RANDOM THOUGHTS BY TPC
25 August 2009 by Cullen Roche
25 Comments
- China was down again last night – how long can the divergence between China and U.S. stock continue before one makes a huge move either up or down?
- The S&P is well off its intra-day highs. Are we beginning to see the first signs of selling the news?
- Volume is better today and breadth is 2:1 – that’s gotta make the bulls feel pretty good.
- Dr. Copper is getting his head handed to him today. (-2.5%)
- Oil is getting his head and his feet handed to him. (-3.5%)
- I’m not the only person who doesn’t believe in the most recent rally.
- Reader Henry has the market cheat sheet:
* weak data = Fed ease, stocks rally
* consensus data = lower volatility, stocks rally
* strong data = economy strengthening, stocks rally
* bank loses $4bln = bad news out of the way, stocks rally
* oil spikes = great for energy companies, stocks rally
* oil drops = great for the consumer, stocks rally
* dollar plunges = great for multinationals, stocks rally
* dollar spikes = lowers inflation, stocks rally
* inflation spikes = will inflate all assets, stocks rally
* inflation drops = improves earnings quality, stocks rally
- Reader Dean points out Dr. Bernanke’s many great successes:
I’ll add a couple to the market cheat sheet:
*bullish sentiment all time high – people want stocks. stocks rally.
*bullish sentiment all time low – there’s money on the sidelines. stocks rally.
Cashin cashing in….
http://www.ritholtz.com/blog/2009/08/art-cashin-take-a-little-off-the-table-this-week/
From Seeking Alpha:
http://seekingalpha.com/article/158166-s-p-hyper-exuberance-brings-66-chance-of-new-lows-ahead
It’s amazing how excited people get over the number 50%. But when you put things in perspective we’ve still been hammered for years:
http://static.seekingalpha.com/uploads/2009/8/25/462317-125117324190328-Christopher-Gurkovic_origin.jpg
A sign of this big rally has been big uptick at close or gap up pre open. There was no big uptick at the close yesterday. Will there be one today?
If we lose China, oil and copper the rally is dead. The selling the news is exactly what you want to see at tops….Remember, tops are a process, bottoms are an event.
TPC,
Are you taking any actions today ?
MS,
I’m not changing anything in my macro strategy. It’s actually held up really well considering the move in stocks over the last week. My 65% cash position is burning a hole in my pocket though. I’d really love to see a blow off top into 1040-1050. I’d look to get aggressive with shorts around there.
TPC, good strategy. Though I think the top will be(or was) set in todays session. Tomorrow is the key day. A massive selloff tomorrow means the rally is over.
The Oil tanks, stock up mantra still holds true…but yesterday was weird as the Stocks up, Oil up, Gold up, Dollar Up, VIX up….was pretty amazing also
Lasr,
What makes you think the data won’t continue to come in better than expected? It appears as though stocks move 1% higher any time we get any piece of data that is better than expected. If housing data comes in better than expected tomorrow stocks will jump again. Same for claims on Thursday and personal income on Friday. What do you think? What makes you so convinced that today is the top?
Btw, great call on 1030 – you nailed it.
TPC,
I have no reason except the “flashes”. Its the same way I said here in June that S&P will hit 1000 before August and in July-Aug that it will hit 1035. I dont really look at data that much, as I think data releases are just a cover for market to do what is pre-determined and estimated by the smart analysts out there. I am probably the last one to look at the data when its released. Tomorrow could be a big sell off day and I dont think market will recover from there until 910-920. I am only cautiously short here though, and will short any upside from 1035. Oil, copper are confirmations that add to my thinking. Just by looking at last two weeks of price action, its clear that trend could shift anytime.
from Clusterstock…
http://market-ticker.org/archives/1371-Government-And-Car-Dealers-Hose-You-Again.html
Interesting thoughts lasr. Thanks.
TPC/Lsar,
The top is likely to be in this week based on the market cycle analysis. I have established a 25% short position and will increase it to 35% when you are pulling the trigger.
http://www.marketwatch.com/story/major-us-benchmarks-clear-major-resistance-2009-08-25
TPC,
I’ll have to put your ‘tops are a process, bottoms are an event’ on my top 10 list; so true
Any thoughts on the recent court ruling on the FED need to disclose 2 Trillions loans in about 5 days? i am curious to see which direction the market will take or how the banks will fare
It’ll just confirm that they bailed out Goldman and 10 other failing firms. What else is new?
Bullish sentiment registers @ highest level for the year(See NYSE Bullish Percentage Chart):
http://www.investorsintelligence.com/x/us_stocks.html
I’ve come across this article from the links of TPC…I guess after 2 years of calling better tomorrow, Ben is right ….MAYBE..It’s similar to Cramer. After he called bottom for the million times, he MAYBE right
http://www.hussman.net/wmc/wmc090824.htm
“Our forecast is for moderate but positive growth going into next year. We think that by the spring, early next year, that as these credit problems resolve and, as we hope, the housing market begins to find a bottom, that the broader resiliency of the economy, which we are seeing in other areas outside of housing, will take control and will help the economy recover to a more reasonable growth pace.”
Ben Bernanke, Federal Reserve Chairman
On Friday, investors took great cheer in an optimistic statement by Ben Bernanke suggesting good prospects for economic growth ahead. We might be inclined to place a sliver of credibility in Chairman Bernanke’s assessment – if not for the fact that the quote above wasn’t from last week at all, but rather, hails back to November 8, 2007, just before the recent recession began. You might recall that the S&P 500 was pushing 1500 at the time. The implosion of the global credit markets was still just a slight rumble.
Just hot off the wire, Japan exports decrease for the first time in 2 months which may signal stimulus efforts are waning.
http://www.cnbc.com/id/32560213
Obviously……
Well, we reached 1037 on the S&P, 2 candlesticks with large upper shadows, avg volume, divergence with the RSI, weakness in other markets (china,oil,copper).
another great news day without big rally at close, not typical to this rally, smart money taking profits?
Look like we are playing in range again. Futures 1015-1037…Are we in the process of topping out?? couple things, German investor confidence index up but the index actually fell by a small percentage…
That along with what Jeff said
“Well, we reached 1037 on the S&P, 2 candlesticks with large upper shadows, avg volume, divergence with the RSI, weakness in other markets (china,oil,copper). “