What can one say to market action such as this? That we were “cautious” about the reality of the economy? Investing based on being realistic was a dismal failure.
I’ve said many times that the entirety of the market rally, especially the rally from QE2, was fueled by free FED money. That didn’t change the endless parade of market prognosticators who told you–with a straight face–that the markets were telling you how strong the economy would be. Just suspend your disbelief and “listen” to what the market is saying. We know how that ended in the year 2000 and in 2008 and now in 2011.
Everyone knew and knows the newsflow but the stock markets action has had the remaining market participants hypnotized. The “Just Buy the Dip” crowd had won so many times that very few would bet against it, only the most secretive and deepest pocketed investors who could take the egregous losses doled out by the ever-levitating equity market. Payback is a bitch.
The latest government “crisis” certainly did not help the economy or the markets. And most everyone I know said that the market would rise once it had passed. It rallied for about a half hour before reversing wildly to the downside. And after about ten days down in a row, Europe is again in crisis. They are selling everything that is not nailed down, especially American stocks. Plus they–and everyone else–is buying gold.
And Ben Bernanke is nowhere to be found.
After spending trillions of newly minted dollars to “save” the system, Uncle Ben is incommunicado. QE3 is just a pipe dream. The massive stimulus that saved banks, the investor class and the markets–at the expense of everyone else–has been squandered. There is no “trickle down”, there is only melt-down. And equity investors are again left holding the bag.
It’s not like the signs weren’t there. They were. I did a hit declaring the Bull Market is Dead that aired on June 6. But I felt, and my work showed, that it died in May when it became clear to me that the stock market was in distribution. Nevertheless, the stocks that everyone loved kept moving higher. And just when the market looked like it would finally succumb to reality, we were surprised with the Magical Mystery Rally just as QE2 ended. What a pump and dump that was!
My long standing target was SPX 1200-1220 sometime in August. We are now here and there is wholesale liquidation and panic as we enter the tenth straight day to the downside. Investors are scared of another real crash. Certainly the fundamentals suggest that it could happen. But there has been tremendous damage and we are very close to the end of this phase of the correction.
I’ve said many times that the market is the same as last year only with worse fundamentals and 20% higher. That ends now that we’ve given back half of the gains from QE2.
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You nailed it bro.
big picture works. thanks
you called it, SB
appreciate it
crash, boom, bam ! it’s almost done,can we put a fork in it. what now, bernanke needs to send all the folks a 50k check,we need stimulating.
What the hell the gaz price is doing at 3.70 in Boston with a barrel @ $88 ???
So what is your reason for buying this market since you are so bearish?
Reaching my target and the death of equities…
“What can one say to market action such as this?”
You can say “told you so…”
never…
Kudos, your calls or should I say puts have been on the money. Thanks for expressing everything a fundamental investor feels about reality and this .gov pump and dump, well said.
gotta look past the hour to hour to get mentally “right”
nice call Scott
you dont think we can get pasted further from here with a crappy jobs number?
part of me thinks they will fudge to move the market higher, and the other part says print a junk number so that QE3 has the possibility of coming to fruition.
with that said, if QE3 were to come out would the market really rally? evveryone is expecting it and the usual result. Yet when you spoke to any money manager spring of last year and continuation of QE would be perceived as a failure, yet markets rallied.
nasty times nasty times.
everyone is too used to big, giant moves. periods of low volatility traditionally follow periods of high volatility…
Scott is this blood buyable at this time.
BUY ONE-QUARTER POSITIONS DURING THE 2PM MARGIN CALL HOUR. We can still fade and test SPX 1200 but there will be a decent bounce there
Sir are you really a prophet?
hah lol
Damn you said “Everyone is expecting a bounce therefore it will go lower after the debt deal”. What did I do, I bot more AAPL and went shomping. Never again will I laugh at the prophet.
Could I have been more clear? No way…
Sometimes wrong but seldom in doubt!
Scott, DO NOT modulate. It’s better when you don’t.
Scott, planning ahead for the shape of the market and call options, what’s your opinion:
Prices had to be lower to justify QE^n for the next Jackson Hole iteration (what inflation?)
The July 4th 3 day weekend rally call was epic, and I am calling a Labor day rally IF we stay lower this month, B.B. makes statements affirming support while taking it to the Hole, and the PPT suggests oversold leading up to the weekend. This is the setup I’m looking for, and we rallied hard going into labor day last year.
Bankers still firmly in control and funding O’s re-election campaign – this means they need to support the market if they want him to win in November next year. Price is what they say it is with round tripping between computers. I think they will want to start September strong, need end of quarter to be somewhat positive).
What say you?
too much thinking for me. I’m just going to “listen to the market”. joking. I’m going to anticipate based on MY market work…stay tuned!
i cant see the bernanke turning on the inflation machine right here right now will do anything positive.qe wont do it either. will we deflate to bring all prices of all goods down? i mean what other way is there. unemployment is higher than they say it is, no one has any extra money left,kids go back to school shortly, parents need money to get the kids ready.stuff would have to become so inexpensive, and remain there for a long time till companies feel that it’s so cheap maybe they can hire again. what else is there, just short of ben really giving us money directly to spend.it may sound far fetched,but how else can you put money in the hands of the real people and not the banks,to start turning the tide…..
Awesome market insights and great call. You rock.
You, sir, have gained a great deal of respect. You absolutely nailed this, I just wish I’d drowned out all the other bullshit and listened.
Thanks. I seem to “gain respect” after major calls like this summer. And like last summer before that…
Then you get to spend nine months at a time having that respect chipped away at by some little jackass with two years investing experience.
Broadway Goes to Washington with a Zero Premium Options Trade
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With kind regards,
your membership will be increasing very soon scott. Thanks for your daily wisdom.
I actually made some coin today.
Awesome call! You have been right on the money. Good to know that a firm grasp of reality and fundamentals trumps the buy the dip greater fool methodology that so many trumpet.
there are a lot of technicals thrown into the assessment of reality…
I don’t doubt that. I just think your kind of analysis is so much more helpful than the trite “price is king”, “trend is your friend”, “buy the dip” pablum that gets regurgitated by most traders.
Scott – you are the second person in a day who has said to me that 1200 is giving half back since the start of QE2, but I see that QE2 began on November 12 when the market was around 1200. It seems to me we have given all of QE2 back. What am I missing?
You CANNOT think about when if officially started. You have to begin at the rally after the Jackson Hole “leak”. That was the first week in September. Take the measurements and then tell me what you’ve found
yeah ok – 1200 is halfway between 1150 and 1350. 1150 the first week of September. But that says a lot too, doesn’t it? The actual pomo does not move the market….the news does. But from the moment they started actually adding the money in November….that was 1200…and poof – gone! It reminds me of that Southpark video. Poof! They may as well have taken that money and flushed it down the toilet.
Scott,
The vindication must feel great.
I’ve been with you all along, great work. I believe we retest the 1020 before any substancial SUSTAINED bounce, and even then that bounce will be short lived and has a 50% chance of not holding 1020.
Think 1970’s; we likely trade between 950 & 1250 for the next 2-3 years. The emperors (Trichet, Clam) truly have no clothes; there are no free lunches; bring on the pain.
Jim
No, “vindication” seldom feels great, especially when one has bearish proclivities. In fact, I am rather nervous that the “chickens will come home to roost” and that won’t be good for anyone…
LOL you’ve been calling this since November I been saying BUY BUY BUY until the end of July*….I freaken nailed it…..where is my credit???
Any reason the PPT fundamental score was BUY if your last sentence is true ?
Scott-
What is the 2p margin call u reference above and what effect does it have on the market? thx