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vin
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Joined: 06 Jul 2006
Posts: 82
Location: Buenos Aires
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 Posted: Thu Jul 06, 2006 8:35 pm Post subject: DEADShort term sentimentsDEAD |
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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. |
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rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 7635
Location: Sunny California
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| Posted: Mon Sep 29, 2008 6:14 am Post subject: |
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Credit Suisse take (Alphaville, Markets Live):
T
| Quote: | The plan as put forward contains three bits of goods news: a) potential
postponing of mark to market (subject to SEC approval); b) less
disincentives for banks to use the programme (by limiting the dilution
through warrants and caps on executive pay); c) less onerous funding and
mortgage guarantee burdens.
NH:
The disappointment features of the plan are the same as on Friday: a)
there is no direct capital injection into banks; b) the size of the
package is too small; and c) there is no fiscal stimulus package (which
the US economy badly needs).
Our Washington specialists believe that the House should pass the bill
today, the Senate (where apparently the passage of the bill is easier)
by Wednesday. We have seen plenty of unexpected political events in the
last 4 days- so nothing is guaranteed!
NH:
With the House in recess after Wednesday until November 6th, any further
package could only be passed if President Bush declares a state of
emergency and recalls Congress (something the Republicans we are sure
would want to avoid!). This suggests that if there is no deal or an
inadequate deal this week, then it is very easy to see 10% downside.
Buffet even warned it could be “the biggest financial meltdown in US
history”.
To succeed three preconditions need to be fulfilled:
NH:
Capital: we estimate that the banks in the US need $200bn of capital and
in Europe at least as much again. Thus the most critical issue is the
price the Treasury pays. This has been left deliberately vague (probably
good news). If credit prices are unchanged, then just $15-25bn of
capital has been injected into banks.
Improved liquidity: $700bn (the first two tranches combined are $350bn)
represents about 12% of the ex-GSE mortgages and is probably an
appropriate amount to ensure markets become more liquid. Funding
mismatches are now being addressed as central banks lengthen the
maturity of their repo operations (which was started on Friday). The
package is however too small (RTC 1 bought $700bn of assets in today’s
prices yet this crisis looks worse).
Workability: The dis-incentives for banks using this programme (in terms
of caps on executive pay and warrants) have been watered down.
NH:
Credit is the judge and jury of this package:
(a) as above, it would improve the mark to market; (b) historically
credit leads a turn in equity by a quarter at major turning points;(c)
60% of corporate funding is LIBOR-related in the UK, some 10% of
consumer funding; (d) The credit spread is the main determinant of the
warranted equity risk premium. At current credit spreads, the equity
risk premium should be close to 5%- against 4.5% now. At around,
1110-1150 on the S&P500, the equity risk premium rises to be above 5%
(depending on what happens to bonds).
If LIBOR and credit spreads do not improve, then equities fall 10% or
more. But we think spreads should fall- not least because credit offers
value. We expect the House to vote on TARP today, Senate by Wednesday.
On equities, we still believe the market stays in a 1,150-1,350 S&P 500
range. The downside is limited by valuation support for equities (1,130
the equity risk premium rises to 5% - our deep value target) and credit
(implied default rates are above previous peaks).
NH:
The Fed,
Administration and Congress have looked over the abyss and realised what
is at stake- if this does not work, then more conventional partial
nationalization will follow. Additionally, the fall in the oil price,
dissipating inflationary pressures and China’s easing of monetary policy
are all good news.
NH:
This can’t be a bull market: very fundamental economic problems remain:
too much leverage, policy mistake in Europe and 2ml excess homes in the
US. Consensus GDP numbers in Europe, US and globally are at least 1% too
high and consensus earnings numbers are about 20% too high. We stay, as
we have been since August 2007, overweight defensives and underweight
banks.he plan as put forward contains three bits of goods news: a) potential
postponing of mark to market (subject to SEC approval); b) less
disincentives for banks to use the programme (by limiting the dilution
through warrants and caps on executive pay); c) less onerous funding and
mortgage guarantee burdens.
NH:
The disappointment features of the plan are the same as on Friday: a)
there is no direct capital injection into banks; b) the size of the
package is too small; and c) there is no fiscal stimulus package (which
the US economy badly needs).
Our Washington specialists believe that the House should pass the bill
today, the Senate (where apparently the passage of the bill is easier)
by Wednesday. We have seen plenty of unexpected political events in the
last 4 days- so nothing is guaranteed!
NH:
With the House in recess after Wednesday until November 6th, any further
package could only be passed if President Bush declares a state of
emergency and recalls Congress (something the Republicans we are sure
would want to avoid!). This suggests that if there is no deal or an
inadequate deal this week, then it is very easy to see 10% downside.
Buffet even warned it could be “the biggest financial meltdown in US
history”.
To succeed three preconditions need to be fulfilled:
NH:
Capital: we estimate that the banks in the US need $200bn of capital and
in Europe at least as much again. Thus the most critical issue is the
price the Treasury pays. This has been left deliberately vague (probably
good news). If credit prices are unchanged, then just $15-25bn of
capital has been injected into banks.
Improved liquidity: $700bn (the first two tranches combined are $350bn)
represents about 12% of the ex-GSE mortgages and is probably an
appropriate amount to ensure markets become more liquid. Funding
mismatches are now being addressed as central banks lengthen the
maturity of their repo operations (which was started on Friday). The
package is however too small (RTC 1 bought $700bn of assets in today’s
prices yet this crisis looks worse).
Workability: The dis-incentives for banks using this programme (in terms
of caps on executive pay and warrants) have been watered down.
NH:
Credit is the judge and jury of this package:
(a) as above, it would improve the mark to market; (b) historically
credit leads a turn in equity by a quarter at major turning points;(c)
60% of corporate funding is LIBOR-related in the UK, some 10% of
consumer funding; (d) The credit spread is the main determinant of the
warranted equity risk premium. At current credit spreads, the equity
risk premium should be close to 5%- against 4.5% now. At around,
1110-1150 on the S&P500, the equity risk premium rises to be above 5%
(depending on what happens to bonds).
If LIBOR and credit spreads do not improve, then equities fall 10% or
more. But we think spreads should fall- not least because credit offers
value. We expect the House to vote on TARP today, Senate by Wednesday.
On equities, we still believe the market stays in a 1,150-1,350 S&P 500
range. The downside is limited by valuation support for equities (1,130
the equity risk premium rises to 5% - our deep value target) and credit
(implied default rates are above previous peaks).
NH:
The Fed,
Administration and Congress have looked over the abyss and realised what
is at stake- if this does not work, then more conventional partial
nationalization will follow. Additionally, the fall in the oil price,
dissipating inflationary pressures and China’s easing of monetary policy
are all good news.
NH:
This can’t be a bull market: very fundamental economic problems remain:
too much leverage, policy mistake in Europe and 2ml excess homes in the
US. Consensus GDP numbers in Europe, US and globally are at least 1% too
high and consensus earnings numbers are about 20% too high. We stay, as
we have been since August 2007, overweight defensives and underweight
banks. |
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Today is the Tomorrow you worried about Yesterday! |
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rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 7635
Location: Sunny California
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| Posted: Mon Sep 29, 2008 5:55 am Post subject: |
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1187...Seems to like that number. Let's hope it does the trick again.
_________________
Today is the Tomorrow you worried about Yesterday!
Last edited by rffrydr on Mon Sep 29, 2008 6:20 am; edited 1 time in total |
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rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 7635
Location: Sunny California
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| Posted: Mon Sep 29, 2008 5:24 am Post subject: |
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You must not live in Zug, the Great Hall of the world's mining kingdom!
Yes, the flipside is that this bailout is of/for something. I had been skeptical of a monster rally going into earning season with many of those models showing "fair value" at 1250. Hard to say what an "earning" even is anymore after this last few years. I am surprised we are down 20pts. The dollar is firm so they're not buggin' out (but the euro/yen is down 2points) and money's coming out of near eurodeposits.
I bought GM debt on friday and got a nice reversal and ditto many debt products. Would like to chalk up the reaction to thin foreign reactions covering their Quarter but, at this point we'll probably do the same here. This could also be the "nudge" we need to force the House's hand. I liked the Buffett/Coke china buy and the european injections. The "bidding war" over Wachovia is almost an embarrassment however. It only underscores how pathetic things have become.
Lehman debt is starting to cry out however. For the rest I'll have to wait. I don't think the Street is going to like that taxing sword of Damoclese hanging over their head. Nor the segmented, conditional distribution. 700 billion ought to be obvious--but with markets, nothing ever is.
_________________
Today is the Tomorrow you worried about Yesterday!
Last edited by rffrydr on Mon Sep 29, 2008 6:19 am; edited 1 time in total |
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pinocchio
Newbie
Joined: 20 Mar 2008
Posts: 18
Location: Switzerland
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| Posted: Mon Sep 29, 2008 4:29 am Post subject: |
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Here in Switzerland, media and newspapers are in panic mode. That was a great contrarian indicator in January, and to a certain degree in March as well. Is my bank account safe? Stories about Swiss customers who lost money with Lehman stuff. (There was a story about a lady who lost 10'000 SWISS FRANCS = 10'000 Dollars. Can you imagine?) And so on.
Germanys Spiegel online is among the best contrarian indicators. Whenever they scream: The financial world is collapsing! Armageddon!!! you know the stock market has probably reached at least a temporary bottom.
But, boy, this is really tough right now. If Henry is right with his last rally predictions, I will call him a god amongst contrarians, buy a ticket to the USA and kiss his feet. |
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diesel
Moderator
Joined: 05 Oct 2006
Posts: 411
Location: Australia & New Zealand
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| Posted: Mon Sep 29, 2008 2:27 am Post subject: |
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| lewie2004 wrote: | | Let's say we get a deal and we open up 300 points on Monday. Are you going to short the markets or sell any longs into strength and sit back and watch for a day or are you going to add money to the market? |
Well looks like we are going to start the day 300 points down rather than up!
So far bailouts have been bought into rather than sold into. Widespread skepticism is just what I wanted to see. I vote for adding money to the market... Anyone else?
_________________
“I was once Snow White, but I drifted” – Mae West |
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diesel
Moderator
Joined: 05 Oct 2006
Posts: 411
Location: Australia & New Zealand
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| Posted: Fri Sep 26, 2008 10:26 pm Post subject: |
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| lewie2004 wrote: | | Let's say we get a deal and we open up 300 points on Monday. Are you going to short the markets or sell any longs into strength and sit back and watch for a day or are you going to add money to the market? |
Fridays breadth was horrible. Market internals still lacking any strength. Short term I would be looking for lower prices, possibly a washout to the downside.
I've been looking at a few investment properties today and bumped into a Chinese man who owns a textile business on the mainland. Said he hasn't seen conditions this bad for 50+ years. He is being forced to liquidate his worldwide real estate holdings.. 
_________________
“I was once Snow White, but I drifted” – Mae West |
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lewie2004
Senior Poster
Joined: 03 Dec 2007
Posts: 111
Location: Marion, Illinois
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| Posted: Fri Sep 26, 2008 3:55 pm Post subject: |
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| Let's say we get a deal and we open up 300 points on Monday. Are you going to short the markets or sell any longs into strength and sit back and watch for a day or are you going to add money to the market? |
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lewie2004
Senior Poster
Joined: 03 Dec 2007
Posts: 111
Location: Marion, Illinois
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| Posted: Wed Sep 24, 2008 2:40 pm Post subject: |
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notes from Dougie Kass.
I never heard anything on CNBC about ameritrade today.. Anyone know what he is referring????
Doug Kass is the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Short Offshore Fund, Ltd. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.
For an explanation of Doug's market ratings, please click here.
Lingering Pessimism Presides
9/24/2008 3:13 PM EDT
A permanent state of negative sentiment is the byproduct of the credit cycle.
I am reminded of something that Grandma Koufax once told me, but it is R-rated and not appropriate. But, in actuality, the horror show called the Congressional hearings is far worse.
The consequences of the credit morass, among other things, will be a total distrust regarding Wall Street and politicians -- as well as a nearly unprecedented apathy and disinterest in investing.
A permanent state of negative sentiment is the byproduct of the credit cycle.
Get used to it.
I am outta here like the credit of yesteryear.
Enjoy your evening, and thanks for reading The Edge.
The Hits Keep Coming
9/24/2008 2:15 PM EDT
Update AMTD
The market is selling off on Ameritrade's (AMTD) money market problems.
More to come.
Memo to Markets
9/24/2008 1:36 PM EDT
The bill to rescue our financial institutions will get done.
Period ... end of story.
All the rest, as Grandma Koufax used to say, is 'chorosis.'
Dog Ate My Homework (Part Deux)
9/24/2008 12:43 PM EDT
The Congressional testimony exposes the rudimentary economic knowledge of our elected officials.
I think it is great that CNBC has hours of Congressional testimony today (and yesterday). It helps to expose the rudimentary economic knowledge of the Congress, and it can't help but dull the perma and secular bullishness in politics and on the part of investors.
At some point, ever-growing skepticism (bordering on disgust!) and regulatory reform are the components of a xxx to the stock market's recovery.
And, oh yes, they should all listen to the short sellers, who telegraphed the litany of economic problems the world currently faces.
Favorite Long and Short
9/24/2008 12:28 PM EDT
Bullish HTS
Bearish TWI
Favorite long: Hatteras Financial (HTS) -- buying more today.
Favorite short: Titan International (TWI) -- shorting more today.
Position: Long HTS; short TWI
New Shorts
9/24/2008 11:27 AM EDT
Bearish JRCC TRN TWI MPS ARO
They include James River Coal, Trinity Industries, Titan International, MPS Group and Aeropostale.
Some new shorts I have taken in the last week include James River Coal (JRCC), Trinity Industries (TRN), Titan International (TWI), MPS Group (MPS) and Aeropostale (ARO).
Position: Short JRCC, TRN, TWI, MPS and ARO
DHR Breaking Down
9/24/2008 10:05 AM EDT
Bearish DHR
I am not covering.
Danaher (DHR), a longtime object of my disaffection, is breaking down in price now.
I am not covering.
Position: Short DHR
Recommended Viewing
9/24/2008 9:02 AM EDT
Will populism cause problems in the passage of the $700 billion rescue package?
Will populism cause problems in the passage of the $700 billion rescue package?
Run, don't walk, to watch this.
What Is IBM Worried About?
9/24/2008 8:20 AM EDT
Update IBM GE
The SEC added IBM to its short-selling ban list last night.
It's getting ridiculous.
Last week, I was being facetious, when I wrote that every manufacturer and retailer might be put on the SEC short-selling ban list because most have captive financing arms.
Apparently, the SEC agrees as International Business Machines (IBM) was added last night to the ban.
This only can backfire, and the SEC and is becoming ridiculous in its broadening of non-financial names like IBM and General Electric (GE).
My Bunny Has a Good Nose
9/24/2008 7:13 AM EDT
A week ago, I suggested that Boone Pickens' Partnership was incurring large losses.
Today's Wall Street Journal confirms that suggestion.
Once again, you heard it here first, folks.
"Even established hedge funds, like T. Boone Pickens' Partnership, and endowments, like Harvard University's, are alleged to have recently suffered large losses over the last two to three months."
-- Doug Kass, The Edge
A week ago, in my "Things I Am Hearing" column, I suggested that Boone Pickens' Partnership was incurring large losses.
Today's Wall Street Journal confirms that my bunny has a good nose.
Once again, you heard it here first, folks.
PRINT DAY'S ENTRIES
ARCHIVES
LATEST ENTRIES
Lingering Pessimism Presides
9/24/08 3:13 PM ET
The Hits Keep Coming
9/24/08 2:15 PM ET
Memo to Markets
9/24/08 1:36 PM ET
Dog Ate My Homework (Part Deux)
9/24/08 12:43 PM ET
Favorite Long and Short
9/24/08 12:28 PM ET
New Shorts
9/24/08 11:27 AM ET
DHR Breaking Down
9/24/08 10:05 AM ET
Recommended Viewing
9/24/08 9:02 AM ET
What Is IBM Worried About?
9/24/08 8:20 AM ET
My Bunny Has a Good Nose
9/24/08 7:13 AM ET
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nodoodahs
Moderator
Joined: 06 May 2005
Posts: 1872
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| Posted: Tue Sep 23, 2008 2:54 pm Post subject: |
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That's good, sound, and slow. I like it. Not going to lose money very often over any 12-month period, but never going to have huge gains over any 12-month period, either. It's very comforting to think about right now, but would be somewhat harder to follow when the S&P 500 is shooting up 25% and the other components are holding it back ...
For those that respond more to fear than to greed, and don't want to spend much time on the markets, it's a good thing. Buy+hold those assets is even lazier and almost as good, but more volatile in the interim, actually better, if one only looks at their account once annually. I actually think that buy+hold diversified (and only look once a year!) is the best prescriptive for the fearful and high-strung.
| mtvk wrote: | lmrhoades,
Here are some rules to make sound investment:
1. Have money in stocks (US, international, emerging), Bond,
Cash, REIT and commodities.
The above are non correlated asset classes. To increase the
return, have more weighting for small cap value, emerging.
2. To reduce max drawdown, be long in an asset class if the index is
above 10 month sma. This check could be done once a month.
3. When extreme pull happens, ie, using $NYHL, $NYSI, move cash/bond
to stocks for short term trade.
4. Do yearly rebalancing to maintain the weights to asset classes. |
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He was wearing my Harvard tie. Can you believe it? My Harvard tie. Like oh, sure, HE went to Harvard. |
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nodoodahs
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Joined: 06 May 2005
Posts: 1872
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nodoodahs
Moderator
Joined: 06 May 2005
Posts: 1872
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| Posted: Tue Sep 23, 2008 11:53 am Post subject: Re: Markets |
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| lmrhoades wrote: | What in the heck is going on with this market? What happened to the mother of all short squeezes?????
We do nothing but fall day after day. Why were we ever in this market to begin with, it's worse by far than 00-02 |
There's a quote about heat and kitchens, might be applicable. Ping the group when you think it's time to get back in?
March 2000 at SPX 1550, July 2002 at SPX 770. Lost 50%, seems worse to me.
Oddly, during that same time, the Dow Jones REIT index gained 15%+ not including dividends.
Maybe it's about what part of the market one is in, and what one is doing in the market, and not about being in "the market" per se?
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He was wearing my Harvard tie. Can you believe it? My Harvard tie. Like oh, sure, HE went to Harvard. |
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lmrhoades
Senior Poster
Joined: 17 Jan 2008
Posts: 100
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| Posted: Tue Sep 23, 2008 11:51 am Post subject: NYHL |
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What is $nyhl and $nysi, i'm assuming some type of guage...how do i follow these?
_________________
LMR |
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mtvk
Veteran Poster
Joined: 12 Jun 2007
Posts: 241
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| Posted: Tue Sep 23, 2008 11:48 am Post subject: |
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lmrhoades,
Here are some rules to make sound investment:
1. Have money in stocks (US, international, emerging), Bond,
Cash, REIT and commodities.
The above are non correlated asset classes. To increase the
return, have more weighting for small cap value, emerging.
2. To reduce max drawdown, be long in an asset class if the index is
above 10 month sma. This check could be done once a month.
3. When extreme pull happens, ie, using $NYHL, $NYSI, move cash/bond
to stocks for short term trade.
4. Do yearly rebalancing to maintain the weights to asset classes. |
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lmrhoades
Senior Poster
Joined: 17 Jan 2008
Posts: 100
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| Posted: Tue Sep 23, 2008 11:36 am Post subject: Markets |
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What in the heck is going on with this market? What happened to the mother of all short squeezes?????
We do nothing but fall day after day. Why were we ever in this market to begin with, it's worse by far than 00-02
_________________
LMR |
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rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 7635
Location: Sunny California
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| Posted: Tue Sep 23, 2008 8:22 am Post subject: |
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Here's your printing press:
http://ftalphaville.ft.com/blog/2008/09/23/16244/a-reminder-as-the-us-printing-press-starts/
'74 didn't a multi-week grind follow the big up? We've never had this day-to-day volitility, so that's a new world. And Banks sold below book in S&L fall--but I have a feeling book, ironically, is better now.
I can't believe their gonna turn around and sell this stuff--or even buy it in the first place creating more false marks. Fiat, like you say, OD. That's what govt. can do.
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Today is the Tomorrow you worried about Yesterday! |
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