Duke, looks like somebody did not like your last Sunday 10/4 posts. Did not see any comments that merited a boot. Watching for the retest and think that area is coming soon one way or the other.
The market decided to pick Door 1 and went for the immediate drop in the S&P to 1871 and then the V shaped rally. It was a possibility but I got it wrong. Thought we were headed to 1815 first, but these thought are free, and you get what you pay for, so we aren't going to get it right every time. On the other hand, when the futures are up 200 on WEN, it isn't hard to buy SIRI on the open and ride it up. I'm opinionated but not totally stupid. The next play will be to short the stock but you already knew that.
The guy said he didn't know who Flabby was. I am referring to the Fibonacci numbers, Anyway, Flabby says we could have a 61.8% retrace which would take us to 2034 where you might want to think of the dark side.
While the market was doing HAPPY DAYS, the spreads on JUNK BONDS AND INVESTMENT GRADE corporate bonds blew out. The credit default swaps CDS hit numbers not seen since 2009. No one noticed because no one understands what it means. We have a liquidity crisis in the system. In stocks we saw it on 8/24 when no one stepped in to buy until after the carnage. In the banking system there aren't enough dollars to pay back all the dollar denominated loans in the EM. Soon corps will have to sell their local currency and buy the dollar. This will cause a massive imbalance in currencies and further kill our export business as the dollar increases in value. At some point the FED will actually figure out what the bond market is saying, but probably not soon enough. LR
Hey Frank, yah I had issues attempting to post Sunday to D's blog also. Now I see they are all gone to. Somehow I can't see this market as all fixed even though it's acting like it. They had to press the short on market Friday or it was game set match for bears IMO. What the market didn't like on the Fed announcement in Sept. they like it now?! That seems to be the case. I'm not sure it is door number 1 or door number 3 or maybe there is a door number 4 too. Ha
My thought in July was that August before the fed could have a downdraft and I thought Oct could as well someplace. I still am watching for that. The China broken story is still broken for now as I see it affecting EM's the dollar and all that good stuff. But Tom Lee can have his day to. LR
I don't think we are in a bear market. Not yet anyway even though that thought has been bated about in the media. A difficult market yes, for sure. Duke your door number 2 had made more sense to me until Fridays’ turnaround. Then reading what chart people were saying that the McClellanx model index was going to show an oversold reading next week because of the after effect of the Fed announcement in September downturn got me re-thinking to. Whatever. I think it is funny though that son of the famous model developer Tom McClellanx said back in Mid August a peak for the market was in and by his updated model he expects nothing good for the bulls for the rest of the year. His own updated model suggested that there probably would be an ugly declining lasting into early 2016. Anyway you have to take it all with a grain of salt.
I think there is a China broken story out there and the market has not yet come to terms with that and is struggling and this time it is struggling up. Where you are gonna short SIRI from is my next question and if 2030/2040 area is coming. Maybe it goes back to around 3.85 area or a bit higher. I think around the 3.85 area must be the new mark. I don’t think things are all fixed now. How did they get fixed? Just doesn’t feel like it with that jobs number. Is the US govt gonna be open after 11/5? Is China settled? Is the Middle East now a vacation spot? Are all the earnings reports gonna beat by one cent again? I’m attempting to be neutral but I am leaning more to the bearish and know a market works both ways. I think the market was in an oversold condition on 8/24. Sometimes the charts don't tell the whole story.
Someplace I think Bill Fleckstein is thinking about covering and Tom Lee is burying out his long.
Depends on your Flab retracement levels to from where to where; 4.04 to 3.31 or 3.97 to 3.60? We are actually there on the first one at 68%. Possible 3.87 to 3.90 on secound I am also guessing around 3.85 was the mark.
Ok, I was thinking we were in your second scenario before today 10/2. I had wondered what would the market rally on for the job numbers, a good or bad report? At first it seemed that bad was bad, but how could that be and then it turned out that bad was good again. So now I am thinking this could meet your number one scenario laid out just as well counting the Tuesday 1871 level as close enough to a V shaped bottom level. My thought now is that no matter what the jobs number printed today the market was gonna figure out a way to rally. If it did not rally here it was game, set, match, check mate or whatever you want to call it for the bears. The bulls had to pull one out of the hat to keep it going & did. I know it's gonna be that the 100,000 less jobs estimated with revisions for August and July was really not that bad and actually was ok. That the Fed keeps rates at zero and that's good now even when it was bad 3 weeks ago.
Next 2 or 3 weeks will tell the tape. I'm getting used to outsized moves in the current market. The Fed could be even goofy enough to raise rates in October even though they missed the boat already since last March and it does not make much sense to now. Should be some interesting spin to read this weekend.
Fed must not even read their own White Paper from the St. Louis Fed VP Williamson recently this past August. Maybe Janet was too busy still reading Keynes to read the white paper, which stated there is No evidence that QE boosted the economy and that ZIRP designed to spark some inflation actually had the opposite effect and was what maybe 'deflationary' . So maybe that spooked the market to when the Fed disses their own policies but keeps on keeping on. So what is left in their bag of tools? Maybe they whack it one more time because if it fits it fits.
I am starting to buy into the idea of a recession around the corner in 2016. It makes more sense to me that the market touches the low of last Oct 14. in the 1820 area. I rarely if ever read SA anymore. Seems there are more and better ideas in other places to read. I wasn't seeing this correction as more than a seasonal and Fed rate Conundrum. Whether they do or don't, even if they don't here next week I think they will be boxed into it soon as the labor market continues to improve as Jim Paulsen notes. The industrial commodity thing, the FX, No QE, the ageing US business cycle, it does not seem like a minor slowdown to me lately.It does not seem like a minor seasonal slowdown to me lately. I think about the only thing I could see changing this is an unleash of some major major China stimulus and that could happen. Just have to be cautious and wait and see.
Climbing the latter, letting the air out of the balloon, down 6/7 cents on a no news day when it had hit 3.90 just a few days ago and the market is up. I don't know what else you call it but this is what SIRI's JM plan Buy Back effort does for you. I don't see him as a white knight. LR
Congrats on the cards. I'm sure it was not all luck. Ya the market watch guys say same on divergence. You never know for sure. Just staying loose for now. Like Frank says the FX is crazy.
1) Do Buy Back always have to follow SEC Rule 10b-18? It's just a safe harbor right? Cause when I do watch SIRI it does not seem to me they follow the rule always.
2) Market Outlook, hearing rumblings about 2007 comparisons from several but if we go on and make a new low here it seems to me something different. Still not a good pattern and maybe a precursor to a bear market next year.
3) JM getting to 80%, what special tax rules come into effect? Is that the RMT scenario or something different?
Frank, thanks for taking the time and explanation. Ya it seems more than just a 1/4 hike is at stake and I think they go ahead with it to. LR
Frank, when you sell FX reserves you are strengthening your currency? What is the impact of China selling reserves? And then if you run out you could have a run on yours?
Thought we might be making a market run earlier in the week but that sure has faded so now maybe the S&P 1820 low is in sight. I was think round 2 of the lows might not be until October. SIRI trades pretty spastic also anymore. But if somehow it make its way back to $4 that will interesting.
Hey Frank, looks like ECB may be going to illogical round 2 with more ECB QE soon. Just gonna make our $ stronger yet again. How is that gonna work out for the world economy? I don't think that well. But my guess is they do it anyway because that's all the central bankers know how to do. The lazy mans guide to success. It works for awhile then it doesn't. LR
Maybe your other side of the range now is more true, obviously it is in a rally mode again. I liker F. Zulauf article in Barrons this weekend. I think most see an October 2014 again redux. I don't think so however, but not a recession yet. So much talk about a small increase in rates between banks. Are there any long range thinkers on the Fed or even medium term?
And that does not tell you something? Malone just loves buying these shares under $3.68. That seems to be the plan here. I don't think he's really out for the shareholders. He is not a white knight here. LR
Well maybe I should have held those more recent SPY puts a little longer to. But a P is a P. I think the current downtrend is gonna end this coming week. Maybe it goes to 1950/1920 area. I think we are in phase I and a rebound coming soon and then Phase 2 after the Fed meets.
At this point I don't think it matters that much whether the Fed raises rates in September or not. It's only gonna affect the short end of the curve anyway. Our $ will still be the strongest, since our economy is. I think the Fed has been attempting to groom the market for a raise even writing a White paper saying QE and ZIRP was not really that effective in helping the economy, so they are going there. Now can SIRI really hit 4.09/4.14? That does not make much sense to me but you never know. LR