It's not what you/(I) think. The reversal I now see is to the upside- on a global scale, at that. That's the only truly contrarian trade left. Everyone else expects a minor pullback, or a major pullback. I don't think we get one.
Think of it this way. If the global indexes were a single stock, let's say VT, then I would say we had a one-year correction. Now it's ready to continue upward.
Another way to look at it. In order to get to 1500+, we need to take SPX prices across a 70-point expanse. Do investors make that move in steps, or do they make the move in one 48-hour emotionally-charged drive?
Well, the way the market is working these days, I'd say the 48 hour approach. Other than last Thursday, when we had that big up day, the market has done almost nothing in the last month.
If we got some other big news from Europe which took more trouble off the table, I could see another big day. You've still got all the factors where a rising market will bring in more buyers -> underperforming hedge funds, underinvested public, pension plans with low equity exposure, etc.
Wouldn't read too much into today's action. From Bespoke:
Today is Monday, so it should come as no surprise to investors that the market was down. Over the last five months, the Dow has only been up on TWO Mondays. It has been down on a whopping 17!
MMM - That's interesting, I was just thinking of how I'd like to own some MMM. They've got such a wide variety of quality products, including their 5200 polyurethane permanent adhesive.
This stuff is completely waterproof and will never let go (I mean it, this is literally a threat!) if you can allow 24 hours for it to cure, perfect for rehanging that soap dish that keeps coming off the bathroom tub wall.
2nd - you could definitely be right. no one knows for sure. i can make as many arguments for people waiting for a people as every "strategist" saying 1,500+ is a forgone conclusion. again, focusing on story stocks and their corresponding support / resistance levels and setups will make us all far more money than trying to time the market.
weird...my post got cut off...meant to say i can make as many arguments for people waiting for a pullback being a bullish sign as arguments for every strategist saying 1,500+ is a forgone conclusion being a bearish sign. i don't think any one of these alone can act as propellents for the market one way or the other.
i like looking at the market only because in general it gives me a sense of when to load up on risk and when not to. as of last friday, the market was at bull market highs, rsi hit 70, stochastics were in the overbought territory...while the market can definitely go higher to me i'd rather wait for confirmation of the breakout before loading up with risk. just going with experience over the past 3 years...
I remember reading that pensions were looking to continued reducing exposure to stocks. It looks like they've been reducing exposure for 5 years...in the 1970's they reduced exposure for 9 or 10 years before the 1982 bull market began.
If the same pattern holds this time, we shouldn't expect pension funds to start increasing equity exposure for another 4 or 5 years, so lots of time before they start bidding up prices.
There is a great article from Warren Buffet in Forbes in 1979 about how pension funds were poor market timers back then and it seems they still are.
BB - Yeah not really sure if the relationship will hold but it looks like they reduced exposure from 1972 to 1992 with the bulk of the reduction occurring over the first 8 to 10 years. If that happens again that would fit in perfectly with what I'm thinking which is a bumpy ride to 1,700 over the next couple of years and then a drop back down to like 1,250 to 1,300 to start the new bull market. Who knows though. I still think govts will do whatever is necessary to keep the slow growth train moving higher and pullbacks should be used as an opportunity to go long.
I looked at MMM's chart using the 102030MA's. Now I remember why I set it up as an alert. 3M has been in an up channel since the beg of June. It would sell off pretty quick below its 30 day MA, then trade up to a new high.
Now what I don't like. It should have traded down to 91 early last week. It's pretty choppy but then today's decline is on much higher volume. And finally, I really don't feel like initiating any new positions until after the fed speaks. For me, I'm better off sitting on the sidelines for now.
Nasdaq continues to be weak. Retraced all of Thursdays gains and hasn't really bounced much. Probably nothing but worth keeping an eye on since it's a leading sector. It could either be a bad sign for the overall market or a sign that $$ is flowing into other sectors. Either way, I'd rather look at the other sectors.
Yeah, I'm noticing it's been under $3 ever since just prior to spring. Does this mean it goes over $3 just prior to winter?
Talk about gifts, I also noticed gasoline spiked just prior to the last summer hurrah this weekend. You wanna see a toppy chart, how far into the 50's is UGA liable to pull back to in the next few weeks going forward?
Yeah feels like a stall but I don't see how Bernanke can't make a move now, considering the unemployment landscape and he's already opened his yaptrap practically committing himself to it. I guess he has to get ahead of mitigating the fiscal cliff effect.
Commodities prices will take care of themselves, dependent on demand, so he probably doesn't care longer term where the dollar goes in terms of commodities. Debt seems to be holding it's price for now, that's probably his main concern, maintaining low rates?
Bonerhead confirmed just today that we should prepare ourselves for the fiscal cliff fight.
So yeah, my take is it's time to get your feet wet if you haven't and be prepared to add on a stall if necessary. We're going up if these guys open the spigot like they keep saying they're going to?
"MUX - Do ya' wish you'd bought this one under $3?"
I actually bought some January 2014 $2.50 calls for $1.65 when MUX broke below $3. And then, when it went down to $2.20, I loaded up on January 2013 $1 calls at $1.30. After that, when MUX jumped to $3.30, I sold my $1 calls and piled that money into AUMN January $2.50 calls, since AUMN was still at $4.30 at that time (below December lows, while MUX was already above those lows).
Currently, I only have the January 2014 MUX $2.50 calls, and as I see now I paid a huge premium for them, and might have to wait for a while until they double...
I can see how home price increases might be mitigated somewhat if rates were to rise, providing you some breathing room there, but what happens to PM prices if rates rise?
Man I hate burning my candles from both ends, but these phenomenon could potentially both swing towards your favor...
I'm hoping these stars align for you in a big way.
If rates start to rise, then PM prices will go through the roof because people will realize that the Fed will not be able anymore to sell its Treasury holdings at the same prices at which it bought them, and thus the Fed's monetary operations will not be temporary in nature (which is something that Bernanke claims) but will amount to a permanent money creation. Hussman mentioned several times that inflation does not shoot up when people see temporary money creation, but when they sense a *permanent* money creation that inflation shoots up strongly. This is EXACTLY what started hyperinflation in Weimar Republic -- people realizing that the central bank will lose money on all the treasuries they purchased during prior QE operations because those QEs kept happening when the rates where already absurdly low and so the rates had nowhere to go but up.
people realizing that the central bank will lose money on all the treasuries they purchased during prior QE operations because those QEs kept happening when the rates where already absurdly low and so the rates had nowhere to go but up.
> How do you lose money on treasuries? The Fed is under no time pressure to sell, so can just hold to maturity and sell at face value.
Why is AUMN down on the day when SLV and GDXJ are up? Are people being silly again? Or is AUMN setting up for another 10% up day on Thursday, after Bernanke reveals QE3? We saw exactly the same scenario pre-Jackson Hole...
yeah nice recovery....kind of reminds me of the period in December 2009. Not sure if you guys remember that but we were hovering around 1,100ish for a while. Boring as shit. Everyone was waiting for a crash meanwhile the momo stocks were ramping higher. I think we should keep our eyes fixed on the indiv stocks. Learned my lesson plenty of times trying to mess with a pullback.
Interestingly, the stocks I own had one of the best relative to the market outperformance day of the year today. Not sure what it means - August was my worst month relative to the indexes this year, so perhaps it is just some catchup.
But weird things like MGIC which announced a strong dividend policy a week ago, then a nice dividend yesterday and was basically flat was up almost 6% today.
My experience is every type of trading has it's good time, so hopefully the market is moving in my direction.
BB - MGIC long term chart looks like just a higher trend with a lot of noise: http://finance.yahoo.com/echarts?s=MGIC+Interactive#symbol=mgic;range=20010709,20120911;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
Past year could have just been one giant shakeout.
Hi BB, I own some MGIC bought on 8/24 mentioned it here then.
Chart seems to say it made and held double bottom at 4ish Sep 2011 and 2012. It traded and closed above 50 dma on both simple and exponential m/a, so if it can continue to trade above this level it will be a good sign.
Since 8/24 MGIC has traded very erratic and seems to be able to be pushed down easily. The best about today is that it traded with good vol 3x's on 10 day vol average and 2.26x's on 90 day ave vol. It seems someone is interested in accumulating in this zone.
I want to try and hold this for awhile 2-5 years, but I know I suffer from short-term itis.
Think of it this way. If the global indexes were a single stock, let's say VT, then I would say we had a one-year correction. Now it's ready to continue upward.
ReplyDeleteAnother way to look at it. In order to get to 1500+, we need to take SPX prices across a 70-point expanse. Do investors make that move in steps, or do they make the move in one 48-hour emotionally-charged drive?
DeleteWell, the way the market is working these days, I'd say the 48 hour approach. Other than last Thursday, when we had that big up day, the market has done almost nothing in the last month.
ReplyDeleteIf we got some other big news from Europe which took more trouble off the table, I could see another big day. You've still got all the factors where a rising market will bring in more buyers -> underperforming hedge funds, underinvested public, pension plans with low equity exposure, etc.
Wouldn't read too much into today's action. From Bespoke:
ReplyDeleteToday is Monday, so it should come as no surprise to investors that the market was down. Over the last five months, the Dow has only been up on TWO Mondays. It has been down on a whopping 17!
MMM - That's interesting, I was just thinking of how I'd like to own some MMM. They've got such a wide variety of quality products, including their 5200 polyurethane permanent adhesive.
ReplyDeleteThis stuff is completely waterproof and will never let go (I mean it, this is literally a threat!) if you can allow 24 hours for it to cure, perfect for rehanging that soap dish that keeps coming off the bathroom tub wall.
2nd_ave -- are you still invested on the long side?
ReplyDelete88% long as of Thursday, 100% long as of Friday.
Delete2nd - you could definitely be right. no one knows for sure. i can make as many arguments for people waiting for a people as every "strategist" saying 1,500+ is a forgone conclusion. again, focusing on story stocks and their corresponding support / resistance levels and setups will make us all far more money than trying to time the market.
ReplyDeleteweird...my post got cut off...meant to say i can make as many arguments for people waiting for a pullback being a bullish sign as arguments for every strategist saying 1,500+ is a forgone conclusion being a bearish sign. i don't think any one of these alone can act as propellents for the market one way or the other.
Deletei like looking at the market only because in general it gives me a sense of when to load up on risk and when not to. as of last friday, the market was at bull market highs, rsi hit 70, stochastics were in the overbought territory...while the market can definitely go higher to me i'd rather wait for confirmation of the breakout before loading up with risk. just going with experience over the past 3 years...
BB - This is a good chart regarding pension assets' allocation to equities:
ReplyDeletehttp://static1.businessinsider.com/image/4fc192aceab8ea4d22000000/chart.jpg
I remember reading that pensions were looking to continued reducing exposure to stocks. It looks like they've been reducing exposure for 5 years...in the 1970's they reduced exposure for 9 or 10 years before the 1982 bull market began.
If the same pattern holds this time, we shouldn't expect pension funds to start increasing equity exposure for another 4 or 5 years, so lots of time before they start bidding up prices.
DeleteThere is a great article from Warren Buffet in Forbes in 1979 about how pension funds were poor market timers back then and it seems they still are.
http://www.forbes.com/2008/11/08/buffett-forbes-article-markets-cx_pm-1107stocks.html
BB - Yeah not really sure if the relationship will hold but it looks like they reduced exposure from 1972 to 1992 with the bulk of the reduction occurring over the first 8 to 10 years. If that happens again that would fit in perfectly with what I'm thinking which is a bumpy ride to 1,700 over the next couple of years and then a drop back down to like 1,250 to 1,300 to start the new bull market. Who knows though. I still think govts will do whatever is necessary to keep the slow growth train moving higher and pullbacks should be used as an opportunity to go long.
DeleteI looked at MMM's chart using the 102030MA's. Now I remember why I set it up as an alert. 3M has been in an up channel since the beg of June. It would sell off pretty quick below its 30 day MA, then trade up to a new high.
ReplyDeleteNow what I don't like. It should have traded down to 91 early last week. It's pretty choppy but then today's decline is on much higher volume. And finally, I really don't feel like initiating any new positions until after the fed speaks. For me, I'm better off sitting on the sidelines for now.
WTF happened at our favorite battery co.? AONE
ReplyDeleteIs that .51 print for real?
Deletehttp://www.engelvoelkers.com/search?startIndex=0&businessArea=&q=&facets=bsnssr%3Aresidential%3Bcntry%3Agreece%3Btyp%3Abuy%3Brgn%3Adodekanes_inseln%3B&pageSize=10&language=en&view=LISTE
ReplyDeleteman i want one of these houses. dirt cheap. my first thought is NBG is going higher on the back of these "values"
Man, those are cheap. Wow.
DeleteCP - hope you're still holding BOIL
ReplyDeleteYeah, I've still got my position, turns out I shoulda' added big time but how could I have known?
DeleteNot to worry, I'm sure it'll be down in an hour or two!
Actually I did almost add, missed it by less than $1
DeleteA nicely done Market-Profile blog that I check every morning:
ReplyDeletehttp://shadowtrader.net/blog/
May be of some interest...
i kind of want to do a long in FB today before zuckerberg speaks.
ReplyDeleteWhat's the speech?
Deleteaddressing techcrunch.
DeleteNG is soooo bi-polar.......
ReplyDeletekind of sort of interested in DMND here.
ReplyDeleteNasdaq continues to be weak. Retraced all of Thursdays gains and hasn't really bounced much. Probably nothing but worth keeping an eye on since it's a leading sector. It could either be a bad sign for the overall market or a sign that $$ is flowing into other sectors. Either way, I'd rather look at the other sectors.
ReplyDeleteSeems like rotation and into more cyclical industries like energy, materials and financials.
DeleteI take this as a sign people are getting more comfortable with the broader economy and want more exposure to the upside.
yeah...i think you could be right.
DeleteBB- That's what it looks like to me also. At least for the past few days.
Deletei've been adding some longs today...mainly in the beaten down stuff: DMND YRCW etc...still cautious.
DeleteBOIL - A new higher high.
ReplyDeleteWe're having our California weather season here, evening boat ride was on glass last night.
We had our Cali November last week, it rained 3 days straight as a Canadian cold front came in to sweep the remnants of the hurricane away.
DeleteAnother thing Canada is good for exporting - cold weather
DeletePerfect day to replace the shingles blown off the boat house early this spring.
DeleteNSPH - Almost looks like it's preparing to come to us.
ReplyDeletePII - New 52wk highs soon?
ReplyDeleteIMAX - On the lower trend line here, could be good entry...
ReplyDeleteJOY - Will this one take off soon?
ReplyDeleteINTC - Looks like a good entry as well.
ReplyDeleteAMD - You know I'm partial to this one, I regretted not buying it under $5 20 years ago.
ReplyDeleteWell okay, maybe it's not the same company anymore.
FXI - Is this thing forming a right shoulder???
ReplyDeleteMUX - Do ya' wish you'd bought this one under $3?
ReplyDeleteBoil - Any more water in this pot today? Seems to have run outta steam...
ReplyDeleteCookin' with gas...
Delete$3 is a natural resting spot. man i can't believe that thing. it was too volatile for me.
DeleteYeah, I'm noticing it's been under $3 ever since just prior to spring. Does this mean it goes over $3 just prior to winter?
DeleteTalk about gifts, I also noticed gasoline spiked just prior to the last summer hurrah this weekend. You wanna see a toppy chart, how far into the 50's is UGA liable to pull back to in the next few weeks going forward?
sure feels toppy...
ReplyDeletei mean bottomy!
DeleteYeah feels like a stall but I don't see how Bernanke can't make a move now, considering the unemployment landscape and he's already opened his yaptrap practically committing himself to it. I guess he has to get ahead of mitigating the fiscal cliff effect.
DeleteCommodities prices will take care of themselves, dependent on demand, so he probably doesn't care longer term where the dollar goes in terms of commodities. Debt seems to be holding it's price for now, that's probably his main concern, maintaining low rates?
Bonerhead confirmed just today that we should prepare ourselves for the fiscal cliff fight.
So yeah, my take is it's time to get your feet wet if you haven't and be prepared to add on a stall if necessary. We're going up if these guys open the spigot like they keep saying they're going to?
"MUX - Do ya' wish you'd bought this one under $3?"
ReplyDeleteI actually bought some January 2014 $2.50 calls for $1.65 when MUX broke below $3. And then, when it went down to $2.20, I loaded up on January 2013 $1 calls at $1.30. After that, when MUX jumped to $3.30, I sold my $1 calls and piled that money into AUMN January $2.50 calls, since AUMN was still at $4.30 at that time (below December lows, while MUX was already above those lows).
Currently, I only have the January 2014 MUX $2.50 calls, and as I see now I paid a huge premium for them, and might have to wait for a while until they double...
I can see how home price increases might be mitigated somewhat if rates were to rise, providing you some breathing room there, but what happens to PM prices if rates rise?
DeleteMan I hate burning my candles from both ends, but these phenomenon could potentially both swing towards your favor...
I'm hoping these stars align for you in a big way.
If rates start to rise, then PM prices will go through the roof because people will realize that the Fed will not be able anymore to sell its Treasury holdings at the same prices at which it bought them, and thus the Fed's monetary operations will not be temporary in nature (which is something that Bernanke claims) but will amount to a permanent money creation. Hussman mentioned several times that inflation does not shoot up when people see temporary money creation, but when they sense a *permanent* money creation that inflation shoots up strongly. This is EXACTLY what started hyperinflation in Weimar Republic -- people realizing that the central bank will lose money on all the treasuries they purchased during prior QE operations because those QEs kept happening when the rates where already absurdly low and so the rates had nowhere to go but up.
DeleteYou're describing to TOG, please scream at us when you detect it's beginning! ;)
Deletethe TOG
Deletepeople realizing that the central bank will lose money on all the treasuries they purchased during prior QE operations because those QEs kept happening when the rates where already absurdly low and so the rates had nowhere to go but up.
Delete> How do you lose money on treasuries? The Fed is under no time pressure to sell, so can just hold to maturity and sell at face value.
Bob Dylan sounds tubercular...
ReplyDeleteAPPL/GOOG - Wow, not very encouraging with both of these taking such a smackdown today.
ReplyDeleteIt's tough, this "trading" stuff...
Why is AUMN down on the day when SLV and GDXJ are up? Are people being silly again? Or is AUMN setting up for another 10% up day on Thursday, after Bernanke reveals QE3? We saw exactly the same scenario pre-Jackson Hole...
ReplyDeleteColonel Possum forecast gold $1725 this week
DeleteLadies...
ReplyDeletehttp://www.marketwatch.com/story/eleven-years-after-the-911-attacks-2012-09-11?link=home_carousel
ReplyDeleteI submit the above 'lesson' can be applied to the Eurozone crisis as well.
In fact, I was talking with Mr. Market during lunch, and his message to bears came down to, 'Get out of my ----ing way!'
DeleteWell IWM remains in green territory, doesn't exactly look like a down day from my electric kool aid bus window...
Deleteyeah nice recovery....kind of reminds me of the period in December 2009. Not sure if you guys remember that but we were hovering around 1,100ish for a while. Boring as shit. Everyone was waiting for a crash meanwhile the momo stocks were ramping higher. I think we should keep our eyes fixed on the indiv stocks. Learned my lesson plenty of times trying to mess with a pullback.
Deleteit will come and be swift but if you're in stocks that are resilient then it will be over in a jiffy.
DeleteInterestingly, the stocks I own had one of the best relative to the market outperformance day of the year today. Not sure what it means - August was my worst month relative to the indexes this year, so perhaps it is just some catchup.
DeleteBut weird things like MGIC which announced a strong dividend policy a week ago, then a nice dividend yesterday and was basically flat was up almost 6% today.
My experience is every type of trading has it's good time, so hopefully the market is moving in my direction.
"kind of reminds me of the period in December 2009."
DeleteMy devious mind just experienced an Tennessee Tuxedo flashback! ;)
BB - MGIC long term chart looks like just a higher trend with a lot of noise:
ReplyDeletehttp://finance.yahoo.com/echarts?s=MGIC+Interactive#symbol=mgic;range=20010709,20120911;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
Past year could have just been one giant shakeout.
Hi BB, I own some MGIC bought on 8/24 mentioned it here then.
ReplyDeleteChart seems to say it made and held double bottom at 4ish Sep 2011 and 2012. It traded and closed above 50 dma on both simple and exponential m/a, so if it can continue to trade above this level it will be a good sign.
Since 8/24 MGIC has traded very erratic and seems to be able to be pushed down easily. The best about today is that it traded with good vol 3x's on 10 day vol average and 2.26x's on 90 day ave vol. It seems someone is interested in accumulating in this zone.
I want to try and hold this for awhile 2-5 years, but I know I suffer from short-term itis.
I watched a little of the FB show before heading out for a ride. Was it just me or did he just set the bar really high?
ReplyDelete