Thursday, August 27, 2015
Fools
Markets rebound as happy central bankers do what they can to remove corrections from the world financial instruments. The world loves up and the thoughtless fools who own stock are happy again. Life is good and down is bad. Fools are happy and usually own stock.
Tuesday, August 25, 2015
Slow Death Ahead for Buy and Hold
Heard many stories today how people bought the break and made money. Every financial adviser telling people to stay the course and think long term.
Well, it is not the hard breaks that kill the most, it is the death by a thousand cuts for the buyers. This hard break may be the the arrow pointing to future long term direction.
Well, it is not the hard breaks that kill the most, it is the death by a thousand cuts for the buyers. This hard break may be the the arrow pointing to future long term direction.
Monday, August 24, 2015
Market Loses Again
No rescue from Fed speak although I am sure they are watching. The Fed has begun the weaning whether intentional or not so the markets are running all over their ranges to find a place where it does not hurt. Interest rates are plummeting again and here we are. Short covering rallies are as vicious as the breaks and there is whole bunch of potential chatter overnight that could send markets sharply higher or lower. The 2008 pattern remains and we have actually surpassed the decline from top to bottom as we have moved -14.24% against -12.5% decline in 2008 in the May 19th to August 24 time period.
Friday, August 21, 2015
Long Luggers
Today's action was just what the long lugging, long term, reckless investor deserves. I cannot tell you how many individuals owning stock either on their own advice or by listening to their financial advisor are guilty of planning a long term just hold and rotate long stock portfolio where years of hiding get crushed in a single quarter. This passive approach is a from a world view sadly dependent on all being sweet,and where one believes they can continue to win by picking door number one. That math doesn't work. Wise up.
AAPL has had a lousy spell here. They have all the money in the world but so what. They have skilled competitors and the law of substitution is starting to catch up. Love me forever in trading and investing ends up looking awful on the P&L.
Downward
The 2008 scenario continues on the pattern data set. Market is running deep discounts currently which are a bit rich for Jackson Hole information unknowns for next week. Liquidation however is the key today so any bid will do. Market has had a tremendous run over the last 7 years and this correction is still a mild one. Twenty thousand invested on the last trading day of 2014 in each one of these stocks gets you this as of 14:30 central today.
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Friday, August 7, 2015
Deflation Leg Down or Fed Saves The World
Jobs numbers were in line with expectations and increased the chance of a September rate hike .
So if deflation accelerates, it will be the ugliest and cruelest of worlds. Equity prices, certainly are the last liquid dog standing, would be vulnerable as the big dogs will be getting out.
The 2008 pattern remains intact though with less volatility . Seven years ago we were over 10% off of our May highs and today we are around 2% off of them. In 2008, the market began its next leg down into the second week of August and slowly sank through September and then fell apart.
If the worst of deflation can be avoided and a 4% to 5% top to bottom correction is all the S&P500 can manage, then the Fed will have saved the world. Any equities bloat created by zero interest rates policies will be absorbed even in a slowly climbing rate environment because equities will have provided real returns in a debt deleveraging world.
Despite the particular evils of inflation, it was always the middle classes way to participate in wealth creation. Deleveraging deflationary economies provided few opportunities to the middle and their major asset real estate becomes unsalable.
So if deflation accelerates, it will be the ugliest and cruelest of worlds. Equity prices, certainly are the last liquid dog standing, would be vulnerable as the big dogs will be getting out.
The 2008 pattern remains intact though with less volatility . Seven years ago we were over 10% off of our May highs and today we are around 2% off of them. In 2008, the market began its next leg down into the second week of August and slowly sank through September and then fell apart.
If the worst of deflation can be avoided and a 4% to 5% top to bottom correction is all the S&P500 can manage, then the Fed will have saved the world. Any equities bloat created by zero interest rates policies will be absorbed even in a slowly climbing rate environment because equities will have provided real returns in a debt deleveraging world.
Despite the particular evils of inflation, it was always the middle classes way to participate in wealth creation. Deleveraging deflationary economies provided few opportunities to the middle and their major asset real estate becomes unsalable.
Friday, July 24, 2015
FOMC Raises Rates Watch
The Goog rally of last week looked like it might shield the rest of the market by forcing more than a short covering rally, but the markets still seem to have that fatigue factor mentioned on an earlier post. On the pattern side, there is action much like that of 2008 where the market topped in May and slid until March of 2009.
Fed could raise rates in September but might be put off by a sharp selloff in equities since the world central bank's actions have to date been used as a function of equity price protection. Equity prices are putting in some discount in front of Wednesday's FOMC announcement just in case Yellen decides now is as good a time as any to raise rates. Selling could last through Monday's trade before the Fed watch begins. Commodity prices are also in a raise cash sell off pattern as prices continue nervous liquidation.
Fed could raise rates in September but might be put off by a sharp selloff in equities since the world central bank's actions have to date been used as a function of equity price protection. Equity prices are putting in some discount in front of Wednesday's FOMC announcement just in case Yellen decides now is as good a time as any to raise rates. Selling could last through Monday's trade before the Fed watch begins. Commodity prices are also in a raise cash sell off pattern as prices continue nervous liquidation.
Wednesday, July 15, 2015
EU Central Bank will Fail on Collecting Anything in the End
The Greece deal outlined on Sunday will never lead to repayment to the banks and unfortunately at some point the weaker links in the EU will have the same economic failure as the Greeks. The EU will shrink to a small collective with the fallen members making their way as outsiders. The Euro was a currency created as a pipeline for the EU central bank to originate loans to members on one hand and to more easily make claims on assets on the other. Economic dramas will continue to erode the EU in what was basically a flawed idea based on a concept that a common currency would magically be able to hold together so many uneven nations.
As for Greek leadership, they are really bad at playing the decision game. If the Germans would not modify their rigid position then Greece had no choice but the default and play out the hard end. They can only take solace in that the game they are playing has few winners.
As for Greek leadership, they are really bad at playing the decision game. If the Germans would not modify their rigid position then Greece had no choice but the default and play out the hard end. They can only take solace in that the game they are playing has few winners.
Thursday, July 9, 2015
Market Fatigue
U.S. indexes may be too tired to take out the May highs. Then if so, any rallies are just pauses before the next break and the the 2008 decline pattern is still intact. Back then the markets continually provided opportunities to sell as
the bulls refused to die. Eventually the battle lines became a rout
however as it all descended into year end lows.
Now pattern recognition has its place in trading and certainly many from HFT to more passive minds have attempted to deliver returns based on mining the approach. But is usually disappoints. Big data's snooping approach in the area has been a big dud so far but the tweaking will undoubtedly continue.
So Greece and China may just represent a part of a story of fatigue. The former tired of lifting bad paper and the latter exhausted from central planning.
Now pattern recognition has its place in trading and certainly many from HFT to more passive minds have attempted to deliver returns based on mining the approach. But is usually disappoints. Big data's snooping approach in the area has been a big dud so far but the tweaking will undoubtedly continue.
So Greece and China may just represent a part of a story of fatigue. The former tired of lifting bad paper and the latter exhausted from central planning.
Tuesday, July 7, 2015
Greece, China, and EU
Markets banging around as Greece and surprisingly to a lesser degree, China, make all equities holders a bit uneasy. China using all the tricks they tried in the US at the time of the crash of 1929. Galbraith's book "Great Crash 1929" is great reading and illustrates the absurdity of orchestrated efforts by brokerage. You can bet these same folks were talking about stopping the declines by raising pools of funds and at the same time selling theirs through someone else.
Greece has a bit of a different significance. It represents the ability of banking in Europe to keep in place a system where the top has no risk and everyone else has to step out. Greece should play the banks and look for relief through hard talk regarding the weak link now being created by bank hardliners. Shine a light on the next stumble and its devastating potential to the EU. They will pay to shut you up.
Greece has a bit of a different significance. It represents the ability of banking in Europe to keep in place a system where the top has no risk and everyone else has to step out. Greece should play the banks and look for relief through hard talk regarding the weak link now being created by bank hardliners. Shine a light on the next stumble and its devastating potential to the EU. They will pay to shut you up.
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