Is the Balloon About To Pop?

jefftheshark · October 27th, 2009, 01:01 PM

No doubt about it, the rally from the March lows has been great, but is it time to jump off the ship?

I think so, and I've been moving out of my longs into various short ETF's like SRS & SKF. So far over the last several days, so good. I'm also adding a small position in VXX, as I'm thinking the VIX "fear" gauge is showing things as being far too complacent.

Is anyone else trading the market this way, and if I'm wrong, does anybody have some cogent reasoning for me to change my mind?

JTS

DWKB · October 27th, 2009, 01:17 PM

I too think the rally might be losing steam, but I have no idea where I would move my money too right now.

Bonds? Ha
Real Estate? Ha again
Commodities? Not gold.

Basically I can head over to a non-existent interest rate on a money market or savings fund and count my non-losses as wins? I don't see a nice solution.

Gaddabout · October 27th, 2009, 02:46 PM

Quote:

Originally Posted by jefftheshark

No doubt about it, the rally from the March lows has been great, but is it time to jump off the ship?

I think so, and I've been moving out of my longs into various short ETF's like SRS & SKF. So far over the last several days, so good. I'm also adding a small position in VXX, as I'm thinking the VIX "fear" gauge is showing things as being far too complacent.

Is anyone else trading the market this way, and if I'm wrong, does anybody have some cogent reasoning for me to change my mind?

JTS

I think three macroeconomic concerns point to your wise decision:

- Jobs still suffering

- Banks still not lending (in fact they're holding their money while cranking up the money-tree shaker known as fees and charges)

- Stimulus money not received, not being spent, or just pissed away in areas that have no impact where the greatest amount of people live.

You look at these and you have to scratch your head how the recession can be over. Who are the people with jobs who are going to ratchet up the spending to get production back on line? It's non-existent, and the economists calling this recession over should be tarred and feathered. If there's no money to spend on junk, and people have no will to spend on junk, how in the world are the widget makers going to get the capital to make the junk and employ people to do it?

It's macroeconomic malarkey and the so-called rally was entirely inspired by political maneuvering and public faith salesmanship.

jefftheshark · October 27th, 2009, 07:54 PM

Quote:

Originally Posted by Gaddabout

I think three macroeconomic concerns point to your wise decision:

- Jobs still suffering

- Banks still not lending (in fact they're holding their money while cranking up the money-tree shaker known as fees and charges)

- Stimulus money not received, not being spent, or just pissed away in areas that have no impact where the greatest amount of people live.

You look at these and you have to scratch your head how the recession can be over. Who are the people with jobs who are going to ratchet up the spending to get production back on line? It's non-existent, and the economists calling this recession over should be tarred and feathered. If there's no money to spend on junk, and people have no will to spend on junk, how in the world are the widget makers going to get the capital to make the junk and employ people to do it?

It's macroeconomic malarkey and the so-called rally was entirely inspired by political maneuvering and public faith salesmanship.

It's funny that according to the so-called "80% of leading economists" the recession is over and they point to rising stock markets and housing, and yet once you dig into the numbers, the news is so unrelentingly bad that you just have to shake your head.

However, when you read the financial press, outside of the CNBC shills of the world, you see an almost 100% conviction that the market is going to correct at least 20% to 50%, but it never does.

Perhaps a watched pot never does boil.

There is something rotten in Denmark, I think. But the situation was basically rotten all summer long and yet the market just keeps chuggin' along.

Perhaps it's just the "big lie" theory in action.

When the 3rd quarter GDP figures are announced, I think anything less than 3.4% to the plus side is going to trigger a move down. But I have no faith that even if the true number is lower than 3.4%, that the PTB won't just lie to us and then "correct" the number in a month or two when nobody's watching, just like they do with the unemployment numbers.

JTS

82CardsGrad · October 27th, 2009, 08:02 PM

IMHO, the market lost its' connection to reality months ago... I can find not other justification for the sharp rise in the market other than the weak dollar. And now that the dollar has strengthened - albeit ever so slightly - over the last few days, what do ya know... the market has dropped.
Take a very close look at the earnings reports. Yes, companies have produced profits... but the vast majority have done so NOT by growing the top line, but rather drastically cutting their expense lines... No top line growth means no capital expenditure... no investment back into the company... and alas, no hiring...

We've discussed this before... it's sad and beyond scary that the only way our country can produce growth is by de-valuing the dollar... What a collossal MESS!!!!!

conraddobler · October 27th, 2009, 09:18 PM

The stock market is not an indicator of the health of the average American's finances.

Zimbabwe has the best returns of any market in the world, that's not worked out well for it's citizens.

Real wealth is earned and created through productive efforts of people, that are valued best in the arena of an open and honest free market, not by a policy wonk in DC, and not by the manipulations of Wall Street, at every turn this government is shunning our free market ideas that built this country and replacing them with Marxist policies, and this started BEFORE Obama but has since been put into high gear.

The people who control the world don't care what name you give to the control, and are in fact much happier with concentrated power rather than diffuse power.

They are equating Wall Streets actions with the free market, ie see we told you it's broken, but it never was broken it was mismanged sure, not broken.

Socialist agendas are handy for concentrating the power and thus the control.

Learn this or regret it for the rest of your life and avoid unecessary explanations to your impoverished grand children.

DWKB · October 28th, 2009, 06:08 AM

This thread is awfully close to P&R level. I thought it was going to be about where to put your money, but the pissers and moaners have since invaded it and given no worthwhile information.

jefftheshark · October 28th, 2009, 08:45 AM

Quote:

Originally Posted by DWKB

This thread is awfully close to P&R level. I thought it was going to be about where to put your money, but the pissers and moaners have since invaded it and given no worthwhile information.

SKF, VXX & SRS are up on average about 4.5% today above what you could could have bought them for at the opening bell.

So that's some information you could have used.

Goldman issued a sneak peek at the GDP numbers that will be announced tomorrow at 8:30 EDT, before the market opens, and they are saying that the number will come in at 2.7%, which could cause a big tumble. Of course they could be doing this to dampen the surprise a bit, and spread out the losses over the next few sessions.

JTS

DWKB · October 28th, 2009, 09:46 AM

Quote:

Originally Posted by jefftheshark

SKF, VXX & SRS are up on average about 4.5% today above what you could could have bought them for at the opening bell.

So that's some information you could have used.

Goldman issued a sneak peek at the GDP numbers that will be announced tomorrow at 8:30 EDT, before the market opens, and they are saying that the number will come in at 2.7%, which could cause a big tumble. Of course they could be doing this to dampen the surprise a bit, and spread out the losses over the next few sessions.

JTS

Ultrashorts are impractical to me personally. I'm not a short term trader. I need long term ideas.

Russ Smith · October 28th, 2009, 10:02 AM

I nearly put a lot more of my IRA in cash this morning but I'm holding off. After I read the story that the ex AMD CEO is one of the people involved in giving insider trading tips to Galleon I thought we might see a huge drop today. I guess I worry a lot more about that stuff than the market as a whole does because while the markets are down, not very much and not related to that story more about housing and fear the GDP numbers won't be as good as expected.

To me the Galleon story is huge, we literally have a CEO in the middle of a huge deal (Abu Dhabi financing for AMD) leaking information to a hedge fund. I mean if that doesn't send a signal that the markets aren't being played on a level playing field what does?

It does look this quarters earnings are not good enough and we're heading down a bit. Also pointed out by some guy on CNBC today, with the coming legislation in healthcare and finance, why would anybody invest in stocks in those markets? You can't know what Obama is going to do in advance so it's a huge gamble. Financial stocks were a big factor in driving the markets forward. Combine that with tech stocks struggling to come through on earnings and 2 of the big movers of the markets have stalled.

conraddobler · October 28th, 2009, 10:57 AM

Quote:

Originally Posted by DWKB

This thread is awfully close to P&R level. I thought it was going to be about where to put your money, but the pissers and moaners have since invaded it and given no worthwhile information.

If I knew what to do and I do.

I wouldn't tell you

conraddobler · October 28th, 2009, 11:05 AM

Quote:

Originally Posted by jefftheshark

SKF, VXX & SRS are up on average about 4.5% today above what you could could have bought them for at the opening bell.

So that's some information you could have used.

Goldman issued a sneak peek at the GDP numbers that will be announced tomorrow at 8:30 EDT, before the market opens, and they are saying that the number will come in at 2.7%, which could cause a big tumble. Of course they could be doing this to dampen the surprise a bit, and spread out the losses over the next few sessions.

JTS

Ah Goldman, the paradox, to believe anything they say or not, btw they are smart, they mix it up enough you have no idea what their angle is at any point in time.

Sometimes their information is a headfake, sometimes dead on, who's to know?

Only the shadow knows....

conraddobler · October 28th, 2009, 11:12 AM

All kidding aside and properly labled as not investment advice I have the following opinions:

I was talking to a host of commercial lenders yesterday trying to get financing for a bed and breakfast.....

The theme I got back was that what's hot to finance now is warehouse distribution centers and medical facilities period... end of story as in that's about all they want to really get excited about, most definitely NOT bed and breakfasts.

So long term I would look into the medical field for long term investments, UHC has beaten down that sector to an extent but it's more recession proof than most IMO.

The problem with giving any ideas here is there is a fundamental question to answer yet that sheds a lot of light upon what you'd do long term going forward.

The inflation / deflation debate.

It's a doozy btw but if I was going to invest long term I'd have to answer that one first before I made too many moves.

http://www.financialsense.com/fsn/2009.html

Follow that link, scroll down, there is a whole series on the inflation / deflation debate with some of the biggest proponents of each, very interesting.

Settles nothing btw in terms of what to do right now.

I happen to believe ultimately the US will repudiate it's debt, revalue it's currency or simply technically default.

The problem is of course timing that, good luck on that.

Gaddabout · October 28th, 2009, 11:43 AM

No one's going to end their demand for energy or oil any time soon. Everytime I hear both are at their ceilings, the next generation cranks up demand and profits continue to roll in. It's not cheap to get into, but for long-term solutions, it's hard to beat performance.

conraddobler · October 28th, 2009, 01:26 PM

As a sidenote there's one good indicator I watch all the time.

Most major selloffs occur after 3 to 4 down days in a row, seems to be a negative momentum thing.

The FED actually watches this closely and over the last few years just as things were going off a cliff they would jumpstart the market with some out of the blue BS.

Well nowdays they have to save the bond market.

So all is quiet on that front and we've had 4 down days in a row all timed to coincide with the GDP announcement tomorrow.

So hang on, could be wild.