Tuesday, May 15th, 2012 @ 2:15pm
Yeah, so. Isn’t it great to be an individual investor, reading the newspaper and watching TV for your information? You probably really believed that the economy was “percolating”, that housing has “bottomed” and that the world is a “better place”.
It’s all propaganda and bullshit. I mean, it’s all going to zero, right? Nope. But if you’ve bought the ”Economy is Great and Europe is Saved” rally since last year, you are probably a bit uncomfortable. After all, you bought assets that were “inflated” by the Central Bankers of the world.
But we all know that story. What’s amazing is that we’ve come to accept, even relish it.
Listen, the market is drier and seemingly less liquid than at any time in the past twenty five years. There have been trillions in liquidity pumped but if there become an impetus to sell, there will be nobody home. And the volume (which no longer matters) is half of what it was in 2007.
Sure, there are extreme viewpoints of sentiment but there is no overly bullishness or bearishness reflected in the market action. We are in an intermediate term uptrend and a near term downtrend. And aside from a few huge moves in individual names, the market has settled into seemingly watching paint dry. Except for the dismemberment of the QE trade in materials. Does any of that mean anything to you?
I’ve targeted the SPX 1310-1320 area as first support last month and we are almost there. You don’t think this bounce is putting in a near-term bottom, do you?
Thursday, May 10th, 2012 @ 11:54am
How many times to I have to say the same thing? I feel like Bill Murray in “Ground Hog Day”. What? The market is living the past two years over again and again? In a similar time in the calendar? You don’t say!
Again, a stimulus-filled Fourth Quarter posts decent economic strength and the Hoi-Polloi INSISTS that it will extrapolate and continue through the rest of the year. And it simply does not. But in each of the past three years there has been hundred of billions of dollars in “assistance” to the investment community and that money stays locked in the closed loop of liquid financial investments. That capital is used for the “Bernanke Bid” that stays under the market regardless of the news. We are currently in the countdown for the next round.
Now, once again, the markets are dealing with all kinds of really shitty news. Even earnings are disappointing. But the hope of Central Bankers to the rescue keeps the Bid rather firm. But don’t let that fool you as there is much damage under the surface. Add that to the legitimate fear of a failure of the finacial system in Europe, again.
The “Europe is Saved” rally started near SPX 1200. We peaked just above 1400. Testing 1300 makes perfect technical sense and it won’t be so bad. Of course it won’t be easy. Emotions must be flared. We must face all out destruction or complete Nirvana. The truth is somewhere in between.
Tuesday, May 8th, 2012 @ 11:50am
As you know, this is the primary lesson that I was taught from all my years on TV. It is a simple message and exactly what viewers want to hear about the stock market.
I have also been articulating a simple message but it is usually drowned out by the noise of the day to day market. After all, it has been proven that the markets spend the vast majority of their time flat to up. This is fact. But when the government targets asset prices, it is a disaster just waiting to happen. Forget about all the news, THIS single aspect of the markets is what is most disturbing to my analysis.
Some of you might think I’m a PermaBear but I am not. I promise. My goal has been and will always be to save individual investors from the pain that has happened and that will happen.
I was bearish in 2007 but watched in horror as the markets levitated based on a belief that the FED could save the day. I had Bull/Bear debates on Fox where I was ridiculed for my position of caution. I even looked at the camera and told the audience to “Listen to me carefully, sell your stocks now”. I got a ton of shit off camera about it.
Our unstated policy is to boost asset prices. Because what company will hire while their stock is going down? What consumer will make hearty discretionary purchases when their 401k is dropping in value?
And that stocks won’t go down in an election year? Remember the last Presidential election? Most every country touched by financial crisis has turned over their government, except for Germany and us. Hmm…
Look, unless Europe gets another trillion or so by summer, there will be an epic run on banks over there. It has already been postponed once. And the market geniuses that believe a strong fourth quarter extrapolates into a strong first or second or third quarter has again been proven incorrect. Without massive manipulation of the numbers, GDP should be negative most everywhere in the civilized world.
My April 17 top call was a guide to the future. I’m not good enough to be that precice and anyone who is simply got lucky. There will be plenty of chest pounding rallies and drops but we’ve got more work to do. And waiting for Bernanke is not an investment strategy.
Wednesday, May 2nd, 2012 @ 11:21am
More bad news means only one thing; another Bear Trap.
As Euro-banks march toward their inevitable Run and failure, the prevailing perception is that the ECB will come forth with another trillion Euros, just like in December. What choice do they have? Another save!
As the domestic economy disappoints though its lack of growth, the prevailing perception is that the FED will pony up the next half-trillion or so to keep the closed-loop of the banking and investment universe happy. Another save!
The major indices are trading at post-crash highs, now near 2007 levels achieved just before the wheels came off the bus. And now there are calls that a new Bull Market is about to begin. The low-volume rally proves it as that has been the trend for the past three years. Big volume only lasts for a few hours and finishes quickly.
Forget about fundamentals for a second. Never mind the double tops, the negative divergences and the clear Distribution that is well underway. Never mind that queasy feeling in your stomach every time you pull the trigger to buy something. One can’t help but wonder if the wheels will come off the bus, again, during your latest trade.
The Bloomberg conference yesterday had more than a few dire warnings about economies/markets. Never mind as the selling this morning was all sopped up by 10am and replaced with a HFT-steady, cardiac-ready pattern of buy programs.
We are now just 5 SPX points above my April 17 high. Patience, as they say, “tops take forever to form and bottoms are formed quickly”.
Tuesday, May 1st, 2012 @ 12:30pm
Here we are, on May 1st, and the major indices are breaking out, again, and on low volume, again. My April 17 top call has failed for the moment. But as every Strategist will tell you, "I'm just early".
Also remember last year when markets had a fantastic "Magical Mystery Rally" as the third quarter began and before a harrowing and volatile drop? This year's action has been remarkably similar to last year and the year before--but many people will tell you that it is different this time. I dunno.
After a small retracement (and renewed doubt) to the latest Primary Breakout near SPX 1360, markets are as confident as I have ever seen. In this election year and with Central Banks in full control, nearly everyone understands to "be long or be wrong". We are all of one opinion and the only "wrong-thinkers" are obviously crazy. Any un-American short sellers are being forced out, one by one.
This game is getting simple; just do exactly the opposite (Costanza) of what fundamentals tell you, stick with the prevailing trend, don't fight the FED and do what everyone else is doing, namely buying liquid financial assets. QED