Dollar/SPY (intra-day)
That pretty much says it all. The dollar fell hard and the indices ripped higher. Breadth went from horrid to terrific. If you slept in today, long equities, you woke up to more of the same. Unbeknownst to you, AAPL was down 15 at the bell. Here is my specific issue with chasing this rally:
The market is going up on the back of technology shares. Agreed? For the most part, oil and banks have been quiet to weak. There has been strength in the industrial names. But, for the most part, tech has stolen the show.
SYMBOL FPE P/S
BIDU 49.00 55.00
VMW 38.00 18.00
ARMH 24.00 17.00
FFIV 20.00 13.00
AMT 49.00 12.00
CRM 75.00 12.00
AKAM 15.00 11.00
RHT 35.00 10.00
CTXS 20.00 8.00
MELI 44.00 19.00
CAVM 54.00 13.00
APKT 25.00 17.00
NETL 23.00 10.00
ARUN 23.00 10.00
Essentially, if I was to buy into nasdaq related stocks now, I will be ignoring the lessons learned 10 years ago, during the dot com bubble of 2000. Am I exaggerating? Absolutely not. Unlike 1999-2000, this economy cannot support those exorbitant valuations. You cannot make gold from shit, no matter how hard you try. We are priced for perfection. Should we deviate from perfection, you will see the floor removed from bids and share prices will plummet.
When will this happen?
No idea. I read some report, from the blowhards at Goldman, calling for S&P 740 by 2011. To me, that’s fucking laughable, on a hysterical trend. But, it’s worth noting, Wall Street is hurting right now. I know you are seeing something different. But, where this shit all starts, people are about to lose their jobs again. What Wall Street needs are some frothy ipo’s, in order to showcase our shit to the public again. It’s not surprising to read Joe Public has pulled all of his money out of the stock market, in exchange for the mattress. This shit is too hard, unless of course you have the proclivity to be one directional in nature. I mean, if you are permanently bullish, you are absolutely killing the market right now. On the flipside of that coin, those same people will end up bearing the brunt of the future pullback, if that shit ever happens.
At the end of the day, clearing all the smoke and shattering all of the mirrors, I am simply asking for better valuations, before allocating fresh capital. Is that too much to ask? What would my excuse be, if the market suddenly dropped 1,000 points from current levels, caught long the above stocks? I suppose I could tell my clients “hey, those stocks were awesome, just prior to their demise.” The bottom line, as much as it pains me to miss out on the fun, I have a fiduciary responsibility to be cautious, when valuations get out of whack. Moreover, with year to date gains close to 28% (down from 40%), I am better off waiting, than playing with the proverbial nuclear tipped Jack in the Box.
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FIG-a-row FIG-a-row FIIIG AAAAA RRRROOOOOWWW
Sounds like a rational blog entry. The S&P seems a little tipsy though. Maybe the bots are churning it.
If you are seriously trying to turn to valuation as your major thesis and using Price/Sales…you are being dense….use a real metric that the big boys use, start by studying up on industry specific metrics
p/s ratio is the standard canary in the coal mine for valuation. I couldn’t care less about what your industry fucktards use. I have my own methods and will use what I like.
Not only are you in dangerous waters here but, you didn’t say a damn thing and still managed to be asshatish.
LJ,
industry specific metrics are telling you to buy here?
I literally saw Joe terranova hold and caressing his ipad on fast money.
If that doesn’t remind you of this
http://www.summit-advisors.com/storage/real%20estate%20bubble.jpg
Then, you are blind to metrics.
“Page not found” does remind me of a few things.
______
It was working fine the first few times i checked. Here’s an alternate link to same picture.
http://bigpicture.typepad.com/photos/uncategorized/time_mag_home_cover.jpg
First link worked fine. So did the second one. Sometimes my Commodore 64 is amazing !
I sell the used oil from my car to Joe Terranova. He uses it to spike his hair.
Much like the “flash crash” previewed a much further decline in the following weeks, today’s AAPL crash is foretelling a tech massacre.
At the very least, it has revealed that recent buyers are keeping their stops too tight. Which is, in the case of most “blow-off tops”, exactly why the moves down are so sudden and violent. The last ones to buy are always the ones with the closest stops.
AAPL “crashed”? Poor Steve.
Sorry, couldn’t help it. I can understand your concerns and caution with the market. I had much of the same opinion about a month ago. Thing is, Mr. Market doesn’t care about what we think. What is, is. That is the deal.
Politics and economic theories aside, when something that is supposed to go down doesn’t, that is a good thing, no?
that cant be a Sealy mattress they didnt hit their numbers.
Do your clients complain to you for not participating in an epic melt-up? Do you console them with valuation explanations? How do you handle that aspect without getting them anxious?
They are up over 200% since 2007. That’s how.
Are you rounding up?
down
This fucking market is like “Playing with Sasquatch”. Keep fucking poking at him and at any moment he will wake up and murder you.
Then don’t poke at him. Leave some beef jerky by his pillow, instead.
Hahaha ……great response!
Danke schoen
Naturally, those cited (by Fly) stocks are unbuyable (by any kind of GARP investor) at current valuations, but here’s the crazy thing: In 1999, the Fed funds rate was north of 5%, and now it’s ZERO. So, who knows what kind of idiotic multiple justifications they may get before this is all over? Or maybe the dollar crashes and they wind up with nominal earnings to support those prices… Normally, investing is like playing three-dimensional chess, but now it’s like playing six-dimensional chess.
That was a logical thought – agreed
Why would anyone want to drive the dollar to zero?
Trade the show until there is no moe. Enjoy your globalism.
I’m just a targeted localist posing as globalist and the socialist anesthetist is adding hypnotist to his reputoire.
Good stuff Fly.
Your suspicion about Goldman’s report indicating SPX 740 by 2011 is right on. As I explained on the PPT note, a review shows that the report is mentioning SPX 740 happening with only 15% probability. Zero Hedge skewed the report findings to highlight only the SPX target but not the probabilities.
GDP for 2007 was revised down from 2.5% growth to 2.3%. The 2008 decrease was lowered from 1.9% to 2.8% and 2009 growth was revised up from a 0.1% to a 0.2% increase.
See, we are in a momentous recovery.
I push the button, it gives me money, I crawl in the corner and wait for an explosion. I walk back to the button for more money……..”>
This has nothing to do with valuations or fundamentals this is a fucking LIQUIDITY ORGY courtesy of the Bearded Clamfucker. As long as he is dropping money out of helicopters onto the HFT trading desks with promise of more to come then the orgy will continue.
I heard that before and it didn’t end well.
I know firsthand that HFTs are not doing well right now. At least one very large one that I have friends working at.
Last time a heard liquidity was frothy was 2007. Question is, June or Oct 2007… I can’t remember
Dr. Fly,
No matter how I look at your blog, I see gold at 2000.
PS. It is probably my poor vision.
wipe the “Denninger” from your eyes.
you may need a special decontamination cloth.
Obama listens to Nas and Lil Wayne
Oh boy
http://www.rollingstone.com/politics/news/17390/209395?RS_show_page=0
Wow, that’s a hard hitting piece if I ever saw one.
I was looking for the question:
“So, when was it you first noted that the Republicans beat their wives?”
__________
Wow…can his responses get any more prosaic?
What dah hezzy?
Test
________
Click on the link above if you are an old person who lives in New England, or who have relatives who are elderly New Englanders.
For some reason the system would not accept my posting the link.
Please be sure to call Barney Frank and Senator Kerry to thank them for supporting O’Bummercare.
______
Nobody uses Harvard anymore … everyone is on Ma Health now … Get a job!
Only 22,000 old people… thrown down the stairs, a la Horatio Clawhammah-style.
Don’t worry… if you like your doctor or your health plan… you can keep them!
No, really… we Sweah tah Gawd!
______
As long as you have a job!
“You cannot make gold from shit, no matter how hard you try.”
I shit gold all the time, I am not making this shit up.
I’ve added a new handle to my walking cane: a CLAWHAMMER.
Tweetaleedoo to you!
GMCR
Hate to question your post on Tech but my OEW guy says Tech just bottomed in August and the 2 yr tech sycle and 4 yr Prez cycle will last till early 2012 … better buy the dips!
http://caldaroew.spaces.live.com/blog/cns!D2CB8C5EBA2ADE86!84261.entry
hate to burst your bubble on OEW but the guy changes his counts as often as he changes his underpants. I should know I was one of his students
So i guess its safe to assume nflx will be 400 by then. Fantastic.
No but the chips are cheap … Chips & Dips!
Zero hedge = poisoned thinking
Yeah, armh is a screaming buy at 18 x sales
At least you’re not making the mistake of trying to short them. So now you just have to deal with underperformance and complaints from your investors. Assuming this is late-1999 that won’t be a problem as you’ll soon be vindicated. But if this is 1995 and these companies put up big revenue growth numbers you’ll have to reassess.
This rally is getting old
Fly as you already know today was the last day to buy or sell for end of 3qtr print. window dressing melt up.
The buying will stop soon.. Like 10 am on Thursday.
This would have been a great day for the goat licking the electric fence video
Shorts can’t get a break
Ta
That was funny
Interesting development – a few democrats trying to sustain the 15% capital gain. A tough sell but interesting nevertheless. http://www.bloomberg.com/news/2010-09-28/house-democrats-push-to-keep-15-capital-gains-tax-rate-in-pelosi-letter.html
I bought a brand new 2010 Honda Civic Sport yeterday and received just over $4000.00 off the suggested retail price. They allowed me to put the entire purchase on my American Express card so that I could collect the airmiles.
My point is that car sales must suck because I never heard of Honda giving out those kind of discounts on their best selling compact car and they usually don’t want you to use your credit card for the entire purchase because the transaction fees cuts into their margins
When you post charts from Yahoo.com you lose a lot of credibility, at least any that you have left.
zero hedge: “Despite Traditional Late Day Ramp, S&P Adjusted For Purchasing Power Lost Is Again Down For The Day”
the war has begun http://www.youtube.com/watch?v=Y2B1OIprTik&feature=fvst
Can someone explain to me in three sentences why dollar down = equities up? Thanks in advance.
Bernanke is insane.
Geithner is incompetent.
The market is rigged.
Dollar down = US goods cheaper to foreign buyers
Good for US exports
Good for US economy
Complete sentences, please.
When the dollar is down, US goods are cheaper to foreign buyers.
That is good for US exports.
That is good for the US economy.
Better now?
A+
Assuming we don’t reach hyper-inflation, lower dollar means
(a) larger export revenues resulting in higher revenue per share
(b) increasingly lower yields motivating investment in equities
(c) Increasing internal consumption of american goods vs foreign goods resulting in higher revenue per share
Ergo, rise in equities.
65% of KO revs are from overseas. In fact, the ten largest U.S. companies have a significant percentage of revenues from foreign sources (over 50%).
Many of them have managed the downturn quite well, having cut costs, strengthening balance sheets and have been basically good stewards of capital. This is the underlying story that the chartists and many third tier bloggers are missing.
The thing to focus on now are the fundamentals of what supports sustainable growth – companies with high barriers to entry, a good return on capital, good free cash flow, and growth drivers that come from economies outside of the U.S.
A weaker dollar can help here.
Will the other 24 countries that devalued their currencies this week affect anything?
USD is what all other currency value themselves against.
but can you printing press can go as fast as mine?
I heard currencies used to value themselves against the pound sterling.
So…
a) good
b) good
c) great
…what’s all the big fuss about Ben being insane and geitner being an incompetent fool?
ps: assuming we don’t reach hyper-inflation.
No zh link allowed.
Just stating my opinion.
Market still going higher.
in all honesty, i value your opinion.
All charts are created equal, fucktArd
He’s just a chart snob, unworthy of your attention.
2 Black Swan Insights:
1. Trucking tonnage down last month
2. Irish bank CDS more troubled daily. Short AIB.
I’d say a Eurozone bailout of Ireland would be a nice goose for usd and then Fly gets paid. I’ve got my popcorn out and prepared to put my hard hat on and go to work
Trucking tonnage has been on the decline for a long time. The glory days are gone.
http://www.youtube.com/watch?v=582zR4YF3Ms&feature=related
Historical charts show that the market can recover with rising unemployment (jobless recovery). But if unemployment doesn’t change direction soon there after, the market will drop.
S&P going to 740 is basically saying the US if fucked and there is going to be a serious depression.
As long as the banks keep playing chicken with the Fed they will remain in suspended animation ….
fly- I have been waiting for a gmcr pullback. Looks like tomorrow is the start, but im not sure about that news. What are your thoughts regarding sec inquiries?
I should take the sailbout out into the bermuda triangle tomorrow. 60 mile per hour winds in a tropical storm tomorrow. Could be fun.
Well the September Surge is coming to a close. Why don’t we put aside all the noise for a moment and reflect… The fact is that one month ago all I heard about was, “ya know sept is the worst month for stocks”. I said it myself… The problem was everyone said it. That was like writing on the wall that we were going to go parabolic.
The bulls have possesion of the ball again… Its theirs to lose. I am indued in the bull camp, however Oct will not be so easy. Be prepared for the waters to get rough again. I will be preparing.
but if we break 1150 there’s wind in our sail till 1170 …
Oh we are going to 1170, thats for sure. Right up to pre earnings or sooner, then we run into that wall of worry that questions valuation after the run. We pullback like a slingshot to the real parabolic move occurs… tis will be the season of prosperity high on Bernanke koolaid
and so it is named: The September Surge of 2010 aka The September Surge
more then a wall of worry climb!
and the October Opus …
Actually, I think we see 1200 on this Primary Wave III into Jan 2011 then have a nasty pullback with Primary Wave IV followed by the final leg up (Primary Wave V) to 1500 then we retest Depression II.
Money is the bitch that never sleeps; one day you’ll wake up, and she’ll be gone.
-GG
Don’t forget OSTK at .41 P/S….