Morning Corner 10.14.11

XLU (weekly info)
-no change (above mid)
high= 33.96
rev= 31.89; mid= 32.93

XLU has been stuck in a range (around 30.00-34.50). It's trending up on the weekly 3LB so defensive positioning is in play. It's above all SMA's. The four dojis after the long week appear to indicate rest before continuing higher.

XRT (weekly info)
-no change (below mid)
low= 43.83
rev= 54.44; mid= 49.14

Retail is trying to make a move higher. It's back above the weekly 3LB mid and testing the monthly 3LB mid. It's above all SMA's but SMA(13) has crossed below SMA(55).


Andy T said...

Thanks Ra.

Will have an Open Thread idea run on Sunday...featuring a paper from Karen.

The DXY not sporting the cleanest "impulse" off the low, but it seems "sporty" enough to take a stab at buying the dip here....the 76 level should be the inflection point.


This should the final z-wave of a multi-year correction. I'm expecting it to lapse into a we should get several more weeks of choppy consolidation following this initial spasm higher.

I guess that means the new year should begin with a pretty large collapse.

ben22 said...

you looked at Neely's count lately AT?

ben22 said...

I really deeply enjoy when Bobble Head puts out his bi-weekly AGW posts so that I can read the arguments that ensue in the comments section, typically gets pretty heated in there

what I find so amusing is the commentary that goes something like this:

“That humans are causing global warming is the position of the Academies of Science from 19 countries plus many scientific organizations that study climate science. More specifically, around 95% of active climate researchers actively publishing climate papers endorse the consensus position.”

I mean, we could go on and on about how silly such a statement is but I think everyone here due to market background understands the great potential danger of consensus. It hardly creates proof or fact on its own.

I pulled this from Wiki:

"The philosopher Karl Popper proposed that since no amount of experiments could ever prove a scientific theory, but a single experiment could disprove one, all scientific progress should be based on a process of falsification, where experiments are designed with the hope of finding empirical data that the current theory could not account for, indicating its falseness and the requirement for a new theory.[6]"

the way I see it, maybe it's caused, or partially caused by man, maybe not, maybe the earth isn't doing anything different than its always done, we certainly don't know for sure, and that people think they prove something by stating that there is consensus on the matter

that's some real weak shit right there.....

as can easily be recalled, there used to be consensus that the world was flat, that the sun revolved around the earth, and so on

seems we have this tendency to think that man is the true center of the universe, the dictator, if you will

as if....

Anonymous said...

yonder QOTD:

"All rational action is in the first place individual action. Only the individual thinks. Only the individual reasons. Only the individual acts."

-Ludwig von Mises

I've, long, enjoyed von Mises' Work(s)..

find him to be a(n), incredibly, clear Thinker/Writer.

one of his Books, "Human Action", should be, more, widely read..

if one likes to read 'on-line', it is available, Gratis, at ..



re: previously known as "Global Warming", now "Climate Change"..

Consensus (!) right? no kidding..

many of those Idiots should take a peek at "Lysenkoism" to see the Value of "Consensus", in Science..

Leftback said...

A few calculations put EPS for Q3 at $24.

That's $96. P/E of 13 x = 1248. So we are not far off fair value.

What happens next to SPX depends on forward momentum for the economy. It is hard to see a multiple contraction at these low rates.

Mel said...

Does that paper from Karen include pics?

ben22 said...

well that sounds all good and well leftback, if only there were agreement on the E in the P/E

through 9/2011 Shillers quarterly adjustments were about $61

and lets stop pretending there aren't issues with how E is "reported" such as in JPM's yesterday

also, I think Japan has provided a fine example of how markets can see multiple contraction even with low rates, our own markets provide examples as well, they just aren't the norm

regardless, unless one believes fully in efficient markets then you have to draw the conclusion that there is no demonstrable norm of objective pricing, the fluctuation in multiples tracked back to 1900 can only provide this conclusion

it is a sentiment indicator, hardly representative of the "value" of anything

Anonymous said...

"it is a sentiment indicator, hardly representative of the "value" of anything"

is a Point, oft, overlooked..

add'l, P/E is a "liquidity"-Gauge, as well..


ben22 said...

I stole that idea, btw re: P/E = sentiment indicator

from Phil Roth

but it makes a lot of sense to me

I just think it's a very weak way to guage whether or not stocks should be bought or sold, not only on the entire market but an individual stock basis as well the minority here clearly

AmenRa said...


Not really. Hell fundamental analysis is voodoo also. It works if you believe the numbers that companies put in their earnings reports.

On that note, thank you JPM for shedding more light on how EPS can be manipulated.

Leftback said...

P/E is a "liquidity"-Gauge

and overall there is still an ocean of liquidity in the US.

Some are calling for $100 EPS this year, my number was $92. $96 would be in the middle. Some called for $80 but that would be a hard stop. Not seeing much sign of that as yet, despite the ECRI.

Leftback's Evil Twin said...

We hope the paper from Karen is illustrated.
Although we will read it for the insights......

Anonymous said...

today's isn't a pretty "Candle" ..

now, having 'Flashbacks' to AR's Cartoon, from last night.. :)


ben22 said...

I think the two of you are talking about liquidity in relation to p/e in two different ways, perhaps I'm wrong about that, but that's what it looks like

I also think we are on the brink of just making stuff up now

saying that we are awash in liquidity and that as a result p/e multiples will not only not contract but would be more likely to expand completely denies the trend in outstanding credit as if it doesn't matter to the discussion but if we want to talk about liquidity, debt matters, clearly.

simply using Japan as an example that contradicts the statement, their central bank has "provided liquidity" for years, yet the trend in multiple compression remained

how? why?

and more important, one could only claim that the US is awash with liquidity if they totally ignore all the debt

ben22 said...


lets just pretend for a moment you knew exactly what the earnings would be by 12/31/2012

tell me how to value the market in the context of the 23x fluctuation in p/e ratios (even more massive in the last 10 years) while rates are on the zero bound

whats the model, because slapping some "historical" p.e on it leaves something to be desired to say the least

ben22 said...

Haven't the europeans been providing liquidity to Greece, among others, since late 2009 now?

whats the problem then?

Leftback said...

You are right, sometimes we are all talking bollocks.
Crisis fatigue....

ben22 said...

meh....I do it too
I'm sick of crisis

but then, it just keeps dragging on

frou frou time....

Anonymous said...

meh....I do it too
I'm sick of crisis

but then, it just keeps dragging on

frou frou time....



AmenRa said...

I need some frou frous x2...

Anonymous said...

i love you guys.

Post a Comment


This blog should not be interpreted as investment advice of any kind. The authors are NOT representing themselves CTAs or CFAs or Investment/Trading Advisor of any kind. The authors may or may not trade in the markets discussed. The authors may hold positions opposite of what may by inferred by this blog.The information contained in this blog is taken from sources the authors believes to be reliable, but it is not guaranteed by the authors as to the accuracy or completeness thereof and is presented here for information purposes only. Commodity trading involves risk and is not for everyone.