Some of you treat the market like she’s the buxom head cheerleader at your junior high who has finally deigned to give you that “one shot” date for which you have been hounding her for weeks and –damnit — you are going to make that “one shot” count!
But you know what happens… “Mr. Smoove” gets a little too hasty and that “one shot” devolves into an embarrassing “fail episode” which necessitates a “strangely soiled jeans” story for Mom on Laundry Day. That’s never good for the psyche.
However, neither is getting hasty with the ever enticing Ms. Market good for your long term mental health. Take iBC’s very own “Exhibit A“: our friend the Hell Hound. Be cautioned, friend– too many hasty market calls and you too could find yourself warily napping in a tin foil sleeping bag.
So instead of racing off to go do something ungodly after this 90% down day we had yesterday, why not take a gander at something I like to call my “Perspective Chart” —
Here I go again with my “reversion to the mean” theme. Note the contrast between the “normal” bear low’s distance from its 200-day EMA in 2002, and that of the recent low we just experienced in early March. Quite a bit more stretched, isn’t it? That’s what gave us our violent “snapback” we’ve been experiencing for the last number of weeks. The market will revert to the mean, that’s just what it does. And the more stretched out it becomes going away, the harder it will careen back. After that massive plunge illustrated above, can we be dead sure this market’s done careening?
And let’s be open-minded and admit it — today may have marked a new rollover point… or not. 90% down days like today are more often followed by at least temporary reversals, or frustrating grind days. My point is your best bet here is to do as Fly has cautioned — hold fire a moment while you wait to see if you’ve a better place to short.
I’d be surprised if you did not find one at a point higher than today’s close, and maybe even when we meet the 34-week EMA in the low 900’s. For downside, I’m looking for support at the 13-week EMA — 828, and then 800.
**************
Hopefully some silver and gold talk tomorrow. FYI — I mentioned on the comments I had bot some more RGLD last week. Well I also added another 20% to my SLW position at the close today, and will be looking hard at PAAS and GDX tomorrow. Stay tuned and be well.
______________________
If you enjoy the content at iBankCoin, please follow us on Twitter
This kind of post is exactly why you deserved to be tabbed! Excellent insight to potential moves and plays. I was hoping for 821 then 805, but close enough :). This is not the time for new lows, but they will be here by July. Oh, and please talk about Gold, Silver seems dead?
GLD held support above the 200 day sma twice in recent weeks, and Monday the trusty PPT upgraded AUY to a buy. I have been looking for a good entry on AUY and think I found one today with a 7.79 buy in AUY
Nice post Jake
“Some of you treat the market like she’s the buxom head cheerleader at your junior high who has finally deigned to give you that “one shot” date for which you have been hounding her for weeks and –damnit — you are going to make that “one shot” count!
that’s my analogy you fargin farger, just 4.6x as verbose and florid. Still though, you’re my boy Jake.
I would have loved to see a comparison to the depression market instead of the tech bust.
I am thinking that we are in a bank centered bear. It’s not the same as the depression, but still both that bear and this one are bank centered.
love reading your stuff.
Great stuff. There’s no “Echo Chamber” around here. Now if we could get Danny to dredge up the ole long term LoBV breadth indicator, we could see how this bottom compares to 1998 and 2002.
offical call on the play it is Danny’s analogy, using a cheerleader in place of prom night. Use some new ideas. And get rid of the cheesy Gotti pics. Yes, yes we know your a tough guy, but that is not going to help with your newbie status.
Are you just rehashing the free videos Dan Fitzpatrick does over on Street.com with ‘reversion to the mean’ stuff ?
Awesome, thanks.
I would have loved to see a comparison to the (D)epression market instead of the tech bust.
Ryan — Johnny Cee (Chart Addict) has that on his blog almost every day, if you want to reference it. I just wanted to show a comparison to a more “normal” recessionary market drop.
______________
Danny and “Line Judge” —
First, farg you, you fargin icehole corksuckers. Denk you veddy mooch.
Second, if you weren’t a “cheezie noobie” yourself, you’d know that we don’t pick our own avatars, and that they are assigned via the oft dastardly mind of Fly. Post something on the PeeG and you’ll find that out. I’m not even Italian.
Third, I disclaim any knowledge of a Danny copywrite on any of this material, but I find it difficult to believe that the “premature pre-teen” meme was first scripted by a 23-year old. For all you know, this sketch is autobiographical.
Last, the only Dan Fitzpatrick I know does a radio show for ESPN Sports, and the last time he talked about “mean reversion” was in reference to Latrell Spreewell heading back to the Clippers in a trade from New York.
Seriously, mean reversion is an utterly, boringly common market analysis tool. I certainly have no claim on its invention. Neither does Howard Cosell or Chris “Boomer” Berman. You might look to a biography of Charles Dow.
__________
I agree with your thoughts on mean reversion but it seems flawed to compare a global financial crisis to overpriced tech stocks?!
Once again, congratulations! Great points. It is easy to see how you got here…..The “olde fashion way”…..you earned it!
Ritholtz had the chart that this blog entry needs, and he had it 3 days and 30 points from the March bottom.
http://www.ritholtz.com/blog/2009/03/sp-500-index-vs-200-day-moving-average/
That’s the problem with the internet – you can’t roll up a nice article and smack someone in the face with it. If someone had done that to me on March 3rd, I might have acted on it. But, nooooooooo.
The Ritholtz graphic spams 80+ years, which is nice, but isn’t so good for figuring out the time scale of the reversion action.
NorthernMac — (That’s two Macks now!) thanks!
__________
Welcome — it’s not so much a comparison of the crises as a comparison of the market reaction.
IOW — I am not saying we don’t have further to go south here, just that there will be some mean reversion along the way.
Note how even in the downslope of the 2000-2003 bear, there were periods where price returned to the 200 day (34 week) and even the 200 week EMA?
I’m not saying we’ll get all the way back to the 200 week MA, but I think the 34 week average is not an unreasonable goal.
_______
Otts —
That chart really is scary, if you compare the thirties to today… the volatility is unbelievable! No wonder no one in our grandparents’ generation trusted the stock market!
________
Great stuff, Mr. Gint – a welcome addition indued!
Jakey – you are owning! Good stuff.
Today, you get gravy with your biscuit.
http://tinyurl.com/cbsqsk
SLW heading in the wrong direction $7.15 , but maybe right for a buy. I got in @ JG’s range of $7.37. Looking for 8.
Jake-you buying more?
Razn — finally filled that gap @ $7.20, which I was afraid it wouldn’t given yesterday’s move.
Answer: hell’s yes. This is a longer term position, btw.
Working on a post now…
_____
This was flying around the Internets today.
Jake what is your IBC email?
******************************************
Franklin T. Bell, CFM, RPA, FMA
7239 Swan Point Way
Columbia , MD 21045
410-381-6861
April 9, 2009
The White House
1600 Pennsylvania Avenue NW
Washington, DC20500
Mr. Obama:
I have had it with you and your administration, sir. Your
conduct on your recent trip overseas has convinced me that you are not an
adequate representative of the United States of America collectively or of
me personally.
You are so obsessed with appeasing the Europeans and the
Muslim world that you have abdicated the responsibilities of the President
of the United States of America . You are responsible to the citizens of the
United States . You are not responsible to the peoples of any other country
on earth..
I personally resent that you go around the world apologizing
for the United States telling Europeans that we are arrogant and do not care
about their status in the world. Sir, what do you think the First World War
and the Second World War were all about if not the consideration of the
peoples of Europe ? Are you brain dead? What do you think the Marshall Plan
was all about? Do you not understand or know the history of the 20th
century?
Where do you get off telling a Muslim country that the United
States does not consider itself a Christian country? Have you not read the
Declaration of Independence or the Constitution of the United States ? This
country was founded on Judeo-Christian ethics and the principles governing
this country, at least until you came along, come directly from this
heritage. Do you not understand this?
Your bowing to the king of Saudi Arabia is an affront to all
Americans. Our President does not bow down to anyone, let alone the king of
Saudi Arabia . You don’t show Great Britain , our best and one of our oldest
allies, the respect they deserve yet you bow down to the king of Saudi
Arabia . How dare you, sir! How dare you!
You can’t find the time to visit the graves of our greatest
generation because you don’t want to offend the Germans but make time to
visit a mosque in Turkey . You offended our dead and every veteran when you
give the Germans more respect than the people who saved the German people
from themselves. What’s the matter with you?
I am convinced that you and the members of your administration
have the historical and intellectual depth of a mud puddle and should be
ashamed of yourselves, all of you.
You are so self-righteously offended by the big bankers and
the American automobile manufacturers yet do nothing about the real thieves
in this situation, Mr. Dodd, Mr. Frank, Franklin Raines, Jamie Gorelic, the
Fannie Mae bonuses, and the Freddie Mac bonuses. What do you intend to do
about them? Anything? I seriously doubt it.
What about the U.S. House members passing out $9.1 million in
bonuses to their staff members – on top of the $2.5 million in automatic pay
raises that lawmakers gave themselves? I understand the average House aide
got a 17% bonus. I took a 5% cut in my pay to save jobs with my employer.
You haven’t said anything about that. Who authorized that? I surely didn’t!
Executives at Fannie Mae and Freddie Mac will be receiving
$210 million in bonuses over an eighteen-month period, that’s $45 million
more than the AIG bonuses.. In fact, Fannie and Freddie executives have
already been awarded $51 million – not a bad take. Who authorized that and
why haven’t you expressed your outrage at this group who are largely
responsible for the economic mess we have right now.
I resent that you take me and my fellow citizens as brain-dead
and not caring about what you idiots do. We are watching what you are doing
and we are getting increasingly fed up with all of you. I also want you to
know that I personally find just about everything you do and say to be
offensive to every one of my sensibilities. I promise you that I will work
tirelessly to see that you do not get a chance to spend two terms destroying
my beautiful country.
Sincerely,
cc: Senator Barbara A.. Mikulski
Senator Benjamin L. Cardin
Frank M. Kratovil, Jr. (D), 1st Congressional District
C. A. Dutch Ruppersberger III (D), 2nd Congressional District
John P. Sarbanes (D), 3rd Congressional District
Donna F. Edwards (D), 4th Congressional District
Steny H. Hoyer (D), 5th Congressional District
Roscoe G. Bartlett (R), 6th Congressional District
Elijah E. Cummings (D), 7th Congressional District
Christopher Van Hollen, Jr. (D), 8th Congressional District
Amen brother. Obama has the right to conduct his Presidency as he sees fit but we have the right to push back when we don’t like what he does. For a guy that won only 52.7% of the vote, he is sure taking some extreme positions that don’t square with the majority of voters in the US of A.
Wildcat,
Your “majority” argument simply does not work.
52.7% IS a majority. It might not be “your” majority but it is a majority.
May I remind you that Bush won by smaller 50.7% “majority” after which, he promptly said, “I earned capital in the campaign, political capital, and now I intend to spend it. It is my style.”
Well, Obama’s-a-spendin’ some capital.
Simple – the tables have turned and you don’t like it.
Obama 1st 90 day approval ratings? 63% – again, a majority
By the way – Bush had only 58% approval after 1st 90 days 2001
Clinton 55%
Dad Bush 57%
Reagan 60%
What were Carter’s?
😉
______________
ECHO ECHo, ECho, Echo…
If a man is offered a fact which goes against his instincts, he will scrutinize it closely, and unless the evidence is overwhelming, he will refuse to believe it. If, on the other hand, he is offered something which affords a reason for acting in accordance to his instincts, he will accept it even on the slightest evidence. The origin of myths is explained in this way.
Bertrand Russell
British author, mathematician, & philosopher (1872 – 1970)
Jake, I thought you might be interested:
I spent this morning trying to find a vendor that would sell some gold ingots for $880/oz. The best I could do: A single 1/2 oz Canadian Maple Leaf for 538 USD(retail). COMEX theme song: “Put it together and what have you got? Bibbity-bobbity-boo!”
http://www.youtube.com/watch?v=8Gac_7neimY Smart kid.
New post!
Goin — Lucky I got some Maples smuggled away.
Probably a good time to stock up on silver… (see next post)…
Plug, plug.
_____
Jake,
ZING – cheap shot.
Carter was higher – as were Kennedy & Eisenhower. You can draw correlations to Carter and Obama if you like but that one won’t hold much water.
I was only pointing out that the “majority” comment was as wrong as 2 boys kissing.
Obama is facing far more adversity in his first 90 days than most presidents ever will. We hope. With that, it is insane that his ratings have held up as well as they have.
Perhaps it is a direct result of the chapped-ass malaise that permeated the last several months of the Bush-archy. We don’t so much love Obama as we are just happy to see a new ugly face.
Or maybe people are actually buying in to this social justice agenda where the weak and beaten think they have some new hope at holding their own against the corrupt power that was the last few years (government and industry).
I know it’s not that simple but I ain’t here to write a book. Just sayin’ it IS still a majority. Might be the dumb, the poor, and the smelly but they did manage to tip the balance and, as a trader, you have to understand why it happened and how it will play out……….
I know, I know.
Buy Gold
No, it’s as simple as Dems promising the world, and not being able to deliver.
Of course the free lunch sign is going to be more popular in the early running.
When the folks find out “it’s not much of a cheese shop,*” we’ll get the Carter results again.
____________
*See post later tonight.
Jake,
I do not disagree with you on the probable outcome.
I do have to say though, there would have been no need to promise anything if the past regime hadn’t ruled with such arrogance.
Somehow, in the future, we really need to find a balance in all of this.
Oh give me a break. “Ruled with such arrogance.”
Please, do not repeat for me the media themes. They hated Bush, they thought Obama was glib and handsome, and there you have it.
We’re fucked. It happens from time to time.
__________
I am so totally stoked about Jake having his bully pulpit.
Jake Gint for President!
Repeating nothing.
Arrogance was a core value.
We have become a society where people refuse to take responsibility for shit and the raison d’etre is greed.
Bush, it just happens, was turned into the poster boy.
At least we agree that we are fucked. Maybe that’s a start.