Why BDI keeps falling despite 25% more iron being shipped ... pricing stays low until demand exceeds ships out there .. then price spikes ... it is not a smooth transition .. Question is when is the breakpoint
For now, stock acting well
there are so many negatives on the horizon and fed is no longer on the side of equities and equity prices have appreciated so much that I thought we are gonne get much more selling today
We will see
some think these events are a buying opportunity as they do not relate to earnings and thus provide some buying.
BUT, fundamentals for owning stocks are terrible and a crash is coming
1- FED is no longer on the right side
2- Housing slowdown again !!
3- stocks are trading at high P/E when profit margins are highest
4- China slowing down fast
5- Margin buyer = weakest holder paying 7% interest - are high
This is a gift to sell here
and china property slowing down (too much inventory) and central banks are at the end of easing cycle
relative strength and price, major divergence between small cap and SPY, Housing on major slowdown again
Who would buy here .. this is best time to take profit
prices .. However, these margin buyers are first to bail out in the lightest drop in equity prices as they are bot levered up and also paying 7% interest.
These margin holders are most aggressive and are looking for +20% gain to offset 7% interest and pocket excess of 10% a year profit ... They are counting on 20% gain on SPY
However, #$%$&P fails to make news highs, as it looks that way (look at Relative Strength Indicator, RSI
S&P earnings are:
Q1, 2014 24.87
Q4, 2013 26.48
Q3, 2013 24.63
Q2, 2013 24.87
Q1, 2013 24.22
it is flat ...
P/E = 20 is not cheap and is not expensive ..
interest rates can not go lower ..
to say we do not need to raise capital .. One analyst made fun of them saying of you want to be a super company .. and they said no capital raise
and now $50M !!!
have a good weekend
have a good weekend ...
you are actually correct .. seemingly bad news is in fact not bad as investors think this is a buying opportunity
However, much money is on margin and this money will quick;ly disappear with index slight move down ..
we saw some selling last half an hour .. selling/cleansing is starting
this is just starting and when investors realize that the market selling off is not due to plane crash and is of something more fundamental, snowball starts rolling
i think there is a lot of money on margin that becomes extremely burdensome as spy starts moving down .. the margin buyers needs to pay 7% interest and also their account balance doubly goes negative as price goes down .. this acton furthers selling .. i think it is dangerous to be on margin now .. cleansing starting
the market is in weak hands .. margin buying with 7% interest is at its peak .. biz cycle coming to an end and soon all this will unfold .. much money has already come out of not liquid stocks
this bounce is getting weaker
don't be naive .. even fed said, there are some bubbles .. i.e. they will not pump it and may deflate if it does not on its own
either way, you will see a much deeper correction than 1% yesterday .. i am not sure how deep, but i am here to sell the bounces and cover the panics