Calm Market Conditions

[Tig 'Ol Bitties]

Carl Swenlin of decisionpoint notes the Rydex Bond Ratio is 10 (previous high was 6) meaning 10-1 investors are betting bonds will decline (rates will go up). I don't trade bonds, but if I did I'd be doing some buying.....

Sideshow,

 

I am inclined to agree with you, although the money in the Juno fund or the Rydex Bond fund cannot be that significant. Futures have a different look according to COT stats with non-commercials heavy short and commercials mildly long.

 

One way or the other, my thoughts are the next rate move is a cut so being long paper at this point makes sense to me and my money, especially after the recent weakness.

[Tig 'Ol Bitties]

Doc,

 

Enjoy your two weeks off, it is certainly well-deserved.

[Guest]

I agree cutting rates more won't help, just make refi people more money from fees and benefit EXISTING homeowners, not stimulate new housing development or the economy in general.

 

But good ol' deficit spending WILL work. It worked for Reagan.

 

The economy is still in trouble from the stock market bubble and too much bad debt, but a lot of people's stock market losses are offset by their housing gains and that gives them real spendable cash from home equity loans, which they could also put into stocks, not just SUV's and liposuction. Tech industry layoffs are brutal, but the overall unemployment rate is not that high. The falling dollar will also be good for some of the large U.S. corporations.

 

The companies that are failing now should fail, that is the way of the competitive free market economy, it is healthy pruning. It was not productive to have 100,000 unskilled "software engineers" being paid $100,000 per year to write HTML "code" for a bunch of silly money-losing dot-coms. It is not productive to over-pay airline employees when demand is down, etc.

 

The large amount of sideline cash, even if much of it is leveraged and "fake", has the potential to fuel a massive rally. The stock market usually makes rolling tops but spike V bottoms, so I don't want to be on the wrong side when it turns big time. I expect a huge dump in bonds due to profit-taking, low yield frustration and falling dollar, with the sales proceeds going to buy stocks instead, not more real estate.

 

GW is no genius but he will not repeat his father's mistake of ignoring the economy, the Republicans won't let him. Soon a massive pre-election goosing of the stock market will begin, either via a tax-free dividend law, or another increase in the IRA and 401K limits, or a huge movement of Social Security "money" into stocks, or some other angle, whatever it takes. Maybe even direct purchases of S&P 500 stock index futures like Rubin engineered for Clinton.

 

With the Commercial S&P traders long now, it is just a matter of time before a Shock and Awe Rally starts. If there is no real reason, one will be manufactured.

 

There will be some historic short squeeze blow-ups in individual stocks with huge percentage short positions. There will be some one-week doubles in individual stocks that are trading below cash with no debt.

 

With the S&P down 50% and the NASDAQ down 75% or so, there COULD still be more downside, and there definitely SHOULD be, in a logical world, because of the still-high valuations. But the world is not logical, nor is the stock market.

 

Look out above.

 

I am slightly net short now, playing both sides, but will quickly go more dong as the buying panic unfolds. It could start with a summer rally and never look back, or we could be flat or make a quadruple or quintuple bottom first (already looks like a triple bottom here). But certainly by October 19th or 26th or so, the bottom will be in and the re-elect Bush rally will be underway.

 

Also, I have just started dong gold, silver and platinum positions as the corrections there are fizzling out, all finally have relatively constructive Commercial positions now, and they should be helped by the weaker dollar and stronger economy.

[strikerm3]

WAG Wild ASSed Guess

SWAG Scientific Wild ASSed Guess

SNAG Sensitive New Age Guy or something you put on the bobby. (See Crocodile Dundee.)

SWAG is cheap herb from Mexico. Thats what the guy on Monster Garage said!

[Guest BEARDRECH]

I have not been trading lately since I have no clue where we go from here.It seems to be evenly split here at the stool whether we go up or down.I am so gunshy now that I wont take a short position unless we get damn close to dow 9k(I won't go long for any reason unless we tank really hard).I just don't feel like getting blown out or even worse those dreaded sleepless nights on the wrong side of the trade.

 

The last few months I have held some corp bond positions which was just as stressfull as holding stocks.was down almost 20k at one point (I was on the ledge a few times!)but held on until today where I bailed with only a 1k loss(whew!).

 

I don't know what to do now,I just will hope for a big pop to short.as time goes by my fear of loosing money continues to grow so I think it is best that I wait and only trade the extremes.

 

I am especially nervous to hold any longs,I had my finger on the buy button when ge was under 22 and hd was near 20,I just could not pull the trigger and I knew I should have.This market is driving everyone out with all the volitility and more people will leave the markets if it continues.

hanky

your above description seems to fit my rather amateurish interpretation of the thesis propounded by the Salifornia professor of Catastrophism ,Didier Sornette--

Without going through the entire litany(those interesdted can do a google) at some point i interpret him as saying(emphasis on IIIII not him) that at some point, just prior tothe catastrophe's occurence, a large scale homogeneous distribution of the glitches,fractures,holes errors,call them what you will,within any failing system,whether it be a hotel balcony,a rusting bridge or,more to the point,a stock market ,will have reached a state of tensionlessness (my term)

By this i mean an indifferentism,to use an anthropomorphic term,an indifferentism based on the exhaustion of all residues of nervous energy by the elements comprising the said system--and this indifferentism of say,one molecule with respect to another,terminates in the catastrophe--

A homlier metaphor for explaining the above would come from a mideavall metaphysical conundrum called "THE DILLEMA OF BURIDANS ASS"; IT GOES LIKE THIS:--A hungry donkey is positioned equidistantly from two piles of hay;being pefectly equally distant from the respective haypiles ,NOT KNOWING which way to turn because of its assinine inability to choose between two equally inviting alternatives, it ruminates and thinks and thinks until it finally, in its undernourished agony ,falls and dies of STARVATION--

uNITE THIS WITH Dok stools last nights prediction of things to come and one must come tothe conclusion that the starvation of the market is in its advanced stages,money instead of hay being the motivating elenment, and death is nigh

hAV I GONE MAD??WHAT SAY U NOW CAPTAIN FLAGG??

BDECH

[On The Beach]

Funny to hear our man Mr. Locke emailed a question live into the Crapvision-Europe's guest 'technical anal cyst' re: going long on the S&P. Ostensibly, Oy is still reasonably sure - guest basically equivocated. Same old yammering about not breaking 905. Simon Hobbes called him on the typical T/A if, or, possibly equivocation. Waste of time...networkers up tomorow because the big swinging MFs want it that way. Indexes toddle around w/o external events. Yawn.

[Mr. Beal]

I wonder if they did any mayhem modeling at the pentagon for shrub?

 

International aid officials criticized U.S. and British troops for failing to rein in the looting, saying they were obliged by international law to prevent chaos.

 

"The picture is a very dark one. There is absolutely no security on the street," said Veronique Taveau, spokeswoman for the U.N. Office of the Humanitarian Coordinator for Iraq.

 

The International Committee of the Red Cross said one hospital in central Baghdad had been attacked by armed looters and others hospitals had been closed.

 

President Bush (news - web sites) promised Iraqis the United States and its allies would help restore order.

 

"Coalition forces will help maintain law and order, so that Iraqis can live in security," Bush said in a taped message.

^from above link

 

I heard one interviewed Marine say, ?there aren?t enough Marines in Iraq to police the streets of Baghdad?.

 

By any cautious accounting method there are many, varied and compelling scores to settle in Iraq. There?s also no loss of murder and intimidation as the pre-positioning for the ?Administration? is shaking down.

[phatbubble]

Looks like a lot of guys got cleaned out.

 

Traffic here is terrible.

 

Where is everybody?

 

Unusually calm conditions before the storm?

 

I'll be out until 1 a.m. eastern time, (working in my under-employed capacity, not having fun) -- so don't count my absence in the Sediment Indicator? tonight.

yeah, don't count mine either. i'm still celebrating my birthday of two days ago. also leaving for a long weekend in london this afternoon. still short but not hugely so.

 

SWAG - loot (eng. colloq.)

SHWAG (also SCHWAG, SCHWAGG, etc.) - skank bud

 

so, is there, somewhere, an indicator that measures the relationship of implied volatility to mathematical volatility, and compares that to something else, with the aim of concluding anything sensible?

 

i am, i said-

 

phat