Still it looks like the universe alignes at the 94 level, but many moves end in a great bull or bear trap, and the potential for the 900 level to be that trap is/was tempting.
we still havn't had any great giddyness.
Monday, December 8, 2008
things to look at
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16 comments:
Nice move and good to have closed out shorts last week. No question.
Seems like we are at resistance and some pull back is in order... but Asian markets are showing more strength as I type.
I cannot believe that we will break through resistance at 91 on this move.
Still liking metals and mining stocks. If we get a recovery, they will do okay and if we get another leg down, the feds will do everything to re-flate the economy.
If I had been near a computer, I would have gotten some SDS at the close... maybe it was a good thing I was busy at 4pm.
You know tony... I'm in a zen mood.
Be careful, I would treat every bounce against the dollar, or in oil or materials as a "Technical counter-trend Rally".
we need to see the economy recover before we can have inflation.
It's that 94 level that really looms dark in our future. that could take 3 days or happen tomorrow. But there is always that chance of just a slick bear trap where we are.
but 3 day up moves feel right, and tomorrow is day 3.
we shall see.
Good points. I guess I'm willing to look at the counter-trend rally as an opportunity, but I agree that great care is needed.
As I've said elsewhere, I think we may teat those lows again... not sure if you agree... but a sentiment rally for another day looks to be in the offing.
The market is now short-term oversold and I may open up some shorts tomorrow.
Renting stocks, not owning them long term. A friend has some UUP (double long dollar) and is hedging it with DRR (double short Euro); while the easy money may have been gotten already, this has been a nice play.
Seems some folks have been shorting Euro and covered on the latest ECB rate cut. Buy on the rumor, sell on the news.
I said, "The market is now short-term oversold and I may open up some shorts tomorrow. "
I meant "overbought" (obviously).
I like Teresa's call.
Funny I'm seeing Bryan's T.A. Wow, and the H&S.. which takes us to like 1050 on the spx... goodness.
but that 2 swing bear flag is TOO OBVIOUS, and everyone getting sucked into it at the 900 level, Is just the kind of market mojo the market plays.
Now I remember why I stopped listening to brian, he goes on for like 20 minutes with hedgeing. and throws out all this horizontal resistance on the 10 and 30 minute.
have you read this?
http://www.powerswings.com/reference/CAMERER_1997.pdf
what it talks about is how people use targets. and oil and materials will be the same way. Iran will need to bring in 500 million a week, they won't care about how much they have to overproduce, they will just produce till they hit the $500Mil target. and the other countries will do the dame thing. Everyone is made to produce for "global Growth", but what will probably happen is that they will all overproduce into lower demand, and it will keep driving all prices lower. Companies would rather overproduce than fire people. Managers are lazy, better to not rock the boat, than to do what has to be done.
I'll read it again... I believe that T.Lo had referenced this and I perused it a while back.
Your summary is spot on and very pertinent right now. Thanks for referring to it, I'll review it now.
add disinflation/and delevereging of every hedgfund, endowment, and other trader in the commodities trades, and still trying to call a bottom, it's like a bottomless pit.
Eventually one of the bottom calls will be correct.
Bernanke and other students of the Depression have said that deflation is fairly easy to fix: you just inject monetary and fiscal stimulus.
Keynes' great thesis was simply that monetary stimulus was not enough and Obama seems to have gotten that memo. We will have an alphabet soup of fiscal programs ala FDR and the prospect of such programs has ignited a mini-rally.
Is it sustainable? That's the $64 question. The pressures to deflate asset classes will be met at every turn with a reflationary injection of capital.
T.Lo had a big column about deflation yesterday, but I'm still stuck on her allocation of 24% gold in the Strategic portfolio and the allocation of TIP in the Core Portfolio. Seems like a disconnect if she really believes deflation is an evil that cannot be fixed.
Well, Keep after it, you and everyone else trying to bottom pick materials will get it at one point.
Hey, I still believe the lows will be re-tested, I'm just thinking out loud on the deflation/ inflation meme.
Inflation is a harder nut to crack than deflation and it seems that the fed, ECB and now Congress are moving heaven and earth to alleviate the deflationary cycle. Will they succeed? Will they overshoot in their usual incompetence?
The commodities deflation is a multifactorial issue with oil, ag and metals all being affected to various degrees by various influences. Metals seem oversold, but that can be corrected in one or two days. Oil and the "income requirements" of petro dictators is a completely different model as you pointed out.
Oil in the short term may continue to drop, but there is no doubt that demand will kick back in eventually... but that could be months.
I'm just trying to find trades day to day, but it does serve also to look at the bigger picture.
Lows may be tested, but I could see the S&P bounce up against this resistance for a couple more days or even longer. No? Not sure what EWT tells us.
The easier trade for that is to bet disinflation until we get economic growth.
Remember, people have been trying to bottom pick Financials for over 2 years, and materials for only 6 months.
I was reflecting on Chanos, and some of the smart short sellers, who are looking for "low hanging fruit"... I always think that is where I'm looking to put my money to work. I'm better in cash waiting for those opportunities.
The great short Might be in treasuries. one could look at the portfolio and say " Teresa is saying that the move in treasuries is over." or you could also look at it like " the risk in treasuries is more to the downside, than to the benefit is to the Upside.".. and with TIPS, though still deflation, in a well diversified portfolio"All irons in the fire". Preparing for inflation can start now.
What we are looking for is "the new Bubble", and it's improbably the last one.
but yes, there is some inflation risk... I would suggest it's down the road.
T.Lo has a new podcast and it covers some of the themes in this comment thread. (Sorry I keep using this comment thread, but I'm at work and cannot access your blog except through Google reader.)
She addresses the commodity deflation and especially oil. More importantly she shows a potential bear flag-- as you mentioned-- in the SPY.
I found it educational; funny because she brings light to the fallacious meme that the fed is "printing money" to combat deflation and therefore inflation will "definitely" be a problem down the road. Makes sense to me now... We are pretty far from an inflationary "holocaust" as Jimmy Rogers has said.
She still does not give a reason for the high gold and TIP allocation in her portfolios, and while I understand the "all irons in the fire" idea, 24% seems higher than just an iron. Perhaps it's a risk reward theory and TIPs are pretty oversold at the moment.
It's all good, I'm beat. I hate starting new short positions. I'd much rather buy weakness on themes I believe in. That and I could be underwater in the futures trading in the morning with only a 200 pt move.
The thing on the Macro charts.. that I "believe in" and it's awful to say "Believe".. since the road is paved with dead beliefs.
But, most reversals are preceded by a Large Bear or bull flag, and for us to finish this down move with a nice Bear flag, and one more low is just art.
but Who knows...
there was an Email she sent about how half the brokers our there talk in hedges just to avoid accountability... there is a fine line between that and speaking in probabilities.
I don't know... I'm beat.
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