Tuesday, November 13th, 2012 @ 12:38pm
On September 14, 2012 the SPX peaked near 1475. After an almost perfect double top two weeks later on October 5, the markets have been in a good, old fashioned near-term downtrend that found support this morning near 1370, down almost exactly 100 points. Few noticed the corrective activity in anything other than in Apple as the market’s levitation into the Presidential Election was of paramount importance. Is this “market symmetry” or something else?
As I’ve mentioned in the past, there has been little change to our fundamental backdrop between then and now. Even plummeting earnings could not damage the domestic equity markets. But 100 SPX points, about 6.5%, came off the top of the major indices and it came at a time of peak distraction, the Presidential Election.
True, some saw the damage occurring but I bet few were able to profit from it especially with QE-Infinity running in the background. Plus, it is the time of the calendar when money managers close their books for the year and perform all kinds of “adjustments” to their portfolios.
Declining earnings, the Fiscal Cliff, European banking crisis, etc. are simply the latest issues facing equity investors and like in the past, they will be met with the exact same type of Policy Response instituted in the past.
The stock market is the last and greatest playing field for attempting to maintain corporate and consumer confidence. The equity market must not be allowed to fall in any significant way or else the entire illusion is broken. Markets will continued to be “funded” by Central Banks and the can will continue to be kicked down the road. Very little will change on any front. Same shit, different day.
Option Expiration will occur this Friday and there will be a bit of volatility, but that 100 point SPX correction area will be very important near-to-intermediate term support as we meander into the Thanksgiving Holiday. I am still of the opinion that this will be a supremely disappointing quarter for market action. And just remember one thing: in a world awash in liquidity, there is none when you need it.
Thursday, November 8th, 2012 @ 12:20pm
Now that this most expensive and fucked up election in history is over, the markets are now facing reality. Why now? Because the Bullshit-O-Meter is no longer being funded by a multi-billion dollar advertising campaign. The attempt at self fulfilling prophesies have been thoroughly exhausted.
All I’ll say is this about that: Most of the media is more full of shit than the politicians themselves. It’s not the Talent, but rather Editorial Directors and Executive Producers who decide what you will know and think every day. Only you’ll never know their names as they peddle their significant influence in anonymity. And don’t think that advertising dollars don’t have something to do with it.
I’ve withheld my opinions on the ex-candidates and will continue to do so here. You don’t read me for my political opinions, but sometimes I tweet them @createcapital
Enough, now on to the markets:
Do you think anything is different now than it was last month or last quarter? The world’s economies will be “muddling along” for a long time to come, like maybe a generation. There is no changing that without an elimination and repudiation of most debt and that won’t happen without a massive crisis. The “chewing gum and twine” economic policies have provided a suitable illusion for those with capital and so the can-kicking continues.
We are now faced with the need for liquidity following Hurricane Sandy. I don’t think $50 billion will cover it, and it is not a “growth event” like some will tell you. It is just bad for everyone, period and I won’t get into the details as it is well covered, but the reality is far worse.
The market’s correction will continue to about SPX 1350 which will test a long-term uptrend line. Technicals are just as simple as that. But the issues of not just slowing growth, but actual shrinkage (no Costanza) remain front and center. There will be no real corporate spending, just hoarding of assets. And if SPX 1350 breaks sharply, another one hundred points will come off quickly, even with Uncle Ben at the helm.
And Apple remains front and center. From the date of Job’s death to its peak it rose $325 or 85% in less than a year. It has corrected about half of those gains in these few weeks. It will find big support in the low to mid $500 area and will begin to ”settle down” shortly.
It has certainly been a wild season and people are exhausted, especially in the Tri-State area (no Dufenshmirtz). Thanksgiving and the holiday season are here but I do not expect it to be “normal” for individuals or the markets. I’m ready for a vicious fourth quarter that goes against historic market norms or seasonality.
Wednesday, November 7th, 2012 @ 1:22pm
Obviously putting one's life on hold knocks everything out of whack. Even after a week with no civility, no top hat, Caveman Style, we've done our best to give to charity, primarily children's clothes.
The press does not do justice to the areas hardest hit. Interesting how Midtown Manhatten is never punished for their sins...
I have a lot to say about the election and markets but must compose my thoughts over the next few days. Please be patient with me for a more detailed accounting. I will however, be tweeting mental farts whenever I feel the need.
Please stay tuned!
Tuesday, October 23rd, 2012 @ 11:52am
Economic reality has been divorced from market action since June 4, when the QE-Whatever rally began earlier than in previous years. It is also when Europe took a page from our Federal Reserve and began to print in earnest.
Anyone looking to do anything other than follow the uptrend was severely financially penalized. And in order to make money, you had “to believe” and view the world through Costanza glasses.
My thesis was/is that economic reality will eventually take hold and bury anyone stupid enough to stay in anything longer than three weeks. So far my thesis has been incorrect. Free money will do that to a market.
But my other supposition was/is that Obama will win the election unless “They” can crash the stock market two weeks before the election. Given how the stock market has more than doubled over Obama’s term, the market is the only Policy Tool that has “worked”.
But now, with 2 weeks to go before the election, it is being “leaked” that Bernanke will soon be finished. And in the NYT no less! This is the reason for the market’s fall. Not that Romney is winning, because he is not. Really.
Uncle Ben’s Free Money Regime has been the sole reason for the stock markets performance. Remember, earnings are actually falling while the markets have been rising. And the market’s leadership has been clearly faultering. That is an untenable fundamental and technical backdrop.
Am I a conspiracy theorist? Is my hat made of Tin foil? Many would say affirmative. But mark my words, Ben or no Ben, the policy of Free Money Forever and ZIRP will be with us for a long time to come.
Tuesday, October 16th, 2012 @ 11:06am
Holy shit, what a week so far.
Yesterday morning the markets took off. No explanation other than that there was a teeny, tiny correction last week. And today, Tuesday, we have another “off to the races” day. The SPX gained 20 full points in literally 2 hours. And it was the broad measure of the markets that rose, led by financials, not the stocks everyone loves.
Remember, the end of the fiscal year for many mutual & hedge funds is October 31. So there is some positioning underway.
The big news through is that Pandit and Havens, the CEO AND the CFO of Citibank have been stepped down just a day after “good” earnings. And just 2 weeks before the Presidential election. Hmmmm. he and Geithner will probably swap jobs.
The reality is that the markets have $85 billion a month to play with this year and $40 billion per month starting next year and into infinity. And financials are leading the way. You just can’t fuck with that kind of money.