We are about to enter a pretty odd time of year for the indices, where junior traders and trade at home Dads run rampant, moving stocks on thin volume. I do not expect the market to make any bold statements, for the remainder of 2008.
There will be many false breakouts, accompanied by incessant rumors of insolvency. But, nothing will be resolved until early 2009.
In my estimation, the best way to protect assets and make some money in a thin December tape is via intra-day trades and/or long/short strategies. As bad as today looked, tomorrow can look glorious, with robust gains in banks, oil and tech. However, don’t expect much follow through.
We’re in a fucking meat grinder tape. This is the sort of market that will destroy year to date gains, inside a short week. My approach is simple: keep the short positions static and trade around them with longs. In other words, I will build up positions in SRS, SKF, FAZ, REW and maybe even a little FXP, down in the $30’s (why the fuck not?), while making advantageous trades in individual stocks/ etf’s, like KBR, JPM, TNA or FAS.
You get the point.
Like last year, I expect the “homo hammer of certain death” to reign down equities, as if Dennis Kneale’s face represented the market, or some shit, and some binged out, over-caffeinated maniac was just hammering it— until its ugly mug turned to dust.
NOTE: The PPT is pretty much neutral right now. Technically, the market is a sell. But, there are numerous sectors that are still in bull mode.
The Fly is God.
Fly, meat grinder? WTF? The recent tape is like child’s play compared to October and November.
Wood:
I disagree. It has been more difficult for me to read, with the idiotic 300 point declines, followed by reversals.
In Oct, it was straight down.
I can understand that.
I really can’t understand the idiocy of people putting money into short term bills at negative rates. sure there are funds that have to do that.
However those that don’t and are doing so have been overdosing on retard pills. Bank deposits offer equal risk. Yes, the guarantee is limited however these days banks are becoming an arm of the government so bank risk is basically equal to bond risk.
This market’s milkshake does NOT bring all the boys to the yard.
Did you see Dennis Kneale without his glasses on that one day? He looked like that Cloverfield monster.
This deal better fucking finalize, I’m tired of long plays.
bold call ovah heah
http://xtrends.blogspot.com/2008/12/dow-to-test-5000-5500-range-in-two.html
meh, this whole thing is shenanigans. i can already see these clowns sending my FAZ/meredith trade underwater, even after she displays confidential documents smuggled from JPM showing that they, along with BAC and C, are bankrupt and never really received a dime from the us gov’t.
Fly, I think you have better places to put your money than FXP. It’s not wise betting against the Chinese government set on propping up share prices.
Aris: Agreed.
The futes are up big, Asia is up huge. Don’t these dummies know that bailouts are more fucking bad news?
Late night thought:
Does anyone else find it odd that one day after the Governor of illinois threatened to ban BAC from doing business in his state, that fucker was arrested and pretty much executed, all in one day?
Don’t fuck with the banks, else they’ll kill you.
Why have positions in both the 2x and 3x (SKF, FAZ) at the same time? Wouldn’t it make more sense to simply buy more of one?
Why not?
I don’t always drink beer…
…but when I do…I prefer Dos Equis !
————————-
Stay Thirsty My Friends !
.
Electronic Arts gets it good from citi tonight:
Electronic Arts Inc (ERTS)
Dead Stock
? “Stuck in the Penalty Box — …” blah blah “…We believe ERTS is entering another period of negative earnings revisions with no positive catalysts on the horizon which will likely keep the stock in the penalty box until it can show sustainable positive earnings leverage. “…
Downgrade to Hold, TP to $21 {from $31} (or 18x CY09 EPS of $1.17). Hold/High Risk 2H
from Buy/High Risk
they remain buyers of ATVI
Like last year, I expect the “homo hammer of certain death” to reign down equities, as if Dennis Kneale’s face represented the market, or some shit, and some binged out, over-caffeinated maniac was just hammering it— until its ugly mug turned to dust.
I sense…. much… anger…
_______
HOO nice call on the takedown of the Gov, can put that one down with Spitzer saying he was going to investigate 9/11. Correlation prolly, bad actors just crap cow pies like that. Thanks for gold words
Tomorrow’s rally brought to you by your latest government ‘bailout’. How predictable. I thought this market was forward looking – who the f*** didn’t see this coming? Please let the homo hammer hit this market soon.
The journal has an article about Bill Miller –
http://online.wsj.com/article/SB122886123425292617.html
Use the Force!
Search your feelings!*
Then, go long, Luke!
________
*(“search your feelings,” — jeezus is that schmaltz, circa 1976 or like, what? lol!)
_____
hahaha ‘jakey wan kenobi’
Fed Weighs Debt Sales of Its Own
http://online.wsj.com/article/SB122888021757894023.html
Holy Cow Batman, the world might be changing again…. This should get Rick Santelli all fire up again.
Fly? Are you there, Fly?
(Fly comes to the door)
Fly, I want to ask you something.
(Fly looks up as Jakey-Wan waves hand in front of his face)
Fly, you will purchase a new laptop for your faithful servant, Woodrow.
(waves hand again)
________
Buckeye — don’t get that. Can’t they just print the damn cash? What’d they do? Run out of ink?
______
Can I come out of the Funnel yet? It’s dark in here.
So this is what it’s like after 10:00 PM.
Jakey:
They can and have printed cash … this might be the Fed thinking a couple of steps ahead (and floating trial balloons)
Sorry for the long post. I couldn’t get the link to work.
Love the use of the word “horrific” in this article. So “British”.
By Patrick Rial
Dec. 10 (Bloomberg) — A global stock slump may have further to go, according to Tobin’s Q ratio, which compares the market value of companies to the cost of their constituent parts, CLSA Ltd. strategist Russell Napier said.
The ratio, developed in 1969 by Nobel Prize-winning economist James Tobin, indicates the Standard & Poor’s 500 Index is still too expensive relative to the cost of replacing assets, said Napier. While the 39 percent drop in the S&P this year pushed equity prices below replacement cost, history suggests the ratio must sink further as deflation sets in, he said. The S&P may plunge another 55 percent to a trough of 400 by 2014, the strategist said.
“Things have always looked absolutely terrible at the bottom,” said Napier, Institutional Investor’s top-ranked Asia strategist from 1997-1999. With deflation “the value of assets falls and the value of debt stays up, then equity gets crushed. The results are always horrific.”
Shares have fallen this year as the worst financial crisis since the Great Depression caused almost $1 trillion of losses at institutions around the globe and dragged the world’s largest economies into recession. The MSCI World Index has tumbled 44 percent in 2008, set for the biggest annual decline in its four- decade history.
Bear-Market Scholar
Napier, who teaches at Edinburgh Business School, based his S&P 500 forecast on the Q for U.S. equities as well as the 10- year cyclically adjusted price-to-earnings ratio, another measure of long-term value.
Before the trough in 2014, investors are likely to see a so-called bear market rally for the next two years as central bank actions delay the onset of deflation, he said.
The Q ratio on U.S. equities has dropped to 0.7 from a peak of 2.9 in 1999, and reaching 0.3 has always signaled the end of a bear market, said Napier, the author of “Anatomy of the Bear,” a study of how business cycles change course. The Q ratio for U.S. equities has fluctuated between 0.3 and 3 in the past 130 years.
When the gauge is more than one, it indicates the market is overvaluing company assets, while a Q ratio of less than one signifies shares are undervalued because it is cheaper to buy companies than to build them from the ground up.
At the end of the four largest U.S. bear markets in 1921, 1932, 1949 and 1982, the Q ratio fell to 0.3 or lower, and history is likely to repeat, said Napier. From the 1982 trough, the S&P 500 grew more than 14-fold to the middle of 2000, when Napier says the last bull market ended.
Quantitative Easing
Measures such as Tobin’s Q ratio and a 10-year price-to- earnings ratio are “valuable tools,” said Andrew Milligan, the Edinburgh-based head of global strategy at Standard Life Investments, which oversees about $190 billion. Milligan said he is bullish on U.S. equities for now as central bank efforts to fight deflation will push the market higher.
“For those who are worried about losing much of their investment almost overnight, very clearly you’d want to wait for those signals to give a much stronger case,” he said. The bear market will have “a painful resolution, it’s just a question of how painful, over what period of time and for what parties.”
Federal Reserve Chairman Ben S. Bernanke’s indication that he will use “quantitative easing” to prevent deflation points to a stock market rally that may last for the next two years, Napier said. With quantitative easing, a tool pioneered by the Bank of Japan, central banks can stimulate inflation by printing money and flooding the market with cash in order to encourage consumers to spend.
The government’s efforts will eventually fail as ballooning government debt devalues the dollar, causes investors to flee U.S. assets and takes the S&P 500 to its eventual bottom in 2014, Napier said.
“Bear markets always end for exactly the same reason, and that is the market begins to price in deflation,” he said. “Equities will be incredibly cheap.”
To contact the reporter for this story: Patrick Rial in Tokyo at [email protected].
Last Updated: December 10, 2008 01:21 EST
Kudlow actually makes sense with this one.
A lot of people on Wall Street are praising Obama’s infrastructure plan for roads, highways, tunnels, schools, green tech, and other build-outs. But they don’t know that in 2008 alone the U.S. spent $114 billion on infrastructure, following $102 billion in 2007. Didn’t do much for growth did it?
Over the past five years infrastructure spending domestically for non-defense comes to nearly $500 billion, with another $500 billion spent on defense-related infrastructure. But an academic study from the University of Chicago argues that government spending does not stimulate jobs and growth, and in fact crowds out private investment. Infrastructure spending also doesn’t create permanent new businesses, jobs, or incomes.
What Wall Street may be missing is that only a permanent change in tax-rate incentives — such as slashing the corporate tax — will reignite investment and job creation. Governments don’t create new technologies or new risk-taking. For that matter they also don’t create the new profits that are so essential to private enterprise. In the short-run, infrastructure building appears to create jobs. But these are not permanent.
The Obama package is unbalanced by relying on this infrastructure business without any real permanent reductions in tax rates or business cash-expensing for investment. That’s why the Obama plan needs to be changed.
You can repair the US economy tomorrow by undertaking two concrete actions immediately.
I. Eliminate corporate tax to zero and have both parties sign on that it will not be changed for 15 years.
2. Declare a spending freeze in nominal terms for the same period again having both parties sign on to the pledge.
in three years time the US economy would be humming along like nothing ever happened.
Look, Fly has a kind of discipline (?) and it works for him. He is happy to be committment short and tolerate big red ink on the mark and very long time frames. It doesnt mean this (style?) is for every one.
Most of you posting are too darn lazy to find your own rules and structure and I doubt are banking any kind of coin whatsoever.
Then you get all pissed and post. And the one time in five you actually bank something, you post.
Er, thats enough home truths thanks – ed.
.
That was a very gay comment, ed.
There’s been a gentlemanly rise in Asia today. it wasn’t frantic, but had that sort of move only an educated gentleman would appreciate. Unhurried, with both the morning and afternoon sessions posting rises interspersed by lunch.
Asia strong again. Yo BearTards gonna take it again.
Volume this volume that. Would you rather go bust on Hi volume or Lo volume – makes no diff – price is king.
And blaming other market participants, Junior traders etc etc is lame. Be responsible for your own actions.
Seriously, I think we could rally til Mar, then craterage. That means 100days of pain for you Beartards rather than banking coin with a more flexible game.
.
Basically, READ TODAYS WOODSHEDDER. It says it all a million times better than me.
.
Chinese exports -2.2% compared to a projected +15%.
Fuck you and your rally till March. Get in the funnel.
http://www.bloomberg.com/apps/news?pid=20601087&sid=abgmrMVPWrQw&refer=home
Private Parts –
If you’ve been paying attention The Fly is: “more interested in being right, than making money.”
Flexible game is for bi-sexuals.
nice one Fly.
I hate when the futures are up and Im short…..makes me crazy.
I don’t care where you people live. You should all be asleep.
Fly
How exactly is China going to effect the US? It’s the other way around. China’s slowdown simply confirms the US slowdown.
What this all means is that we’re going to see all interest rate convergence at Japanese levels sooner than we think.
China has an immensely powerful monetary lever they can pull. They can reduce bank reserve requirements which are now sitting at around 12% of deposits.
China has problems but they will move as quickly as possible to internalize aggregate demand.
I too have FXP. Tho i think my timing was horrendous. It is more an eventuality… FXP to triple digits in 2009.
FAZ will start to get more buyers just for the fact that newbies see it as cheaper than SKF (when in reality the % changes are roughly equal)
RESERVE Bank governor Glenn Stevens warned yesterday growth in China may have already fallen below the critical 8 per cent level.
Most economists regard 8 per cent as the magic number for China with anything below that level effectively a “recession” and a potential trigger-point for economic and even political instability.
A significant downturn in China would be a huge blow for Australia and particularly the nation’s mining sector, which underpins the economy.
Mr Stevens told the nation’s top economists last night “China’s slowing may be part of a third striking fact” that is sending the global economy into a tailspin.
“The most striking economic fact of the past several months is not continued US economic weakness, but that China’s economy has slowed much more quickly than anyone had forecast,” he said.
“There is every chance that the rate of growth of China’s GDP is currently noticeably below the 8 per cent pace that is embodied in various forecast for 2009.”
Underscoring the deepening concern about the economic outlook, NAB yesterday tipped the RBA will slash official interest rates by another 1.25 per cent to a low of 3 per cent by March as business activity last month slumped to recessionary levels last seen in the early 1990s.
This gloomy mood was picked up by the share market yesterday with investors shunning the big gains on Wall Street to send the benchmark S&P/ASX 200 index down 27 points to 3604 yesterday, with financial stocks among the hardest hit.
Deutsche Bank economist Phil O’Donoghue said a recession in China is “not good news for Australia” in the short term.
But he is optimistic that China will bounce back and the Australian economy can manage its slowdown.
Despite his gloomy assessment of China’s present position, Mr Stevens believes Chinese authorities are moving policies towards stimulating growth after years of trying to slow its overheating economy.
“”Chinese exports -2.2% compared to a projected +15%.
ya, but the tape aint listening , Hang Seng +5.59%, Shanghai +2% today.
maybe if we shout enuff the tape will change, but i doubt it.
If we can get past 50dma (like FXI did) we go higher. If not, then not. Re: woodshedder. he wrote a good piece.
Starscream, try not to use sexuality as a way to explain trading structure or disciplines. Thats real playground stuff.
.
Investors Intelligence at extreme ?
http://www.market-harmonics.com/free-charts/sentiment/investors_intelligence.htm
Good Morning, America!
It’s 3AM on the West Coast, and that beautiful broadcast station of the nation….C-N-B-C is on the air!
To open their on-screen banter, Planet of the Apes chick just said that Dow futures were SHARPLY higher.
Not mildly,
not moderately,
but SHARP-LEE!
All the while silent…the nuclear physicist, Joe Kernan, immediately mumbled “bullshit” under his breath, in reaction (all while still kissing her ass, of course)….I wonder who she blew last night?
I am usually a positive person, but does anyone really know how fucked we are in this country right now, and for the next several years…on a financial/business/stock market level?
I mean: R E A L L Y F U – K E D??
Good god, these thin volume homo-hammer-fund-hedge-bastards are ruining what is left of American free enterprise here.
Time to tune in that FM Mexican Radio that drifts in late at night to get some honest to goodness news.
Rio Tinto puking up everything to stay viable in the mining business….
http://money.cnn.com/news/newsfeeds/articles/djhighlights/200812100427DOWJONESDJONLINE000367.htm
Got to make you think of Rio!
As a matter of fact, if CNBC keeps cheerleading the sickly +80 point Dow futures,
They need to stand up and start singing like Los Del RIO and sing the goddamn Macarena!
http://www.youtube.com/watch?v=ntNIRDa92rY
Heeey Macarena!
How is it possible that there are perky people at 6:30 am?
Surely this is a joke.
Didn’t a laptop fall off a truck somewhere in Brooklyn that can be sent to Woodshedder? It’s good karma to be good to Shed.
Back to work.
Boca
People that live in the burbs have to be up at 5.30 to make into NYC.
oh I’ve been up working for quite a while, but it’s the concept of perkiness at this hour that is faintly disturbing.
CNBC sux donkey balls. And so does Bloomberg TV. Phuktards.
Wow….
Meredith is so right on the truth.
Hurts, doesn’t it?
Let ’em buy these turd roller stocks today.
I’ll just watch.
this should be read.
http://www.marketwatch.com/news/story/Valuation-model-shows-stocks-most/story.aspx?guid=%7B8B075A43%2DA23A%2D4B6F%2DB22B%2D6A138ACE25CB%7D
Fuck Dennis Kneale and, if I may be so bold, Michelle Cabrusa Cabrera too.
-DT
Chivas
Nice article. Now a question…does todays financial crisis dwarf any previous crisis? In other words, is this time different? I think it is. I think this crisis is a game changer…which means the Ford model may now have to be tweaked or adjusted accordingly. What are your thoughts?
Pete
Pete,
the answer to your question is yes. however, it is also true that the global response to the crisis is unprecedented in terms of magnitude and cooperation. there has never been in history such a massive response on all possible fronts to a financial crisis.
financial armadeddon is the exception to the rule. often times playing the exception to the rule is a suckers game. for the time being, i choose not to do that.
I think SP500 goes to 990 by the end of the year. Too many people are skeptical and under-invested. If we rally a bit more, everyone is going to chase returns again to make their 2008 performance look less horrid. The December 1 puke was perfect because it shook out all the weak hands during this move. We can easily test the lows in the 1H of 2009, but for the next 3 weeks it’s full steam ahead.
I mean you had huge companies pre-announce horrible Q4 results, it has no impact. No surprise to the market. Everyone knows Q4 sucks.
It seems the insurers are fine till the end of year too. Auto bailout looks like it’s happening. There no huge “surprise” negative news on the horizon. Up we go.
To the FLY, just read your posts last week. That FLY is right.
I bought the close yesterday. 100% long here with a stop of a couple % lower if I’m wrong.
BTW, I just want to point out that I was neutral a day before the PPT.
DT wins again!
-DT
I really don’t know how anyone can predict anything at the moment for the medium term.
Look at these freaking market. The big news out today was not the car deal. Forget that shit as that was a done deal the day the 4 jackasses were asked how they got to Washington. The big news today is Chinese exports falling off a cliff. Now no one was expecting that and it puts the entire 8% china growht rate in play. Take a read of the Australian central bank governor’s speech today and he’s clearly bearish about china braking through below 8%. Yet the Asian markets are up. The currencies are also doing fine in terms of those rates which are a decent liquidity market such as the Euro/ yen etc.
So what to do? Normally you can say that one of the best indicators is when the markets move in the opposite direction of the news, which seems to be happening today. But it’s really hard to bet against the news knowing direction these days can turn on a dime.
I bought some Euro just below here with a stop at 1.2843 and continue to watch the blood sport in the stocks… if we see 9.50 in C I’ll sell it out.
The Big Three have a message for all a youse:
Get inna fuggin’ funnel!!
______
Chivas – Thanks. Interesting article.
Karma-Oddities are goose schtepping once’tagain.
J — I can’t believe you are a currencies trader and yet are feigning (?) confusion here.
One reason, and one reason alone for the melt up.
(hint– it’s not “not bullshit” It just comes wearing a different cloak).
_________
Jake, Too late to chase the CBL Preferred? Wait for a pullback? Waddaya think?
Jake:
currencies are really hard too at the moment, although I think the Euro wants to head a little higher. But you just take the money and run and keep the stops really tight.
DT: PLEASE spell my girlfriend’s name correctly:
Michelle Caruso-Cabrera
http://www.cnbc.com/id/15838214/
“Winner: Best cabrera’s on all of CNBC”
CNBC currently ignoring this story:
Asian trade in ‘Free-Fall’
A blizzard of grim data this week points to a full-blown trade slump across Asia, confirming fears that the region’s strategy of export-led growth would backfire once the West buckled.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3692255/Asian-trade-in-free-fall-as-exports-to-West-dry-up.html
Taiwan to PRC -42%!!!!
Flemming Nielsen, from Danske Bank, said exports from Korea and Taiwan both shrank by over 20pc last month.
“The numbers are terrible. Intra-Asian trade is in free-fall. Taiwan’s exports to mainland China in November were down a whopping 42pc.”
Yeah all this Asian trade thing is ‘old’. Look at the FXI , it doesnt care. When FXI reverses down its time to look at that stuff agian.
/
Chowder,
But explain why BHP is up 10% today. I can’t on the asian stuff.
Zenprofit,
I like my breasts to be made of flesh… apologies on the spelling error.
-DT
I am seeing a lot of comments about the market ‘ignoring’ bad news. If the market ignores bad news what does that tell you ? It tells me the news is already priced in. The market going up despite bad news is a very positive sign. If you are waiting for an all clear signal as far as the news is concerned, you will miss a big portion of the up move.
In 2003, correct me if I am wrong, the news was still terrible and the markets kept going up. People were so skeptical that they missed out on a 40% rally.
I finally sold FXP… that means everyone else should probably buy it because stuff goes up after I sell it.
The 2x inverse ETFs like FXP, SKF, SRS, etc. have been a total disaster. For those playing, you are not only betting on the decline of the respective index, but the sequential pattern of the down days. The ETFs are re-jiggered EVERY DAY to 200% negative exposure. So you have several up days in a row in the index the ETF tracks, you get DESTROYED due to the math of compounding. That’s why the real estate and financials indexes are DOWN HUGE YTD, but SKF and SRS are like flat on the year. What a disaster.
Just short the 1X long ETF for financials and real estate if you want negative exposure. At least you are betting on the fundamentals, not how the indexes move day-to-day and randomness of day-to-day moves compounding.
yep
You’re right cap.
Yogi — I think CBL pD is “good to par” — which is $25, and much safer than the common here, so you should have at least some of your CBL exposure in it.
Phat div too, of course.
________
ERX is going around and tearing off false Snidely Whiplash moustaches, whilst “drinking one’s milkshake” at the same time.
_________
$TNA (Tina)
When I was a kid there was a wonderful cartoon character called Tina (TNA). Tinas Tits, to be precise. The strip followed her happy tomfoolery as she was (mistakenly) convinced her ample bosom had magical powers.
Today, I would again like to thank TiNA and her marvellous breasts, for banking me coin-a-plenty.
Ultra ETFs – Absolutely. These are trading vehicles only. To buy and hold is suicidal. FXI is back to “only” $31 but FXP got flushed to $30s.
Anyone seen that moronic stuttering idiot Hank Paulson recently?
Options on the SPY for Dec expiration, a week from Friday, suggests that we go nowhere. The bulk of the calls and puts are anchored right where we’re trading now.
Done daytrading for the AM (and probably until the 2:15 PM games). Thanx SMH,KRE on the long side.
This is a Secretariat market. Put on the blinders (so you can’t see the news) and just trade the price action.
This market has turned me in to a volatility junkie. I’m bored to tears right now.