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Poor Fleck.

 

After all these years, he still hasn't figured out that when HedgeFunds decide to "rotate" out of a boner sector like the HGX and into a broken down ride like the SOX, they could care less about fundamentals.

 

When 1 HedgeFund manager looks over his shoulder to see what the other 8999 are buying, he's going to join the herd, not fight it.........

 

Following on the same theme, chip darling Maxim Integrated Products (MXIM) successfully played "beat the number" when it reported earnings results last Tuesday night. That is almost laughable, however, after getting a good look under the report's hood. Maxim's bookings were less than expected and declined. Its backlog is down. The company's inventory, which rose, is now up enough that Maxim can fill 40% of its backlog for the next 12 months just with the inventory it has on hand.

 

Obviously, Maxim's margins were helped by building inventories. But this company and others like it are wedging themselves into a corner: They'll soon face simultaneous shrinking revenues and collapsing margins, and there will be a veritable implosion of earnings. That cake is baked, barring an explosion in GDP or a miraculous rebound in demand for tech doodads, neither of which I see in the offing.

 

big.chart?symb=mxim&compidx=aaaaa:0&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&size=2&state=8&sid=3030&style=320&time=18&freq=7&nosettings=1&rand=5149&mocktick=1&rand=127

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Noland has written an excellent piece tonight.

 

He claims that a Nasdaq-style blowoff may now be occurring on the bonds and the HGX.

 

And it might spread to commodities as well.

 

With widely advertised tightening by the Open Mouth committee, and Leeson's bonehead comment "anyone who has not appropriately hedged this position by now obviously is desirous of losing money.", the entire bond market community and the GSE's all went short the T-Bone and the HGX late last year.

 

Now those trades are unraveling, and the 9000 HedgeFunds smell blood and are frontrunning the dislocation and the unwinding.

 

This explains why Fannie Fubar is getting killed, yet the homebuilders continue going up.

 

And the same can be said about the widely advertised "Chinese Hard Landing", where way too many went short the commodities, oil, gold, etc., and now you are beginning to see a massive squeeze on energy, precious metals, and the CRB index.

 

This is precisely the reason why bull markets never "crash" on the first drop.

 

Its because everybody is too keen on picking tops, and way too many bears jump on the short side in size, all at the same time, at the first "official" warning of a correction.

 

Witness the high put/call ratios the last three days, right when the NYA is on the verge of a breakout to new all - time highs.

 

And repeated crash warnings from McHugh, Arch Crawford, Bernie Schaeffer, and other technicians.

 

Virtually nobody is considering the possibility of higher prices.

 

So get ready.

 

Another Breakout is coming..................

 

Whether it morphs into a Blowoff remains to be seen............

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Part of Noland's point I think is that the mini melt up on TBones was probably caused by the GSE's trying to balance. That's been the story in the other melt ups the last year and a half. They have probably been killed on this yield curve flattening.

 

Maybe in there somewhere is why Al keeps trying to be stingy with the feed recently. Not that this makes any sense.

 

The preauction melt up certainly had all the markings of an accident. Rising rates into the auctions is always the preferable path for the buyers and dealers. Then a post auction fall in rates, rise in price, gives everyone a little capital gain cushion. Only the Treasury suffers in such a case. Not much perhaps in the big picture; a few basis points on a few more billion of the trillions in paper.

 

Also, Uncle Sam is going to be paying a cool one billion a day in interest payments this year. One good reason why low long rates might be a good thing. Especially after the genius move to shorten Uncle Sams duration during the historic 50 year low in rates and explosion in debt the last three years.

 

If you listen to a classic rock station on the radio I'll bet that like here over half of all ads are for mortgage companies. Overwhelmingly touting refis and equit extraction to 'get out of debt". Being Michigan however that equity extraction is a rather pathetic thing compared to many places.

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Weekend Chart Roundup

 

Dow Stocks in Alphabetical Order

 

Dow1

 

Dow2

 

Nasdaq Stocks (excluding MSFT and INTC) Ranked by Market Cap

 

Nasdaq

 

S & P 500 Ranked by Market Cap (excluding Dow and NDX stocks)

 

S & P 500

 

Top 100 IDB This Week

 

IBD1

 

IBD2

 

IBD3

 

IBD4

 

IBD5

 

Breakout City

 

Breakout City from last week

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Part of Noland's point I think is that the mini melt up on TBones was probably caused by the GSE's trying to balance.? That's been the story in the other melt ups the last year and a half. They have probably been killed on this yield curve flattening.

 

Maybe in there somewhere is why Al keeps trying to? be stingy with the feed recently.? Not that this makes any sense.

 

The preauction melt up certainly had all the markings of an accident.? Rising rates into the auctions is always the preferable path for the buyers and dealers. Then a post auction fall in rates, rise in price, gives everyone a little capital gain cushion.? Only the Treasury suffers in such a case. Not much perhaps in the big picture; a few basis points on a few more billion of the trillions in paper.

 

Also, Uncle Sam is going to be paying a cool one billion a day in interest payments this year.? One good reason why low long rates might be a good thing.? Especially after the genius move to shorten Uncle Sams duration during the historic 50 year low in rates and? explosion in debt the last three years.

 

If you listen to a classic rock station on the radio I'll bet that like here over half of all ads are for mortgage companies.? Overwhelmingly touting refis and equit extraction to 'get out of debt".? Being Michigan however that equity extraction is a rather pathetic thing compared to many places.

 

The bond rally was certainly out of place and out of time. The federal budget deficit is heading toward its largest one month deficit in history, maybe over $100 billion. Rates should be going up, not dropping. But the mutli-trillion dollar mortgage market trying to hedge itself against maybe $500 million of publicly traded government bonds leads to these convexity problems we have been getting.

 

The maturity period of debt issued by the Treasury continues to drop. Even in bill issuance, there is a now a heavy reliance on four week Treasury bills. What happens if there is another ten sigma event that disrupts markets for a few weeks? Last November, when faced with a debt limit crisis it simply borrowed from Federal employee retirement plans. Interestingly, the new SS accounts are modeled after those same retirement plans.

 

Supporters of GWB's SS plan should look closely at the fine details of the new SS accounts. No you won't be able to day trade your SS money in your Scwab account. In fact, you will have only five investment choices - and when you turn 47 the government will decide for you how to invest your money (if you want to be in the market at all). Look it up for yourself. This is not a plan for people to control their investments, but for the government to control more of your personal life - and when they need extra money, they'll just borrow a little bit from your SS account.

post-889-1108181726_thumb.jpg

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... What happens if there is another ten sigma event that disrupts markets for a few weeks?  Last November, when faced with a debt limit crisis it simply borrowed from Federal employee retirement plans.  Interestingly, the new SS accounts are modeled after those same retirement plans.

 

Supporters of GWB's SS plan should look closely at the fine details of the new SS accounts.  No you won't be able to day trade your SS money in your Scwab account.  In fact, you will have only five investment choices - and when you turn 47 the government will decide for you how to invest your money (if you want to be in the market at all).  Look it up for yourself.  This is not a plan for people to control their investments, but for the government to control more of your personal life - and when they need extra money, they'll just borrow a little bit from your SS account.

 

Thanks for the heads up Hiding Bear.. My mother worked in the Post Office and participated in the Federal Thrift Program.. it was a safe steady way to save for retirement, I recall only three funds, one each for money market, bonds, and stocks. It was possible to transfer between them, but not often..

 

It sounds bad, but when you compare it to the way the SocSec surplus has been handled I think it's an improvement. Under the new system they would at least have to leave a marker, the other surplus funds collected to date are gone and unaccounted for...

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6:16  Nvidia to pay execs about $1 million in bonuses

 

big.chart?symb=nvda&compidx=aaaaa:0&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&size=2&state=8&sid=129254&style=320&time=8&freq=1&nosettings=1&rand=4769&mocktick=1&rand=608

 

Just replace Lydia with Nividia:

 

 

Lyrics to "Lydia the Tattooed Lady" sung by Groucho Marx in the Marx Brothers movie "At the Circus"

 

source: http://www.clown-ministry.com/Articles/Poe...dy-groucho.html

 

My life was wrapped around the circus.

Her name was Lydia.

I met her at the world's fair in 1900,

marked down from 1940.

 

Ah, Lydia.

She was the most glorious creature

Under the su-un.

Guiess. DuBarry. Garbo.

Rolled into one.

 

Oooooooh

Lydia oh Lydia, say have you met Lydia,

Lydia, the Tattooed Lady.

She has eyes that folks adore so,

And a torso even more so.

 

Lydia oh Lydia, that encyclopidia,

Oh Lydia the Queen of Tattoo.

On her back is the Battle of Waterloo.

Beside it the wreck of the Hesperus, too.

And proudly above waves the Red, White, and Blue,

You can learn a lot from Lydia.

 

La la la, la la la, la la la, la la la

 

When her robe is unfurled, she will show you the world,

If you step up and tell her where.

For a dime you can see Kankakee or Paris,

Or Washington crossing the Delaware.

 

La la la, la la la, la la la, la la la

 

Oh Lydia oh Lydia, say have you met Lydia,

Oh Lydia the Tattooed Lady

When her muscles start relaxin',

Up the hill comes Andrew Jackson

 

Lydia oh Lydia, that encyclopidia,

oh Lydia the queen of them all!

For two bits she will do a mazurka in jazz,

With a view of Niagara that nobody has.

And on a clear day you can see Alcatraz.

You can learn a lot from Lydia.

 

La la la, la la la, la la la, la la la

 

Come along and see Buff'lo Bill with his lasso.

Just a little classic by Mendel Picasso.

Here is Captain Spaulding exploring the Amazon.

Here's Godiva but with her pajamas on.

 

La la la, la la la, la la la, la la la

 

Here is Grover Whalen unveilin' the Trilon.

Over on the West Coast we have Treaure Island.

Here's Najinsky a-doin' the rhumba.

Here's her social security numba.

 

{whistles}La la la, la la la, la la la, la la la

 

Oh Lydia, oh Lydia that encyclopidia,

Oh Lydia the champ of them all.

She once swept an Admiral clear off his feet.

The ships on her hips made his heart skip a beat.

And now the old boy's in command of the fleet,

For he went and married Lydia.

 

I said Lydia

{He said Lydia}

They said Lydia

{We said Lydia}

La La!

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