May 21 (Bloomberg) -- Any investor who wants to gauge how serious the stock market’s retreat is need only know the Standard & Poor’s 500 Index has fallen to within 6 points of its low on May 6, when panic selling prompted calls for reform.
Translation: We make up things like "fat fingers" because we too like to watch "Dancing With the Stars" and taking the time to get to the bottom of things would distract us from that.
Europe’s debt crisis has pushed the S&P 500 down 12 percent during the past month as concern grew that deficits in Greece, Spain and Portugal will unhinge the global economic recovery. Regulators have proposed six potential causes of the May 6 crash, including losses in exchange-traded funds and an unwillingness to match orders among some electronic traders.
Translation: if we can't blame it on fat fingers, we'll make sure you believe that the problem is caused by fiscally irresponsible little countries across the pond (even though our own policies are just as bad).
“As far as we know, it’s not a computer error today,” Jerome Dodson, who oversees $4 billion as president of Parnassus Investments in San Francisco, said of yesterday’s slump. “The May 6 flash crash was driven by technical troubles and didn’t reflect any fundamentals. It’s surprising that regular trading would take us down to the same levels as a technical glitch.”
Translation: "Fundamentals!" (pauses to clean coffee off of keyboard). If the stock market GOES UP, it's fundamentals, if it GOES DOWN it's a glitch. & "These are not the droids you are looking for".
The chart patterns show concern the U.S. economy may weaken after expanding during the past three quarters. Reports yesterday showed more Americans filed for jobless benefits in the week ended May 15 and the Conference Board’s index of U.S. leading economic indicators unexpectedly declined in April.
Translation: When Uncle Sugar runs out of money that was borrowed and you've yet to be taxed on, and that was used to artificially bring demand forward to make himself look good & to give his bankers friends betting cash, the charts start looking bad after awhile.
“If this begins to bleed into people’s psyches, then it can perpetuate a negative sentiment that could weigh not only further on the index, but begin to impact the real economy,” said Kevin Caron, a market strategist at Stifel Nicolaus & Co. in Florham Park, New Jersey, which oversees about $90 billion.
Translation: People don't like it when their Treasury is looted.
U.S. stocks are valued at 19.4 times annual earnings from the past 10 years, according to inflation-adjusted data tracked by Yale University Professor Robert Shiller. That compares with the average of 16.4 since 1881.
Translation: I'm being "generous" with these so-called valuations. But you'll never hear that on TOUT-TV.
Birinyi Buys
While the stock selloff reflects reasonable concern that Europe’s sovereign debt crisis will derail global growth, U.S. corporate earnings and favorable valuations will prevail, said Laszlo Birinyi, the founder of Birinyi Associates Inc. Profits for S&P 500 companies are forecast to increase 17 percent this year, pushing the index’s price to 13.2 times annual income, according to data compiled by Bloomberg.
“I am not of the view that we’re going to go into a 20 percent downdraft,” Birinyi said in a telephone interview yesterday. “We are buying to take advantage of this weakness.”
Translation: "I'm a tool"
Billionaire investor Kenneth Fisher also sees the equity plunge as a buying opportunity. The chairman of Fisher Investments Inc., who oversees about $35 billion in Woodside, California, said the U.S. economic recovery will outweigh the debt crisis in Europe.
Gross domestic product in the world’s biggest economy rose at a 3.2 percent annual rate in the first quarter. Consumer spending increased by the most in three years and business investment on new equipment advanced at a 13 percent pace. The economy will grow 3.2 percent to 3.7 percent this year, the Federal Reserve said on May 19.
“If GDP is rising, you don’t have a recession,” said Fisher. “We’re getting the stock market correction that begins to let us put everything behind us and move on to the next leg. This is a bull market.”
Translation: "I'm an even bigger tool than Birinyi. Anybody that followed my real estate advice back in 2005 is broke & destitute. But I still flap my gums whenever I get a chance"
All kidding aside, Last night I was asked my views on some levels that we could hit... Frankly, there are too many crosscurrents at play here, but I'll toss out a few levels to give it some perspective.
1070 - TD&ZH are warning that there's a huge "size wall" there... If it gets taken out in the cash, watch out below...
1065 - Flash crash LOW PRINT (seems irrelevant now - futures pointing near there)
1050 - The Chicago pits seem to love that number
1044 - The February low (with the "forces that be" may prove to be an irrelevant number as well)
1042 - The .1457 FIBO extension from 1219.80... EW'ers & fibo freaks (like me) are keen to this number
1000 - purely psycological
972 - A number CV tossed out during the January correction but was never hit...
956 - That was the summer '09 previous high (may act as somewhat of a H&S)...
932 - (a .2357 fibo extension from 1219.80)... This would mean the market has done more than a 20% correction... Many pundits would say that we're now in "BEAR MARKET" territiory (as if we were ACTUALLY in a bull)... Whatever...
Or, if you wish, I could go find Birinyi, Fisher, or AJC for you... In the end, they'll probably be right... Obama is probably on the phone right now asking how many trillion it will cost to buy back 2,000 DOW points...
282 comments:
«Oldest ‹Older 201 – 282 of 282 Newer› Newest»CV
Shhhhh!!! By saying his name brings him into existence.
Carnage hour fast approaching...
@DL
"Cash is for Wussies" - LOL
TWSWB didn't appreciate me pointing that out to him last night...
Who needs cash when you can use credit?
Yeaah Baby!
A. Powers.
Heavens to mergatroid. Exit stage left...
I may change my mind an hour from now, but right now, I'd say the odds favor a decent rally on Monday.
Then, on Tuesday, we get to see CV's bottom.
@Amen
I'm not really sure here...
I'm getting the feeling that they don't want to go into the weekend under 10,000...
Just a guess...
Remember the last time we were here (back in February) and they did that "chump" print in the last 5 minutes on Fridat to get it back over 10,000?
do we close red?
Mr. Topstep's understudy was talking about the Chicago PITS bracketing 1074 and 1097...
Well- Here's the 1074 part of that...
Considering no one knows what the hell may happen overseas this weekend it's better to be safe than sorry. My .02
I'd briefly bought SPXU at 1087 (that morning FIB number)...
Put I just punked out and sold it...
gutless wonder... :-)
AmenRa @ 2:55
Who knows? We might get another Hank Paulson-style Sunday night bailout.
Well, if there was going to be a big announcement, may as well make it an hour before opex...
Just to really rock the boat.
(snark)
I-Man @ 3:00
I'm thinking it'll come from Europe if it comes at all.
This is setting up for quite the crash in to the close and again on Monday.
Trin has been inching higher...
I'm out of puts and into my favorite weekend trade. Long cold beer, short cold steel.
I pulled these from a paper I wrote for an investment company here in DE last year, maybe it's helpful given what's going on today in judging social mood:
3. Dollar sentiment is extremely low right now as I will show below in more detail. As I mentioned at the end of Wednesday’s note, the Dollar Index has reported 3% bulls several times in the last month via Daily Sentiment Index. We could contrast this with fairly consistent extreme bullish readings in the Euro of above 90%. These were the same levels that accompanied the bottom in the dollar index last March. This sentiment has been decidedly bearish for some time and as a result we now see accompanying headlines that reflect this social mood surrounding the dollar. We had even heard a commentator in May state on Bloomberg that the US Dollar was “dirt”. While I can find countless examples, here are three article titles from the last few months:
I. London Telegraph: “China’s Yuan Set to Usurp US Dollar as World’s Reserve Currency”
II. Financial Post: “Day of Reckoning Looms for the U.S. Dollar”
III. Jim Sinclair’s article from 8/19/09: “Countdown To The Implosion Of The Dollar”
ETF superpit hit re FXP:
http://www.youtube.com/watch?v=CP4mrI5Ylzg&feature=uploademail
interesting Nic, I've been big on the China short since the start of the year, in fact that and the dollar are my two best calls. but, FXP was not the best way to make this trade, it's up, but I should have done a lot better.
i still hold a huge position in FXP
@I-man,
earlier, lol, now I know why when I was by Johnny Bidu's office earlier I heard PacMan.
GIB to infinity.
They're practicing gobbling up all their clients money...
Arrgghh. The smell of intervention is rancid.
So much for I-Man's brokers' predictions. LOL.
Love the irony...
i missed the good news! this riotous indices are going to have me sticking to gold and oil now.. they're seem to be doing their own thing. off to the beach at the close..
I guess nobody wants to be short this weekend.
Bought some June SPY calls about 15 minutes ago.
Wow. TICK was pinned above 700 for almost a minute. Talk about desperate.
1097 on Monday... then back to business.
The shorts' fear of weekend bailout news driving this? Manic is the word here. This "market" is no place for the little "investor". I wonder when they'll/we'll figure that out. Off to the gym.
I-Man @ 3:59
I'll take it.
Wow...
SPX closed right on top of the 55ema on the weekly chart.
Close: 1087.69
55EMA: 1087.4
Ra, I wonder if the last push had anything to do with a weekly close over the Phi number?
I-Man
If you're close to one of the numbers you'd better close higher. That's what I'm thinking.
@I
I hope we do not hit 1097. I'm thinking 1088-1094 and then watch the arse fall out of her. LOL
Birinyi: since '62 there have been 24 declines greater than 10% during a bull market. 9 of these became bears.
http://www.bloomberg.com/apps/news?pid=20601087&sid=alY5oKJaZSuQ&pos=7
Problem I have with this story is they are assuming what we just had was a bull market.
wave 4 flat....good luck with any longs, lol.
Nic @ 4:08
68% isn't enough to qualify as a bull market?
(I am in the secular bear camp, however).
I-Man
That and closing above the 233SMA daily.
Nic,
we should ask Mr. AIG how many bull markets have had 400 point up days..those occur in bear market rallies...see I can church up data any way I want it to look just like he can.
trying to call something a bull or bear based on the percent gain is idiotic....sorry.
I am in your camp DL.
Ben
Also the daily candle failed to close above the midpoint from yesterday. Which makes it a failed rally for the bulls.
This ain't no bull market...
Neither was 2003-2007 for that matter...
"The shorts' fear of weekend bailout news driving this?"
why can't it be as simple as a lot of puts being in the money.
This isn't a daily bullish piercing line so technically not a reversal. I think AmenRa would agree
oops there is AmenRa!
I believe Doug Kass is flipping bullish today, saying the bottom is in.
I can't find a link.
Ra,
thanks, also, we got that confirmation on the XLF even though it was up 3.5% on the day.
general observation:
a lot of traditional TA types are long into the weekend
a lot of wavers are short into the weekend
fundamental inWestors lost as always and want to play golf over the weekend
Bullshit market maybe.
May 21 (Bloomberg) -- Investors withdrew some $12 billion from U.S. and European equity funds in the week to May 19, the most in almost two years, on concern Europe’s sovereign-debt crisis will slow global growth, EPFR Global said in an e-mail.
...But the numbers of wussies is growing rapidly!
"a lot of traditional TA types are long into the weekend
a lot of wavers are short into the weekend"
Interesting observation, actually.
Wuss In Tennessee,
Ha Ha
Ben
XLF barely avoided closing below its monthly 3LB reversal (14.70). Probably due to the GS rumor this morning.
I'd like to add that 3LB'ers are also short into the weekend.
DL,
4:40, I think so as well, I don't have any hard data, just seems that way based on what I'm reading around web land. Next week should be a lot of fun.
@Ra,
but it did confirm the weekly right?
sorry man, I'm still learning this 3lb, and if it's not obvious, I want to take a short position in XLF, lol.
Doug Kass is bullish, Cramer is negative.
http://www.thestreet.com/story/10762394/2/kass-fear-is-the-rational-buyers-friend.html
We'll get BOTH on Monday...
Green open... Sell to Johnny (& Doug Kass)...
1097...
Bottom drops out... Falls thru Tuesday...
New Bottom... (lower)... BOTTOM...
Kass is right (a day or two late)...
Ben
Yes. XLF did confirm the weekly 3LB reversal.
Picking off stops into the close in the last half hour had to be the easiest "beer money" Lloyds algos ever made...
@Amen
SPX is now "confirmed" as well right?
but not "TRENDING"
Nic,
thanks, I'm a bit sad about the article, Kass has bought the idea that the central banks will credit over the problems.
oh well, he's just like everyone else, the same group think he rails against.
CV
That's correct.
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