Market view and possible direction

[Bluerobin]

I made thousands of credit decisions. Never did I differentiate between an AAA and an AA+. Yep, they both are good ratings. I was more concerned with their payment history. Since we have never defauted, I would imagine this rating would not have much impact after the first few panic days.
Note, I also used another agency other than S&P - much more accurate.

[yclept]

Some auctions to watch:

The Treasury Department will auction $32 billion of three-year notes on Tuesday, $24 billion of 10-year notes on Wednesday and $16 billion of 30-year bonds on Thursday. These will be the first Treasury auctions since the debt ceiling was raised.

Source: seekingalpha.com/article/285126-the-economy-politicians-and-market-timing?source=email_macro_view

I don't think the Fed meeting on Tuesday nor anything they say will have much effect this time. Unless, of course, they raise the prime rate to get ahead of the inflation that's beginning to rear its head, but I think it very unlikely they will be raising any rates for quite awhile. Which, in part, means that a year from now we're going to be talking about out-of-control inflation as well as all the current stuff which I suspect will remain largely unsolved.

[ModE98]

Ole' Blue, I sure do hope your calmness in this storm of fiscal mayhem holds and it all turns out to ber a tempest in a teapot. But I remain extremely concerned over a protracted bear market just ahead. That's just me... too many downside possibilities for any comfort.

[safeharbor37]

I think the market is already technically in a bear market , but, because it was so quick, it could also be recovered from fairly quickly. It reminds me of the pull back in 1987 which is talked about as much worse than it was [unless you were on margin] and which slowly recovered continuing the long term bull market.
The difference this time is that there is actually a reason for the pull back [over and above the fact the market was overbought] and that reason might very well lead us into uncharted territory. It appears that there is neither the will nor the way to correct the national economic condition. The government cannot create prosperity, but it can undermine and sabotage prosperity ~ only a minority understand this.
In any case; This too shall pass ~ but it may take a long time. Every time something like this happens, I start to fear that we've reached the other side of the hill and are on the way down, but, just a our wealth took a long time to manifest, it'll probably take a while for us to twiddle it away.

[safeharbor37]

In re: Reply #163; Money is not wealth although it a form of wealth. The US has great wealth as a product of its unique genesis. That wealth can be converted to money like Saudi Arabia converts oil to money by selling it or the US can convert that wealth so that it is even more valuable through various forms of adding value. Education and technical expertise is probably the US's most valuable commodity at this time, but there are also natural resources which we're not properly exploiting and there is the American workforce which has unfortunately been undermined by unionization, minimum wage requirements, etc. and welfare mentality.
We're sitting on wealth. The problem is that wealth sat upon does not increase in value. That wealth is material, intellectual and spiritual, but will degrade without application. [see: Parable of the ten talents]

Bankers know that history is inflationary and that money is the last thing a wise man will hoard. ~ Will Durant

[ModE98]

Safe ... what wealth? For all practical purposes we are bankrupt. Good thing the government has printing presses! We owe so much money it is pitiful, even China says so (as if we needed to be reminded by our largest debt holder).
Maybe we can pay off with Monopoly money?
Of course, there are many reasons for all of this... it would take up several volumes to define it all. Oh well, the beat goes on. All we have to do is devalue the dollar (big time) and pay it all off cheaply.

[Bluerobin]

Mod, I still think the great unwashed are going to cause a panic period. That may hurt the markets for a while and cause some interest inflation.

[ModE98]

Ole' Blue, if things keep going as they are, there may be reason to panic, it could get much worse. As long as it is not too prolonged, with any luck, everyone will end up still standing on their feet. Let's hope anyway.

www.chimerareit.com/Admin/AttachmentFiles/61NLY-Q2%202011%20Market%20Commentary.pdf

www.cnn.com/2011/OPINION/08/06/greene.money.mood/index.html?hpt=hp_c1

These calamitous periods come and go though out history. In time, this too, will pass.

[ModE98]

9:21 pm and Asian markets all down, but no huge sell off. Maybe tomorrow will be down some here but no panic sell-off.

[yclept]

"These calamitous periods come and go though out history. In time, this too, will pass."

Reminds me of the story about the cannibal who passed his former enemy in the jungle.

[ModE98]

yclept.....

[lovetobike]

This message has been deleted.

[lovetobike]

I saw this headline on msnnbc: Obama: US will always be AAA-rated, despite downgrade I'm beginning to think Obama is getting a little

[yclept]

Shorts are looking good for tomorrow if futures and Asian markets can be counted on:

Americas
INDEX VALUE CHANGE OPEN HIGH LOW TIME
DJIA INDEX 10,605.00 -121.00 10,733.00 10,748.00 10,586.00 21:04
S&P 500 1,098.40 -12.90 1,113.70 1,115.50 1,094.00 21:04
NASDAQ 100 2,012.50 -25.50 2,044.00 2,044.00 2,008.75 21:01
S&P/TSX 60 658.20 -31.40 675.50 681.20 656.70 08/08
MEX BOLSA 31,617.00 0.00 31,590.00 31,590.00 31,590.00 18:00
BOVESPA 48,534.00 -4,506.00 51,620.00 51,855.00 47,740.00 08/08
Europe
INDEX VALUE CHANGE OPEN HIGH LOW TIME
DJ EURO STOXX 50 2,299.00 -81.00 2,330.00 2,431.00 2,210.00 08/08
FTSE 100 4,822.00 -253.00 4,848.00 4,848.00 4,807.00 20:53
CAC 40 10 EURO 3,126.50 -154.00 3,201.50 3,335.00 3,017.50 08/08
DAX 5,962.50 -295.00 6,081.50 6,283.50 5,717.50 08/08
IBEX 35 8,468.50 -216.50 8,725.00 9,035.00 8,454.00 08/08
FTSE MIB 15,723.00 -399.00 16,060.00 16,815.00 15,530.00 08/08
AMSTERDAM 282.85 -13.45 290.55 297.70 275.00 08/08
OMXS30 907.00 -52.00 933.00 955.00 902.25 08/08
SWISS MARKET 4,994.00 -207.00 5,060.00 5,262.00 4,820.00 08/08
Asia-Pacific
INDEX VALUE CHANGE OPEN HIGH LOW TIME
NIKKEI 225 8,720.00 -400.00 9,240.00 9,250.00 8,720.00 20:55
HANG SENG 20,390.00 -351.00 20,220.00 20,514.00 19,967.00 08/08
SPI 200 3,730.00 -223.00 3,981.00 4,009.00 3,728.00 21:05

Look at the FTSE futures trading now. Man, what a walloping! Might just have to consider shorting some EWU tomorrow; I think they're still having some riots tonight. London is getting it again and I've read it's spread to Liverpool.

[yclept]

If this morning's market action turns out to be anything but a dead-cat bounce, I'll be very surprised (and not particularly pleasantly so!).

[yclept]

www.bloomberg.com/news/2011-08-09/fed-to-keep-rates-at-record-lows-at-least-through-mid-2013.html

Well, the Fed says they will keep the benchmark interest rate low through the middle of 2013, which I suppose takes a little uncertainty out of the market. But then, it's been at this 0-.25% rate for about 2-1/2 years already, so I don't see this as a remarkable statement. I'm sure when inflation starts up big time, they will renege on that "promise", since it will be important at that time to curb it.
Upon seeing the news, the market seems to be fluctuating a little more widely than it did this morning, but with no decided change in direction one way or the other. If anything, the direction is lower as measured by most indices. I think in a half an hour or so the statement will be interpreted as "no new information" except that they also said the economy is performing worse than they had anticipated. We should resume our decline.

When you stare into the abyss the abyss stares back at you.
Friedrich Nietzsche

Insanity in individuals is something rare - but in groups, parties, nations and epochs, it is the rule.
Friedrich Nietzsche

[Trongersoll]

>>>--->

[ModE98]

Good grief, what a day. Great ending for longs.

[Sammy]

;D I was thinking of taking a Bonine for motion sickness watching the market today. Wow!

Ugh, I sold Biogen a few years back for a small profit. Hmm, new drug for MS has the stock flying. Oh well.... could'a.... would'a........ blah blah. LOL

[clarkrl2]

If you use the CPI to measure inflation it is currently at 3.56%. With the 30 year treasury at 3.64% it is the only one paying interest greater than the inflation rate. Some people say CPI is not an accurate measure of inflation so I guess a person can make their own judgement. Here is a link to historical inflation rates as measured by the CPI www.inflationdata.com/inflation/inflation_rate/historicalinflation.aspx
Here is a link to treasury yeilds
federalreserve.gov/releases/h15/data.htm
The five year is currently showing as an inflation indexed negative yield, the seven year is at 0.09%, the ten year at 0.62%, the 20 year at 1.36%, and the 30 year at 1.62%.

[ModE98]

Looks like "capitulation" will enter the picture at any time. If we get another good drop in the morning, followed by an afternoon recovery, maybe a near term bottom is signaled. However the problems will not go away soon, so we may continue to fade for a month or so.
Have a fear that perhaps there may be another big shoe to drop before it is safe to venture a significant buy. The screwballs in Washington are likely to mess things up and then, Armageddon.

[Value Buy]

Aug 10, 2011 18:55:43 GMT -5 ModE98 said:

Looks like "capitulation" will enter the picture at any time. If we get another good drop in the morning, followed by an afternoon recovery, maybe a near term bottom is signaled. However the problems will not go away soon, so we may continue to fade for a month or so.
Have a fear that perhaps there may be another big shoe to drop before it is safe to venture a significant buy. The screwballs in Washington are likely to mess things up and then, Armageddon. [/quote

No capitulation this morning --still up a 100 points.
I just do not get this market.
I guess I will have to wait 30 minutes or so, and see what happens

[ModE98]

Value.... Coming to the belief that trying to guess the market's next move is an exercise in futility. So many factors enter the picture and all are subject to quick change... everything in a constant state of flux. This is like riding a merry-go-round, life (and the market) has its little ups and downs, and no one gets the brass ring every time. Just empty-handed until a try with the next go round.
Got lucky in timing, picking up some CIM. RIT and TWO yesterday near lows and they are popping today quite nicely. Unfortunately, currently no trend to be one's friend... as yet. This is likely to be a volatile long term "bumpy" market until a positive recovery trend sets in...2012, 2013, 2014 ??

[clarkrl2]

I think I'll start putting on some short positions on SPY to hedge my long positions if the market rallies tomorrow. My targets are 119, 122, and 125. These numbers are just below Fibonacci levels from the last top to the last bottom. I really don't think there is anything special about Fibonacci levels other than some people follow them. Of course if none of these levels are reached over the next few trading days I'll have to come up with a plan B.

[Value Buy]

Four consecutive days of 400 plus point moves. A new NYSE Dow record.
We very easily could have seen a 500 or 600 plus move today.......
At least the President did not muck up the rally today with his speech.
Now Europe bans short stock sales for Belgium, France and Italy. Will be interesting to see where the Euopean market goes tomorrow.

[safeharbor37]

I'll be out of pocket for a while after early next week so I'll leave my thoughts to review when I get back in a couple of months. I really don't want to make any changes at this time [at least partly] because I wouldn't be around to adjust if I guess wrong ~ but I can guess without risking anything; so here goes:
The volatility is too great for me. I think the best strategy for me is to stay on the sidelines for the time being, but day traders should be getting rich[er].
I've predicted this correction for a while and that the market will close higher at year's end. I'll stick with that, but I believe that the current correction is not over and I don't know when it will be. It's possible that the recovery I predicted will occur after year's end and not before. I think I see the trend, but the timing may be off. Also, a lot of stuff is happening and more may happen which may influence the markets. Basically I predicted the high prematurely and may have done the same for the recovery.
I do not see this as a bull/bear market, but just volatility. I don't think the next severe correction will match the Feb. 2009 lows, but could be drastic. If things are still going south at year's end, better get the ark ready. I am of the opinion that Feb. 2009 will mark the very bottom which will not be revisited. If you look at the chart from 2000 to 2009 you'll see a step decline and I expect that the next eight or so years will prove to be a step incline to a point higher than the beginning high of 11,000 for the DOW, but probably not the spot high of 14,000. That would correspond to the next cycle and a new [real] bull market.
I think the underlying trend is more important than the temporal crises which tend to create volatility but don't really make markets [bull/bear]. I suspect that there are still opportunities for traders to make or break themselves, but that's too exciting for me. Some like Trump and such are cherry picking stocks and I think that's a good idea, but as I said before, one needs to be on hand to watch that kind of investment.
If I don't get to post again for a while, I'll wish you a good time and to make lots of money.

[yclept]

"I really don't think there is anything special about Fibonacci levels other than some people follow them."

All Chambered Nautili (both in and out of the market) pay close attention to Fibonacci numbers.

[clarkrl2]

Most cephalopods are wrong 50% of the time when forecasting market direction. The Chambered Nautilus on the other hand has the incredible ability to correctly forecast market direction 50% of the time. When depending on a cephalopod for market forecasts I always choose the Chambered Nautilus.

[yclept]

It's getting really easy to predict this market. Sometimes we look for complexity where there is none.
Tomorrow, 8/12 will be down.
Monday, 8/15 will be up
Tuesday, 8/16 will be down
Wednesday, 8/17 will be up
Thursday ...

Or if one prefers a longer holding period, one should have been short this week (2 up days, 3 down days). Next week, one should be long (3 up days, 2 down days) ...

But, the down days have been bigger in absolute value than the up days, so if one wants a longer term strategy than weekly, one should be short.

[yclept]

Looks like my alternate day analysis above is proving as ineffective as the Fibonacci retracements always seem to. So easy to identify after the fact by picking the "correct" starting point, but never extensible into the future. Oh well, it was a good theory until today.

Here's something a little more concrete if not as technical:

Postal services looks to cut 120K jobs. Facing a second year of losses of $8B or more, the U.S. Postal Service has proposed slashing 120,000 jobs, and to withdraw its employees from federal health and retirement plans and set up its own systems. The service has also said it will be unable to make a $5.5B payment due on September 30 to cover future employee health care costs. The job cutting requires the approval of Congress, and if passed could have major ramifications for government workers and the national labor movement.

This congress (no capitalization, they don't deserve it) will likely go along. So there's another 120,000 jobless some time in the next year or two, and an historical change in the employer/employee relationship of the Federal Government. Until now, government employees in general have earned less than their counterparts in private industry, but have had great benefit and retirement packages.