So I'd simply like to leave this message of peace and goodwill (and say "thanks" to you all who come every day).
Happy Easter! & Chag Pesach Kasher veSameach!
Morning Audibles 4.2.10 - Enjoy the Holiday Weekend!
To all the "peeps" who share this blog everyday, I'll be out and around all weekend enjoying some nice sun, and attending some gatherings.
So I'd simply like to leave this message of peace and goodwill (and say "thanks" to you all who come every day).
Happy Easter! & Chag Pesach Kasher veSameach!
CV
So I'd simply like to leave this message of peace and goodwill (and say "thanks" to you all who come every day).
Happy Easter! & Chag Pesach Kasher veSameach!
Morning Audibles 4.1.10 - April Fools Day
"A FOOL and his money are soon parted" (Thomas Tusser - English Farmer/Writer, 1524-1580, who also said "Sweet April Showers do spring May flowers")...
Speaking of Fools (and April), here's how Wall St. works to make the logic of Tusser come true.
It starts with these two guys (shown here paying a visit to their sock puppet sugar daddy rich uncle). They then proceed to play version of 3 card monte [probably with tarot cards]. They bid up equity prices day in and day out, exchanging them between themselves. So as to not look so obvious doing it, they focus on "single digit midgets" (like C, AIG, FNM, FRE), or shares that are hanging around somebody's REPO shelf.
On the first 2-3 days of each month then, a big transfer occurs.
These MoMo's (money managers), appear to the masses to be hard working types, pouring over charts & analysis all month & interested in nothing more that YOU being able to retire in semi-luxury in that retirement McGolf community.
Of course it was YOUR money that the MoMo's used for that transaction (the money YOU NEVER saw because it was whisked out of your paycheck, and into your 401k account for the Momo to distribute while he fancied himself being THIS GUY).
Now OTOH, if you're a "trader" of this phenomenon, it's probably just best to wait until all these transactions have taken place, and if you're a market BEAR, that opportunity won't likely come until next Tuesday or so.
Any questions? You could perhaps refer them to Tusser, who also said, "Methesulah lived to be 969 years old. You boys & girls will see more in the next 50 years than Methesulah saw in his whole lifetime"... And Tusser said THAT in the 1500's...
On the first 2-3 days of each month then, a big transfer occurs.
I always wanted to have this guy in my foursome...
Of course it was YOUR money that the MoMo's used for that transaction (the money YOU NEVER saw because it was whisked out of your paycheck, and into your 401k account for the Momo to distribute while he fancied himself being THIS GUY).
Instead, THIS GUY, just made "A million dollars"
Any questions? You could perhaps refer them to Tusser, who also said, "Methesulah lived to be 969 years old. You boys & girls will see more in the next 50 years than Methesulah saw in his whole lifetime"... And Tusser said THAT in the 1500's...
Morning Audibles 3.31.10 - Last Day of MBS Purchases by Fed
If anybody really thinks this is the end of the line, they probably need their head examined. But it's nice to observe occasions with a little cake and a few party favors.
After all, tomorrow is April Fools Day, and therefore we have more important things on hand to celebrate in this country.
I could probably be really funny here and conjecture about all the things that might happen as MBS purchases by the FED fade under the carpet into the past, but I'd rather take a more normal approach, and treat it for what it is... Here, I'll give you the Easter Bunny version (so as to be seasonal).
Let's review what the Fed buying MBS did in the first place.
- Helped bolster fraudulent balance sheets for the next wave of liquidations.
- Given banks time to raise capital & loan loss reserves ahead of that.
- Given a feeling of 'safety' (with implicit guarantees)
- Allow for a period of "risk on" trades to occur (more on that later)*
- Create a hypothetical conduit for "risk on" trades to unwind to a desired direction (don't laugh or spit out your coffee when I say that, while I doubt that was "in the plan" - I don't think the FED is that smart), It may end up as a bonus feature.
Still, while it is now easy to understand what this form of QE accomplished in hindsight, it is difficult to understand what the withdraw of such will produce.
Remember, this move has been 'telegraphed' for a long time. Amen Ra (on this blog, and many other blogs, for that matter, have even taken to doing "countdowns" as the final day approached. To offer a comparison, remember back in February (on the Thursday before OPEX - after the close of the markets) when the FED did a surprise hike on the "discount rate"? Remember the market reaction? A quick "whoosh" in AH trading, but by the next morning, algos & HFT were treating it as nothing ever happened. Now, remember, the "raising of the discount rate" was another move that was widely telegraphed (yet nobody was sure when it was coming). This policy shift (with regards to MBS), has been known about for quite some time.
So I'm going to hazard a guess that BASICALLY NOTHING HAPPENS. Or, if it does (and on what day it occurs), will likely be attributable to the mysterious way in which the markets move in aggregate.
Bottom line? This is "priced in" (and has been for quite some time).
Now we can get in to OTHER hypothesis. Being "priced in" could actually mean that a "RISK OFF*" trend needs to ensue (as hinted about above). It's a matter of 'timing'. The official end of these purchases by the Fed comes at the end of the first quarter. So it could be, in hindsight, that the apparent strength in equities over the past 6-8 weeks (especially PD bank stocks), has been typical "window dressing" in anticipation of the final event. I mean, even if you own a "clunker" car, you're probably going to slop it up with a little "Armor-All" if someone is going to take a look at it. Right?
So I'd nominate the same hypothesis as we've been doing for the past few weeks as the possible outcome.
- Equities are probably a little overbought 'technically' here, it's probably time for a little correction
- The dollar seems to be readying for its final medium term rally of strength
- The Treasury needs yields to flatten (appropriate time for some RISK ON trades)
These are "highly probable" occurrences, but, as always, the TIMING can't be predicted. The exact duration & steepness of the move (how far - how fast) is tough to determine as well. So if you're looking at in terms of equity index levels, what does it mean? 1150? 1120? 1000? Do we push minimally higher first?
My best guess is that if we push higher now (say, within the next 3 trading days), it will only be 'marginally' higher (I've set 1183 as a bogey in that case). One thing that this Fed & this Administration have successfully accomplished thus far is to EXTEND & PRETEND. Someday we'll probably crash. But the easiest way to "get by" in the meantime is to AVOID going totally vertical.
ANOTHER date coming up on the calendar is April 14th (the anniversary of the sinking of the Titanic). I suppose we need to get about "re-arranging some deck chairs" in order to pay proper tribute.
I could probably be really funny here and conjecture about all the things that might happen as MBS purchases by the FED fade under the carpet into the past, but I'd rather take a more normal approach, and treat it for what it is... Here, I'll give you the Easter Bunny version (so as to be seasonal).
- Helped bolster fraudulent balance sheets for the next wave of liquidations.
- Given banks time to raise capital & loan loss reserves ahead of that.
- Given a feeling of 'safety' (with implicit guarantees)
- Allow for a period of "risk on" trades to occur (more on that later)*
- Create a hypothetical conduit for "risk on" trades to unwind to a desired direction (don't laugh or spit out your coffee when I say that, while I doubt that was "in the plan" - I don't think the FED is that smart), It may end up as a bonus feature.
Still, while it is now easy to understand what this form of QE accomplished in hindsight, it is difficult to understand what the withdraw of such will produce.
Remember, this move has been 'telegraphed' for a long time. Amen Ra (on this blog, and many other blogs, for that matter, have even taken to doing "countdowns" as the final day approached. To offer a comparison, remember back in February (on the Thursday before OPEX - after the close of the markets) when the FED did a surprise hike on the "discount rate"? Remember the market reaction? A quick "whoosh" in AH trading, but by the next morning, algos & HFT were treating it as nothing ever happened. Now, remember, the "raising of the discount rate" was another move that was widely telegraphed (yet nobody was sure when it was coming). This policy shift (with regards to MBS), has been known about for quite some time.
So I'm going to hazard a guess that BASICALLY NOTHING HAPPENS. Or, if it does (and on what day it occurs), will likely be attributable to the mysterious way in which the markets move in aggregate.
Bottom line? This is "priced in" (and has been for quite some time).
Now we can get in to OTHER hypothesis. Being "priced in" could actually mean that a "RISK OFF*" trend needs to ensue (as hinted about above). It's a matter of 'timing'. The official end of these purchases by the Fed comes at the end of the first quarter. So it could be, in hindsight, that the apparent strength in equities over the past 6-8 weeks (especially PD bank stocks), has been typical "window dressing" in anticipation of the final event. I mean, even if you own a "clunker" car, you're probably going to slop it up with a little "Armor-All" if someone is going to take a look at it. Right?
So I'd nominate the same hypothesis as we've been doing for the past few weeks as the possible outcome.
- Equities are probably a little overbought 'technically' here, it's probably time for a little correction
- The dollar seems to be readying for its final medium term rally of strength
- The Treasury needs yields to flatten (appropriate time for some RISK ON trades)
These are "highly probable" occurrences, but, as always, the TIMING can't be predicted. The exact duration & steepness of the move (how far - how fast) is tough to determine as well. So if you're looking at in terms of equity index levels, what does it mean? 1150? 1120? 1000? Do we push minimally higher first?
My best guess is that if we push higher now (say, within the next 3 trading days), it will only be 'marginally' higher (I've set 1183 as a bogey in that case). One thing that this Fed & this Administration have successfully accomplished thus far is to EXTEND & PRETEND. Someday we'll probably crash. But the easiest way to "get by" in the meantime is to AVOID going totally vertical.
ANOTHER date coming up on the calendar is April 14th (the anniversary of the sinking of the Titanic). I suppose we need to get about "re-arranging some deck chairs" in order to pay proper tribute.
So RELAX, and enjoy the cruise in one of these babies!
AmenRa's Daily Candle Wrap
SPXDoji day. Boring. Midpoint stayed above 10 SMA. Held fibo ext 85.4%. No daily 3LB changes. Only 1 more day of QE!!!
DXYBullish short day. Tested Gann 2x1 level and passed. Uptrend is back (Go Bucky!). No daily 3LB changes.
VIXBearish short day. Tested the fibo ext 50% and failed. Did not hold the 21 SMA. Midpoint still above 10 SMA (barely). No daily 3LB changes.
GOLDBearish short day. Confirmed doji to the downside. Back below the 89, 55, 21 and 10 SMA's. No daily 3LB changes.
EURUSDBearish short day. Midpoint is still below the 10 SMA. Next fibo level of 1.2935 is back in sight. No daily 3LB changes.
BACBearish long day. Three previous days all show heavy selling pressure. Couldn't hold the fibo ext 85.4%. No daily 3LB changes.
Morning Audibles 3.30.10 - P2, The Run of Forrest Gump
On just about every financial blog I read, the constant topic seems to be, "How long will this bull run continue, seemingly unabated"? I've been known to ponder the same question from time to time. My ponderer is sore. So instead of trying to figure it out on charts or anything (which enough, ahem, "experts", have done already). I thought I'd illustrate what seems to be the path we're following in a metaphorical sense (both in terms of possible duration, and underlying motive for doing so).
Everyone remembers Forrest Gump running across America. Most famously, he ran across America back to back several times over a span of three years to get over the heartbreak of Jenny's leaving him.
Everyone remembers Forrest Gump running across America. Most famously, he ran across America back to back several times over a span of three years to get over the heartbreak of Jenny's leaving him.
