Is the stock market going to tank?

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Originally Posted by woodstocksez

(As an aside, I don't understand what you were doing if you were waiting for a rally like this to get out, since it only added a few percent to your 25% return - not enough to absorb the risk of waiting for it, I wouldn't think.)

How do you know the market isn't undervalued apart from the consumer confidence numbers? Maybe the Wilshire 5000 should really be at 11,000 (or more) right now, given the current state of the economy and the best guess(es) as to the future, and what you term a sucker rally has the market still well short of where it should be. Have you done that analysis? I doubt it. (I have no idea if the Wilshire 5000 at 9300 is too high, too low, or just right.) There may be (teams of) analysts out there doing it, but I doubt that includes anyone posting in this thread.

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I wasn't waiting for the rally to get me a few % points more, rather I thought it was a good time to bale on speculating in the market as a whole. Rather than trying to guess which way the market is going and placing my bet accordingly after these financial genius give me their through analysis, I figured it would be way more profitable to sell the sheep covered calls from here on out. Even doing that, one needs to be mindful of the overall market trend, as a pull back in values complicates the game plan.

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Originally Posted by Stu Gotz

WTF is going on today. Part of the market is screaming deflation trade (oil equities down, gold down, equities in general down, dollar up) but another part of the market is screaming inflation (debt land with treasuries gapping lower and HY moving higher).

Anyone care to interpret?

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This June dow futures 4 hour chart isn't as big as I wanted it to be but work with me. The blue box is from May 4 until today. Top of the box coincides with the 8500 level, a very strong strength/resistance area. Bottom of the box is the 8200 level. You can see how price is trading within the range and anytime we get near or on these major areas price shoots back in the other direction. This is usually what markets do. We'll probably drop back to 8200 in the next day or two then bounce back toward the 8500 level.


http://i15.photobucket.com/albums/a3...s/dowmay09.gif

Buffet vs. Einhorn

Pass the popcorn.

http://www.businessinsider.com/david...-moodys-2009-5

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Originally Posted by ICEHOCEY77

This June dow futures 4 hour chart isn't as big as I wanted it to be but work with me. The blue box is from May 4 until today. Top of the box coincides with the 8500 level, a very strong strength/resistance area. Bottom of the box is the 8200 level. You can see how price is trading within the range and anytime we get near or on these major areas price shoots back in the other direction. This is usually what markets do. We'll probably drop back to 8200 in the next day or two then bounce back toward the 8500 level.

]

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Damn good analysis. Could have made money on that today..

einhorn is right McGraw Hill should be worried too, S&P is next

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Originally Posted by Stu Gotz

Buffet vs. Einhorn

Pass the popcorn.

http://www.businessinsider.com/david...-moodys-2009-5

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Maybe he knows something we don't - that the government will get into the rating biz, and only the government, as they should.

Govt doesnt even have to get in. After what happened with the ratings of CDOs, etc noone takes the ratings agencies seriously anymore. Firms can do their own analysis rather than trust the crap dished out by Moodys if need be, and if they dont need to find spread opportunities, they can use a specific spread level to gauge risk. Beats seeing "AAA" on an Alt-A bond.

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Originally Posted by Bean

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If only everyone would act that way to Dennis Neale we'd be better off for it.

Neale is the kinda dude that thought it was really cool to be the water boy in high school, but still got beat up and wedgied a lot, and walked away with a smile at the end, thinking he was in with the big boys. I thought CNBC was scraping bottom a few months ago, but, lo and behold, they gave him a prime time slot. I've heard some incredibly stupid and ignorant things said on his show, but, I can't listen much after the first few weeks.

Big equity move up worldwide. DAX is up 4% and breaking above resistance. Nikkei has already broken out. US heading for death match at 950 SP00. It looks good for now with momentum picking up. I'm sticking with 1050-1100 as a target on this move. As long as bonds don't collapse we'll be ok.

well gm is up nearly 300% from its low this morning

And oil keeps climbing, climbing, climbing. I love it. :D:D:D

S/P 500 held above 870'ish EOMonth. 950 and higher is looking better. Bulls on parade!!!!!!

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Originally Posted by grapedrink

well gm is up nearly 300% from its low this morning

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Perfect argument for staying out of this market.

Youre right stay out. Wouldnt want to miss out on anything

Like the next correction.

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Originally Posted by Brock Landers

Youre right stay out. Wouldnt want to miss out on anything

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gotta love the frat finance mentality

Yup, the frat finance mentality. Buy low and sell high...you need a tattoo and initiation to be able to do that. Alternative is to buy high and sell whenever, Im assuming thats what youre doing?

Be greedy when people are fearful, be fearful when people are greedy

-Remember the golden rule, he who has the gold makes the rules.
-Buy Coats in August and umbrellas in February.
-I can't afford to waste my time making money.

Wait this isn't the arrogant platitude thread?

I guess getting rich isn't even in the cards anymore.


Staying Rich in the New Normal - Bill Gross of PIMCO

http://www.pimco.com/LeftNav/Feature...rmal+Gross.htm

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Originally Posted by Stu Gotz

I guess getting rich isn't even in the cards anymore.


Staying Rich in the New Normal - Bill Gross of PIMCO

http://www.pimco.com/LeftNav/Feature...rmal+Gross.htm

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"I remember as a child my parents telling me, perhaps resentfully, that only a doctor, airline pilot, or a car dealer could afford to join a country club. My how things have changed."


I remember that time.

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Originally Posted by Moeghoul

I'll send you a postcard from gold 1200/oz before you send me a postcard from 1100 S/P. ;) Yesterday was a classic knockdown at the open, but gold made back most of that loss overnite. Lotsa big money has/is rolling in for the next move higher.

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I'll be taking the lead in this race early next week..

Might be, I gotta take a look at the econ calendar for next week.

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Originally Posted by 4matic

I'll be taking the lead in this race early next week..

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Early ended yesterday. :smile:

http://online.wsj.com/article_email/...TYxNTEwWj.html

How Traders Killed Value Investing
Want to know why GM stock is above zero? Look to hedge funds and short-term trading.
By DAVID WEIDNER

Long before the June 1 negotiating deadline, it became quite clear that General Motors Corp. was headed for bankruptcy. Its debtholders were going to get crushed. The shareholders were wiped out.

Except that they weren't. As the deadline neared, shares of GM did a funny thing: They kept trading at more than $1 each. They didn't disappear.

Last month, shares rose a few pennies during a given trading day and fell a few pennies the next. Taken as a whole, GM shares reflected nearly $1 billion in value that did not exist. Even today, with GM in bankruptcy, the automaker's shares are trading around $1.50.

Market analysts seem baffled, but trading in GM reflects the sea change that's taken place in the markets during the last decade. Simply put, the market has slowly given itself to short-term traders. The traders control volume, and whoever controls the volume controls the price.

The old notion that profitable companies with good growth prospects should have rising share prices -- and that failures like GM should be gone, or at least trading in the pennies -- is history.

Today, a hedge fund investing billions using a quantitative formula can stall a stock; a couple hedge funds aligned can turn a profitable company into a Dow laggard. Toss in a few short sellers and you have the great Wall Street collapse of September 2008.

It wasn't always this way. Before the machines and the shorts took over Wall Street, stocks were evaluated by an underlying company's prospects. Buy-and-hold investing ruled the day. Investors such as Warren Buffett and Bill Miller were the models.

Those fellows are a far cry from this generation's masters of the universe. Traders are in charge now. They rule the market. They dominate volume. That stock you bought because you thought the company was in good shape? It's a pawn in the hands of a computer model or some supertrader like Steven Cohen at SAC Capital Partners or Bridgewater Associates' Ray Dalio.

To move a security, they don't need to own it. They can have a short position. They can put an order to sell 1 million shares in a dark pool, those anonymous marketplaces that operate outside the walls of the exchanges. They can own options or futures contracts. Buy enough GM puts and watch the price begin to fall under the pressure.

Stocks As Targets
For the long-term investor, whether you're investing for retirement or simply betting on a company's potential success, the payoff is suddenly in play -- every stock is a potential target of forces outside of the traditional movers.

The buy-and-hold guys are still there, but lately they've been less successful than their hedge-fund counterparts.

Mr. Buffett and Mr. Miller ride the wave of the overall market, hoping that their undervalued holdings will someday be valued by investors. The hedge fund guys create their own wave. Mr. Buffett is slow and deliberate with his investments, usually holding stakes for years. By comparison, Mr. Miller is a speed demon. He turns over 20% of his portfolio every year.

Quants, hedge funds and today's new breed of trader can turn over their holdings in a day or even just a few hours.

Slowpokes like Mr. Buffett and Mr. Miller don't bring Wall Street enough fees for the brokerages to care about them. For all the success markets and regulators have had in slashing trading costs, those reforms have inadvertently hurt small investors.

Mr. Cohen and Mr. Dalio are exactly the kind of customer Wall Street cares about. You and the guy who runs your retirement portfolio couldn't provide enough fees to buy a dinner and drinks at Dylan Prime for the prime brokerage trading desk, much less a Bentley. The brokers just want to handle the action and they don't care what kind of order you place: long, short, puts or calls.

As spreads on the exchange have shrunk, trading margins squeezed middlemen on every transaction. The best way to offset those losses has been to increase the number of transactions. Brokers have been happy to step up to heavy traders such as hedge funds and provide margin loans. Those loans not only increase volume, but carry more lucrative fees.

The special attention paid to big traders doesn't only distort the market, it leaves fewer resources for investors with longer time horizons. During the last year, about 2,000 sell-side research analysts -- the guys paid to inform investors -- have exited the business, according to an earlier report in The Wall Street Journal.

And why not, when machines make so many of the day's trades?

Wagging The Dog
Program trading, which mechanizes a variety of trading strategies, accounted for about 30% of volume on the New York Stock Exchange in May, compared to 10% a decade ago. It was just 4.6% for the same month in 1989. The NYSE cautions that its methodology for counting program trades has changed over the years, but you can see the trend.

A 2007 study by the consulting firm Greenwich Associates found that the credit derivatives market -- the vast network of agreements and contracts that bet on debt -- now drives the pricing of the corporate bonds that underlie those derivatives, a development akin to the rabbit chasing the hound.

Money managers have complained this trend is making corporate bond prices more volatile. The study concludes: "In many ways, hedge funds have become the market."

A market dominated by nontraditional trading forces explains, in part, why GM shares have kept so much value. Arbitrage traders make a lot of contrarian moves. They buy to cover their short positions. They sell to take a profit. All they really need is for the price to move.

There's no simple solution to the problems of the market. A few proposals today aim to improve things a bit, such as the elimination of naked shorting, reinstatement of the uptick rule and more transparency of traders' holdings. Some people, like Grant Thornton's David Weild are calling for separate markets for certain securities, such as newly issued stock.

But separating investors from traders in the market would destroy it. The market needs both. Traders, after all, provide regular price discovery and the other side of the deal. They keep the market moving, but they've also replaced investors as the market's driving force. Don't bet on that changing anytime soon.

Write to David Weidner at david.weidner@wsj.com

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They can own options or futures contracts. Buy enough GM puts and watch the price begin to fall under the pressure.

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Reminiscences of a stock operator would say that price would continue in the direction it was going beforehand. Unless there was already underlying sentiments.

A better question is when does the Dow hit 14,000 again. I'm thinking sometime between 2012 to 2030.

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Originally Posted by Sea 2 Ski

A better question is when does the Dow hit 14,000 again. I'm thinking sometime between 2012 to 2030.

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Way to narrow it down, bro.

I'll take the under, definitely over 14K by 2121. In a huge way. All the stocks I've bought at 7,8, 9, will be buying me drinks on the beach on St. John in 20 years.

In case that doesn't work out, I've learned to repair shoes, I've bought some pots and pans and some fake medicine, and I've bought a donkey to carry my wares from village to village.

It's really amazing that people pay you guys for advice. Why pay for a horse's ass when you can get a whole donkey for dirt cheap?

http://content.screencast.com/users/...06-14_0233.png

http://content.screencast.com/users/...06-14_0239.png

^^^^^^^^^^^^Looks like you've got it all figured out there, flyboy.

“While rational expectation is returning to part of the investment community, most are still trapped in institutional weaknesses that make them behave irrationally. The Greenspan era has nurtured a vast financial sector. All the people in the business world need something to do. Since they invest with other people’s money, they are biased towards bullish sentiment. Otherwise, if they say it’s all bad, their investors will take back the money, and they will lose their jobs. Governments know that and create noises to give them excuses to be bullish.”

This institutional weakness has been a catastrophe for people who trust investment professionals. In the past two decades, equity investors have done worse than owning bonds in the U. S. market, lost big in Japan and emerging markets in general. It is astonishing to see how a value-destroying industry has lasted for so long. The bigger irony is that the people in this industry have been 2-3 times as well paid as in other industries. The key to its survival is volatility. As markets collapse and surge, it creates the possibilities for getting rich quickly. Unfortunately, most people don’t get out when markets are high like now. They only go through the ride.”

--Andy Xie, former Morgan Stanley economist

Looking at the 3 month S&P 500 chart, looks like it has broken through support to me. I am super nervous about the current levels holding.

It's quint expiration week so we could easily test both sides of the range 903-950 SP00

The yen is blowing through all kinds of supports right now. Tomorrow, 8572 is a key area of support, it held today. It held as resistance 4 times during the month of May on the daily chart, but if 8572 can't hold then around 8500 the 150 EMA is lurking.

It will be interesting to see what happens to the various capital markets as California gets closer and closer to whatever the end game is.

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Originally Posted by Stu Gotz

as California gets closer and closer to whatever the end game is.

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It's not a great scene when people are actively praying the Big One hits before the next mortgage payment is due.

We'll bail them out somehow. New York next. Moral hazard, my ass.

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Originally Posted by Steven S. Dallas

It's not a great scene when people are actively praying the Big One hits before the next mortgage payment is due.

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I doubt that's the case. Stop paying your mortgage and bam, free housing for a year (or more!).

"opacity reduces scrutiny and confers power on the few with the ability to pierce the veil."