DEADShort term sentimentsDEAD

[vin]

New here – mostly swing trading. I’ve been searching for a serious site and believe I have found it here. Mr. To’s commentaries are excellent. Let’s cut to it - I for one am spooked short term (1-3 weeks). Here are my reasons:
First, the current rally just doesn’t seem to have teeth. The move up on June 29 seemed exaggerated. It was just a big ‘Hurrah, the Fed did what we expected.’ Many read a future pause into Bernanke’s statement but who knows? It’s almost as if the market ‘willed’ a rally.
Second, after this delayed follow through day the major indexes responded with a pullback on increased volume (modest in percentage loss).
Third, two days prior (June 27th) all three indices had what I call a ‘heave day.’ They climbed over the previous day’s high only to close lower than the previous day’s low – all on increased volume.
Fourth, there was no doubt some end of the quarter window dressing and short covering.
What has happened since? Some call it consolidation; I call it distribution and selling into bounces. The accumulation volume has been anemic. Although the holiday week clouds things the leading events remain.
Lastly, the most important thing is the gut. Something makes me feel very uneasy (see below). Maybe it was the synthesis of what I mentioned above; maybe I am worried about locking in gains on this recent move up. Nevertheless, I liquidated everything except LEN as I don’t think homebuilders can get beat up much more (gee, wonder where I got that idea?).
North Korea lobbing missiles into the sea doesn’t help. I think there will be one more shakeout before we test old highs again. I don’t know if we’ll sink to (or below) the mid-June lows, but it could be painful. Predictions are pretty much worthless until events transpire. I’m only building an arguable case. The market doesn’t care or need reasons to steamroll every naysayer out there. Let the tape decide.

Side note: I was reading my Bible before the market opened and came across these verses:

“With her enticing speech she caused him to yield, with her flattering lips she seduced him. Immediately he went after her, as an ox goes to the slaughter, or as a fool to the correction of the stocks…” Proverbs 7:21-22

I don’t claim to have divine intervention on my side, and starting my day with this verse might have been what spooked me. Take it for what it’s worth, but the wording in this verse is uncanny in its application to bulls running up a blind (r)alley. The Bible remains the best book on investing ever written (not to mention the invaluable spiritual content). If you don’t have one, get one.

[Odysseus]

Wow, Henry. That's a name out of the past.

I've tried to compare Cramer to Granville many times. Two nuts, blend in some dried fruit. Voila, Fruitcake.
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Psychic with Alzheimers. I can predict what I will forget.

[HenryTo]

The greatest contrarian indicators we have seen in a while, as they bring Joe Granville out of the woodwork:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aMVeMY2hvYUI&refer=home

I can't believe they would give publishing space to anyone who use the "Superbowl Indicator" as a serious indicator.

[nodoodahs]

Timing: From an index options standpoint, it's as if we're out of adrenaline. The sky would really have to be falling (VIX 45+) for the Fear/Greed to signal a "buy," or we'd have to have several consecutive weeks of lower volatility to work off some of this condition. Similarly, we'd have to trade 1425+ for a few weeks to work the EZ Trend back to a "buy" condition. This strategy has been 25% stock, 25% bonds, and 50% cash for a while now ...

I keep three pages of breadth charts here:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2624141
One page daily bars, one page weekly, one page monthly. The way I read them, esp. the weekly and monthly, the area of the January lows is most likely a strong intermediate-term bottom, or within a couple of percent of one. I actually said that a few times in January, and once in early February:
http://www.billakanodoodahs.com/2008/01/aggressive-moves-to-cash/#comment-58992
"Technically we are very much oversold on a variety of breadth measurements, all of which are at levels suggestive of long-term, or at the very least, intermediate-term, bottoms."
http://www.billakanodoodahs.com/2008/01/jan-2008-returns/#comment-61667
"Right now, my intuition is that both of our Timing models are wrong - and that the bottom has been reached and a multi-month rally is on."

Fundamental strategy has underperformed the market YTD, Aggressive has beaten it but is down high single-digits as of Friday's close. Both try to stay 100% long U.S.-traded stocks.

Rotational is right about break-even YTD, was up about a percent on Friday's close, tries to stay 100% long but has access to lots of different asset classes.
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[rffrydr]

Yeah that about sums it up. Is there anything left to say?
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Today is the Tomorrow you worried about Yesterday!

[gregf]

http://www.bloomberg.com/apps/news?pid=20601109&sid=aDSFgf3DHR_A&refer=home


March 17 (Bloomberg) -- U.S. stocks are on the brink of the broadest bear market in four decades as investors ignore the strongest buy signals in almost 20 years.

[rffrydr]

One, maybe "the" bellweather showing a turn:

http://stockcharts.com/h-sc/ui?s=GE&p=W&yr=2&mn=0&dy=0&id=p23686829448

Note: GE was first back into the the summer credit crash.
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Today is the Tomorrow you worried about Yesterday!

[mtvk]

Good sense from Bush. I never thought he could make sense. Congress craving for votes will push these bills. Hope they get vetoed.

[rffrydr]

The Strong always succumb to the Weak. It's a matter of fundamental economics.

Capitalism guarantees nothing: it's as old as Tesla vs. Marconi, Edison vs. The World, Apple vs. IBM--it took a third of a century to become Microsoft so I suppose that's proof of something.




Yes the Strategic Reserve should be tapped. It already functions like that for most purchases through it's "Royalty Scheme." Co-ordinated would be the ticket. There is no "war" that could be better served.
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Today is the Tomorrow you worried about Yesterday!

[nodoodahs]

"Mankind," much like the "stock market," is not monolithic. I suspect there are a good mix of personalities, some of whom love being "the deciders" and some of whom loathe "the deciders," some of whom value freedom and non-coercive means of exchange, and some of whom ... don't. There are wolves, there are sheep, and there are a few that neither desire leading, nor being led. I suspect the natural state is conflict between wolves, and conflict between wolves and non-wolves, with the sheep getting sheared or eaten, when not being led.

Our positive (i.e. non-normative) mission, should we choose to accept it, is to recognize that the U.S. is closer to a Plutocracy or Corporatist State than it is to anything else, and that the "freedom of exchange" holds only within certain limitations and boundaries. It doesn't matter, for the sake of the "market commentary" discussion, whether we like that, or think that's the way it should be. It is what it is.

Once we recognize that, we have a clearer view of the whys and wherefores of certain actions, don't we?
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[HenryTo]

Some are more idealistic than others but given the historical record so far, I would have to postulate that capitalism is not the natural state of mankind.

[nodoodahs]

We could discuss our normative views as to whether or not capitalism is a "good" thing, but that would be even further off topic.

The various __cracies are ALL inherently incompatible with a system of free exchange (such as capitalism), because they all require a State which enforces the views of some group of people, through coercion, outside of market mechanisms. That argument stands on its own, regardless of personal system preference ...

The system in place, and our positive (i.e. non-normative or "value-free") examination of it, does provide us with useful market knowledge. Knowing, for example, that a "government" is heavily in bed with major corporations, will lead us to surmise that they have an incentive to act towards furthering the ends of those corporations ... even ensuring their survival, when the market forces would dictate otherwise ... bailouts are a natural consequence of such a system, aren't they?
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[mtvk]

If capitalism or something else is quasi good or quasi bad, depends
on what % people are fools or idiots. Meaning, if everyone is
rational, most probably would have chosen the right system.

For people to be irrational or not, depends on how far those evolved
away from irrational emotional brain working to rational non emotional
brain.

Seem to me we are not there yet.

[nodoodahs]

I would venture the inherent conflict between Democracy and capitalism is that it allows a "government," through use of coercive force, to command and control production, and inflict barriers to the free exchange of goods and services.



This is, of course, the same source of conflict between other forms of "government" and capitalism.



The only difference between Democracy, Plutocracy, Republicanism, Apartheid, etc., is in who gets control of the coercive power (which is inherently anti-capitalist). Their incentive is always the maintenance and accumulation of more wealth and power, regardless of who rules. This "who" difference between Democracy and Plutocracy emerges in the nature of the anti-capitalist outcome, but make no mistake, it is still anti-capitalist.

In a (more pure than we arguably have now) Plutocracy, the Forbes 400 would tend to turn over more slowly, as they enact laws and regulations that squash competition (such as tariffs on Chinese goods, requirements for use of fluorescent lights that the Chinese can't produce cheaply yet, safety and emissions regulations on cars that the Chinese don't have the technology to meet yet, etc.). In a Democracy, the Forbes 400 wouldn't turn over at all, since they would all be nationalized companies that didn't produce very well at all ...
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[HenryTo]

Yes, it is unfortunately worded.

Let me back up for a second.

The Forbes 400 in the US list turns over completely once every 20 years. Companies with a dominating market position (and wealth) today may go bust tomorrow, a la IBM, GM, Bethelem Steel, Yahoo, Tribune, AT&T, Western Union, K-mart, and so forth. This phenomenon is directly reflected by the theory of "creative destruction" inherent in capitalistic economies.

In such an economy, it is the survival of the fittest - whether you are the CEO or a shelf stocker at Wal-Mart. The boom-bust cycles, as well as the adoption of new and more efficient technologies, will adversely affect the weakest in society the most - i.e. the least financially, mentally, and physically able.

In a capitalistic society, wages are determined by marginal cost of production - which usually result in extreme disparites in income levels in any given year. The sports world is one example (being able to sprint 9.80 and 9.95 in the 100-meter dash makes a big difference). The financial industry is another example - as investment bankers and venture capitalists exist to provide capital to emerging or existing companies and thus serve a vital function for the capitalistic economy. That is why they are paid so well. By definition, the majority of the population are disadvantaged - that is why there is always an inherent conflict between capitalism and democracy.

[nodoodahs]