What's going on with the US stock market lately?

[Phelonious Ponk]

I guess the big difference between you and I, Roger, is that you may think the markets are more competent than the fed. I personally think there's nothing free about them and the prices are being set by bi-polar, schizophrenic gambling addicts. The Fed may, in it's own twisted way, have some notion of the good of the country in mind. That gives them a slight edge, in my view. Very slight.

Tim

 

[RogerD]

I guess the big difference between you and I, Roger, is that you may think the markets are more competent than the fed. I personally think there's nothing free about them and the prices are being set by bi-polar, schizophrenic gambling addicts. The Fed may, in it's own twisted way, have some notion of the good of the country in mind. That gives them a slight edge, in my view. Very slight.

Tim

We agree far more on this than you think. I as a trader can blow up far easier, trying to go short in this Fed induced bubble insane market. My job is to recognize abnormal price patterns in the excess. The Fed has done a wonderful job at creating several of these situations historically. These bubbles will at some point end,but the Fed looks at it as creating wealth. Not the kind of wealth made by hard work but by the stroke of a button. All experiments of easy money end badly, I'm just waiting.

My work tells me a top is in place on Monday. Is it "the" top? Well in a bubble, at this extended point the risk is minimal,that it is not.

George Lindsey's 3 Peaks and a domed house. 23 is the Dome in the S&P 500 and Apple's

http://screencast.com/t/T9o5XsxvLhPp

Apples Top and 3 peaks,domed house

http://screencast.com/t/xKO1sQKTx

Anybody that thinks it will be different this time is a fool. This is all a replay of the 1920's as the Federal Reserve started QE in 1927 and blew a stock market bubble that burst in '29. The only difference is that Benjamin Strong is now Ben Bernanke and he is a so called scholar on the Depression and it's causes. He is truly a Idiot Prince.

"There was extensive money supply growth...massive supply build up by industry...rampant speculation...ending with a parabolic stock market blow off...all for a presumed demand that was nearly nonexistent.

How could things have gotten so out of whack?

To answer this question, let's look to John Steinbeck...

"The bank is something more than men, I tell you. It's the monster. Men made it, but they can't control it." John Steinbeck, The Grapes of Wrath

That's right, the banks, starting with the Federal Reserve, caused a massive -- credit induced -- spending binge.

The Federal Reserve Governor at the time, Benjamin Strong, administered what he called "a little coup de whiskey to the stock market." He sold the dollar, purchased hefty amounts of Treasuries, and extended cheap credit to the masses.

Unfortunately this "little coup de whiskey" produced a drunkenly distorted economy. And when the bills came due the banks could not recover their loans. And depositors lost their savings forever."

http://www.greatdepressiononline.com/archives/day1of7.htm

 

[Phelonious Ponk]

We agree far more on this than you think. I as a trader can blow up far easier, trying to go short in this Fed induced bubble insane market. My job is to recognize abnormal price patterns in the excess. The Fed has done a wonderful job at creating several of these situations historically. These bubbles will at some point end,but the Fed looks at it as creating wealth. Not the kind of wealth made by hard work but by the stroke of a button. All experiments of easy money end badly, I'm just waiting.

Not much hard-earned money left in America as we pass building things off to cheaper labor markets, and pretend there's no end to making money from merely moving money around. The financial markets make me think of Richard Thompson's song..."You dream too much, and it's gonna end bad...."

Tim

 

[RogerD]

Not much hard-earned money left in America as we pass building things off to cheaper labor markets, and pretend there's no end to making money from merely moving money around. The financial markets make me think of Richard Thompson's song..."You dream too much, and it's gonna end bad...."

Tim

+1

 

[andromedaaudio]

http://blogs.marketwatch.com/thetel...bet-on-the-sp-500-to-the-tune-of-1-3-billion/

Off course this is a hedge position , but a big autumn drop might be possible (or not ) , maybe will see a topping market this year , with more tapering and possible interest rate hikes

 

[rrr]

http://blogs.marketwatch.com/thetel...bet-on-the-sp-500-to-the-tune-of-1-3-billion/

Off course this is a hedge position , but a big autumn drop might be possible (or not ) , maybe will see a topping market this year , with more tapering and possible interest rate hikes

Yeah, the press is buzzing with this news this morning but this reporting period is more than six months old. Take a look at the open interest in the SPY and see if you can find the "bulge" from a $1.5 billion put position. I can't see it, so he may be out of the position by now. (We've had a pretty good run up which would have hit long put positions pretty hard.)

 

[BobM]

If you look at the chart of the S&P500 for the last couple of months you will clearly see a head and shoulder pattern emerging. The most recent shoulder has formed and many would say that we actually passed above that point. Therefore the "downward" move off the second shoulder is avoided.

However, it is entirely possible that we could be forming a double head, topping at 1850 resistance level. If that happens, then we back off below 1800 again before starting another shoulder, watch out. That could coincide with a typical spring/summer selloff.

Still, the longer term prognosis for the economy and corporate profits is still good, so I would use any prolonged dip as a buying opportunity, or at least a good time to rebalance/realign your portfolio for another rise.

 

[Barry2013]

I am reminded of a true story told to me by my economics tutor during the run up to the 1929 crash while studying economics many years ago.
The editor of a mid western local newspaper could see the crash coming and tried to alert his readers to it by printing in the paper a spoof prospectus inviting investment in a cat and rat ranch. There was a thriving market for cat fur at that time and the supposed investment was based on feeding the rats to the cats, killing the cats and selling their fur and feeding the cat bodies to the rats. The running costs would therefore be negligible, the returns accordingly high and investors would make a mint.
On the day it appeared he walked as usual to his office and was astounded to find a huge and winding queue up to his newspaper office. It comprised a very large number of people who wanted to invest immediately in this supposed enterprise.
I suppose that is a pretty good example from the past of what we now call irrational market exuberance but I think I prefer this story

 

[andromedaaudio]

1988 SP 500 we could have the 24 july double top here and go down , interest rates increase in the near future ???

 

[andromedaaudio]

This " could " be a topping pattern i might gamble a bit

http://adnbeursanalyse.nl/Indices/S&P500-grafiek.html

 

[Barry2013]

1988 SP 500 we could have the 24 july double top here and go down , interest rates increase in the near future ???

Two members of the Bank of England's 9 person Monetary Policy Committee earlier this month voted for a quarter per cent interest rate rise. Latest inflation figures 2 days ago came in below expectations. MPC plans are very opaque. Opinions split on rise later this year or February next against background of 3.2% growth in UK GDP and fast falling unemployment.
Nationally a good picture but internationally it all looks very fragile. Big questions about the outcome and consequences of ECB bank stress tests and where the US Fed is going.

 

[Whatmore]

global yields are low, credit spreads are at pre-financial crisis levels, there is no volatility so where are the returns coming from? They are coming from riskier and riskier investments. More leverage...
It will end in tears

 

[BobM]

PE's are historically at reasonable levels. I have no doubt that there could be a retraction at some point, probably when the Fed is completely out of their buying spree and before they actually adjust rates upward (market anticipation). Usually rising interest rates are bad for the equity markets and bond markets alike.

But after the initial shock of them starting to rise, financial institutions and banks will be better off than before, being able to play a larger spread between loans and borrowing. So profits will rise and the market (for them at least) will go up. The US economy is actually in pretty good shape, so I expect the same after an initial drop. Emerging markets have also dropped a bit, but come back to just below reasonable levels. I think they will also return after an initial reactionary drop.

So my advise is to wait for the dip of 5-10% as rates are adjusted upwards and use it as a buying opportunity. I think there will be some resistance as the S&P nears 2000 in the near term, but if it breaks through that number it could easily go up another 50-100 points on momentum. Probably a good time then to take some profits and wait for the pullback.

Lower rates, weak results from retailers and plunging commodity costs (probably due to a strong dollar and not weakness in the economy though) would suggest a broad advance in the market is without merit. Typically, they're all signs of a slowdown. Therefore, you may be inclined to sell. But business is relatively strong across the board in the US. Job's are available for the recently unemployed. It's jobs for the long term unemployed that need improvement, and that seems to be occurring as well in the recent jobs report.

Is this a bubble or a late term move in our 5 year old recovery? I'm betting on the latter but keeping an eye on the former. But for right now I think the fundamentals (remember those?) are supporting this move up. As the overly supportive economic policy is unwound there should be a return to fundamental analysis again, and rationality. Then we will see, but that is probably 6-12 months away IMO.

The US equity market was up 30% last year. Did you participate or were you too scared? Run with the bulls and follow the crowd if you realized these gains. If you are not in it then indeed I would be more cautious about getting in at a top, but if you have those gains from last year and this year so far then you can sustain a bit of pullback until things become a bit more obvious. Over the last 5 years, every pullback has been immediately followed by a dead cat bounce back up. Opportunities for getting in have abounded. Can it continue, we'll see. But conditions for market gains are promising at a time when investor psychology has been so negative. That is a contrarian indicator that things are going higher.

 

[andromedaaudio]

whats it gonna be , small correction and then up again like today or is the market heading for more down side later this month ??

 

[andromedaaudio]

The market cant break really through the 1900 area S & P. which is support /resistance
There are quit a lot saying the market could face a big sell off soon , as the fed easy money policy is coming to an end we ll see.
I know , i know a stock marketcrash is predicted just about every year

 

[BobM]

I think we're seeing a bit of a dead cat bounce today after 2 bad down days. I think we will break down again later this week. There's a good bit of support at about the 1870-ish level as we saw, but if it breaks through that then it's down to 1815. That would just about be a 10% correction from the top of 2012, and probably a great buying opportunity.

 

[ack]

The market cant break really through the 1900 area S & P. which is support /resistance
There are quit a lot saying the market could face a big sell off soon , as the fed easy money policy is coming to an end we ll see.
I know , i know a stock marketcrash is predicted just about every year

A correction has been coming for a long time; historically, October is brutal (except for last year); I see buy triggers at DOW 16000 or S&P 1800; volatility will continue until the November elections here, then new hope will lift up the markets again if Q3 earnings are as good as expected - a good catalyst for that will be Amazon announcing on Oct 23. Apple has proven resilient, therefore I would expect more people to flock to true performers... Fundamentally, the economy here is in a very good shape, but on the other hand, Europe is now running a temperature again; so I expect news from China to influence direction. Right now is the time to day-trade carefully, not plan long-term yet.

EDIT: As I wrote this, Intel beat expectations - a good sign, hopefully of more to come

 

[BobM]

3Q earnings (so far) have been decent enough. They are growing. Those fundamentals (remember fundamentals?) are still fairly strong, but the market has not been trading on fundamentals for the last 2-3 years. It's been trading on news, and the news out of Europe, out of Africa, combined with falling oil prices and Saudia Arabia saying thay are expecting to keep them low for the next 2-3 years (I personally think this is a US plot in conjunction with Saudia Arabia to put further pressure on Putin who needs high oil prices for his economy), are causing this selloff.

If you buy in here I believe you will be patting yourself on the back by year end for being a smart trader and getting in low.

 

[andromedaaudio]

no i only trade options . i expect a big sell off and i ll be in the calls at november expiration its a gamble off course

 

[edorr]

A correction has been coming for a long time; historically, October is brutal (except for last year); I see buy triggers at DOW 16000 or S&P 1800; volatility will continue until the November elections here, then new hope will lift up the markets again if Q3 earnings are as good as expected - a good catalyst for that will be Amazon announcing on Oct 23. Apple has proven resilient, therefore I would expect more people to flock to true performers... Fundamentally, the economy here is in a very good shape, but on the other hand, Europe is now running a temperature again; so I expect news from China to influence direction. Right now is the time to day-trade carefully, not plan long-term yet.

EDIT: As I wrote this, Intel beat expectations - a good sign, hopefully of more to come

Fundamentally, the economy is in a death spiral. Companies cut back and deliver earnings, not growth. Cutbacks result in reduced share of wage income, which reduces aggregate demand (which explains low growth). Surplus cash is not used to invest (we have low demand and over capacity) but used for stock buybacks, jacking up stock prices. Corporations have now become machines that directly convert wage earnings into return on capital (the biggest scam perpetrate on the middle class in modern history). Meanwhile, the market has been trading not on news, not on fundamentals but on monetary policy. Cheap money looking for yield, Tulip mania and bubble economics all over again. Anyway, back to audio...