Market view and possible direction

[ModE98]

A hit Monday.
Followed by the resurrection of the DOW on Tuesday
It better, or

[yclept]

I think I'm positioned to make big money this week. It's not the way I'd like to do it, but when given nothing but lemons, all one can do is make lemon aid. This looks like the surest market bet I've ever had the opportunity to exploit. When the market crashes, it always goes fast. It goes down much faster than it ever goes up.

[ModE98]

Some commentators seem to think Congress leaders would like to get the debt package wrapped up prior to market open Monday. The problem now rests in the House where there are still some holdouts in both parties.
Hope they screw it up enough to get at least an early sell-off so some good bargains may be picked up on any market swoon. Believe they will bring it down to crunch time, perhaps late Tuesday.
What a @#&^%* mess!

OT: Will not vote for any incumbents (in my state) next Nov 12, need fresh blood up there. (Sorry, just had to get that off my mind).

[mtntigger]

Mod - Do you think they'll be able to come to a decision by Tuesday? You're such an optimist. I think it won't be until Wednesday at the earliest.

BTW, I totally agree... vote everyone out.

[yclept]

Looks like I've got some damage control to attend to tomorrow, though in the end, I think this country is headed down the tubes so maybe I should just keep the short positions in place. I'll probably the leveraged shorts for this dead-cat bounce to run it's course, then put them back on later in the week.
This might bode very well for my contest entry. It will probably gap way down at the open on Monday and recoup throughout the rest of the week as the market comes to the realization of exactly how bad the economic situation really is.

[bimetalaupt]

Jul 31, 2011 21:06:14 GMT -5 @yclept said:

Looks like I've got some damage control to attend to tomorrow, though in the end, I think this country is headed down the tubes so maybe I should just keep the short positions in place. I'll probably the leveraged shorts for this dead-cat bounce to run it's course, then put them back on later in the week.
This might bode very well for my contest entry. It will probably gap way down at the open on Monday and recoup throughout the rest of the week as the market comes to the realization of exactly how bad the economic situation really is.

Y,
OK.. you are not the only one who thinks we are and I keep asking why do you think with M3 up 6%, M1 up 13.8% and the Dollar down that like Germany we are going to export our way out of the decline.. Should be a bull years for the DJIA.. Projection as listed.. from the MMXII.. ... Your Turn!!
Just a thought,
Bi Metal Au Pt

Attachments:

[yclept]

Increased money supply is really just a measure of inflation in my opinion. True, it should make American goods more competitive on world markets and allow us to pay off foreign creditors with cheaper money. But I don't see how any of that leads to an improvement in our economy.

I doubt we'll export ourselves out of this crisis. America doesn't make anything the world wants anymore. The high unemployment we have is a reflection of that. The idle factories we have are dinosaurs as is much of our workforce. What education we still have is largely concentrated in useless academic areas. Nobody needs an employee with a masters degree in English Literature. American companies haven't laid off domestic workers due to lack of capital (as the Republicans are constantly bemoaning), but rather due to lack of demand for their products. Give them more money (as our tax code is doing), and they will sit on more money. To a certain extent that is due to the products being able to be produced faster, better, and cheaper overseas. To a larger extent it's due to consumers being unwilling to spend frivolously now for fear of needing the money later for essentials.
I'll grant that the stock and bond markets are sponges that absorb excess money not used productively and that increases market capitalization. But I think they've already sucked up the excess liquidity that has been injected over the last several years. When the liquidity injections stop (as may now be the case), the sponges will begin to dry out. Stock and bond prices have already run a long way up in the last year and a half or so. If you stick a fork in them, I think you'll find they're done.

[yclept]

SPX has crashed convincingly below the 200d MA. Look out below!

[ModE98]

And now reality begins to set in.... Believe you may be correct, yclept.
Do not see much bullish incentive for the time being.

[safeharbor37]

ModE,

A hit Monday.
Followed by the resurrection of the DOW on Tuesday. . . .
It better, or. . . .

Think maybe your timing is off? This may be the pull back I've been wondering about for a while. The market goes up and the market goes down, but it's a problem predicting exactly when. Now I've got to distinguish between a buying opportunity and a falling knife.

[yclept]

For those who believe in such things (I don't), I see the next significant support for the $spx at somewhere a bit above 1050. But I think "it's different this time"! This economy is broken and going to get a lot worse. The 2008 low was around 750, but it started from a higher level. If we drop as far (point wise) as we did back then, we could see something around 550 in the next two years. But that doesn't take inflation into account; in constant 2008 dollars that would be about 556, so there's reason for hope!
I think all of this long-term prognostication is foolishness, which isn't the same as saying one doesn't have to pay a little bit of attention to it to try to figure out what the people who believe in it might be thinking.

Hamlet:
What have you, my good friends, deserv'd at the hands of
Fortune, that she sends you to prison hither?
Guildenstern:
Prison, my lord?
Hamlet:
Denmark's a prison.
Rosencrantz:
Then is the world one.
Hamlet:
A goodly one, in which there are many confines, wards, and
dungeons, Denmark being one o' th' worst.
Rosencrantz:
We think not so, my lord.
Hamlet:
Why then 'tis none to you; for there is nothing either good or
bad, but thinking makes it so. To me it is a prison.

[ModE98]

More to go.... Original thinking erroneous. yclept, 1050 may be in the ballpark by late September, maybe lower if the predictions of some for a second crash come to pass. Whatever, it seems no time to get bullish. Shorties may have the market on their side for a few months. Oh well, it is only guess work anyway.

[safeharbor37]

Bad economic news, the Chinese downgrade US credit and the market goes up. What do you think of six more years of Obama and Company?

[ModE98]

Safe ...... cannot answer, we are not supposed to get deep in politics on this board. But my thoughts right now... a blight on both parties. Clean out Washington in November 2012.

[Bluerobin]

Mod, I agree! Until then I am writing the fools and requesting Initiative and recall. Think they will give us a law like that?
Futures are down again today. I am tired of taking haircuts because of stupid politicians!

[yclept]

For whatever it's worth (not much), and I can't really put a good "handle" on the "why" (just a feeling deep in my guts) -- I think we might go up a little tomorrow and then next week drop over the edge into the abyss. Today will look like a cakewalk in comparison to what's coming the next several weeks.

I believe this congressional (I'm not capitalizing congress, house, senate anymore; proper English be damned, they don't deserve it) committee that's going to supposedly identify the cuts in the budget is going to be a complete failure. I'll bet they won't even be able to agree on the members before the date the committee is supposed to have its results (after all, they're on vacation the rest of this month). That means we're going to get across-the-board cuts on Nov 23 which will be an economic disaster.
The market supposedly looks 6-months ahead, but in this case, this plan got sprung as part of the deficit ceiling deal and was a complete surprise. So the market has to go down really fast to make up for the lack of warning. The recovery is over (my opinion); we are headed into a 1930s style depression (also my opinion) -- what the hell, we've already got a good start on the dust bowl conditions that existed in the Midwest during the depression. Even Hawaii is in an abnormally dry condition:

droughtmonitor.unl.edu/

Looks to me like everything is set up just right. "Brother can you spare a dime?"

www.pbs.org/newshour/rundown/2011/08/super-committee-picks-pose-tough-challenges-for-congressional-leaders.html

wallstreetpit.com/80810-joint-select-committee-on-deficit-reduction-has-been-set-up-to-fail

blogs.wsj.com/washwire/2011/08/03/can-the-super-committee-raise-taxes-or-not/?mod=google_news_blog

[safeharbor37]

OK. It hit today. At least it makes sense.
My question now is how far down will it go. It seems to have dropped immediately then leveled out, but somehow I sense that it may dive later today ~ of course it could partially recover, but I don't know why it would.
I suspect that program trading has something to do with the nonsensical swings, but also maybe institutional traders who can't even a good percentage of their holdings without unduly affecting share prices. If it dives later it may indicate a panic ~ but the effect will be ameliorated by short covering. The summaries on MSN MONEY are just about worthless afterthought guesses.
In general, my interest is in when it would be appropriate to start bottom fishing ~ and it surely isn't yet.
[Sorry about the political reference in Reply #140, but sometimes it's related ~ I'll try to do better.]

[Bluerobin]

Safe, in this case politics is definitely having an impact on investing. Are we looking at another 700 point drop?
yclept, I suspect they may do something so as not to get unelected. The real disaster will come after Nov 2012.
I have mostly dividend stocks, so I am trying not to sell.

[ModE98]

Safe ... sometimes its better "vent" a bit. I have been around 88+ years, and this, by far, is the ultimate worst Congress ever (at least to date). Just keep it short, and to the point on this board.
The outlook for the market looks bleak. No doubt, a few pops on the way down... but it appears to me the direction is clear, at least until we get through October. And it could be worse if the dreaded "second coming" of the worst of the recession comes to pass. Think smart money is now in protection mode until a new glimmer of light appears.

[yclept]

Blue,
One of the articles I linked mentioned that the most likely candidates for the committee will be:

[Value Buy]

Jul 27, 2011 20:19:51 GMT -5 burger said:

I've pulled almost everything out of the market for the time being (did so yesterday) because I'm not real big on shorting. I figure the downside is much larger than the upside right now, so I'm going to sit on the sideline until things get straightened out.

Congratulations.
I have been decimated this week. Was not paying attention, due to work issues, and politicing........ After the mutual funds readjust tonight, I am in the red for the year.......

[Bluerobin]

yclept, I don't care who is on the committee. I am holding congress responsible. They have to wake up and start doing what is best for their constituents. If they gave a tax credit only for each job created, instead of blanket tax cuts, we might actually get somewhere. The Bush cuts didn't work, neither will extending them.
Cutting the military will be good for the deficit, but bad for defense stocks, etc. Someone has to get a clue.

[burger]

This market is crazy. The money I had in the market still managed to break even today thanks to my horse from the weekly pick (DXD) and yclept's horse (SRTY). I did close out my position in DXD right before the close today. Still have SRTY. We'll see how tomorrow goes. I might be buying more of that or selling out completely.

I'm just glad that about 85% of my money has been on the sidelines for the last week and a half.

[safeharbor37]

It did indeed drop further at the end which I interpret as a sign that there are still sellers out there and, even though there may be a little bounce early tomorrow, I suspect that the bottom is way further down. I'll be out of pocket shortly so won't be able to play anything, but that may be just as well as I haven't studied the market enough lately to make even an educated guess.
I suspect that the end of the world calls are premature so this should eventually pass, but like some times before, I'm in uncharted waters and suspect I'd better keep the life vest handy [or the fire extinguisher].
Well, there's still time for the 2017 prediction to pan out, but that's six years +/- so, in the meantime, it should be interesting.

[Value Buy]

I am now 1.66% in the hole for the year on stocks and stock funds.
I could kick myself. I should have realized D.C. did not know what they were doing, and should have pullled to the sidelines.
Only Exxon, Chevron, and Nisource are positive for me on the year.
Have to check on my one bond fund yet......

[yclept]

Looks like rough sledding tomorrow. Futures are down a little. Far east is taking another beating:


NIKKEI 225 9,306.02 -353.16 -3.66% 00:59
HANG SENG INDEX 20,844.60 -1,040.15 -4.75% 00:05
S&P/ASX 200 INDEX 4,107.70 -168.80 -3.95% 01:18

[safeharbor37]

Looks like a little boost today with a neutral to strong ending going into a weekend. It doesn't look like a panic situation so what we may have is simply a more realistic valuation of the market.
I looked again at the historical charts which indicate that we'll have volatility with no significant permanent increase in the markets for another 5-6 years. I'm still guessing that the markets will end the year in the black, but of course [full disclosure] I have been wrong.
The debt situation is a continuation of previous policies decades [or longer] old and I don't think anyone much was surprised and no one much expects the US economy to go in the dumper right away. So, to some degree, it's business as usual.
The seventeen year cycle suggests that dividend stocks and trading are the ways to profits during the slack cycle and this has been true for the last 10-11 years. There may be a slight growth in the markets before the next cycle, but not dramatic growth. The big difference between this and the last cycle is that there was [almost hyper-] inflation whereas there's not so much at this moment [but prices are increasing and I suspect permanently]. Interest rates on loans will go up before interest rates on savings. Cash is slowly devaluing for the time being, but that could speed up ~ hopefully the interest rates will improve before it loses too much value.
That's my two cents [and worth every penny, +/- 2]

[yclept]

I think we get hit hard on Monday (to the downside) due to the credit rating drop by S&P -- totally uncharted waters. Then there's the Fed meeting which I expect to be just some more cheer-leading.
Poor old Bernanke hasn't got much ammo left, and most of what he does have are blanks and star shells.
I don't see any improvement until the after the 2012 elections and hopefully all those pee party and other stripes of republicans are sent packing. By then we're going to need early 1930s remedies. Everybody ready for a new WPA, and CCC? The problem there is that those programs only moderately helped the economy. It was WWII that actually ended the depression. If we have another world war, it's going to be a one hour affair as the nukes go pop, pop, pop. So there won't be any growth come out of that.
On that cheery note, I reckon I'll close.

[safeharbor37]

Following WWII the preferred form was "surrogate warfare" where we attack countries which are affiliated with our enemies, but, unlike our real enemies, lack the capacity to strike US soil. The attack 09/11/2001 changed that to some degree, but the US took immediate steps to move the conflict as far from the homeland as possible.
I am of the opinion that the New Deal actually prolonged the Great Depression so I'd say we'd be better off if we can create an external threat to justify "full mobilization" which would make acceptable domestic sacrifice and take a lot of unemployed off the street as in WWII. Then we could say, "Look! Those billions [trillions] in stimulus really worked!"

[ModE98]

>:(With the S&P downgrade in the U.S. credit rating from AAA to AA+ and a dysfunctional Congress and President unable to make the hard decisions with elections a little over a year ahead, it sure looks to indicate a BEAR market for some time to come. Likelihood of a repeat of some of the recession lows may be lurking. Whatever may happen, I hope it holds somewhere north of 9500 DOW (if we are lucky). Think it would be wise to be extremely conservative in one's approach to investing until this all plays out.
Pledge for election, Nov 2012 ... Out with all the old... In with the new.