AmenRa's Corner

A place where a skillful caddy always offers cool contemplation when it comes to your "stick" selection.



Creditcane™: The little engine that could has derailed. Gracias PIMCO. Gracias NY Fed. Gracias Blackrock. Gracias FHLB of Chicago.



SPX
Bearish long day. Midpoint above EMA(10). Above all SMA's. Tested and failed 1177.84 (the .0344 fibo from high). No daily 3LB changes (reversal is 1165.32) - so close so close. QE2infinity (aka the beginning of the end).



DXY
Bullish long day (confirmed gravestone doji). Midpoint above EMA(10). Tested its 76.4% retrace at 76.29 and passed. Still below 78.41 (.0557 from low). Daily 3LB reversal up (reversal is 76.65).



VIX
Hammer day. Midpoint above EMA(10). Below weekly 3LB mid and monthly 3LB mid. No daily 3LB changes (reversal is 21.21) - so close so close. Escaped the "no fear" zone.



GOLD
Bearish long day (aka CB's fight back). Still above all SMA's. Midpoint below EMA(10). No test of new 0% retrace. Daily 3LB reversal down (reversal is 1377.60).



EURUSD
Bearish long day (confirming dark cloud cover a day late). Midpoint below EMA(10). Back below its 61.8% retrace at 1.3899. Above all SMA's. Daily 3LB reversal down (reversal is 1.4049).



JNK
Bullish short day again (but closed lower). Above all SMA's. Midpoint above EMA(10). Held the 100% retrace. No daily 3LB changes (reversal is 40.01).



10YR YIELD
Bearish long day. The 0.0% fibo retrace at 23.59 is the line in the sand. Still below the weekly 3LB mid (25.35) and SMA(21). Midpoint above EMA(10). No daily 3LB changes (reversal is 23.81).



DJ TRANS AVG
Bearish long day (rising three method pattern failure). Holding above the upper trend line and all SMA's. Midpoint above EMA(10). No daily 3LB changes (reversal is 4583.57).



CRB
Bearish long day. Midpoint barely above EMA(10). Above all SMA's. Failed the Gann 1x1. New low on daily 3LB (reversal is 299.93).



AAPL
Spinning top day. Above all SMA's. Midpoint above EMA(10). failed to hold upper trend line. No daily 3LB changes (reversal is 300.14).






BoA should remember how in the old days problems were solved...

42 comments:

cv said...

Didn't GS publish a EURUSD target of 1.55 just about a week ago?

Must be why they did so well today...

Andy T said...

Rooney wants out of Man Utd. What a petulant little person.

cv said...

He's probably wondering if his check will bounce...

AmenRa said...

The Recklessness of Quantitative Easing
John Hussman

excerpt:

Opacity masquerading as solvency

One of the arguments for quantitative easing is the notion that the Fed's purchase of $1.5 trillion of Fannie Mae and Freddie Mac debt somehow "pulled the U.S. economy back from the abyss" of a Depression. But a closer examination of the past 19 months suggests that a much more specific mechanism - suspension of truthful disclosure - was actually the key element. Unfortunately, the benefits of this suspension are also impermanent, because the underlying solvency problems have been left unaddressed.

In early 2009, many major U.S. banks were faced with clear capital shortfalls that effectively rendered them insolvent - their liabilities exceeded their assets. Instead of restructuring this debt, or dealing with the problem in a sustainable way, the Financial Accounting Standards Board, responding to Congressional pressure, suspended "mark to market rules" and allowed major U.S. financials to use "substantial discretion" in valuing their assets. Since it was neither possible nor credible for banks to immediately write up those assets overnight, loans from the Troubled Asset Relief Program (TARP) were critical in bridging the immediate shortfall. Over the following quarters, banks substantially wrote up their assets, and they issued a large volume of additional stock. The new issuance created a moderate but legitimate improvement in the financial position of these banks, but the asset writeups appear to be inconsistent with the growing volume of delinquent and unforeclosed homes, and the deteriorating debt-service performance of commercial mortgage-backed securities. Presently, the U.S. financial sector is essentially opacity masquerading as solvency.

As Meredith Whitney has observed, the "recovery" of the U.S. financial sector has been a two stage process - massive writeups of troubled assets on balance sheets, followed by large reductions in loan loss reserves on income statements. This activity has not only driven the improvement in operating earnings reported by banks, but has been one of the primary contributors to the recovery in the aggregate earnings of the S&P 500 Index. It is not a process that should be extrapolated.

AmenRa said...

con't:

As for Fed purchases of U.S. agency securities, there is little doubt that these actions allowed the U.S. housing market to function, albeit at a weak level, over the past 18 months. But this cannot be credited to anything inherent in quantitative easing. Rather, the Fed did something that neither the American public, nor the U.S. Congress were willing to do democratically: it essentially guaranteed Fannie Mae and Freddie Mac debt by taking massive amounts onto its own balance sheet. This was later followed up by more explicit 3-year guarantee by the Treasury (through the end of 2012).

Think of it this way. If Fannie and Freddie had already been explicitly protected by the full faith and credit of the U.S. government, their securities would have been indistinguishable from U.S. Treasury securities, and housing activity through Fannie and Freddie would have proceeded without any action by the Fed. It wasn't quantitative easing that helped the housing market. It was the Fed's willingness to put the U.S. public on the line for any losses sustained by these two insolvent financial institutions.

By purchasing $1.5 trillion in Fannie Mae and Freddie Mac obligations, the Federal Reserve has placed U.S. taxpayers in the position of absorbing whatever additional losses will come on two-thirds of the nation's mortgages. Prior to the Fed's actions, the bondholders of these institutions had no right to the full faith and credit of the U.S. government, but the Fed's massive purchases of this debt are now effectively irreversible without such a guarantee. There appears to be no way for the Fed to extricate itself from this position without provoking massive economic dislocations, except through continued Treasury guarantees to make this agency debt whole so that private market participants will buy it back. By making that "monetary policy" decision, the Fed has actually forced an act of fiscal policy.

AmenRa said...

re: Hussman's weekly commentary

Read the whole thing. It's really good.

McFearless said...

anything happen this afternoon?

got to read all the comments just now

gold safety trade....meh...trending with stocks for a few years now...just not a perfect correlation.

bac losses of $47b's no way?.....it's called leverage, it works in both directions.

twas a huge distribution day, odds are we should be green tomorrow so we'll see later this week what this is all about...dollar, gold...action baby!

call me ahab said...

AR- this line-

As Meredith Whitney has observed, the "recovery" of the U.S. financial sector has been a two stage process - massive writeups of troubled assets on balance sheets, followed by large reductions in loan loss reserves on income statements.

exactly- solvent banks brought to you by mark to fantasy-

sure makes me feel warm and fuzzy about the banks- now that they are solvent

call me ahab said...

. . .I mean really- it's all a big joke-but everyone plays along-

as if anything has changed

mcHAPPY said...

Before I worry about downside targets, a daily close under 1129.24 please.

To me this still feels like April... bad news for banks leads to momentary fall followed by new highs and THEN a fall. Same here.

Luckily Bucky has his groove back. But unfortunately we know Bucky can go up for a little while with the markets before all hell really breaks loose.

Andy T said...

AmenRa: Good stuff there.

AmenRa said...

ahab

The banks haven't been solvent since the crisis began. It's just funny thinking about all of the steps taken to keep that info from getting out to the public.

McFearless said...

"I mean really- it's all a big joke-but everyone plays along"

As has been said recently....it's that easy.

Andy T said...

ben22: Anything happen? Well, I'm back in the money on the DXY I bought two weeks...pretty "psyched" about that. Woo-hoo....making some big money now....

call me ahab said...

b22-

it's that easy

fwiw- I sold my SKF today- decent profit- $1 + a share- however- I would have been better off selling on Friday-

was holding out for BAC- but of course- all was good on paper-

thankfully- reality poked it's head up today and said hello

McFearless said...

Ra,

thanks for the Hussman link, it was great.

I look forward to the day when the phrase 'don't fight the fed' is laughed at.

call me ahab said...

Tepper won't be laughing

McFearless said...

nice fellas....looks like you guys want to make money.

McFearless said...

most people wont be laughing ahab, that's how all the best calls go....we'll see, one can dream.

McFearless said...

this is so stupid:

http://sports.yahoo.com/nba/blog/ball_dont_lie/post/NBA-bans-its-first-pair-of-shoes-due-to-unfair-?urn=nba-278191

NBA is going into a major bear market.

also strange because back in the day they didn't ban Pumps...Dee Brown even won a dunk contest in them!

http://hoopedia.nba.com/index.php?title=DeCovan_%22Dee%22_Brown


I had a pair of Reebok Pumps...man when I pumped those things up I had like.....4.3ish, 4o speed, or, at least Pumps claimed to have made you "better" at sports....really though it just made the shoe more snug. Guess that damn social mood wants to keep em down....

Andy T said...

@McFear: The company who owned the shoes probably begged for an official press release from the NBA. That firm will make much more money with a "banned" shoe....

Terrific marketing....

Dee Brown?...that now seems like "old school" days...

AmenRa said...

Ben

After QE2 doesn't work the Fed will be be exposed. Their "independence" will get challenged by Congress. Other CB's will pull away and do their own thing. All hell breaks loose.

McFearless said...

AT,

yeah I'm sure they will sell a ton now, only $300 and a bunch of kids will find out they still can't dunk.

I got my fantasy bb draft this weekend, this nba season really should be interesting.

Ra,

yeah it's pretty scary how unstable it all is. I'm going to CV's if it gets bad. on paper it seems like he's got the best set up.

AmenRa said...

Ben

Relatives down south still have a farm with cows, pigs, chickens. Plus some fields with corn and some type of bean. There's a catfish pond down the road too. Have to brush up on my tractor driving skills :-)

Andy T said...

Going back through the comments today....

cv: Pretty sobering story here that you highlighted.

http://www.aolnews.com/nation/article/young-adults-are-new-face-of-homelessness/19678303.
~~~~~~~~~~~~~
Whenever I see stories like this, I immediately think about what some entrepreneur might be able to do with groups of 18-25 year olds who have no home or job.

There's probably a private solution in there there somewhere, but with a mandatory minimum wage, it makes it very difficult.

I'm sure there are some private employers in areas that could provide a mix of room+board+cash in exchange for work.

It's difficult to understand how certain nations, with huge shipping costs (logistic hurdles) to the US, can sustain a competitive advantage in certain areas when we have 2mm YOUNG workers who aren't working and have no place to live.

McFearless said...

speaking of down south...I finally caught an episode of that show swamp people about the guys that hunt alligators...wow.

McFearless said...

Ra,

when I was in high school/college I had a job at a hardware store, one of the best things besides driving around the forklift...plowing the snow with the bobcat.

prosciutto gristle said...

What the fuck? I was telling you guys to read Hussman yesterday and the day before. Huge props to AmenRa for spoon-feeding it, though!

How bout dem Giants! Good stuff there...

call me ahab said...

prosciutto-

I remember that- sometimes I need to be spoon fed:-)!

prosciutto gristle said...

OK Ahab, you're off the hook. So to speak.

AmenRa said...

prosciutto

I remember seeing Hussman's name in the posts and had to keep reminding myself to read his commentary.

AmenRa said...

...and I do try to read him every week.

prosciutto gristle said...

"Try" to read him? Oh come on. What's the alternative? Barry Ritholtz or Calculated Risk or David Goldman? They are douchebags, that is their livelihood. Even Mish is on the fence at this point! It amazes me that you folks still read BR at all. Correct me if I'm wrong, but not so long ago this site was founded on the tacit proposition that BR is unbearable.

McFearless said...

I only read guys with beards like these moving forward:

http://www.amusingplanet.com/2010/10/european-beard-and-moustache.html

AmenRa said...

prosciutto

I want to try and understand all viewpoints. No one is absolutely right or wrong.

prosciutto gristle said...

True, but there is so much puffery and bluster everywhere you look. If you try to understand all viewpoints--rather than focusing on informed and sincere ones--you run a high risk of getting sold a bill of goods. Nothing is perfect, but you can't do much better than Hussman, IMO. Particularly now that mannwich is AWOL.

God, I miss him.

Anonymous said...

Prosciutto, don't think we all missed it. I was late on my hussman read for the week and went straight there on your note. Fantastic as always.

Colin

Jennifer said...

This seems to be one of those mornings where the basic index numbers do not tell the whole story...the NAZ futs are up more than 9, but AAPL is down (slightly) ISRG down big, ALKS down big, AMLN down huge...guess something nasty happened in biotech land.

Jennifer said...

Hmmm, I'm responsible for providing 36 small halloween "toys"...think vampire teeth are acceptable?

Holy cow...AMLN is off by almost half.

McFearless said...

go with 36 sets of those wax lips/teeth, I loved those when I was a kid. do they still make those?

Jennifer said...

Yes -- that's a great idea. I'm sure all the teachers will be thrilled!

cv said...

new thread up

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