titillating details, but also because it also raises questions about an authoritarian government’s attempts to curb sexual freedom and limit privacy in a society where rapid economic growth and the ubiquity of the Internet have upended traditional values.
Do you realize this guy lived with his mom? What an inspiration:)
I wonder how Mr. Ma's mom feels.
ReplyDeletePAL...double bottom above 3?
ReplyDeleteDollar falling off a cliff...v
ReplyDeletev
v
Mr. Ma's ma.....good question Chicken.
ReplyDeleteI think this guy Ma is a real inspiration for boomerang teenagers and couch-surfers everywhere.
"2nd - I still have about 40% cash and will use it to average down should we crash. I doubt we will though but who knows."
ReplyDeleteTOF, a few weeks ago we all seemed comfortable with a drop in S&P to 960-1000 area, which we described as being its fair price. As of now, S&P is still WAY above our target (i.e., overvalued according to our prior thinking) and we already feel like the market is panicking and the sell-off is way overdone. Maybe S&P *will* drop to 1000 and then stay there for a while -- that wouldn't be a crash, right?
Any idea what finally spooked the dollar?
ReplyDeleteHEK is net positive over the last 2 days.
ReplyDelete"IMO, when this run or the dollar ends, they crash it like they crashed the Euro."
ReplyDeletecheapy, notice that $USD crashed today just like everything else. Strange, isn't it?
Only the treasuries rose yet again. The low treasury rate now is becoming more and more supportive of equities and the housing market, which is a nice negative feedback loop in any market sell-off. At some point, and I think soon, people will look at this low treasury rate and say "The Hell with Bonds (for now)," I am going back into the stocks!
David- Could you please ask them to do it in the next hour? :)
ReplyDeleteWhy does everyone want to own SNDK right now?
ReplyDeleteDCI - Off @ $42.60, no telling where we go from here...
ReplyDeleteOK, now that I read through all of today's posts, I can report on my trading activity today, which was quite heavy.
ReplyDeleteFirst of all, in my small IRA account, a forgotten buy limit order was hit for SD at $6, making my total SD position 3/4 of that account. Then, I manually bought some line at $22.84 for another 1/4 of that account.
Then, in my OptionsHouse account, June $50 BP puts hit their sell limit order at 3X of the purchase price -- thanks again, TOF! :)
Also, 1/2 of my SPY June 114 puts hit their sell limit order at 2X the purchase price (the other 1/2 has an effective cost basis of 0 and I am letting them "ride").
I was itching to get rid of my lowest strike 1 June $112 put (which I bought in December 09 at the wooping price of $7.20), and I manually sold it this morning at $6.33, as I really don't want it to expire if we get a multi-week market rebound now.
Also, SKF hit a sell limit order at $22 for 100 shares I purchased back in February at $21 or so.
Finally, someone panicked enough to buy from me 10 July $5 WATG puts at $0.25 each. That's how I like to scale into long positions -- by selling options and then getting shares assigned at prices that seem "unreal" at the moment (such as WATG at $4.75).
My total portfolio is getting "longer" by the day, as I keep scaling out of my ultrashorts and selling puts.
Everyone covering their shorts right now?
ReplyDelete"people will look at this low treasury rate and say "The Hell with Bonds (for now),""
ReplyDeleteThat's precisely the moment we should buy TBT and/or TMV (or beaten up stocks).
15 year fixed now @ 4.20%
ReplyDeleteWe may have just witnessed the bottom?:
ReplyDelete"Fed says Europe crisis threatens economy"
Or are these guys just supremely observant?
C just popped 2%??
ReplyDeleteNow it's "pooped" :)
ReplyDeleteNot a good close for bulls...
ReplyDeleteMark- One more 'o' could mean the difference between a heart attack, or a heart attack on a plate...
ReplyDeleteOne buck to go for X+3B's buy point in BAC.
ReplyDelete2nd :)
ReplyDeleteWhat are we...10pts above the flash low?? We could hit that AH. :)
ReplyDeleteCool...we're only 89 away from 10,000.
ReplyDeleteWhat a spike in FAZ!!!
ReplyDeleteI have the flash low of 1066.
ReplyDeleteThe Nazi's have returned to their agenda!
ReplyDeleteHm... Interesting close. I am salivating more and more at the huge premiums that sellers get now for selling puts. My primary goal now is to get rid of my June SPY puts at great prices before this VIX spike wears out. I just placed a sell limit order at 2.5X the purchase price for my remaining June $114 SPY puts (about 15 more points to go on SPY before that order gets hit) and at 3.5X the purchase price for all my June $117 SPY puts (about 50 more points to go on SPY before that order gets hit). I am keeping my September $119 puts as a souvenir (I purchased them when they were out of the money), which have already gone up in price who knows how many times :).
ReplyDeleteCome to think of it, Germany has the same needs and desires as China. Why should we expect any cooperation?
ReplyDeleteOdd how gold didn't sell off in the end of day panic.
ReplyDeleteMiners got creamed, though
ReplyDeleteYep, gold can be unpredictable while the immediate trend is obvious, it can stagnate or whip in unpredictable directions for extended periods. Yet, GLD lost more than U$D during the session.
ReplyDeleteI never could figure out the angles.
I would guess that the criminals (ie Fed and bullion banks shorting with unlimited free tarp dollars) are slamming it so they can cover for options exp.
ReplyDeleteDid anyone get the license off that Mercedes bus that just ran us over???
ReplyDeleteI bought a little bit of DGP today, and if they slam it tomorrow, I'll add some. I have come to the conclusion that when this strong dollar game ends, everyone will have been panicked out of stocks into US govt paper, and then the dollar gets crushed once they have everyone in it.
ReplyDelete"shorting with unlimited free tarp dollars"
ReplyDeleteYep, that's the best explanation out there... I have the same problem understanding which way U$D and treasuries are headed as well, which of course repeatedly throws a monkey wrench in my spokes.
And to be honest I actually even think I'm early buying it, but I came up with a sane method that will load me up larger the lower it goes. I don't think this free money game lasts much longer, because we are the next Greece times 100.
ReplyDeleteSo assuming everyone's broke(aside from a select few), doesn't that put us all in the same boat and we can expect the rocking back and forth to continue until either the boat sinks or all the debt is swept overboard along with some of the crew?
ReplyDeleteThe boat nearly sank with the Bear Stearns wave and gold was spanked pretty hard along with it, although equities were much worse off.
"I have come to the conclusion that when this strong dollar game ends, everyone will have been panicked out of stocks into US govt paper, and then the dollar gets crushed once they have everyone in it."
ReplyDeleteThat's a great thought, cheapy. I like it. There is no way I am selling my GLD now. If it went to new highs during this amazing $USD rally, I can't even imagine how high GLD will go once the $USD rally reverses.
Mark, why do you think SD is going down so hard? They hedged their NG sales at $9.15 for 2010, and also hedged a bunch of their oil at $84. Do you have an idea what the sensitivity of their cashflow is to the price of oil and to the price of NG?
ReplyDeleteThe question is does the Fed and the government allow the crash they have caused to play out tomorrow and Monday, like in 1987, or do they sacrifice the dollar to keep the market from a total capitulation panic?
ReplyDeleteHonest, I don't see any other way to stop it than the end of the dollar.
Gold - Has anyone heard anything regarding central bank buying of gold in the future? I heard someone mentioning this somewhere on television but don't exactly remember when or where... I wrote it off as an improbability.
ReplyDeleteTo me it didn't make any sense b/c supposedly banks have been selling, and from where are they to obtain cash to buy unless they sell equities and/or Treasuries? After-all, they're broke, right?
Maybe my words were too strong there. How about the end of the dollar as reserve currency? They have now caused everyone to panic out of everything else into dollars. That's the ramifications of zero interest rates and credit printed with wild abandon pumped into malinvestment government supported loser crap and paying for decades, or maybe better to say a century of idiotic fiscal and monetary policy.
ReplyDeleteThere sure does seem to be a battle going on right now in gold, I can't count the number of times it's gone green today only to turn right back down again.
ReplyDeleteYes, the Central Banks have been large buyers of gold in the past couple years. India at $1055 bought 100 or 200 tons. A bunch of smaller ones, too. All that I read of were sub $1100, I think, but I haven't heard of any lately.
ReplyDeleteOn 2/5, the Feb low, LOD was 1044 and the close was 1066. ES right now is 1064.
ReplyDeleteDavid- RE-SD...I think it's all about debt/credit right now. All of the hardest hit today had debt issues. Which was at the heart of the great unwind we went through last year.
Cocktails anyone!!! :))
How's this for looking at the bright bright sdie???...
ReplyDeleteDo you guys ever think about/compare your total port to the current value of the S&P? I do and it pleases me :).
MOMMY!!!!!!!
Every day is a new opportunity to lose those gains...
ReplyDeleteCheapy....I'm losing them faster than I can type right now :)
ReplyDeleteNo need to be a hero right now, so I just sold the shares of FTWR I bought today @ 4 for 4. Schwab wins that one.
ReplyDeleteI did place as many stink bids as I could find though just now. Trolling....
ReplyDeleteEvidently Cramer called for "sell everything". I didn't see it myself.
ReplyDeleteThat should cause a capitulation panic by Monday at latest, I would expect.
"The question is does the Fed and the government allow the crash they have caused to play out tomorrow and Monday, like in 1987"
ReplyDeleteAnd the answer is... NO! The latest AMB data came out this afternoon (after the market has closed), and the Fed has increased the AMB over the past 2 weeks, after 5 straight decreases:
http://research.stlouisfed.org/publications/usfd/page3.pdf
As I had posted previously, all major corrections over the past 1.5 years were immediately preceded by several decreases in a row of AMB, and all recoveries from those corrections were preceded by at least one expansion of AMB (i.e., the market has NEVER put in a bottom before Fed has reversed its AMB tightening). I also mentioned that 5 decreases of AMB in a row were unprecedented since the crash of 2008, so it is no wonder that the current correction feels more evil than the previous ones. It may still have a few more days to go, since in the past, I believe, there was a lag of 1 or 2 days before the market started reacting to the new infusion of cash into the banks.
new post
ReplyDelete