30 September 2010

30 SEP 2010, Thursday

  • Perhaps you've heard..."Best September since 1939!!!"  Chart above, SEP 1939 is highlighted.
  • So, what happened after SEP 1939?  It dropped 40% over the next 2.5 years.
  • Courtesy of Karl Denninger, even the fundamentals then are similar to now it seems.
  • Markets, below, interesting how the trend line down from the OCT 2007 top seems to have repelled price.  Also, the uptrend line is drawn from the OCT 2002 lows.  Incidentally, they are intersecting right about here as well.  
  • Currently staying above the breakout over the 1130 area and consolidating.  For a move up?  Or a move down?  It's a real tug of war between bulls and bears in this zone.  Further consolidation does allow it to burn off some of the overbought.  Momentum indicators are beginning to wane. 
  • If it falls solidly back into the range, that won't be a good sign.
  • Moving averages as guides indicate positive.  I'm not so sure.  Watching other indicators, such as NYSI, for clues.  Can Da Boyz keep this thing pumped into elections?  Or earnings season...2nd week of October?  Interesting how the Fed's POMO schedule, as currently advertised, only goes into the 2nd week of October.  Coincidence?  I dunno.  Heck, they could always put out a revised POMO schedule.  Believe me, these POMO days are having an impact on stock market moves.  It gooses them up and it even provides incredible upside reversal days (stick saves).  Sadly, if that is in fact what is going on, and I can't prove it...what happens when that support is removed?     
  • It's a quandry...my head says it can still go up after catching it's breath some and my gut says it's a complete bullshirt move wholly unsupported by any fundamental or technical reasoning.
  • Thus, for now, still just trading it intraday.  It is what it is!

    29 September 2010

    29 SEP 2010, Wednesday (Early in the trading day)

    • Just my opinion but this HFT is really getting out of hand.
    • Above is 2 weeks worth of a 15 min chart of the NY Stock Exchange's Advancing Stocks minus Declining stocks.
    • I provided a 2 week look so you can see how this differential normally moves.  Now, look at the far right side of the chart which depicts the first hour of trading this morning.
    • I'll leave it to you to draw a conclusion, but as for me...the chances of a pattern like that occurring in a free market are absolutely nil to zero!  Only computers have that kind of precision.
    • This sucks!!!
    • BUT...Great news!  Congress votes to postpone vote on taxes and adjourns for the session to go home and campaign.  House Speaker Pelosi is rumored to hand out "protective devices" to the Democrats going back to swing states so that they may be prepared to defend themselves if they say anything stupid in Town Hall meetings.  Isn't that thoughtful of her!

    28 SEP 2010, Tuesday

    • The heck with POMO, bank bailouts and outrageous federal deficit spending....
    • WE WANT BEER!
    • "I'll take one more!"

    27 September 2010

    Today's HFT Example


    • Courtesy of Zero Hedge...today's example of HFT run amok.  These have been happening in different stocks the past few months.  The games have not stopped and this is another incident of proof.  
    • Click on the above bid-ask grid to make it larger...then look at the price column on the left side.  From $43 down to $4 and back into the $40's all in less than one second.
    • Where was the 10% circuit breaker that was put in place after May's Flash Crash???
    • How people can feel genuinely at ease in this type of market continues to puzzle me.

    26 September 2010

    26 SEP 2010, Sunday

    • OK...blast from the past...how many folks remember MC Hammer?  You know..."Can't touch this" and "Stop!  Hammer time."  He was flashy, upbeat and caught people's attention...no?  What can we say about his staying power though?
    • OK, OK...I'm meandering here without a doubt.  But, for whatever reason, this popped into my head this weekend while I was thinking about the markets and what may lie ahead.
    • Chart at the bottom...it's breaking out, returned to test it's breakout and then shot upward on Friday.  Sure, I see it and I should be trading what I see and not what I think.  OK...I will trade but I won't talk about that here because that is intra-day stuff unsuitable for most folks.  And it's not investment which is what most people are looking for....a multi-month/quarter window.  And I don't see that.  I'm seeing the Hammer flash and am trying to avoid the "Stop!  Hammer time" flash crash (bastards didn't get me in MAY...whew!).    
    • But...I think too much.  Sure, I do indeed.  I'm always concerned more about what I don't see that bothers me.  I've studied way too much market history and...Heck, it works for me.  It's the old saw of "Plan for the worst and hope for the best."  
    • One thing that I recall from the ramp into the ultimate 2007 top is that each upmove was faster and with fewer safe entries as they progressed.  Seems similar...we could still go higher, no doubt.  It's just an observation on how the top was made last time.  Heck, just for a recent example, look at the FEB-APR 10 ramp. 
    • Sooo...what am I seeing in the market...it's up and overbought.  Hasn't taken any reasonable breathers that I might be comfortable taking a shot at.  That's just me.
    • When I combine the fundamentals with the technicals... I just scratch my head and try to imagine what is driving this up (I mean besides POMO cash).
    • Thoughts...Uncle Ben has smashed interest rates to zero...savers can't make any money in money market funds/CD's...folks that are piling into longer dated bonds at these levels must be insane (to me) when he's openly stated that he wants higher levels of inflation.  Don't you see it?  He's trying to force people to take on higher levels of risk...to step up and buy assets like....oh, I dunno...stocks, homes, mortgages, unsecuritized loans.  Who benefits from that steer?  The banks and brokerages who sell that stuff...not you.  But you're trapped.  Yeah, I'll pass in general.  Trade?  Sure.  Invest?  Hmmm....waiting for the "next bus" / significant down swing doesn't bother me.
    • Are we, the masses, being played?  Sure we are!  I've no doubt about that at all.  Interesting how the Hindenburg Omen criteria were conveniently re-written on Wikipedia a week after the August signal...no?  I will continue to monitor the traditional measures and call them as I see them.  As to the August signal, it either already happened in a mild dip or it can still happen since we're still in the time window.  Will be interesting to see how that ultimately plays out.   
    • Currently, we've breached the 1135 and I'm watching the 1165 area.
    • In my opinion, a very hostile investment environment exists for the average person.  If you're inside with the Fed (ie, Da Boyz), you get the "word", so to speak, when to get into what and when to exit.  The rest of us get set-up to be the bag holders at the end of the run.  I am not interested in that game!  And, seeings how I write this for family and friends that may be curious, I try to be as reasonably cautious as I can in not steering them into harm's way.  Missed opportunity, to me, is more tolerable than getting slammed.  That's just me.
    • Choose wisely and good luck.

    24 September 2010

    24 SEP 2010, Friday

    • Hasn't been much to say recently as the market is not moving in a normal ebb and flow manner.  More like it's just being pushed, held and pushed again.  Most of the push is happening while you are asleep via the after hours stock index futures and overseas markets.  (You can check the charts via the sidebar...put the SPY or QQQQ in the daily chart and you'll see the overnight gaps.)
    • Above, history of Quantitative Easing overlaid on the SP500...click chart to enlarge (as always).  Can "Buh...Buh...Buh...Bennie and da Feds" buy a stock market rally?  Hmmm...chart seems to indicate they can. 
    • Currently, the POMO is going and as the market approaches resistance areas...it jumps them during the low volume after hours timeframe.  Uncanny....reminiscent of the MAR 09 launch and also the MAR-APR 10 pump.  This is very frustrating...but it is exactly how Goldman Sachs was generating those "no losing day streaks" that just aren't possible...unless of course, you ARE the market?
    • Fed-Man is saving the day!  Fed POMO cash injected into the Broker/Dealers and just the threat of a potential Quantitative Easing II (QE2) has forced most bears to the sidelines or convert to trading upside action.
    • My only question is if QE1 hasn't really worked, why don't we try something different instead of going to re-visit....    

    • All this is doing is reducing the purchasing power of your dollar!  This has the greatest negative impact on the middle class and poor.  Yup, they lose purchasing power while the value of property, stocks and materials are propped up.  And we still have not investigated, prosecuted and sentenced the fraudsters that created the biggest collapse since the Depression.  Unbelievable...absolutely, un-forking-believable!!!  Blasted rats are still running freely about on our ship of state and in the canyons of Wall Street.  Sad...just sad.  And us everyday average Shmoes are the ones paying for it.  Most of the time, I steer clear of the class warfare thing....but can you describe this as anything else?  When I see some perp walks, orange jumpsuits, hand cuffs and leg irons on those responsible...then I will be able to step back from that charge.  I'm still hopeful that the wheels of Justice remain...even if they are grinding agonizingly slow in this instance.
    • I don't know about you, but I'd prefer the deflation route where values come down but the purchasing power of the dollar is maintained.  Prefer not using the old buck for wallpaper, toilet paper or for heat from a fire.  Sheesh!
    • I still think we're going to get the deflation first....just my opinion.  The pumping has bought time but I think they're just about out of time and the debt deflation will come as nothing has been fixed.  Instead it's all been papered over.
    • Another thing to consider...What if Super Ben is just jawboning QE2 for effect???  What if he's already taken way too much on the Fed's balance sheet and is instead looking for a way to lighten up.  What happens when Super Ben and Da Boyz stop propping the stock market?  Just some questions I ask myself. 
    • Time will tell.

    21 September 2010

    HFT...The Devil You Know

    • Ain't this grand...the UK is considering initiating a "PAYE" (Pay As You Earn) system.  In other words, the employer sends your paycheck to the government, then the government takes their take and transfers the remainder back to you via a bank transfer.  that way they can raise taxes, immediately, if necessary.  Soooo...the truth is finally out...you work for the government!!!  Modern day slavery.  Think about it!  Please!  If the government touches your paycheck first, they effectively, determine what is theirs and what is yours.  Cool, huh? 

      20 September 2010

      20 SEP 2010, Monday

      • Well, the market has broken out of the range...fina-freaking-ly.  What it does next is the question.  It did it in one straight line (ie, no retracements so to speak) and is even more overbought short term than it has been.
      • Folks...this price action is unusual and frustrating.  Using the moving averages as guides, it's positive and retraces can be bought.  But, as for me, I just don't trust it (and neither do many experienced managers and here).  I don't know what it is...but I just don't trust it.  I've not been holding anything...just trying to trade some.  You should do what you feel confident / comfortable with.  Basically, I've got little conviction toward either direction.  Heck, this could be a fake-out breakout, too....why is the VIX rising recently as the market rises...usually inversely related.
      • Is this the Fed POMO money at work...trying to prop into the elections?  I dunno.  Is the market forecasting a booming economy ahead...just my opinion but I don't see it.  Hey!  Government reported, today, that the recession ended in JUN 2009....wow, timely.
      • The stock market can and will do whatever it wants despite the economy.  This is one of those times where we're seeing precisely that.
      • Federal Reserve meeting statement tomorrow, Tuesday, at 2:15 PM may be clouding this some, too.  Do the Feds unleash "Quantitative Easing II (QE2)" or not?  What will be the market's reaction?
      • Frankly, this is one of those times where I'm just going with my gut....and I don't trust it.  I'll trade it but I won't invest in it until I see some more normal "flow".        

      19 September 2010

      19 SEP 2010, Sunday


      • Above...the tax debate.
      • Markets...very dull week.  13 SEP (Monday) post still applies.

      17 September 2010

      17 SEP 2010, Constitution Day

      • Retail sentiment has been going through some rather violent swings during this sideways range.  Right now, they're as bullish as they get which can be a warning of risk since they are not often correct.  As an aside, the newsletter writers are more toward bearish.  Would love to see both of these groups giddily bullish.  Alas, can't have everything.
      • Market has been on a straight upward tear unusual to normal price action...challenging 1135 area soon.  They're hasn't been much to say.  Will this thing turn bull or turn bear?  Watching.  Today's Option Expiration Friday...perhaps Da Boyz have ramped it this high to cash in on the cheap options they bought in early September?  




      15 September 2010

      15 SEP 2010, Wednesday (Early AM)

      • Fun and games with the FED POMO money talked about in the last line of the last post???  (Charts courtesy of http://market-ticker.org/akcs-www?blog=Market-Ticker)
      • Yesterday in the AM (Tuesday), above, currency manipulation alert big time here...forcing fast and hard moves...on the left Euro, middle Australian Dollar, and right US Dollar.  Yup...your US Dollar is getting crushed....'cuz Bernanke is ordering it beaten down.  Moves like that can only occur with huge money.  Think about that....he wants you to be able to purchase less with that dollar.  Nice huh?  This is government desperately doing what it can to prop up crap that shouldn't be propped.
      • And overnight, Japan responds by intervening on behalf of its own currency...hasn't done that since 2004!  You can see the results below...that's the US Dollar versus the Japanese Yen.  So, yesterday's AM move and last night's late night move....Sheesh!  A whole boat load of currency traders were absolutely annihilated.  Make no mistake, those moves are the market's equivalent of war...a full on frontal assault in an attempt to drive your enemy back and crush him.

      • Interesting how this is happening right around the SP500 1130 breakout level.  Are the powers that be doing everything they can to try and jump and hold that level?  Or is it just coincidence?  We are in that "decision" area for the market.  Hopefully we can get some more clues soon...it will be a tussle back and forth for a little bit while the bulls and bears duke it out.
      • Bernanke has been trying to knock the US Dollar down and now Japan says, "Enough".  Does this break Bernanke's plan?  
      • When currencies start behaving like this...other markets will be impacted.  Things could get real interesting, dicey or scarey depending on your perspective.
      • Be careful out there.
      • I'm just trading lately...no holding....and judging by these types of moves...I'm glad. 

        14 September 2010

        13 SEP 2010, Monday

        • Back in July I was looking at two possible areas of interest....1135 and 1165.  Well, we're back approaching the initial area and I'm watching to see if we get a turn down or does it keep going up this time and break out to complete the inverse head and shoulders.
        • The breakout of the inverse HnS would get the bulls all giddy and scare most bears since it projects to 1250.
        • Ms Market could screw the most by breaking out, then faking out, turning back down and give us a downside resolution to all this mess of the past 4 months.
        • Sideways ranges are tough...only meant for those who trade, if at all.  But, I think we're getting close to direction time.
        • Momentum indicators are still up after Monday's action, so not much to do unless day trading.   
        • One more item of note that bears need to be aware of...in the second half of August, the FED indicated it was going to begin purchasing US Treasuries through open market operations...the current schedule has it going into mid October.  That puts cash into the broker / dealers hands that they can deploy into the stock market if they like.  MAR 09 run-up began under similar circumstance as they did similar ops into NOV 09.  Hmm...look what the market's done since late AUG 10.  Just be aware...you could potentially be fighting the FED.  Choose your points wisely....just saying.

        12 September 2010

        12 SEP 2010, Sunday

        • Know what?  Summer is over but Da Boyz haven't come back yet.  Proof?....
        • No volume.  As a matter of fact, volume is at lows you typically see around Thanksgiving or Christmas times of the year.  Highly unusual...what is setting up?
        • Thinking we just saw a pump before a dump...but it is still very sideways and subject to head fakes in both directions.  
        • This market is trying to "throw" any and every rider.
        • You can check the charts in the sidebar for current action.
        • Think it's been bad recently?  Here's an interesting analog from bespoke.com that shows similar action from 1960....just for grins.  Gosh, I hope that doesn't play out...a couple of more months of yuck.  There is no road map...and this one shows even wider up and down swings than we've had to endure over the past 4 months.  And once all the riders have been shaken...the move happened.
        • Ms Market is doing her thing...frustrating the most people!
        • PS...Sunday night (11PM EST)...currently gapping upward over last week's resistance...but it's after hours and things can definitely change over night.  But, I will add that the market, recently, seems to be ruled by the goons with HFT computers while the rest of the country sleeps and waits for the scraps the next day.
        • It's tough out there...be careful!

        12 SEP 2010, Sunday (Odds and Ends)

        • Just a post to put some info up that I'll be able to search and find in the future.
        • Probably put another post up later on the market...was pretty much a nothing week.


        • Historical PE Ratio of SP500.  PE Ratio is price / earnings...how many $ are investors willing to pay per $ of earnings.  Sound investment is when rational investors pay as few $ for stock as possible for higher earnings potential.
        • This is a fundamental measure of the stock market (economy) which rises and falls, cyclically.  It's not a timing tool.  More of an environmental indicator much like a thermometer.  
        • Just as temperature changes for many different reasons, the PE Ratio does, too.  PE Ratio rising...stock prices are advancing faster than earnings OR earnings are falling faster than stock prices.  PE falling...stock prices are declining faster than earnings OR earnings are rising faster than stock prices.
        • Using history as a guide, you can see what the norm was since 1900.
        • Let's say that the red line boundary is a "Stocks are hot!" area...people are willing to pay up for stocks regardless of earnings (Love 'em!!!).  And, the green line boundary is a "Stocks are cold!" area...people are unwilling to pay up for stocks regardless of earnings potential (Hate 'em!!!).  It can stay hot or cold for long stretches, as you can see.  That's OK!  You're still going out...you just dress appropriately...so to speak.
        • Now, to the macro thinking....but first some background...
        • In 1975, IRA's were authorized (and further expanded in 1982) just as the Baby Boomers were hitting their 'high productivity years' (ie, max work and spending for family, housing, cars, kids college, etc).  Even though they were spending big, they were saving big, too!  It was this stable, large and growing, pool of funds that became the investment capital necessary to fund the research and development which brought previously unimagined products to the marketplace (ie, computers, Internet, cell phones, etc, ring a bell for anyone?).  Private investment capital (ie, savings) and private spending by hundreds of millions of free individuals...THAT is what powered the innovative economy we enjoyed in the 1980-90's.  It was one very long positive feedback loop...a virtuous cycle. 
        • NOTE:  Government spending, government direction of particular industries (ie banks, autos, housing, healthcare, energy production, etc...cough, cough) nor government bailouts of failed financial giants (without prosecution of fraud when present) played no part in that discussion.  The only government involvement (and it was probably 100% unwittingly initiated) contained in the discussion was to encourage savings by individuals...our capitalist system did the rest.  It's not magic nor is it rocket science.  It's capitalism!
        • Pssst!  Can someone please explain that to the fella at the top of this post...I would really appreciate it!
        • OK, back to the PE discussion after that groundwork was laid...
        • One big question is why did it get hotter than ever before in the mid 1990's and stay that way for so long?  One possible answer is the "locked up" savings (ie, IRA's) coupled with a booming economy due to new technologies.  With regards to stocks...it was a definite "Love 'em" phase.
        • Next question...where to next?  Is it possible that as the Boomers are now drawing their IRA savings down, the stock market will lose some of it's underpinnings for several years?  Has that been, in part, what is occurring now?  Was the subprime mess just the catalyst?  Are we moving toward the "Hate 'em" phase for stocks?  I'll guess we'll know in a decade or so.  Which brings me to the old familiar Secular Bear Market reminder below...   
        • Sooo, what is to be garnered from this PE Ratio information for the typical "buy and hold" investor...back to the PE Ratio chart...
        • Buy and hold opportunities come along infrequently.  However, they do tend to come after the economy has been down on the mat for a long time, private debt burdens are reduced and savings begin to rebuild the required fuel for the capital investment cycle again...it'll happen...it just takes time.  
        • Buy and hold environment?  You can see them in the chart...the closer you get to the green line (or below it).  Buy and hold fares better in the "Stocks are cold...Hate 'em" environment of single digit PE Ratios AND investors are shunning / swearing off stocks "for good".  It doesn't seem to me that we're there...people aren't afraid of stocks as too risky.  But, the Buy and Hold time is coming...tell your kids!
        • America is not done!  We've been here before and we'll get through it this time too .  The machinery of capitalism is just "down for a maintenance period" now.  The machine is still working...just at a low output during the maintenance phase.  Government can help by stepping aside and let the technicians (Adam Smith's "invisible hand"?) do the work unimpeded..."Hey kid!  Quit throwing wrenches in there and just go get me a Coke while I finish my work here".  She'll be back up and running in awhile.  
        • Patience, care for one another and good decisions along the way are all that is necessary!

        07 September 2010

        7 SEP 2010, Tuesday

        • A major contributor of global warming greenhouse gasses....Bessie is blowing monstrous farts!!!
        • Sooo...read the article here.
        • AND....don't forget the "Green Police"....love the complete absurdity (I hope) of this Super Bowl ad.
        • Thus, once again, I'll reiterate the challenge to the global warming advocates..."Demonstrate your resolve!  Do your part and go vegetarian all the way!  Lead through actions not through fear mongering."
        • Short of that...you're not serious and should be summarily dismissed by any rational person.  Lead the way through your actions instead of demanding others to play your game while you go about your day to day business on your merry way.
        • Heck!  If global warming is a "consensus" then, as a majority, if you eliminate your livestock / meat consumption...think of the impact that would make globally!
        • But, alas, I've yet to see any of you make the sacrifices that you require of others to make on behalf of your cause.
        • One more thing...if China is bringing on 2 coal fired power plants for electrical production per week, does that mean the US should take 2 power plants off line per week to offset the emissions that will be pumped into the "closed system" we call an atmosphere?  How quickly would that reduce the US to the stone age?  Do we attack and eliminate power generation capabilities of China who are producing the inexpensive products that you so readily consume?  Nonsense!
        • Do you folks even think of this stuff?  'Nuff said!
        • Oh yeah...one more thing...Meltdown of the climate "consensus".

        6 SEP 2010, Labor Day (Part 2)

        • STOP!!!  This trading range has been a ridiculous multi-month sideways morass ever since the "Flash Crash" kicked it off.  The good news is that, now with Labor Day past, Da Boyz are back from the Hamptons and may be ready to do something...anything.  Out of sideways comes up or down...which one is impossible to know.
        • The 1130-1040 area has been a wide and loose 90 point range (highlighted by the white horizontal lines).  I took 25 points off the top and bottoms to identify the middle area and it yielded 1105-1065 (highlighted by red horizontal lines)...that area has been the "kill zone" for both bulls and bears alike...tough.
        • The recent 3 day surge brought price right back to the top of the "kill zone" which coincides with the down trend channel line.  Much of that move was accomplished via overnight gaps in a low volume pre-holiday week trade.  So, I'm not putting alot of trust in it.
        • Daily and weekly charts above.  Not much to say....daily getting better but short term overbought while weekly is sideways.  No real clues...except the fundamentals and they're not good.  
        • One day at a time!

        06 September 2010

        6 SEP 2010, Labor Day


        • Groundhog Day...reliving the same thing again and again and again and....
        • Infrastructure spending to "repair our crumbling roads and bridges", as pitched in Obama's Stimulus in 2009, was less than 20% of the entire package.  While most of the spending was transfer payments to states and unemployment insurance.
        • Heck!  We haven't even finished spending the first humongous stimulus yet.
        • Now, the administration is back pitching infrastructure as the savior...interestingly within 2 months of the mid-term elections.  Hmmmm...OK...OK, I'm the constant skeptic.  This is obviously another attempt to throw something against the wall to see if it sticks.  They'll keep doing this until they can actually claim credit for something...it seems.  Remember the "Summer of Recovery" theme?  Didn't seem to work...so, throw something else up there until it works!
        • I'm tired of forever indebting our kids to save our ass.  Time to take one for the team, take the tough medicine, and actually give our kids a chance.
        • But I'm a fool, apparently.

        5 SEP 2010, Sunday (Part 2)

        • From pragcap.com, a little historical perspective on US government bond yields during the Depression and afterward.

        03 September 2010

        2 SEP 2010, Thursday

        • Ahhh!  The simplicity of the never ending sound-bite...and the truth.
        • More banking links to terrorist activity....They loot...We should prosecute!!!  Is any one else tired of this crap?  Well, I guess it makes it official....our legal system has been split in two; one for the common man and one for the oligarchs. Welcome to Amerika, Comrade.  Hey, President Obama...Change this!  Whoops..."no can do pardner...far too much in campaign contributions from dem!  So, be a good little commoner and be quiet."
        • Below...the Student Loan Scam or "How Easy 'Government-Guaranteed' Money Results in Ever Upward College Costs" (remember how the housing bubble inflated due to the availability of easy money???).  When you click the pic below, you may have to click it again in the new window to enlarge to readable size.

        01 September 2010

        1 SEP 2010, Wednesday

        • Time to review monthly seasonal patterns.
        • A really good write-up on why we're in our current mess.  It's because there is too much bad debt in the system that must be cleared.  Instead of allowing it to clear Congress is trying to paper it over through:  1) spending, 2) changing the accounting rules to enable losses to be concealed, and 3) now, they're looking toward more spending.
        • YAY!  These guys are so smart!  Pffft!!!