This is just a quick note, prior to this weekend's detailed comments about the State of the Markets. Today's brief dip under 8000 is UNLIKELY to be the low we are looking for in this time frame. 6500-7500 remains the range where that low should happen, and the next few days to weeks is the range in time.
Friday is the last day for rich investors in hedge funds to notify the funds of their desire to withdraw funds on December 31. So, between now and the next few days to weeks, those funds that have been notified that they need to produce cold, hard cash will be selling more holdings to avail themselves of cash for distribution. Therefore, today is a low probability for the low of 2008, but again, we're very close...much closer to the low than the high. Any probing under 7500 will get us excited; probing under 7000 will get us exstatic; and under 6500 will get us arrested!
From this low, whatever the final number turns out to be, we expect a 30%-80% rally in the following 3-9 months. Unfortunately, that rally will eventually give way to the slaughter of 2009/2010. First things first though, and a major low is imminent!
Check in this weekend for massively, wealth enhancing information.
For what it's worth,
Ken
Nov 13, 2008
Nov 6, 2008
BE CAREFUL WHAT YOU WISH FOR...
Like our election day warning said, "buy the rumor, sell the news" and THEY have sold everything hard ever since Obama spoke those words that will also live in INFAMY: "Change has come to America"!
No doubt change has come, but will it be the change we need, or the change THEY tell us we need? Noone can still believe THEY are doing what is "our" best interest anymore, not after the lies and denial of the past year, let alone the past 10 years. Whether it's the "weapons of mass destruction" that never were found, or the "recession" that we are technically NOT in, is there a single truth that anyone can point to that has helped us recently?
Let's hope that the change that has come is at least honesty! If life is getting worse for the masses, let's hope that we can know in advance, and prepare, rather than being left to hold the empty bags.
Be cautious what you wish for...is it worth the price? What is the cost/benefit ratio? Who is the grantor of the wishes, and what are they getting out of the deal? These are questions that are hard to ask when we're in personal pain, but must be asked. Otherwise, the current pain we are trying to get rid of proves to be nothing compared to the pain we suffer for acting emotionally at the wrong time.
As Rummy so eloquently said, "There is the stuff we know we don't know that is the unknown". We can all agree that we have a little better handle on this concept today than we did a year ago. But, compared to what we still don't know, what we know is not worth knowing.
To tie this all together from the wisdom of the past several comments of the past month, much of which I collected during years of personal research and work around the country with experts in their fields, the main engine of our decision support system is targeted to uncover what they are "doing", rather than what they are saying.
So far, while dreaming about the future and how it will look once change comes, THEY are still selling everything that is not attached to the floors and walls including: crude, euros, stocks, gold, and bonds. Why? Because the massive multi decade bets that THEY'VE been playing, with the help of those in power, are no longer playable. And they want out of the game, NOW. So, everything is for sale until they know the new game, which will take several months to know and learn. Until then, there is no price support, no matter what is being talked about. In other words, don't rely on Dow 8000 holding, as it means nothing to those that need to raise cash at all costs.
CHANGE HAS COME to America my friends, even if this is not the change you expected.
For what it's worth,
Ken
No doubt change has come, but will it be the change we need, or the change THEY tell us we need? Noone can still believe THEY are doing what is "our" best interest anymore, not after the lies and denial of the past year, let alone the past 10 years. Whether it's the "weapons of mass destruction" that never were found, or the "recession" that we are technically NOT in, is there a single truth that anyone can point to that has helped us recently?
Let's hope that the change that has come is at least honesty! If life is getting worse for the masses, let's hope that we can know in advance, and prepare, rather than being left to hold the empty bags.
Be cautious what you wish for...is it worth the price? What is the cost/benefit ratio? Who is the grantor of the wishes, and what are they getting out of the deal? These are questions that are hard to ask when we're in personal pain, but must be asked. Otherwise, the current pain we are trying to get rid of proves to be nothing compared to the pain we suffer for acting emotionally at the wrong time.
As Rummy so eloquently said, "There is the stuff we know we don't know that is the unknown". We can all agree that we have a little better handle on this concept today than we did a year ago. But, compared to what we still don't know, what we know is not worth knowing.
To tie this all together from the wisdom of the past several comments of the past month, much of which I collected during years of personal research and work around the country with experts in their fields, the main engine of our decision support system is targeted to uncover what they are "doing", rather than what they are saying.
So far, while dreaming about the future and how it will look once change comes, THEY are still selling everything that is not attached to the floors and walls including: crude, euros, stocks, gold, and bonds. Why? Because the massive multi decade bets that THEY'VE been playing, with the help of those in power, are no longer playable. And they want out of the game, NOW. So, everything is for sale until they know the new game, which will take several months to know and learn. Until then, there is no price support, no matter what is being talked about. In other words, don't rely on Dow 8000 holding, as it means nothing to those that need to raise cash at all costs.
CHANGE HAS COME to America my friends, even if this is not the change you expected.
For what it's worth,
Ken
Nov 4, 2008
IT'S WHAT YOU KNOW YOU DON'T KNOW...
I'm hearing so many reasons why no matter what the market rally has begun, that I am forced to look for alternatives.
Like our ominous reminder of the old Wall Street adage last April, "Sell in May and go away" brought in the biggest decline in decades, today I'm forced to remind those that are either unaware or sippin' too much denial koolaide of an even older Wall Street adage, "buy the rumor, sell the news"!
Only moments after the biggest election day rally in decades ended, the naysayers began speculating about how bad a super majority of Democrats would be for the markets, and bla bla bla. If any of the reasoning even mattered, it might be interesting to listen to. But, it doesn't. Connecting thoughts or reasons to past events or future possibilities is a waste of time. If not that, then what?
Well, the strength of our decision support system is really two fold. First, it engages the only predictive market theory known to man (but typically misunderstood, therefore under utilized), which is the Elliott Wave Theory. Second, in addition to its ability to forecast what IS going on, Elliott Wave Theory reigns supreme in telling its disciplined students what IS NOT going on.
What IS NOT going on right now is the birth of a new bull market to new all time highs. What IS NOT going on is the salvation of the economy and markets by President Elect Obama.
What IS going on, based upon our decision support system, which leans heavily upon Elliott Wave Theory, is a relief bounce, which could be already over, to suck in more "little guy" buyers, so the Wall Street Insiders can sell the stuff they need to, before the next debacle hits.
Wall Street adage number three of the day: "Watch what they do, not what they say". THEY are deleveraging, THEY are selling, THEY are preparing for lower, much lower, prices in the months or years to come.
Whomever wins tonight, and it looks like it'll be Obama, God Bless the President of the United States, and more importantly, God Bless the people who pay for the mistakes, but receive no benefits for the egocentric actions of those we elect to govern and look out for us. As Obama says, "change has come to America". Let's hope he really does what he says he'll do. It's been awhile since we had a savior, but we're ready!
For what it's worth,
Ken
Like our ominous reminder of the old Wall Street adage last April, "Sell in May and go away" brought in the biggest decline in decades, today I'm forced to remind those that are either unaware or sippin' too much denial koolaide of an even older Wall Street adage, "buy the rumor, sell the news"!
Only moments after the biggest election day rally in decades ended, the naysayers began speculating about how bad a super majority of Democrats would be for the markets, and bla bla bla. If any of the reasoning even mattered, it might be interesting to listen to. But, it doesn't. Connecting thoughts or reasons to past events or future possibilities is a waste of time. If not that, then what?
Well, the strength of our decision support system is really two fold. First, it engages the only predictive market theory known to man (but typically misunderstood, therefore under utilized), which is the Elliott Wave Theory. Second, in addition to its ability to forecast what IS going on, Elliott Wave Theory reigns supreme in telling its disciplined students what IS NOT going on.
What IS NOT going on right now is the birth of a new bull market to new all time highs. What IS NOT going on is the salvation of the economy and markets by President Elect Obama.
What IS going on, based upon our decision support system, which leans heavily upon Elliott Wave Theory, is a relief bounce, which could be already over, to suck in more "little guy" buyers, so the Wall Street Insiders can sell the stuff they need to, before the next debacle hits.
Wall Street adage number three of the day: "Watch what they do, not what they say". THEY are deleveraging, THEY are selling, THEY are preparing for lower, much lower, prices in the months or years to come.
Whomever wins tonight, and it looks like it'll be Obama, God Bless the President of the United States, and more importantly, God Bless the people who pay for the mistakes, but receive no benefits for the egocentric actions of those we elect to govern and look out for us. As Obama says, "change has come to America". Let's hope he really does what he says he'll do. It's been awhile since we had a savior, but we're ready!
For what it's worth,
Ken
Nov 3, 2008
ELLIOTT WAVE THEORY PREDICTS NEXT PRESIDENT WILL NOT LAST A FULL TERM !
(click on chart to enlarge)
Ironically, this is the one election that you should actually vote for the candidate that you "LIKE THE LEAST". Why? Because after the short, but probably very sharp rally that is due to begin between October 10 and Thanksgiving runs its course into early 2009 (forming wave B, or the intervening rally between two down waves: A and C), the following decline which will be wave C should obliterate the market lows of 2002/2003, causing financial dislocation not seen in the last 100 years. That dislocation will very likely cause the expulsion of the current government, or at least the leaders, mostly at no fault of their own.
This "scape goating" will become rampant, and take no prisoners. With this in mind, if you are an Obama fan, you don't want him to win Tuesday, as he will very likely be laughed, chased, or worse out of office before the 2012 election. Obama fans should prefer to have him lose Tuesday and be the shining light as the "what could have been" when the stuff really hits the fan in the next 2-3 years. If you are a McCain fan, you don't want him to win Tuesday, since he will receive all the follow-on blame of the Bush legacy, culminating in his early dismissal, if he lives that long. If he loses, although he'll be too old to run again in 2012, Sarah Palin could be viewed as "should have been" choice back in 2008.
Either way, the wave pattern is unmistakable, and ominous. Once wave B up exhausts itself in the 11k-12k +/-500 points in early 2009, the largest decline since 1929 is scheduled to visit not only American markets, but this time, the global ones as well. This is the first time in history that diversifying was the wrong strategy. In fact, complete concentration of assets should be highlighted into the coming wave B rally in the next 2-6 months as my 11k-12k target gets approached: 100% cash or T-bills will be the only survival plan that works.
So, again, ironically, for the first time in US history, voting for your favorite candidate will guarantee his demise as a viable political entity in the future, whereas voting for your least favorite all but guarantees several elections to come working in favor of your preferred party.
As they used to say in Chicago in the glory years of political machinery, "vote early and vote often".
For what it's worth,
Ken
Oct 30, 2008
CLOSE, BUT NO CIGAR...YET ! BUT WE'RE SO CLOSE !
Again, the Fed's rate lowering had only temporary success in creating the Hope that Wall Street lives on, this time only 90 minutes, prior to the anxious sellers coming in to raise cash. There is so much pain and suffering (losses) that any and all chances to sell anything are taken without question. This is PERFECT for our call for a major, multi month, low coming to fruition in the next few days to weeks.
The GOP is pulling out all the stops to try to bolster the McCain ticket into election day. The Fed's secret PLUNGE PROTECTION TEAM is historically active in the pits, buying with both hands to keep the inevitable final purge from happening prior to Nov. 4th. However, just like the attempts of the past year didn't stop the 6000 point decline in the Dow, neither will these attempts stop the final 2000 +/- point decline into the test of the 6500-7500 area, which is needed to fulfill the pattern, into the wave "A" low that is due in this time frame. If they (GOP) can pull it off, it'll be a beautiful backup strategy. If Obama wins, which polls show is most likely, the collapse will occur just after elections and the blame will be placed on the "uncertainty of the untested Obama" presidency.
Either way, like the old saying, "you can't fool mother nature", we can translate that to the current, "the Fed can't change mother MARKET"! Nothing they've tried in the past year, and they've thrown everything they have at it, has worked. In a few days to weeks, the last wave of the initial decline from 14k to 6500-7500 will manifest and the buying opportunity of the past year will be presented. From there, the "head fake" uber-rally will blast emotion, hope, and stocks higher in an inauguration day extravaganza that will be celebrated as the coming of the market messiah. Get ready, as this bear market bounce is foretold!
The test of our belief, our souls, and our portfolios will come back in the 11k-12k area early in 2009. What will you do? If you don't prepare for that exit opportunity, you will miss the last chance to save your wealth from the most severe destruction of your life. The decline following this bear market rally into 11k-12k will make the slide of the past year look like hiccup.
Bottom Line: by the middle of December, we should not only have seen the final wave of this initial decline from 14k, but should be on our way back up to what will become the Spring Fizzle rally, that rolls over and makes 2009 the biggest bust year since the Great Depression.
I'll be posting entries for the rally in a few days, as we get closer to the 6500-7500 area.
For what it's worth,
Ken
The GOP is pulling out all the stops to try to bolster the McCain ticket into election day. The Fed's secret PLUNGE PROTECTION TEAM is historically active in the pits, buying with both hands to keep the inevitable final purge from happening prior to Nov. 4th. However, just like the attempts of the past year didn't stop the 6000 point decline in the Dow, neither will these attempts stop the final 2000 +/- point decline into the test of the 6500-7500 area, which is needed to fulfill the pattern, into the wave "A" low that is due in this time frame. If they (GOP) can pull it off, it'll be a beautiful backup strategy. If Obama wins, which polls show is most likely, the collapse will occur just after elections and the blame will be placed on the "uncertainty of the untested Obama" presidency.
Either way, like the old saying, "you can't fool mother nature", we can translate that to the current, "the Fed can't change mother MARKET"! Nothing they've tried in the past year, and they've thrown everything they have at it, has worked. In a few days to weeks, the last wave of the initial decline from 14k to 6500-7500 will manifest and the buying opportunity of the past year will be presented. From there, the "head fake" uber-rally will blast emotion, hope, and stocks higher in an inauguration day extravaganza that will be celebrated as the coming of the market messiah. Get ready, as this bear market bounce is foretold!
The test of our belief, our souls, and our portfolios will come back in the 11k-12k area early in 2009. What will you do? If you don't prepare for that exit opportunity, you will miss the last chance to save your wealth from the most severe destruction of your life. The decline following this bear market rally into 11k-12k will make the slide of the past year look like hiccup.
Bottom Line: by the middle of December, we should not only have seen the final wave of this initial decline from 14k, but should be on our way back up to what will become the Spring Fizzle rally, that rolls over and makes 2009 the biggest bust year since the Great Depression.
I'll be posting entries for the rally in a few days, as we get closer to the 6500-7500 area.
For what it's worth,
Ken
Oct 25, 2008
A Week That Will Live in INFAMY
(click on chart to enlarge)
CHART AU COURANT: This is it folks, the purge/plunge appears to be at hand. Whether it shows up this week, next week, or the week after, the test of 8000 that held earlier this month, will likely break in the coming days, setting up the ultimate test of the lows of 2002/2003. That number is 7200 Dow, 776 S&P, and 1100 Nasdaq. If these levels break, the next stops will be 5700-6300 Dow, 610-735 S&P, and 800 +/-50 Nasdaq. There is a very good chance that from the lows of the coming days, there will be a 50%-100% rally within the coming 6-12 months. It's rare that so great an upside bounce has the potential to manifest within such a short time frame. But, the more dramatic the decline, the more dramatic the bounce. Like a rubber band: the more you pull it back, the harder it snaps forward. The green box at the right of the chart shows the closing price from Friday of 8378. The blue vectors show the pattern I predicted from back in the summer, and have been adhered to very tightly throughout the decline. The upward pointing ones show what the bounce should look like once this low comes in during the next few days.
_________________________________________________________
MARKETS: Since there is NO WAY to know for certain in advance, there are various strategies for entry that professionals use to act from a position of strength, rather than from a position of weakness that the public prefers.
Here they are:
1. The aggressive stance is to put half your available funds in at a test of the early October lows and the other half at the old lows of the 7200, 776, and 1100 areas, believing that any further declines below these levels will be minor and brief, especially since the decline of the past year has been so deep and fast.
2. The conservative stance will be to put half your available funds in at the test of the 2002/2003 lows, and the other half either at the test of the lower ranges stated above, or on the way back up through the spike highs this month: 9800 Dow, 1045 S&P, and 1900 Nasdaq.
3. The very conservative stance will be to put half your available funds in on the way back up through the spike highs this month: 9800 Dow, 1045 S&P, and 1900 Nasdaq and exit all stock and mutual fund positions early next year on the wave "B" peak near 11,000-12,000 Dow, 1150-1250 S&P, and 2000-2300 Nasdaq.
These options should be used for individual stock entries as well. Once you pick an option, you should stick with your plan to increase the odds of success. The key to success is "planning your trade, and trading your plan". Both are incredibly important to the outcome; without both, the other is too hard to do.
As the title of this comment suggests, this will be a week or two of volatility not seen in history. Iron-like focus and stomachs, in addition to a clear plan set out in advance of the action, are the keys to emotion-free, position of strength, decisions. Any buys under 7000 Dow, and added to under 6000 Dow if that is presented, will be major money makers in the coming months, PROVIDED THE PROPER EXIT OPPORTUNITIES ARE TAKEN. This buying opportunity is the best one of the past year, but not THE buying opportunity of a lifetime, like the one in a couple years will be. Again, that is why the exit I've described above and for the last several weeks will be so important.
For what it's worth,
Ken
Oct 24, 2008
ALMOST OVER (for the "A" wave down)
There was panic overnight in Asia and our markets have tested 7980 so far. Will the Dow punch under its lows of earlier in the month, or rally 2000-4000 points from here? That is the big question, but here is the risk/reward on both.
Punch lower: As I've been giving for a year now, the 7000 area +/- 800 in the Dow is the target for this initial wave "A" down. Earlier in the month, it touched 7800, or the high end of the target given when the Dow was 14,000 in October 2007. Today's lows retested it and have bounced, but there is nothing keeping it from getting deeper into the range. So let's say it tests 7000 in the next day or two. That is 10% more risk from here, after already falling 40% from the top. 10% is livable, so buying could be done from 8000-6500 Dow.
Move higher: If wave "A" is done, I've been talking about the wave "B" bounce into 11,000-12,000 into early 2009. If that happens, that would be a 35% - 45% move higher. We'd all like to join in on that, expecially since it'll eventually fail and roll over to make lows under those of the current lows. So, grabbing some while we can, and selling into it is a good plan.
Therefore, if we can risk 10% - 15% from here, we could participate in a 35% - 45% rally in the next 6 months. We call that a 3:1 winning proposition.
Good Luck.
For what it's worth,
Ken
Punch lower: As I've been giving for a year now, the 7000 area +/- 800 in the Dow is the target for this initial wave "A" down. Earlier in the month, it touched 7800, or the high end of the target given when the Dow was 14,000 in October 2007. Today's lows retested it and have bounced, but there is nothing keeping it from getting deeper into the range. So let's say it tests 7000 in the next day or two. That is 10% more risk from here, after already falling 40% from the top. 10% is livable, so buying could be done from 8000-6500 Dow.
Move higher: If wave "A" is done, I've been talking about the wave "B" bounce into 11,000-12,000 into early 2009. If that happens, that would be a 35% - 45% move higher. We'd all like to join in on that, expecially since it'll eventually fail and roll over to make lows under those of the current lows. So, grabbing some while we can, and selling into it is a good plan.
Therefore, if we can risk 10% - 15% from here, we could participate in a 35% - 45% rally in the next 6 months. We call that a 3:1 winning proposition.
Good Luck.
For what it's worth,
Ken
Oct 21, 2008
IT AIN'T OVER UNTIL IT'S OVER...and it's not over!
I can feel the weight of the market every day...pundits trying to talk it up, and at times hailing "the bottom happened last week". Depending on your time frame, they may be right, but only if you are extremely short term biased.
There is AT LEAST another dramatic decline coming that breaks the lows of the past two weeks, and perhaps two more lows. This upcoming decline will punctuate the initial wave (call it wave "A DOWN") of the new Bear Market that began at 14,200 in Oct. 2007. Look for a Dow level of 7150-7350 for the target of this finishing move of this initial wave down. Then, a multi month wave "B UP" should last into early 2009. Unfortunately, following that rally, the remainder of 2009 and most of 2010, perhaps into 2011, will be where the big bang shows up. This will be wave "C Down", and will be a doosy! For now, let's focus on the new lows coming in the next week to three weeks near Dow 7000. That is not only the last buying opportunity for the next several years, but the set up for the last exit point in early 2009, before the big one...
See last post for a very clear picture of my halucination.
Get ready, and stay tuned.
For what it's worth,
Ken
There is AT LEAST another dramatic decline coming that breaks the lows of the past two weeks, and perhaps two more lows. This upcoming decline will punctuate the initial wave (call it wave "A DOWN") of the new Bear Market that began at 14,200 in Oct. 2007. Look for a Dow level of 7150-7350 for the target of this finishing move of this initial wave down. Then, a multi month wave "B UP" should last into early 2009. Unfortunately, following that rally, the remainder of 2009 and most of 2010, perhaps into 2011, will be where the big bang shows up. This will be wave "C Down", and will be a doosy! For now, let's focus on the new lows coming in the next week to three weeks near Dow 7000. That is not only the last buying opportunity for the next several years, but the set up for the last exit point in early 2009, before the big one...
See last post for a very clear picture of my halucination.
Get ready, and stay tuned.
For what it's worth,
Ken
Oct 17, 2008
CAVEAT EMPTOR...AGAIN !
(click on chart to enlarge)
CHART AU COURANT: With every pundit and TV station and newspaper asking if the markets have reached their lows, I remind everyone of some numbers I posted last week, which are still valid below in red. Use the chart for reference while reading. The area between the two red lines in the chart is the expected rally point, and exit area of the relief rally. Whether it comes before or after the possible test of the 6000's is of little consequence, because either way, it will be the last chance to avoid the following test of the 5000's. Don't get hooked on the Dow numbers, just look at the picture to see that compared to the 14,200 peak and move to the recent 7,800 (a 6,400 slaughter of your wealth), the move from the 10,000 to 11,000 area down to the 5,000's is completely reasonable to imagine. If you can imagine it, you can do the math on your wealth. If your portfolio is now 40% of what is was a year ago, and it recovers to be only down 20% by early 2009, take this early 2009 wealth number and cut it in half to see a value you will have to live with if this scenario plays out. The upward pointing white line that broke last June, is the 34 year trendline that began when the old bull market was born. The downward pointing white line is the new trendline that began last June. The blue vectors at the lower right are my "path of pain" the our forecasting model is suggesting. Yes, the same forecasting model that has been giving us the pinpoint bullseyes on entry and exit points captured in these postings.
__________________________________________
Last week, on Oct. 9, I said: With the Dow off 40% since its high a year ago, there should soon (days/weeks, not months) be a rally back up toward the underside of the break down level of 10,300-11,000. This rally should begin sometime around the election +/- 10 days. In the meantime, there is likely a sharp, failing rally that begins with the next few hours/days that might reach into the 9800 area +/- 300. Prior to the election however, there is still better than 50/50 odds of 7800-8100 being tested first though, with 7100-7600 a respectable possibility. Any panic under 7000 should be greeted with short term joy and bought strongly. Use the stretch of the rubberband to your advantage.
There is so much emotion in the market these days that the moves that I am forecasting in the next few days to weeks are happening in the following hours to days. Within a day of posting the section above in red, the Dow screamed 1800 points. This led to another two day fall of 1600 points. Finally, another rally into yesterday's close of 750 points. Over 4000 points of travel in a week. That alone used to take years, but just happened in a week. It is prima facie evidence that panic abounds. The good news about panic is that it doesn't last long, so we are nearing the end of the 1st of at least 2 great panics of this Bear Market. The levels above in red should be used to guage your near-term risk/reward into the election. In fact, the election could punctuate the panic and create the relief rally (in between the soon-ending 1st panic, and the upcoming, in 2009, much larger 2nd panic) that could pop Dow prices back up towards 10,300 to 11,000...maybe a bit higher. However, the piper hasn't been fully paid to the downside yet, as leverage, speculation, and greed are still rampant. The proof of this is the fact that the crowd is still looking for the rally to "break even" from year-a-go values, rather than looking for a prudent higher level to exit to protect their wealth. That distinction will be the bane of their existence in the coming years with only a fraction of their former net worths.
For what it's worth,
Ken
Oct 15, 2008
George Santayana ROLLS OVER IN HIS GRAVE AS HISTORY REPEATS...AGAIN !
Selecting the theme to these comments is always difficult. This issue was between Santayana's "Those who do not know history are destined to repeat it" or King Solomon's "There is nothing new under the sun". Perhaps I'll use both...let's see.
It's interesting that everyone on the planet, except those that know history, are asking if the Bear Market is over, when recent (the last 80 years) history tells us that the average Bear Market lasts 20 months, not the 12 months that this current one has growled. True, one can argue that if the average is 20, then there should be some shorter and some longer, so maybe this one is of the shorter variety. If that is the argument, then we must take an average of the worst Bear markets, since never in history have we been in the dire straits we currently find ourselves. If that measure is taken, the average would push 30 months. Global history demonstrates that government intervention doesn't work over the long term, regardless if it can create temporary trend changes. South American and Asian governmental currency devaluations, Japanese governmental bailouts of stock and real estate markets, US bailouts of Long Term Capital Management, Bear Stearns, AIG, Fannie, Freddie, and the ongoing attempt to save our raped and pillaged economy, among the few off the top of my head, didn't work over time. To blame our predicament on the government allowing Lehman to fail, or on Presidant Bush, or on any single event or person requires a level of denial and or halucination of the pathologic variety.
The only way to change the effect is to change or eliminate the cause. All the bailouts to date, stimulus packages, money market guarantees, money printing, global credit facilities, etc. (I can't even remember all the "too little, too late" fixes they've tried in the last year) have rallied stock markets for shorter and shorter time frames as the situation worsens, including the two-day wonder of a rally that ended in Tuesday's open hour. The global monied elite know how to sort the chaff from the wheat, and don't need CNBC or FoxNews to tell them what these manipulations mean to their capital. The fact that the monied elite continue to sell every rally on every new desperation tells us that none of the moves so far are worth believing in. By definition, if they were believable, the market would be rising rather than falling.
Investing is just that simple, usually, as evidenced by the well know market motto: "Buy low, sell high". Anyone that tells you they can actually do this, without showing you the audited statements to prove it, is lying. As we all know, it's hard to "buy low", because it's hard to tell how low is low. Even harder, "selling high" is something we are only told about after the time WAS right. Here's the psychological rule that has served me well over the years, which plays a large part in my decision support system. The crowd mentality or direction is the red light (sell) or green light (buy). When everyone is happily bragging about their genius and its results on their portfolio, I like to sell. When the same crowd is moping about their losses, I like to buy. As I always heard in the halls of the psych department, "moping ain't coping". Coping means taking action. Action is a cause that leads to an effect. If you aren't happy with the effect, change the cause. It's that simple.
The bottom line is that we must take responsibility for our actions in all facets of our lives. We cannot be masters of our domains if we rely on other for financial decisions. If we don't understand the game, we shouldn't be playing. If we can't afford the risk of loss, we can't afford the reward of gain. The sword had two edges. For every action, there is an equal and opposite reaction. When we attend the leverage party and stay too long, we can't be surprised at the consequences. They are typically as intensely painful as they were intensely pleasurable. Ying-Yang. Seven years of plenty are followed by seven years of famine.
Buy low, sell high! Are we low here or high? If neither, then find a level that is low to buy, or high to sell. Keep it simple...trust noone, but if you do trust, verify.
For what it's worth,
Ken
It's interesting that everyone on the planet, except those that know history, are asking if the Bear Market is over, when recent (the last 80 years) history tells us that the average Bear Market lasts 20 months, not the 12 months that this current one has growled. True, one can argue that if the average is 20, then there should be some shorter and some longer, so maybe this one is of the shorter variety. If that is the argument, then we must take an average of the worst Bear markets, since never in history have we been in the dire straits we currently find ourselves. If that measure is taken, the average would push 30 months. Global history demonstrates that government intervention doesn't work over the long term, regardless if it can create temporary trend changes. South American and Asian governmental currency devaluations, Japanese governmental bailouts of stock and real estate markets, US bailouts of Long Term Capital Management, Bear Stearns, AIG, Fannie, Freddie, and the ongoing attempt to save our raped and pillaged economy, among the few off the top of my head, didn't work over time. To blame our predicament on the government allowing Lehman to fail, or on Presidant Bush, or on any single event or person requires a level of denial and or halucination of the pathologic variety.
The only way to change the effect is to change or eliminate the cause. All the bailouts to date, stimulus packages, money market guarantees, money printing, global credit facilities, etc. (I can't even remember all the "too little, too late" fixes they've tried in the last year) have rallied stock markets for shorter and shorter time frames as the situation worsens, including the two-day wonder of a rally that ended in Tuesday's open hour. The global monied elite know how to sort the chaff from the wheat, and don't need CNBC or FoxNews to tell them what these manipulations mean to their capital. The fact that the monied elite continue to sell every rally on every new desperation tells us that none of the moves so far are worth believing in. By definition, if they were believable, the market would be rising rather than falling.
Investing is just that simple, usually, as evidenced by the well know market motto: "Buy low, sell high". Anyone that tells you they can actually do this, without showing you the audited statements to prove it, is lying. As we all know, it's hard to "buy low", because it's hard to tell how low is low. Even harder, "selling high" is something we are only told about after the time WAS right. Here's the psychological rule that has served me well over the years, which plays a large part in my decision support system. The crowd mentality or direction is the red light (sell) or green light (buy). When everyone is happily bragging about their genius and its results on their portfolio, I like to sell. When the same crowd is moping about their losses, I like to buy. As I always heard in the halls of the psych department, "moping ain't coping". Coping means taking action. Action is a cause that leads to an effect. If you aren't happy with the effect, change the cause. It's that simple.
The bottom line is that we must take responsibility for our actions in all facets of our lives. We cannot be masters of our domains if we rely on other for financial decisions. If we don't understand the game, we shouldn't be playing. If we can't afford the risk of loss, we can't afford the reward of gain. The sword had two edges. For every action, there is an equal and opposite reaction. When we attend the leverage party and stay too long, we can't be surprised at the consequences. They are typically as intensely painful as they were intensely pleasurable. Ying-Yang. Seven years of plenty are followed by seven years of famine.
Buy low, sell high! Are we low here or high? If neither, then find a level that is low to buy, or high to sell. Keep it simple...trust noone, but if you do trust, verify.
For what it's worth,
Ken
Oct 9, 2008
NEAR TERM, RISK/REWARD NOW FAVORS UPSIDE...FIRST TIME IN 12 MONTHS !
(click on chart to enlarge for details)
CHART AU COURANT: Here is the current, bloody picture of the decline I've been warning of for the past year. This is the exact chart I published on June 2 of this year, when the Dow was at 12,500. That was titled, "Dow 12,000 or BUST" and went on to say that any break of 12,000 was the warning bell and immediate sell signal for buy and holders. On July 14th of this year at Dow 11,055, I updated the original chart with new blue vectors showing the path to 8,000 or lower that I expected the markets to follow now that 12,000 had been broken. Look at the chart above to see how closely the market is living my halucination. As you can see, here at 8579, we're approaching the next "bounce" level around 8,000. In the overnight session Thursday night, the Dow futures touched 8274. Monthly (shown), and weekly, daily, and hourly (all not shown) stochastics are massively oversold and in position for a relief rally at the least. The Dow futures are testing the 5 standard deviation level below their 200 day moving average of price (not shown), which is statistically impossible to maintain for much longer (hours/days). Finally, the 40% decline in the past year by today's closing price is just below the Fibonacci 38.2% minimum retracement level; the next most common is the 50% level, which is 7,100, the low of 2002, and the uptrend line from the 1987 low. Ironically, there are many similarities to 1987. So, at the rate of loss of the last few days, we are almost certainly within a couple days of bottoming. Worst case from here would be a down and dirty test of 6,000 +/- 300 into mid next week.
Those of you that attended my "special warning" meeting in Seattle in Fall '07 and moved to the sidelines are the happiest campers in the world. What will be know as the slaughter of 2008 continues to destroy the "buy and hold" generation, which is most of public between age 30 and 80. In 1987, the Dow lost 22% in a day, and in 2008 it lost the same 22% in the last week. Unlike '87, when that plunge market the end of the entire correction that began two months early than the October crash, this time it marks the end of the "first part" of the correction that began in November 2007, and will likely continue through 2009, perhaps longer. But, certainly is NOT ending now.
_______________________________________________
With the Dow off 40% since its high a year ago, there should soon (days/weeks, not months) be a rally back up toward the underside of the break down level of 10,300-11,000. This rally should begin sometime around the election +/- 10 days. In the meantime, there is likely a sharp, failing rally that begins with the next few hours/days that might reach into the 9800 area +/- 300. Prior to the election however, there is still better than 50/50 odds of 7800-8100 being tested first though, with 7100-7600 a respectable possibility. Any panic under 7000 should be greeted with short term joy and bought strongly. Use the stretch of the rubberband to your advantage.
The bottom line is that NOW IS TOO LATE TO SELL. Why? Well, at worst, there is another 10-20% risk from here, whereas from here, there is a 20-30% reward in the short term, and even better reward if you can hold for 5 years, the minimum anyone should be buying and holding for (10 years being ideal).
We must expect the Fed and Treasury departments to pull out all stops to float this sinking ship. They will try to convince companies to buy back their shares; get the monster mutual funds and hedge funds to get in there and buy stocks; and secretly jump into the futures markets to try to get a massive "short squeeze" rocketing higher. They are rumored to be looking at taking equity stakes in banks and brokerages in exchange for capital, in essence nationalizing our banking system. Who knows what they'll do, but at this point, they will try everything to save the boat. In addition, the Republicans know that there is no McCain if the markets are down in the toilet at election. So, the Fed and Treasury will be pressured to do something to "put lipstick on this pig" prior to voting day, including another EMERGENCY interest rate cut.
Markets like these are brutal and make it hard for bulls and bears alike to profit. Remember, historically, after a smash like this, the first 40 days of the recovery are the best days to be in the market, which is why it's too late to step out. If you leave the party at this point, you will be unlikely to jump back in for the juicy rally. Further, you'll be unlikely to exit after 3-6 weeks of bounce and avoid the retest of the lows. Either way, the question you need to ask at this point is: "if you had no money in the market currently, would you put it in right now?" If the answer is no, then exit. If the answer is yes, then stick around.
(closed trades are always in black type)
INTERESTING PLAYS TO LIGHTEN UP ON OR SHORT SELL: Currently, there are no open short positions, which usually happens close to market lows. But, stay tuned. We took amazing profits into the Freddie/Fannie failure and will re-short on a reasonable rally.
INTERESTING PLAYS TO ACCUMULATE OR BUY: GE under 20 (entered 19.99 on 10/9, breakeven stop placed on 10/13, exited 19.99 on 10/13 at breakeven) and adding under 12, BX under 10 (entered 9.99 on 10/9, placed breakeven stop 10/14, exited 9.99 on 10/14 at breakeven) adding under 5, GS under 75 (entered 74.99 on 10/10, exited 126.99 on 10/14, +52 a share or 69% in two days) buying again under 80 and adding under 50, MSFT under 21 (entered 20.99 on 10/10, exited 25.79 on 10/14, +4.80 or 22.8% in two days), YHOO under 20 or above 22 and adding under 13 (entered 19.82 on August 11 and 12.25 on 10/10, placed 10.25 stop on 10/14 on 2nd position only), GOOG under under 310 (entered 309.99 on 10/10, exited 388 on 10/14, +78.01 or 25% in two days) adding under 230, EBAY under 19 (entered 18.50 on 10/6, placed 17 stop 10/14, exited at 17 on 10/14 -1.50 or -8% ) and adding under 12, DELL under 17 (entered 16.50 9/16, placed 15.50 stop 10/14, exited 15.50 on 10/14, -1.00 or -6%) and adding under 10, SMH (entered @ 25 on 9/15 ) adding under 21 (entered 2nd position at 20 on 10/10, placed stop at 22.35 on 10/14 for both positions, exited 10/14 at 22.35, -2.65 or -10% on initial entry, +2.35 or +11.8% on second ) , SLV under 10 (entered 9.99 on 10/10) adding under 7, SBUX under 13 (entered 12.99 on 10/6) adding under 8, RIMM re-entering under 53 (entered 52.99 later on 10/6, exited 67.18 on 10/14, +14.19 or 26.7% in a week) and add under 45, AAPL under 135 (entered 134.99 9/16) adding under 90 (entered 2nd time 89.99 on 10/6, exited this position only at 113.78 on 10/14, +23.77 or 26.3% in a week) and under 65 , INTC under 19 (entered 18.99 9/16) adding under 13. CRM under 45 (entered 44.99 on 9/29) adding under 32 (entered 30.50 on 10/10, exited this position only at 40 on 10/14, +9.50 or 31% in two days) adding 2nd pos. back under 27, RIO under 18 (entered 16.88 on 9/29) adding under 8, and PCU under 19 entered 18.88 on 9/29) adding under 8 for 50% pops. SCHN under 28 (entered 27.99 on 10/6) adding under 20. UWM under 32 (entered 31.99 on 10/6, exited this pos. at 32 on 10/14, breakeven) and adding under 22 (entered 2nd at 22 on 10/10, exited at 32 on 10/14, +10 or 45% in two days) re-entering under 18. IBM under 90 (entered 89.99 on 10/8, exited at 97.86 on 10/14, +7.87 or 8.7% ) adding under 75, and HD under 19 (entered 18.99 on 10/10, placing breakeven stop on 10/14) adding under 12. Long the Euro around 1.3450 to 1.3350 (entered 1.3400 on 9/10, stop places at breakeven on 10/12...exited 1.3683 on 10/13, +2.83 handles or $3,537.5 per contract) and standing aside for now.
For what its worth,
Ken
Oct 8, 2008
One of the oldest Wall Street Adages know on Wall Street is: SELL ON ROSH HASHANNAH; BUY ON YOM KIPPUR !
Well, we'll see how it holds up this year (5769 of the Hebrew Calendar). But, there is a wonderful set up building for a dramatic slide on tomorrow's open, and an intra-day bottom, with a massive rally from around that low. I'd love to see the Dow test the low 8000's tomorrow, S&P test high 800's to low 900's, and the Nasdaq test 1500-1600, then reverse violently. If this scenario happens, a multi month low is a good bet.
The short selling ban ends tonight at midnight as well. Wouldn't it be interesting if as short selling becomes available again, it sparks a monster rally, thus ending the falacy that shorting causes markets to fall?
For what it's worth,
Ken
The short selling ban ends tonight at midnight as well. Wouldn't it be interesting if as short selling becomes available again, it sparks a monster rally, thus ending the falacy that shorting causes markets to fall?
For what it's worth,
Ken
FED JOINS IN ON GLOBAL RATE CUT PROGRAM, but not enough...YET !
Here's a quick comment on the 1/2 point interest rate cut the Fed just joined in on, which is the first global interest rate move since the 9/11/2001 Terror Attacks.
Come on Ben, why only cut 1/2 point when that what was expected? You know you should have cut the whole point, and will before this is even close to being over? Your "slow to react" decisions are part of this problem, which we know you didn't create, but certainly haven't nipped in the bud.
The markets were setting up across the globe my midnight PST for a crushing decline, with Europe and Asia markets down 5%-10%, and US markets down another 5%. With this rate cut, the US markets have moved a couple percent higher in the overnight futures market at their best level, but while I'm writing this, have given it all back and are negative again now, about 6a PST, 30 minutes before the official market open. There may be a few hours to few days of rally, but again, a 1/2 point too little to do the job. The market knows they could have cut a full point, so will do its best to push whatever buttons needed to get what it wants.
For now, the losses of the overnight rally and turn negative on the day will scare the "you know what" out of Uncle Ben, and the potential for or actual crash that could happen next might finally cause the needed action by him and his FOMC buddies. A 1/2 point rate cut still doesn't fix the problem, which can be summarized in a few words now: lack of public confidence. Had our government decided to send each household $100,000, we'd likely have seen the bottom. True, that would cost about $3.5 trillion, but that is about half what the entire mess will likely take to fix, and they have known that for the last year. They know that if they play the "little at a time" game, they can get the public to "feel the pain" and take the medicine (paying the tax bill). They know that if they take the "right" medicine and hand out the $100k checks, they would get the response the country needs, but they'd all be unemployed. Too bad they aren't doing the fiduciary duty they signed up and were elected/hired to do: put the public interest in front of their own.
By the way, long time followers of these writings can check back to my July 30, 2008 comments titled: "SHOCK AND AWE SELLING IMMINENT...no stock will be spared!" I showed a picture of the S&P 500 that issue that had closed that day at 1265. It closed yesterday at 996, fully 21% lower in 70 days. Even worse, the Nasdaq is down 35% below its Summer high! More recently, the broad market indices are down 15% in the last week alone!
Hopefully, many took the warning and have been spared the pain of the last couple months, and those that follow.
For what it's worth,
Ken
Come on Ben, why only cut 1/2 point when that what was expected? You know you should have cut the whole point, and will before this is even close to being over? Your "slow to react" decisions are part of this problem, which we know you didn't create, but certainly haven't nipped in the bud.
The markets were setting up across the globe my midnight PST for a crushing decline, with Europe and Asia markets down 5%-10%, and US markets down another 5%. With this rate cut, the US markets have moved a couple percent higher in the overnight futures market at their best level, but while I'm writing this, have given it all back and are negative again now, about 6a PST, 30 minutes before the official market open. There may be a few hours to few days of rally, but again, a 1/2 point too little to do the job. The market knows they could have cut a full point, so will do its best to push whatever buttons needed to get what it wants.
For now, the losses of the overnight rally and turn negative on the day will scare the "you know what" out of Uncle Ben, and the potential for or actual crash that could happen next might finally cause the needed action by him and his FOMC buddies. A 1/2 point rate cut still doesn't fix the problem, which can be summarized in a few words now: lack of public confidence. Had our government decided to send each household $100,000, we'd likely have seen the bottom. True, that would cost about $3.5 trillion, but that is about half what the entire mess will likely take to fix, and they have known that for the last year. They know that if they play the "little at a time" game, they can get the public to "feel the pain" and take the medicine (paying the tax bill). They know that if they take the "right" medicine and hand out the $100k checks, they would get the response the country needs, but they'd all be unemployed. Too bad they aren't doing the fiduciary duty they signed up and were elected/hired to do: put the public interest in front of their own.
By the way, long time followers of these writings can check back to my July 30, 2008 comments titled: "SHOCK AND AWE SELLING IMMINENT...no stock will be spared!" I showed a picture of the S&P 500 that issue that had closed that day at 1265. It closed yesterday at 996, fully 21% lower in 70 days. Even worse, the Nasdaq is down 35% below its Summer high! More recently, the broad market indices are down 15% in the last week alone!
Hopefully, many took the warning and have been spared the pain of the last couple months, and those that follow.
For what it's worth,
Ken
Oct 6, 2008
10k, 9900, 9800, 9700, 9600...falling like flies !
(click on chart to enlarge)
Meltdown Monday? Well, it's kinda looking like it could be. The Dow hit our minimum target set last Spring of 9750 this morning (which was -570 or so), tried to bounce, but slid again to 9500 (which was -800). It's unlikely that even 9500 will be a serious low, even if it launches a several day run back up toward 11,000. A move above 12,000 would be need to technically turn this market around for a multi month move. More likely, several more up-down sequences lower should at least test 8700-9300 before Halloween, perhaps the mid 7000's. When they got to 9500 at the worst today, a panic buy program was launched on light volume that put 500 points back on the Dow, but they still couldn't keep it above the magical 10k. Remember, on Sept. 25th, we wrote, "THE MARKETS ARE AT THE HIGHEST RISK OF A CATASTROPHIC SELLING EVENT SINCE 1987. If our lawmakers play politics too long (and I means in hours, not days), we are going to see the "BIG ONE"! Any break of Dow 10,500 should launch a landslide of selling to at least the 9,500 area, more likely 7,500-8,000 (another short term bottom should be created there). Only an immediate move above 11,500 will postpone the coming slide (perhaps allowing 12k to 12,300 in a panic to buy like last week), which could easily slash another 2,000-4,000 off the Dow this year." Today's low was 9525, 1500 Dow points under the close on Sept. 25th at 11,000. Some might call that catastrophic, but it wasn't, YET!
By the way, all this selling is happening without the ability to "sell short", which doesn't come back online until Thursday, unless they postpone it again. So, the media's story that short sellers "caused" this slide is proving to be faulty.
The carnage is wide and deep, and I feel you pain, for I've been trapped in situations like these in the past. This is a bit different than past bear markets, as this one sat on top of the largest credit extension in history. Regression toward the mean suggests that this correction becomes as overdone to the downside as the bull market became to the upside. If this is becomes reality, my halucination of Dow 5k and S&P and Nasdaq 500 levels. Question: Are we closer to the top or the bottom? Well, let's say we're in the middle. From 14,200 to 9800 is 4400 points. If we're half way, then we subtract 4400 from 9800 and we come up with 5400. Hey, that is a number I can justify with multiple targeting methods, and have for over a year if you've been keeping track. What if we're closer to the bottom? Okay, let's say we're 2/3's done. Now we can target 7600 Dow for the ultimate low. But, what if we're closer to the top and are only 1/3 done? Then, we have to target that scary post 1987 crash low of 1700 Dow. Okay, even I don't want to consider that, although objectivity demands that I must keep it in my head.
The "markets" now want a Fed rate cut, and they may childishly pound on the floor (prices) until they get their way. I will use the 7500 area to become 1/3 invested; the 5400 area to become 2/3 invested; and, save the final 1/3 for either the 1800 area or the break back above 11,000. The hardest decisions in the world will be to invest money at these levels, but I have found when I have a plan, write the plan down, and review the plan when I feel anxious, my odds of execution of the plan increase dramatically.
(closed trades are always in black type)
INTERESTING PLAYS TO LIGHTEN UP ON OR SHORT SELL: Currently, there are no open short positions, which usually happens close to market lows. But, stay tuned. We took amazing profits into the Freddie/Fannie failure and will re-short on a reasonable rally.
INTERESTING PLAYS TO ACCUMULATE OR BUY: GE under 20 (entered 19.99 on 10/9) and adding under12, BX under 10 (lower from 11 on 10/9)(entered 9.99 on 10/9) adding under 5, GS under 75 (down from 85)(entered 74.99 on 10/10) adding under 50, MSFT under 21 (up from 18 limit)(entered 20.99 on 1010), YHOO under 20 or above 22 and adding under 13 (entered 19.82 on August 11), GOOG under 390 (entered 389.50 on 9/28, using break even stop as of 10/2, exited at breakeven on 9/29) and under under 310 adding under 230, EBAY under 19 (entered 18.50 on 10/6) and adding under 12, DELL under 17 (entered 16.50 9/16) and adding under 10, SMH (entered @ 25 on 9/15 at market open) adding under 21, SLV under 10 adding under 7, SBUX under 13 (entered 12.99 on 10/6), RIMM under 95 (entered 94.99 9/16, exited 99.99 on 9/25, +5.00 or 5.5%) but will re-enter under 63 (re-entered 61.18 on 9/29, stop set at breakeven 10/2, exited breakeven on 10/6) re-entering under 53 (entered 52.99 later on 10/6) and add under 41, AAPL under 135 (entered 134.99 9/16) adding under 90 (entered 2nd time 89.99 on 10/6) and under 65 , INTC under 19 (entered 18.99 9/16) adding under 14. CRM under 45 (entered 44.99 on 9/29) adding under 32. SBUX under 13 (entered 12.99 on 10/6) and adding under 8. And, new additions in the natural resource areas...RIO under 18 (entered 16.88 on 9/29) adding under 8, and PCU under 19 entered 18.88 on 9/29) adding under 8 for 50% pops. SCHN under 28 (entered 27.99 on 10/6). UWM under 32 (entered 31.99 on 10/6) and adding under 24. IBM under 90 (entered 89.99 on 10/8) adding under 75, and HD under 19 (entered 18.99 on 10/10) adding under 13. Long the Euro under 1.3500 (entered 1.3498 on 10/6, placed break even stop on 10/7, exited 1.3808 on 10/9, +3.1 handles or $3750 per contract). If out I'll buy around 1.3450 to 1.3350 (entered 1.3400 on 9/10, stop places at breakeven on 10/12) adding around 1.2850 to 1.2650.
For what it's worth,
Ken
Oct 4, 2008
SLIPPERY SLOPE OF GLOBAL VILLAGE HOPE !
From the moment the House passed the Bailout Bill Friday, the Dow fell 470 to close at their lowest level since March 2007, reminding us that having money in the Blue Chips as been "dead money" for 18 months, now 28% off the year-a-go all time highs of 14,200. That number is -31% each for the S&P 500 and Nasdaq indices, which is more widely reflective of the "market" than the Dow. Since most your investments are not as diversified as these indices, you are probably down more than 31% in your investment and 401k's. Although most pundits will tell you that the average bear market in the past 100 years saw a drop of 28-34% so you should be buying here, that is a reckless argument. Just because the average bear was that number, the actual range of declines that are used to compute the average is much scarier than the average. Especially, the big ones in the 1930's, 1970's and early 2000's. Theses were periods when declines of 50% to 80% were common.
I'm hearing rationalizations like "if you think it's bad here, you should see Europe and Asia", which means we're relatively better than they are. But, if they decline 80% and we only decline 60%, is that tolerable? Not for me, which is why I've been on the sidelines with my safe money (CD's, money markets, and FDIC protected bank accounts) since summer 2005.
In case you missed it, California Govern-ator Arnold informed Treas. Sec. Paulson today that the credit markets are so stagnant that he'll need Federal assistance within a couple weeks to the tune of $7 billion to keep the biggest state in our country going. With many other states, counties, and cities in trouble, imagine the line up at the Treasury's door by the end of the year.
It's amazing that our government still hasn't admitted that we are officially in a deflationary recession, on the way to depression. Historically again, they'll do that within a few weeks of the ultimate bottom; finally admitting what we already know. Like I said in a blog post this week, when stocks, gold, silver, copper, crude, and real estate all decline together, that is deflation! When unemployment rises and payrolls plunge fall at the same time, along with government bailouts of the automotive and finance industries, that is recession. When they happen at the same time, that is the worst of all world: deflationary recession. And when it's a big one, like the 1930's in America, or the last 20 years in Japan, and many others in the past 100 years around the world, that is depression.
Action Steps: The "predictive" market theory used in our system has been preparing us for this decline for well over a year. It now tells us to expect a large corrective bounce higher to begin shortly, probably later in October. It's corrective because it will NOT come from the ultimate market low (unless there is an actual crash event in the next 60 days that brings the markets and economy to its knees), but from a trading low. This means that by the end of October/middle of November, with the Dow in the 8500-9500 range, the S&P in the 800-900 range, and the Nasdaq in the 1500-1700 range, a multi month oversold rally will arrive (sometimes known as the Christmas Rally) and "appear" to be the bottom. It will likely offer a very sharp rally and suck the ill-informed back into the markets, and/or convince the general public that "holding on" had once again paid off, and they've been saved again. To those that embrace it as a wonderful gift and look to lighten up on their losers below their break even levels, the gift will pay off.
The final market low will come in a few years when NOBODY wants to talk about stocks, own stocks, think about stocks, admit they own stocks, or be friends with anyone that does any of these. Like in the early 1980's, after 16 years of "net sideways" markets since 1966, including several 40-60% bear markets and several 60-100% bull markets, nobody admitted they owned stocks. It was all about CD's at 15-20% interest and buying real estate directly from banks for nothing down and just agreeing to make the payments. In 1982, which was the birth year for the bull market that advance the Dow from 700 to its 14,200 peak in November '07, very few Americans owned stocks. There were only a few mutual funds. It cost hundreds of dollars to buy a hundred shares of stock, unlike today's ten dollars per trade. There were no online brokers, discount brokers, or rich stock brokers. In fact, brokers were thought to be just below lawyers on the social pyramid (now barely above). You couldn't sell stocks to your grandmother who loved you unconditionally. That's how tough it was. Guess what? We need to get back to that to wash the system of the excesses that have built up in the past 26 years. When that happens, the best and last buying opportunity of our life time will present itself. Be ready.
Until then, if you are very nimble, objective, humble, saavy, and lucky, you can play many of the extremely violent up and down swings that are to come in the next few years in stocks, bonds, gold, silver, oil, euros, and maybe even real estate. Otherwise, get your money and mind ready for the gloomiest, hardest, scariest, toughest, and dangerous periods since The Great Depression. Will it get that bad? Who knows. But, unless you have certainty that it won't, isn't it better to be safer than sorrier?
Many will say that you can't afford to be out of the market, for when it turns higher, the big gains are made early. That is true of the past 26 years, when the greatest bull market in history was in it's final 26 years of it's 76 year life. But, if that great bull is finally gone, and we're in the correction of that entire move, then one year (since the 14,200 peak last Nov.'07) and only 28%-31% declines in the market averages is nothing compared to what it will take to correct the move from the 1932 Dow low of 39 to the peak of 14,200. The typical 50% correction will take the Dow to 7000. Since this was an "atypical" advance, logic would suggest that the correction needed will be atypical as well. My halucination points to 4,000-5,000 Dow, 500 S&P, and 500 Nasdaq. Like recent failures of WaMu, Lehman, AIG, etc., these stocks fell 50% per week from the time new investors bought in. If you bought WaMu because it was cheap on July 7 at 5.50, it was 3 by July 14. If you bought it at 3 because it was cheap, it was 1.50 by Sept. 14. If you bought it at 1.50, it was 50 cents by Sept. 25. If you bought it at 50 cents, it was 11 cents by the next day. There is always a way to get a 50% haircut on the way down. Those of you that were in the market during the Dot.com bubble burst, you know that you thought microsoft, yahoo, amazon, ebay, and all the others were cheap on their paths down from $100 or higher to $10 or lower from 1999 to 2003. Our human brains have enough trouble with arithmetic advances or declines, but very few of us can plan and execute in environments of geometric advances or declines. Know your strengths and weaknesses, and avoid situations where you are untrained or weak.
If you don't agree with me, that is okay. If you want to prove me wrong, just keep your funds in the markets for the next 3-5 years and invite me for coffee November 2012. If I was right, I'll buy, otherwise I'll need you to buy.
For what it's worth,
Ken
I'm hearing rationalizations like "if you think it's bad here, you should see Europe and Asia", which means we're relatively better than they are. But, if they decline 80% and we only decline 60%, is that tolerable? Not for me, which is why I've been on the sidelines with my safe money (CD's, money markets, and FDIC protected bank accounts) since summer 2005.
In case you missed it, California Govern-ator Arnold informed Treas. Sec. Paulson today that the credit markets are so stagnant that he'll need Federal assistance within a couple weeks to the tune of $7 billion to keep the biggest state in our country going. With many other states, counties, and cities in trouble, imagine the line up at the Treasury's door by the end of the year.
It's amazing that our government still hasn't admitted that we are officially in a deflationary recession, on the way to depression. Historically again, they'll do that within a few weeks of the ultimate bottom; finally admitting what we already know. Like I said in a blog post this week, when stocks, gold, silver, copper, crude, and real estate all decline together, that is deflation! When unemployment rises and payrolls plunge fall at the same time, along with government bailouts of the automotive and finance industries, that is recession. When they happen at the same time, that is the worst of all world: deflationary recession. And when it's a big one, like the 1930's in America, or the last 20 years in Japan, and many others in the past 100 years around the world, that is depression.
Action Steps: The "predictive" market theory used in our system has been preparing us for this decline for well over a year. It now tells us to expect a large corrective bounce higher to begin shortly, probably later in October. It's corrective because it will NOT come from the ultimate market low (unless there is an actual crash event in the next 60 days that brings the markets and economy to its knees), but from a trading low. This means that by the end of October/middle of November, with the Dow in the 8500-9500 range, the S&P in the 800-900 range, and the Nasdaq in the 1500-1700 range, a multi month oversold rally will arrive (sometimes known as the Christmas Rally) and "appear" to be the bottom. It will likely offer a very sharp rally and suck the ill-informed back into the markets, and/or convince the general public that "holding on" had once again paid off, and they've been saved again. To those that embrace it as a wonderful gift and look to lighten up on their losers below their break even levels, the gift will pay off.
The final market low will come in a few years when NOBODY wants to talk about stocks, own stocks, think about stocks, admit they own stocks, or be friends with anyone that does any of these. Like in the early 1980's, after 16 years of "net sideways" markets since 1966, including several 40-60% bear markets and several 60-100% bull markets, nobody admitted they owned stocks. It was all about CD's at 15-20% interest and buying real estate directly from banks for nothing down and just agreeing to make the payments. In 1982, which was the birth year for the bull market that advance the Dow from 700 to its 14,200 peak in November '07, very few Americans owned stocks. There were only a few mutual funds. It cost hundreds of dollars to buy a hundred shares of stock, unlike today's ten dollars per trade. There were no online brokers, discount brokers, or rich stock brokers. In fact, brokers were thought to be just below lawyers on the social pyramid (now barely above). You couldn't sell stocks to your grandmother who loved you unconditionally. That's how tough it was. Guess what? We need to get back to that to wash the system of the excesses that have built up in the past 26 years. When that happens, the best and last buying opportunity of our life time will present itself. Be ready.
Until then, if you are very nimble, objective, humble, saavy, and lucky, you can play many of the extremely violent up and down swings that are to come in the next few years in stocks, bonds, gold, silver, oil, euros, and maybe even real estate. Otherwise, get your money and mind ready for the gloomiest, hardest, scariest, toughest, and dangerous periods since The Great Depression. Will it get that bad? Who knows. But, unless you have certainty that it won't, isn't it better to be safer than sorrier?
Many will say that you can't afford to be out of the market, for when it turns higher, the big gains are made early. That is true of the past 26 years, when the greatest bull market in history was in it's final 26 years of it's 76 year life. But, if that great bull is finally gone, and we're in the correction of that entire move, then one year (since the 14,200 peak last Nov.'07) and only 28%-31% declines in the market averages is nothing compared to what it will take to correct the move from the 1932 Dow low of 39 to the peak of 14,200. The typical 50% correction will take the Dow to 7000. Since this was an "atypical" advance, logic would suggest that the correction needed will be atypical as well. My halucination points to 4,000-5,000 Dow, 500 S&P, and 500 Nasdaq. Like recent failures of WaMu, Lehman, AIG, etc., these stocks fell 50% per week from the time new investors bought in. If you bought WaMu because it was cheap on July 7 at 5.50, it was 3 by July 14. If you bought it at 3 because it was cheap, it was 1.50 by Sept. 14. If you bought it at 1.50, it was 50 cents by Sept. 25. If you bought it at 50 cents, it was 11 cents by the next day. There is always a way to get a 50% haircut on the way down. Those of you that were in the market during the Dot.com bubble burst, you know that you thought microsoft, yahoo, amazon, ebay, and all the others were cheap on their paths down from $100 or higher to $10 or lower from 1999 to 2003. Our human brains have enough trouble with arithmetic advances or declines, but very few of us can plan and execute in environments of geometric advances or declines. Know your strengths and weaknesses, and avoid situations where you are untrained or weak.
If you don't agree with me, that is okay. If you want to prove me wrong, just keep your funds in the markets for the next 3-5 years and invite me for coffee November 2012. If I was right, I'll buy, otherwise I'll need you to buy.
For what it's worth,
Ken
Oct 3, 2008
OOOPS, WHERE'S THE RALLY? BUY RUMORS, SELL FACTS...WATCH 10,000 !
The House just passed the bailout bill that the Senate did, and the market is falling again, off the +300 peak it was at when the vote ended...President Bush is about to speak and sign the new bailout bill, and possibly hint at the use of the backup plan that was prepared if a weak market followed the passage of the bill, but the market fell. That is likely to be a interest rate lowering of 1/2 to 1 full point (50 to 100 basis points). Let's wait and see. It would have to be very scary for him to announce the rate lowering, as it's Bernanke's job and turf.
Markets are very, very oversold, so this is NOT the time to be selling stuff you have held through the pain, or putting on "new bearish" trades. Use a 5-10% rally to lighten up on your dogs, and use any further 5-10% decline to put a "little" money to work for a trading rally. All eyes are on Dow 10,000 which is the psychological level of pain for most Americans. If we test that today, it'd better hold, or we'll see 9,000 in a hurry...maybe 8,300.
Oye Vey!
For what it's worth,
Ken
Markets are very, very oversold, so this is NOT the time to be selling stuff you have held through the pain, or putting on "new bearish" trades. Use a 5-10% rally to lighten up on your dogs, and use any further 5-10% decline to put a "little" money to work for a trading rally. All eyes are on Dow 10,000 which is the psychological level of pain for most Americans. If we test that today, it'd better hold, or we'll see 9,000 in a hurry...maybe 8,300.
Oye Vey!
For what it's worth,
Ken
Oct 2, 2008
CASH AND FETAL...We're very close!
One of the CNBC commentators answered when asked where people should be to be safe in these markets..."the only two positions I feel comfortable in at this moment are CASH and FETAL". Although this seems like a funny answer, and one we can all relate to it, the extreme sentiment echoed in it speaks to the complete lack of preparation that the general public took prior to the current market slide that began a year ago.
Good News/Bad News: The good news is that a multi month bear market bounce in an ongoing multi year decline is very close to starting, and it will be huge.. The bad news is that it is only going to offer temporary relief for the markets, as they reset to slide later in this "deflation and de-leveraging" cycle. So, develop a plan quickly to use the bounce to reduce exposure to markets you are too involved in, and start thinking about preservation of capital, rather than return on capital for the next couple years. Otherwise, what has happened to your portfolio in the last year will seem mild compared to what will happen to it in the next few years...assuming I'm correct.
In a rare scenario today, gold, oil, stocks, commodities, and currencies all fell at the same time. How can this happen to historically uncorrelated markets you might be asking? Well, when huge brokerages, funds, and banks all get into the same trades on the way up, and all get margin calls on the way down, and no one is there to take the bad stuff off their books, they have to all sell the good stuff that has created profits for them recently. So, they can't sell mortgages and commercial paper and derivative garbage, they must sell crude, gold, euros, google, aaple, and anything else that is liquid.
2008 year to date numbers are just out: 98% of all mutual funds are down this year! That has got to suck if you are holding any, including the 401k statements you coming to you this week or next. Those that have been following this blog have avoided thousands of points of decline, several bankruptsy events, enjoyed stellar profits in short periods of time in stocks, crude, euros, metals, ETF's, etc. While the markets were swinging all over the place, we have forecasted things to buy and sell. Just lucky? Well, absolutely, as long as you remember that the definition of luck is "when preparation meets opportunity".
At 10,482, the Dow is almost 4,000 points off it's Nov.'07 peak. Most indexes are worst off than that on a percentage basis. When the decline is over, somewhere out in 2010-2013, the Dow will likely have entered the 4,000-6,000 range and the Nasdaq the triple digits. OUCH! Must it happen? No. But, the odds are favoring that it will. Therefore, use any rally into the end of the year or early 2009 to prepare for the most devistating selling cycle in financial, real estate, and commodity assets since the 1930's. And if you think it couldn't happen again, that the government will save the system, that there are safeguards in the system that will keep it afloat, think again. That fantasy should no longer be part of your consciousness after the incompetance we've seen in the last several years.
Be safe and remember the only two positions of safety: cash and fetal. Feel free to contact me if you would like more personalized help with your situation. Stay tuned for the mark of "a" bottom.
For what it's worth,
Ken
Good News/Bad News: The good news is that a multi month bear market bounce in an ongoing multi year decline is very close to starting, and it will be huge.. The bad news is that it is only going to offer temporary relief for the markets, as they reset to slide later in this "deflation and de-leveraging" cycle. So, develop a plan quickly to use the bounce to reduce exposure to markets you are too involved in, and start thinking about preservation of capital, rather than return on capital for the next couple years. Otherwise, what has happened to your portfolio in the last year will seem mild compared to what will happen to it in the next few years...assuming I'm correct.
In a rare scenario today, gold, oil, stocks, commodities, and currencies all fell at the same time. How can this happen to historically uncorrelated markets you might be asking? Well, when huge brokerages, funds, and banks all get into the same trades on the way up, and all get margin calls on the way down, and no one is there to take the bad stuff off their books, they have to all sell the good stuff that has created profits for them recently. So, they can't sell mortgages and commercial paper and derivative garbage, they must sell crude, gold, euros, google, aaple, and anything else that is liquid.
2008 year to date numbers are just out: 98% of all mutual funds are down this year! That has got to suck if you are holding any, including the 401k statements you coming to you this week or next. Those that have been following this blog have avoided thousands of points of decline, several bankruptsy events, enjoyed stellar profits in short periods of time in stocks, crude, euros, metals, ETF's, etc. While the markets were swinging all over the place, we have forecasted things to buy and sell. Just lucky? Well, absolutely, as long as you remember that the definition of luck is "when preparation meets opportunity".
At 10,482, the Dow is almost 4,000 points off it's Nov.'07 peak. Most indexes are worst off than that on a percentage basis. When the decline is over, somewhere out in 2010-2013, the Dow will likely have entered the 4,000-6,000 range and the Nasdaq the triple digits. OUCH! Must it happen? No. But, the odds are favoring that it will. Therefore, use any rally into the end of the year or early 2009 to prepare for the most devistating selling cycle in financial, real estate, and commodity assets since the 1930's. And if you think it couldn't happen again, that the government will save the system, that there are safeguards in the system that will keep it afloat, think again. That fantasy should no longer be part of your consciousness after the incompetance we've seen in the last several years.
Be safe and remember the only two positions of safety: cash and fetal. Feel free to contact me if you would like more personalized help with your situation. Stay tuned for the mark of "a" bottom.
For what it's worth,
Ken
Sep 25, 2008
Another One Bites The Dust!!!! WAMU IS DONE !!!!
(click on chart to enlarge)
CHART AU COURANT: The first (top) chart is the monthly chart of how fast the mighty can fall ($44 to 18 cents in under a year). The lower chart is a close up of the anatomy of denial. It shows hourly bars for the last 3 months of WaMu's life, like the heart beat of a dying man, finally going to zero. So many lies were told during the last 3 months. So many promises broken. So much fraud. On the other hand, as I said in my comments on September 11, Wamu appeared not to have long to live. I said I was going to withdraw my money and move it from the worst bank in the country to the best bank, Wells Fargo. On September 16, my comments were titled "Panic Returns to Wall Street...Market Bottom Due This Week (at least short term)". The market bottomed on September 18th and rocketed 1200 Dow points in 10 market hours (the short term bottom was in). A week later, today in fact, the government has taken over the largest, worst run bank in the country, yes WAMU, and it no longer exists. GONE, Caput, Fini, TOAST! Who's next? Wachovia Bank (WB)? National City (NCC)? You can bet there will be more, even with the bailout package!
___________________________________
MARKETS: Luckily, and it may be due to the conspirators, WAMU didn't fail last week. If it had, with all the other catastrophic events going on, the odds are high that the system would have imploded, and the FDIC would not have been able to take it, causing the immediate run on most other banks in the country. As it was last week, there was a run on many money market funds, causing the FDIC to begin backing those as well, never done before. JP Morgan Chase will be your new bank, if you had funds in WAMU, which is a good thing. As for Kerry Killinger...good luck in prison, as your days under the microscope have just begun.
As the government on both sides of the aisle play their positioning games at the stake of us poor tax payers, the markets have had enough of the circus. The BAILOUT package is needed to rescue the "system", but will likely usher in selling by the fact that it further degrades the dollar and inflates the national debt. The credit markets are frozen in time, and are dictating the future of the stock market. Since it will take a while to fix the credit markets (at least months, not weeks), the stock market is extremely unlikely to bottom anytime soon, for more than a day or three.
THE MARKETS ARE AT THE HIGHEST RISK OF A CATASTROPHIC SELLING EVENT SINCE 1987. If our lawmakers play politics too long (and I means in hours, not days), we are going to see the "BIG ONE"!
Any break of Dow 10,500 should launch a landslide of selling to at least the 9,500 area, more likely 7,500-8,000 (another short term bottom should be created here). Only an immediate move above 11,500 will postpone the coming slide (perhaps allowing 12k to 12,300 in a panic to buy like last week), which could easily slash another 2,000-4,000 off the Dow this year.
(closed trades are always in black type)
INTERESTING PLAYS TO LIGHTEN UP ON OR SHORT SELL: Currently, there are no open short positions, which usually happens close to market lows. But, stay tuned. We took amazing profits into the Freddie/Fannie failure and will re-short on a reasonable rally. Looking to short the Euro near 1.4900 or higher, near Fibo 50% of prior decline.
INTERESTING PLAYS TO ACCUMULATE OR BUY (if you have to in a dangerous environment): See September 19 posting for profit taking on a lot of former trades. BX under 11, GS under 85, MSFT under 18, YHOO under 20 or above 22 and adding under 13 (entered 19.82 on August 11), GOOG under 390 (entered 389.50 on 9/28, using break even stop as of 10/2, exited at breakeven on 9/29) and under 290, EBAY under 19 (entered 18.50 on 10/6) and adding under 12, DELL under 17 (entered 16.50 9/16) and adding under 10, SMH (entered @ 25 on 9/15 at market open) adding under 21, SLV under 10 adding under 7, SBUX under 13 (entered 12.99 on 10/6), RIMM under 95 (entered 94.99 9/16, exited 99.99 on 9/25, +5.00 or 5.5%) but will re-enter under 63 (re-entered 61.18 on 9/29, stop set at breakeven 10/2, exited breakeven on 10/6) re-entering under 53 (entered 52.99 later on 10/6) and add under 41, AAPL under 135 (entered 134.99 9/16) adding under 90 (entered 2nd time 89.99 on 10/6) and under 65 , INTC under 19 (entered 18.99 9/16) adding under 14. CRM under 45 (entered 44.99 on 9/29) adding under 32. SBUX under 13 (entered 12.99 on 10/6) and adding under 8. And, new additions in the natural resource areas...RIO under 18 (entered 16.88 on 9/29) adding under 8, and PCU under 19 entered 18.88 on 9/29) adding under 8 for 50% pops. SCHN under 28 (entered 27.99 on 10/6). UWM under 32 (entered 31.99 on 10/6) and adding under 24. Long the Euro under 1.3500 (entered 1.3498 on 10/6, placed break even stop on 10/7) adding under 1.3000.
For what it's worth,
Ken
Sep 19, 2008
1930's...AGAIN? Bernanke Thought So This Week!!!
Fed Chairman Bernanke, THE undisputed expert on the Great Depression, evidently felt so scared of seeing that scenario unfold this time, that he and Pres. Bush, Treasury Sec. Paulson, SEC Chairman Cox, and at least several hundred lesser knowns put together the "everything including the kitchen sink" bailout package (which is being called the stabilization package so they don't have to say bailout) of the century this week. This has changed the rules that have been in place for 70 years. And, we don't know the particulars yet. Only the headlines were disclosed in an attempt to turn the markets, which worked so far. Did they put on a bigger bandaide or fix the problems? Most likely, this is another bandaide. They say the money markets are now covered under FDIC, and that the Government (you and I) will be taking half a Trillion (with a T) of bad mortgages off banks balance sheets. Wow, I guess the Darwins concepts of evolutionary survival of the fittest no longer apply to American business, banking, or speculating. It's now okay to be a blundering idiot and destroy other people's lives and net worths, and be backed and bailed out by good old Uncle Sam.
THIS IS NOT GOOD NEWS...WE SHOULD NOT BE CHEERING !!!
Coming so close to financial collapse, for the US and other countries, is nothing to celebrate. Are our systems and products too advanced for our regulators and leaders to control? Apparently! Check out the list below of all the longs I sold prior to the open on the hype of the "stabilization". I got huge one and two day moves, and must exit, as I don't understand the new rules of the new game. When I do, I can play again.
__________________________________________________
(closed trades are always in black type)
INTERESTING PLAYS TO LIGHTEN UP ON OR SHORT SELL: Currently, there are no open short positions, which usually happens close to market lows. But, stay tuned. We took amazing profits into the Freddie/Fannie failure and will re-short on a reasonable rally. Looking to short the Euro 1.4900 or higher, near Fibo 50% of prior decline.
INTERESTING PLAYS TO ACCUMULATE OR BUY (if you have to in a dangerous environment): See August 11 posting for profit taking on a lot of former trades. MSFT under 23, adding under 18, YHOO under 20 or above 22 and adding under 13 (entered 19.82 on August 11), GOOG on break back above 475 or under 461 (entered 460.99 at 9a on 9/3, exited at breakeven premarket 9/19) and adding under 400, EBAY on break back above 22 (lower from 24 on 9/15) (entered 21.99 on 9/15) and adding under 17, SNDK under 12 or above 15 (entered 15.01 on 9/5, using 13.48 stop as of 9/10, exited 24 premarket 9/19, +8.99 or 59%), GRMN under 30 or above 35 (down from 36 on 9/16, entered 35.01 on 9/18, using breakeven stop as of 9/19), DELL under 17 (entered 16.50 9/16) and adding under 10, SMH (entered @ 25 on 9/15 at market open) adding under 21, SLV entered 10.75 (exited 12.45 9/19, +15.8%)...I'll reenter 11.75 and add twice this amount at 8.75. GS under 118 (entered 117.48 on 9/16 6:09 am, exited 139.80 premarket 9/19 +22.32 or 18.9%) or above 130 and adding under 88 (lowered from 95 on 9/17), C which is riskier than most below 15 (entered 14.99 on 9/17, exited premarket 9/19 @21.99 +7 or 46%). GE under 23 (entered 22.99 9/16, exited 29.49 premarket 9/19 +6.50 or 28%), MS under 18 (lowered from 24 on 9/17) (entered 17.99 on 9/17, exited premarket 9/19 @34, +16.01 or 88% ), JEF under 14 or above 19 (entered 19.01 9/17, exited 28 premarket on 9/19, +9, or 47%), SBUX under 13 or above 17, UWM under 43 or above 46 (entered 46.01 9/16, exited premarket 9/19 @ 55, +8.99, or 19.5%), RIMM under 95 (entered 94.99 9/16, exited 99.99 on 9/25, +5.00 or 5.5%) or above 100, AAPL under 135 (entered 134.99 9/16) or above 140, INTC under 19 (entered 18.99 9/16) or above 21.
In Crude, I will buy any test of 100 +/-2 or a break above 112 now (entered $101.78 on 9/10 and stop is now breakeven as of 9/19 at 11a PST, exited 109.08 10:40a PST, +$7.10 or $3505 per contract) adding near $90 (added $90.98 on 9/16 @4:30am PST, exited this second position only $96.98 on 9/17 11:28a PST, +6 handles or $3000 per contract). Standing aside as of 9/22 10:44a.
Re-entered the Euro at 1.4439 @ 8a on 9/3 (exited 1.4539 on 9/18, +1 handle or $1250 per contract) and I'll add second entry back if under 1.4050 (added 1.4049 on 9/15 @ 4am PST, stop on this second position only at 1.4000 entered 11am PST, exited this position only 1.4359 on 9/17 @11:44a PST, +3.1 handles or $3875 per contract), standing aside now to see how things shake out or buying under 1.4200 (entered 1.4199 on 9/19 4:30a PST, exited 1.4649 on 9/22 9:26a PST, +4.5 handles or $5,625 per contract, as bounce pattern looks corrective, and everyone calling for further immediate move higher).
For what it's worth,
Ken
THIS IS NOT GOOD NEWS...WE SHOULD NOT BE CHEERING !!!
Coming so close to financial collapse, for the US and other countries, is nothing to celebrate. Are our systems and products too advanced for our regulators and leaders to control? Apparently! Check out the list below of all the longs I sold prior to the open on the hype of the "stabilization". I got huge one and two day moves, and must exit, as I don't understand the new rules of the new game. When I do, I can play again.
__________________________________________________
(closed trades are always in black type)
INTERESTING PLAYS TO LIGHTEN UP ON OR SHORT SELL: Currently, there are no open short positions, which usually happens close to market lows. But, stay tuned. We took amazing profits into the Freddie/Fannie failure and will re-short on a reasonable rally. Looking to short the Euro 1.4900 or higher, near Fibo 50% of prior decline.
INTERESTING PLAYS TO ACCUMULATE OR BUY (if you have to in a dangerous environment): See August 11 posting for profit taking on a lot of former trades. MSFT under 23, adding under 18, YHOO under 20 or above 22 and adding under 13 (entered 19.82 on August 11), GOOG on break back above 475 or under 461 (entered 460.99 at 9a on 9/3, exited at breakeven premarket 9/19) and adding under 400, EBAY on break back above 22 (lower from 24 on 9/15) (entered 21.99 on 9/15) and adding under 17, SNDK under 12 or above 15 (entered 15.01 on 9/5, using 13.48 stop as of 9/10, exited 24 premarket 9/19, +8.99 or 59%), GRMN under 30 or above 35 (down from 36 on 9/16, entered 35.01 on 9/18, using breakeven stop as of 9/19), DELL under 17 (entered 16.50 9/16) and adding under 10, SMH (entered @ 25 on 9/15 at market open) adding under 21, SLV entered 10.75 (exited 12.45 9/19, +15.8%)...I'll reenter 11.75 and add twice this amount at 8.75. GS under 118 (entered 117.48 on 9/16 6:09 am, exited 139.80 premarket 9/19 +22.32 or 18.9%) or above 130 and adding under 88 (lowered from 95 on 9/17), C which is riskier than most below 15 (entered 14.99 on 9/17, exited premarket 9/19 @21.99 +7 or 46%). GE under 23 (entered 22.99 9/16, exited 29.49 premarket 9/19 +6.50 or 28%), MS under 18 (lowered from 24 on 9/17) (entered 17.99 on 9/17, exited premarket 9/19 @34, +16.01 or 88% ), JEF under 14 or above 19 (entered 19.01 9/17, exited 28 premarket on 9/19, +9, or 47%), SBUX under 13 or above 17, UWM under 43 or above 46 (entered 46.01 9/16, exited premarket 9/19 @ 55, +8.99, or 19.5%), RIMM under 95 (entered 94.99 9/16, exited 99.99 on 9/25, +5.00 or 5.5%) or above 100, AAPL under 135 (entered 134.99 9/16) or above 140, INTC under 19 (entered 18.99 9/16) or above 21.
In Crude, I will buy any test of 100 +/-2 or a break above 112 now (entered $101.78 on 9/10 and stop is now breakeven as of 9/19 at 11a PST, exited 109.08 10:40a PST, +$7.10 or $3505 per contract) adding near $90 (added $90.98 on 9/16 @4:30am PST, exited this second position only $96.98 on 9/17 11:28a PST, +6 handles or $3000 per contract). Standing aside as of 9/22 10:44a.
Re-entered the Euro at 1.4439 @ 8a on 9/3 (exited 1.4539 on 9/18, +1 handle or $1250 per contract) and I'll add second entry back if under 1.4050 (added 1.4049 on 9/15 @ 4am PST, stop on this second position only at 1.4000 entered 11am PST, exited this position only 1.4359 on 9/17 @11:44a PST, +3.1 handles or $3875 per contract), standing aside now to see how things shake out or buying under 1.4200 (entered 1.4199 on 9/19 4:30a PST, exited 1.4649 on 9/22 9:26a PST, +4.5 handles or $5,625 per contract, as bounce pattern looks corrective, and everyone calling for further immediate move higher).
For what it's worth,
Ken
Sep 17, 2008
PANIC returns to Wall Street...MARKET BOTTOM DUE THIS WEEK (at least short term)
(click on chart to enlarge)
CHART AU COURANT: Following up on the headline from last post, at least a short term low is due this week for the stock markets in the US of A. This chart of VIX is how the "street" measures panic. It's the price of buying insurance against the worst case scenario. So, when VIX is low, the street is NOT fearful of things they don't know about. When it's high, they are very, very worried about disasters they don't know about. However, it's like child psychology: when you want your child to do something, you tell them not to. Here, the street (which is all of us put together) never buys the panic insurance until the disaster they didn't know about happened. That would be like finally buying your earthquake insurance after the big one hits. Stupid, right? So, we use VIX to tell us when the disaster is over or nearly so. Look above...you see the spikes in the past above the 30 level are rare, and above 35 are very rare. In fact, VIX has never closed above 35, and only closed above 30 a handful of times in its history. When it's up this high, it's telling us that street is paying too much for insurance against disaster, and it's time for a reversal in the next day or two! In addition, the stochastics are extremely extended above 90, which is also rare. Finally, the VIX is approaching the 4 standard deviation band. The only time in history that the VIX closed above this band was in August 2007, when it actually rose to the 6 standard deviation band for a few minutes. That panic low led to a 1700 point Dow rally (13%) and 200 point S&P rally (14%) in the following two months. Don't get me wrong. Nothing is for sure, but I point out that this is what short term bottoms often look like, at least in the past several years. On the other hand, very rarely, panic like this is actually ahead of the actual disaster. If that is the case this time, imagine what the disaster will be, considering what we know so far.
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INTERESTING PLAYS TO LIGHTEN UP ON OR SHORT SELL: Currently, there are no open short positions, which usually happens close to market lows. But, stay tuned. We took amazing profits into the Freddie/Fannie failure and will re-short on a reasonable rally.
INTERESTING PLAYS TO ACCUMULATE OR BUY (if you have to in a dangerous environment): See August 11 posting for profit taking on a lot of former trades. MSFT under 23, adding under 18, YHOO under 20 or above 22 and adding under 13 (entered 19.82 on August 11), GOOG on break back above 475 or under 461 (entered 460.99 at 9a on 9/3, exited at breakeven premarket 9/19) and adding under 400, EBAY on break back above 22 (lower from 24 on 9/15) (entered 21.99 on 9/15) and adding under 17, SNDK under 12 or above 15 (entered 15.01 on 9/5, using 13.48 stop as of 9/10, exited 24 premarket 9/19, +8.99 or 59%), GRMN under 30 or above 35 (down from 36 on 9/16, entered 35.01 on 9/18, using breakeven stop as of 9/19), DELL under 17 (entered 16.50 9/16) and adding under 10, SMH (entered @ 25 on 9/15 at market open) adding under 21, SLV entered 10.75 and adding twice this amount at 7.75. GS under 118 (entered 117.48 on 9/16 6:09 am, exited 139.80 premarket 9/19 +22.32 or 18.9%) or above 130 and adding under 88 (lowered from 95 on 9/17), C which is riskier than most below 15 (entered 14.99 on 9/17, exited premarket 9/19 @21.99 +7 or 46%). GE under 23 (entered 22.99 9/16, exited 29.49 premarket 9/19 +6.50 or 28%), MS under 18 (lowered from 24 on 9/17) (entered 17.99 on 9/17, exited premarket 9/19 @34, +16.01 or 88% ), JEF under 14 or above 19 (entered 19.01 9/17, exited 28 premarket on 9/19, +9, or 47%), SBUX under 13 or above 17, UWM under 43 or above 46 (entered 46.01 9/16, exited premarket 9/19 @ 55, +8.99, or 19.5%), RIMM under 95 (entered 94.99 9/16) or above 100, AAPL under 135 (entered 134.99 9/16) or above 140, INTC under 19 (entered 18.99 9/16) or above 21.
In Crude, I will buy any test of 100 +/-2 or a break above 112 now (entered $101.78 on 9/10) adding near $90 (added $90.98 on 9/16 @4:30am PST, exited this second position only $96.98 on 9/17 11:28a PST, +6 handles or $3000 per contract). I'll add it back under $89.
Re-entered the Euro at 1.4439 @ 8a on 9/3 (exited 1.4539 on 9/18, +1 handle or $1250 per contract) and I'll add second entry back if under 1.4050 (added 1.4049 on 9/15 @ 4am PST, stop on this second position only at 1.4000 entered 11am PST, exited this position only 1.4359 on 9/17 @11:44a PST, +3.1 handles or $3875 per contract), standing aside now to see how things shake out.
For what it's worth,
Ken
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