Say, not to sound ungrateful about things, but the people in charge of arb’ing up the market have gotten kind of boring with their ‘buy futures Mondays’ routine here, almost to the point where it has become a tradable pattern in and of itself, don’tcha think?
Funny-da-mentally, nothing has changed over the weekend…and if there was no cause for wild optimism on Friday, surely the report that five more banks were marched to the wall after the close Friday wasn’t an upper, was it? No?
Looking over the early runs this morning, the report that “Stocks set to snap losing streak; futures higher” has me shaking my head wondering whether the world has completely taken leave of its senses;’ ‘fraid I know the answer to that one already, though.
Peoplenomics this weekend was about “Where Next?” although the report from Robin Landry (sent to his colleagues in the investment business, not a general letter, sorry) filled in many of the blanks…
“In my last update I said it was more likely that the market top would be in January rather than the March-April time period. The action this week appears to confirm that the top of wave P2 has indeed been made and we are now in the early stages of P3 down to new lows below 6500 .
There is still the possibility that this decline is merely a correction and we have one more rally into the late March early April time period, however, I cannot emphasize too much the gravity of the situation if my wave count is correct. I have attached a couple charts showing the counts as I see them for those interested in the more technical aspects of my work.
Regardless of which of the two counts turns out to be the correct one, the decline over the next few days has more to go before a rally for minor wave 2 begins. This rally should be used to get prepared for a decline larger than the P1 decline from the top in Oct 2007 to the bottom in Mar 08.
I know many of you did not believe my reports in 2007 when I said the Dow was going to decline to the 6500 area. You did not act and had a terrible 17 months of stress, anxiety, and loss of assets, not to mention many sleepless nights. I hope more of you will act this time.
I limit my updates, for the most part, to the technical aspects and leave the fundamental reasons for others who have more time to write and list all the things they believe are the reasons for what the market is doing. I believe they are rarely correct. The target zone for minor wave 1 is between 9750-10,000. The rally for minor wave 2 should be at least 38% of the distance of minor wave one but more likely between 50 to 62 percent.
I have said for years that the buy and hold mantra was going to be like a curse word once this Bear market was over and many firms who espoused this view went out of business during wave P1 down. Many more will follow during this wave P3 decline. The updates I send out will be more frequent if P3 has indeed started. I believe it has.
Take a look at the weekly MACD on both the S&P and the Dow 30. That alone is enough to signal extreme caution. As always comments and questions are welcome. I will answer as time allows. rlandry@allegiance.tv
What happens in a few minutes is that the market on the 60-minute chart seems likely to follow the course of the black lines instead of the green, but that’s fine with me since my time horizon is (perhaps optimistically) out in January of next year for my short-side options. Today may be a chance to buy more (he said, rubbing his hands together gleefully with a miser’s glint in the eyes…)…
From the 60-Minute chart:
So, what’s my point of concern – where it might look like a little longer upside? Your guess looking at the chart is as good as mine (better maybe, since you probably haven’t started to “load the boat” with put options yet).
A rally north of 10,300 (1-i) would have me not buying. But if you look at my Aggregate chart, and the performance of the Global Index on the Peoplenomics side, the reasons to be buying large into the long side seem few and far between.
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Some of what’s to come in the market this week may be seen as a rally to help Ben Bernanke hold onto his job. His reconfirmation is up this week and although I expect he’ll be in for another term, that has placed a bit of a cloud on the Fed meeting. Maybe the headline in BusinessDay: “Scramble to save Bernanke as markets take a beating” has caused some of the gnomes of Greenwich to loosen up the longs today.
We get to wait around till Wednesday for the Fed decision, but it’s no mystery: The Fed can’t lower and if they raise, Ben & Company will be accused of killing the embryonic recovery. Not that the ‘recovery’ is any more real than “Good times are just ahead” jingoisms from the last Depression. Bernanke is hemmed in by zero interest on the lower side and worse.
China announced plans for a big convertible bond issue at 3% which means maybe someone will figure out there’s a Dollar-Yuan Bond carry-trade possible here; at least I think so. I’ve never been drunk enough to do a carry trade. Borrow US funds a bit over Fed rate, turn around and buy 3% convertibles, take spread, buy a new business jet. yeah, seems simple enough, doesn’t it?
About the only thing that could ruin life might be some really bad news on something like housing. The Case-Schiller/S&P 20-city housing index is due for an update tomorrow and with all these option ARM’s coming up to reset housing could rear its head. or, come to think of it, so could the commercial side.
Still, I keep hearing that banks are making sweet-heart deals with borrowers to pay even some nominal amount like a hundred bucks a month just so they can keep from putting homes over onto the ‘non-performing’ side of the books, and since that’s keeping the books looking a tad better’n reality, the market gets time to work lower. But not before a little nose candy for the bulls today.
Secret Ingredients
Hats off to Reuters for laying out how the SEC wanted ‘national security status for AIG details“.
This was in the late Bushista – earliest Obama days, so I guess there’s no pinning blame on one or the other. It is, after all, a duopoly only in name in America, especially with the supreme court decision on unlimited special interest next week. Kind of like the democans and the republicons have joint checking now.
Rolling Out Terror – Again
I suppose you heard that Osama bin Laden rolled out another message this weekend and in it, he reportedly took credit for the almost-bombing of a flight to Detroit recently.
The real story this morning on topic is that bin Laden’s message is being touted as something of a precursor to a possible future attack.
This is related to finance how? Think back to 2001 and what did we have? A market which was on the verge of recognizing that we were on the verge of a Second Depression. Along comes terrorism and conveniently, we get spending at Depression-era CCC and WPA levels except it’s on airport security, the TSA, body scanners and so on.
Yes, 9/11 was a terrible thing, don’t get me wrong. But just watch over the next week, or so, as editorials spring up across the land saying the ‘latest threat means we need to get body scanner funding right away urgent-like…’ I can almost hear them now.
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A passenger trying to open a door caused a flight to be diverted this weekend.
Elections Delayed Are…
Coming in September to Afghanistan since officials figure there are too many security concerns at the moment. But isn’t elections delayed the same as elections denied? Just doesn’t pass the sniff test somehow…fighting for freedom, but no voting yet… hmmmm…
The Money Goes Where?
I saw the report today that Brazil, China, India, and South Africa (BASIC) have urged wealthy nations to hand over $10-billoion to poor nations this year to fight climate change.
Not that spending money is a bad thing. But, usually in a rational world, the process is Party A says “Here’s what costs add up to…” and then money is deployed, not “Here’s money, see how much you can spend…”
Wetazona
Northern Arizona got socked pretty bad by the rains over the weekend. As a result, Flagstaff and some of the surrounding area is now a federal disaster area. On the other hand, my commodity guy JB about 60-mil;es south says it wasn’t too bad, so apparently localized damage.
Layoffs Not Over
Electronics outfit Ericsson is cutting 1,500 jobs.
Drop by tomorrow morning – Labor Department should come out with it’s Mass Layoff report for December early this week. Wouldn’t want you to miss that chart…
Linguistic Follow-up
Disappearances meme: An Australian millionaire is missing.
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Elliott Abrams using the word diaspora Friday. “What Haiti needs: a Haitian diaspora“.
Goggle’s news engine is up to 5,319 hits on the word this morning from a pre-quake level of under 100 a few weeks back. Not bad for seeing it comes 6-8 months back, huh?