[Hisam135i]

Originally Posted by Vanity

Can't really tell you that. All anyone can say right now is that: DOW has failed 6 separate days to reclaim and hold 13,000, and that the markets only went up +14 points on good jobs data and Greece deal finally finishing. So it's close. The bigger question is where it will fall and what might the catalyst be.

This. If nothing major/severe happens in the global economy, such as war in Iran or chaos in Europe, I believe a 5-10% pull back would be healthy for the markets. If something catastrophic does however occur, it could be a large pull back. The drop on monday, was in my opinion quiet healthy for the markets. The DOW was very close to breaking its trend line, but managed to comeback throughout the week.



As everyone knows, the markets react first than think later, which is why the markets rallyed on through the week, after fears of greece started to slowly fade (even though they did technically default just a "structured" default).

What I find interesting is how the Dow Transports and the Russell 2000 arent having the same rallys as the rest of the sectors (possibly due to rising energy prices for the Dow Transports). The Russell 2000 however is showing that the little guy is indeed staying out, which could mean that all the people that are going to buy into this rally could have already bought in, symbolizing that the markets maybe running out of steam.








Just a quick post for the week.

[Vanity]

Cnbc article came out today with Pro traders telling people to buy in this rally at 1300. (still too expensive IMO) which is why I almost know this correction will ram past 1300. I'm still working on the vidence to support this model I'm working on, but I'm weighing the probabilities of this being a 20%+ new bear market. As the 2010 crash tried to bring a new bear, didn't hit 20% to declare one. In 2011 we had hit 20% on the intraday, but never closed a session past it so no bear. But each subsequent drop has been bigger in magnitude than the last since 2009. 09 baby bull is getting old and just "barely" shook off dropping 20% in 2011. Tells me there is weakness. Trend suggests this next correction might break through, as recent crashes have been working towards a 20% drop but failed.

Remember, information that everyone knows is information not worth knowing in this market. If everyone thinks this is going to be a 3-5% correction, it won't be. Just like how no one thought we would get to these multi year highs, and so we did. that's how the market makes money, you will never make money if everyone already knows the outcome. Which is why I'm leaning towards a larger correction rather than a small one. Anyone else been working out the ,agnitude of the correction? Anyone want to share their target ranges besides me and Mact?

[stylinexpat]

I'm playing MCP and SLV these days. I also like LVS along with MPEL.

[Vanity]

Anybody noticing the blow-off top formation?

SPX saw 120% volume relative to last 10-day avg volume. Dumb money is getting in on the top. Insiders have been selling since Feb, picking up selling pace from 6:1 in Feb, to now 7:1 in March, and most recently at 13:1.

Calling the top on this rally has been tedious and long-strained. I really do believe 2012 is going to mirror 2008. Doesn't it just feel like that all over again? Elections, high oil prices, declining earnings. Companies are issuing Q2 earnings to be negative at a 3:1 ratio. Hasn't been this high since the "crisis days" back in 09'.

Food for thought. Trade accordingly. I believe the months from April - September will be really rough. This is all my opinion so everyone hear should research and tinker it to their investment needs.

Mact, still there?

[Vanity]

Published March 15th, 2012, ECRI.

ECRI Recession call stands, re-affirmed.

Many have questioned why, in the face of improving economic data, ECRI has maintained its recession call. The straight answer is that the objective economic indicators we monitor, including those we make public, give us no other choice.

How about forward-looking indicators? We find that year-over-year growth in ECRI’s Weekly Leading Index (WLI) remains in a cyclical downturn (top line in chart) and, as of early March, is near its worst reading since July 2009.

As for the job's data coming out, which I pointed at increasing to 9% last month from suggesting Gallup polls, here's the ECRI's take on it:

Most data, both public and private, are seasonally adjusted. But the nature of the Great Recession seems to have had an unexpected impact on the statistical seasonal adjustment algorithms that are hard-wired to detect when the seasonal patterns evolve and change over the years. This is normally a good thing, but when the economy fell off a cliff in Q4/2008 and Q1/2009, it was partly interpreted by these procedures as a lasting change in seasonal patterns. So, according to these programs, data from Q4 and Q1 would be expected thereafter to be relatively weak, and therefore automatically adjusted upwards. Our due diligence on this subject indicates a widespread problem, resulting in many recent economic headlines being skewed to the upside.

And as for further QE's, whether domestic or global, here's their opinion as well:

It is notable that the WLI, which is sensitive to the prices of risk assets that have been supported by massive worldwide liquidity injections, has hardly been swayed from its recessionary trajectory. In spite of the efforts of monetary policy makers, actual U.S. economic growth has slowed, while WLI growth has barely budged from a two-and-a-half-year low.

The bigger question is, can unprecedented, concerted global monetary policy action repeal the business cycle? The objective coincident and leading indexes that we have always monitored are still telling us that it cannot.

Recession call maintained for US.

Add in Europe already being in Recession, and then now China:



These are just 1 month periods of home sales, Dec. 11, 2011 - January 12th, 2012.

Don't see the FED doing any QE this year, as Twist ends in June and they would need a crash to happen in order to justify more stimulus (as the country, to the majority of the public, does not feel like 2008/09). By then, any move would be too politically objective as it drives near the elections. Can you already hear the public uproar against Wall Street and then the FED as well if that happened?

This is going to be a big year. I can feel it


Update: More on that China slowdown coming into play very soon:

BHP Billiton warns of Chinese slowdown.

The world's biggest mining company, BHP Billiton, has sparked new fears about the economic outlook for China by warning the country's demand for iron ore is slowing.

I'll let you read the rest for yourselves. This should all come into play when Q1 earnings come in soon (by April 10th). Housing data coming out this week has been disappointing.

[Hisam135i]

Anyone have any ideas about the Tvix collapse today

[Vanity]

Originally Posted by Hisam135i

Anyone have any ideas about the Tvix collapse today

Ever since share creation halted the product has been trading at a premium. No supply, but demand exists. Hence, a premium. This is why on days when UVXY dropped 15%, TVIX either dropped a little bit (3%), or actually went up. The share have been halted since mid February. The underlying NAV (net asset value) of the instrument was actually trading at $8, and the underlying instrument for TVIX had been tracking VIX futures flawlessly. It was the premium that was distorting the surface. I suspect the correction today by Credit Suisse is so they can initiate shares creation again. Meaning, TVIX should be back to working 100% soon.

[BayMoWe335]

Originally Posted by Hisam135i

I just picked up some TVIX aftermarket at 18.47 hopefully didnt pay to much

Well....

[Hisam135i]

Originally Posted by BayMoWe335

Well....

LOL i sold this at over $20.34

[Vanity]

Morning Bulls!

Insider Selling

The ratio of insider selling to insider buying is even more pronounced on a value basis, hitting its highest level in a year recently, according to data from Thomson Reuters. Taking the total market into account, insiders sold $44.77 worth of stock for every dollar they bought in February. That's the highest insider sell-to-buy ratio since February 2011, when it hit $44.53 to $1.

That is all.

P.S. VIX was a good play this week. 40% in 2 days

What's everyone else to these days? Thread has been slow and no replies.

[JohnJ80]

debating what I want to do with Starbucks and the two shares of Apple I bought in the 400's lol! Hey, I'm only a college student.

[Hisam135i]

Mostly been playing with the banking sector since the stress teat release

[Vanity]

Standing by to see whether or not a top has just formed. Pointed out a couple days ago of a blow-off top formation. We will know soon if 1414 is the top for spx.

[Vanity]

First day of second quarter: Spot VIX 15.64.

But:

15,000 VIX June 42.50 call options were purchased. VIX would need to increase 155% by June to collect on this bet.

As well,

30,000 VIX June 55 call options were purchased, too. VIX would need to increase 251% by June to collect any money on this bet.

It seems reasonable to see the June 42.50 calls, as we saw a peak of 44 VIX last October in a 22% decline. What's a bit out-of-place is seeing a large purchase of June 55 calls, since we haven't seen 55 since 2008 (-56% decline total, VIX 75-80). As a large purchaser looking to hedge against a drop, VIX 30 calls would be much more reasonable to purchase if only looking to hedge against a minor correction. Hedging against VIX 55 by June is confusing, as I'm not sure how anyone could make money off this large gamble.

Do remember that June is when Operation twist is finished, and 010' and 011' we saw double-digit declines after QE ended. This year, with it being an election year, large monetary easing is going to be highly politically taboo (should Bernanke take that into consideration). If politics doesn't deter Bernanke, then perhaps inflation and gas prices will, seeing as how another QE injection will take gas prices through the roof and bring the world into huge economic slowdown (similar to gas prices and the consequences in 2008). LTRO injection of $500 billion new liquidity Dec 19th saw gas roar 40-50% higher. Talks of a $1 trillion QE 3 would take gas to unprecendented levels as all of that liquidity will end up in equities and commodities (and not the economy, Money velocity is decelerating).

But Benny Ben may be tied-up like ECB Draghi with inflation, as the 2.6% inflation in Eurozone currently is holding back the ECB from printing anymore. They have a strict 2% mandate. If anything, they'll be taking money out of that system before they inject more. Germany won't all for inflation. If Ben injects more QE now, he will find himself in the same position as Draghi. It's funny because now QE has run into a wall, and introducing QE3 has large downside risk as well. This is what happens when you continue pumping liquidity, negative consequences begin emerging. I suspect this is why Ben keeps teasing the markets of more QE, instead of initiating more QE.

If this plays into my model well, no QE 3, this year would play into a decline larger than what we saw in 2010 and 2011. Letting the equities and commodity markets cool-off after a large decline would significantly lower gas prices, give a boost to the economy, and then allow ample room for QE to bring us back up, as well as not being politically interfering this year. It would also play into this baby-bull coming to an end, as it's had a 37 month run-up now from 2009 lows. And it is consistent to see mini-bull runs in Secular Bear markets die-off after 33 months. We're a bit overdue. And sitting pretty above 13,000 DOW and 1400 SPX while VIX is at 5-year lows signals NO ONE is hedging at the top.

Food for thought. And comment guys, you're all being so quiet these days

P.S. You all know the alternate scenario for if QE3 does happen, so I won't bother writing it. But just keep in mind that QE3 this time is not going to be as beneficial as previous QE's if it is released.

[Hisam135i]

Originally Posted by Vanity

First day of second quarter: Spot VIX 15.64.

But:

15,000 VIX June 42.50 call options were purchased. VIX would need to increase 155% by June to collect on this bet.

As well,

30,000 VIX June 55 call options were purchased, too. VIX would need to increase 251% by June to collect any money on this bet.

It seems reasonable to see the June 42.50 calls, as we saw a peak of 44 VIX last October in a 22% decline. What's a bit out-of-place is seeing a large purchase of June 55 calls, since we haven't seen 55 since 2008 (-56% decline total, VIX 75-80). As a large purchaser looking to hedge against a drop, VIX 30 calls would be much more reasonable to purchase if only looking to hedge against a minor correction. Hedging against VIX 55 by June is confusing, as I'm not sure how anyone could make money off this large gamble.

Do remember that June is when Operation twist is finished, and 010' and 011' we saw double-digit declines after QE ended. This year, with it being an election year, large monetary easing is going to be highly politically taboo (should Bernanke take that into consideration). If politics doesn't deter Bernanke, then perhaps inflation and gas prices will, seeing as how another QE injection will take gas prices through the roof and bring the world into huge economic slowdown (similar to gas prices and the consequences in 2008). LTRO injection of $500 billion new liquidity Dec 19th saw gas roar 40-50% higher. Talks of a $1 trillion QE 3 would take gas to unprecendented levels as all of that liquidity will end up in equities and commodities (and not the economy, Money velocity is decelerating).

But Benny Ben may be tied-up like ECB Draghi with inflation, as the 2.6% inflation in Eurozone currently is holding back the ECB from printing anymore. They have a strict 2% mandate. If anything, they'll be taking money out of that system before they inject more. Germany won't all for inflation. If Ben injects more QE now, he will find himself in the same position as Draghi. It's funny because now QE has run into a wall, and introducing QE3 has large downside risk as well. This is what happens when you continue pumping liquidity, negative consequences begin emerging. I suspect this is why Ben keeps teasing the markets of more QE, instead of initiating more QE.

If this plays into my model well, no QE 3, this year would play into a decline larger than what we saw in 2010 and 2011. Letting the equities and commodity markets cool-off after a large decline would significantly lower gas prices, give a boost to the economy, and then allow ample room for QE to bring us back up, as well as not being politically interfering this year. It would also play into this baby-bull coming to an end, as it's had a 37 month run-up now from 2009 lows. And it is consistent to see mini-bull runs in Secular Bear markets die-off after 33 months. We're a bit overdue. And sitting pretty above 13,000 DOW and 1400 SPX while VIX is at 5-year lows signals NO ONE is hedging at the top.

Food for thought. And comment guys, you're all being so quiet these days

P.S. You all know the alternate scenario for if QE3 does happen, so I won't bother writing it. But just keep in mind that QE3 this time is not going to be as beneficial as previous QE's if it is released.

Fun facts about gas prices:
every 10 cent rise in gas prices = 12 billion out of consumer spending
every $10 rise in price of crude oil = -.25% effect on US GDP.

As you stated there are many factors that make me also find it hard to believe that QE3 is going to happen this year; well unless there is a severe hit to the market. The markets are doing fine now, no need for QE yet were close to all time highs! It would be a definite waste in my opinion as well as lead to a rise in the price of pretty much everything (inflation) as you said.

Also, QE is pretty much our last defense from a catastrophe since interest rates are already scraping rock bottom, cant exactly go any lower. Meaning if something, such as the drop in 08, were to happen again our only way to stop it would be to dump money in the economy using QE, which would most likely lead to hyper inflation! So QE isnt something that should be used lightly and only should be used in a time of need not for just creating the wealth effect to hopefully get the economy back rolling which it hasnt exactly done so far.

this is also food for thought a bit on the extreme side though for the last paragraph

[r0wr]

Spoken like a true bear Vanity

[Vanity]

Originally Posted by Hisam135i

Fun facts about gas prices:
every 10 cent rise in gas prices = 12 billion out of consumer spending
every $10 rise in price of crude oil = -.25% effect on US GDP.

As you stated there are many factors that make me also find it hard to believe that QE3 is going to happen this year; well unless there is a severe hit to the market. The markets are doing fine now, no need for QE yet were close to all time highs! It would be a definite waste in my opinion as well as lead to a rise in the price of pretty much everything (inflation) as you said.

Also, QE is pretty much our last defense from a catastrophe since interest rates are already scraping rock bottom, cant exactly go any lower. Meaning if something, such as the drop in 08, were to happen again our only way to stop it would be to dump money in the economy using QE, which would most likely lead to hyper inflation! So QE isnt something that should be used lightly and only should be used in a time of need not for just creating the wealth effect to hopefully get the economy back rolling which it hasnt exactly done so far.

this is also food for thought a bit on the extreme side though for the last paragraph

Some more fun facts about gasoline price gouging:
-Every $10 increase per barrel of crude oil = an extra 45 cents added per gallon.
- When crude comes back down $10/barrel, only 3 cents are shed off per gallon.

This is why I really question how trigger-happy Bernanke is going to be with QE3. And glad we come to the same conclusions, I myself do believe that QE3 will likely happen after a large decline, rather than before it. The history of QE's shows it is an post-crisis response, not by any means a "preventative" policy.

Bernanke will likely wait several months after a correction in the markets before new liquidity is dumped in, similar to what we always see after a crash. Liquidity comes in after a lot of carnage has occurred. Last year we declined -22% over 3-4 months before Twist came into effect. Makes you wonder, why a -22% decline only warranted Twist (a very ineffective QE policy, relative to others, imo). You have to logically argue whether QE3 would warrant a larger decline (would make sense, as per arguments described above about more "room" for liquidity to come in).

But if you look at 1961, the last time Twist was introduced, it was a policy that went on for many years. In 1965 when Twist came to an end, the markets tanked -25%.

However I don't believe Hyperinflation is a real problem, just yet. Money velocity is steeply declining which indicates this liquidity is not finding itself into the actual economy (as evident by where unemployment stands after a multi-trillion dollar liquidity policy).

[Vanity]

Originally Posted by r0wr

Spoken like a true bear Vanity

Even this bear realizes that 70% of the time you need to be a Bull to make money.

[Hisam135i]

Originally Posted by Vanity

Even this bear realizes that 70% of the time you need to be a Bull to make money.

Lol doesn't matter if your a bear or a bull, two keys to success:
1) never fight the trend
2) never fight the fed (or bernanke LOL)

[Vanity]

Not sure about you guys but, in my opinion, now would be a good time to lock in the profits from your longs. It's about to become deja vu all over again soon. We hit 1430 region on ES and have not come anywhere close to that since, signaling a top is most likely in place. 1400 is now turning into resistance again. Will be interesting to see what happens. Even if job numbers are good tomorrow, that means no QE.

Bull markets may climb the wall of worry, but bear declines slide down the slope of hope.

[Hisam135i]

Originally Posted by Vanity

Not sure about you guys but, in my opinion, now would be a good time to lock in the profits from your longs. It's about to become deja vu all over again soon. We hit 1430 region on ES and have not come anywhere close to that since, signaling a top is most likely in place. 1400 is now turning into resistance again. Will be interesting to see what happens. Even if job numbers are good tomorrow, that means no QE.

Bull markets may climb the wall of worry, but bear declines slide down the slope of hope.

agreed we have been having lots of side ways action since breaking the 1400 barrier. Now that we are back underneath there is some definite resistance whenever re-approaching.

[Vanity]

Originally Posted by Vanity

Not sure about you guys but, in my opinion, now would be a good time to lock in the profits from your longs. It's about to become deja vu all over again soon. We hit 1430 region on ES and have not come anywhere close to that since, signaling a top is most likely in place. 1400 is now turning into resistance again. Will be interesting to see what happens. Even if job numbers are good tomorrow, that means no QE.

Bull markets may climb the wall of worry, but bear declines slide down the slope of hope.

Not sure if anyone took my advice on Thursday to sell. Bulls are going to lose 13,000 on DOW rather brutally on Monday it looks like. Futures are -142. This confirms my recent post 2 weeks ago of a blow off top formation.

I believe now we will be declining from here on out to exaggerate enough pain out of the markets for more liquidity injections. -22% for $400 Billion Twist. Any ideas for how much of a decline is needed to release $1T USD, especially now that unemployment has dropped to 8.2%