Now More Than Ever

[wndysrf]

This morning on the radio I heard that Angelina Jolie is leaving the country and moving to England.

 

To get a "fresh start" somewhere else.

 

She's throwing out all the vials of blood obtained from Billy Bob Thornton. Wasn't it just 6 months ago that these two couldn't keep their hands off each other? Couldn't bear to be away from each other for more than 10 minutes?

 

In two months, we will hear of a marriage proposal from a European rock star.

 

Nowhere but Hollywood do you see such excessive sex rotation. One celebrity after another, springing in and out of different beds.

 

So many "contracts" made which are supposed to last forever.

 

So many promises broken.

 

So much energy wasted.

 

So many gifts, booze, and designer drugs consumed during the seduction.

 

And so few of these people are happy.

 

What continues to be a source of amazement during this bear market is the incredible amount of money which trades around in a circle in the mutual fund industry. Giant block trades. Sell this. Buy that. One huge stock purchase for the "long term". Only to be traded for something else 2 months later.

 

With all this rotation, few funds manage to beat the S & P.

 

Few funds are even able to report a positive return during the bear market, unless it's a bear fund that shorts stocks.

 

Everyday, IDB profiles some "top rated" funds, listing their largest holdings, top buys, top sells, etc. None of the funds' buy or sell decisions make any sense. Huge blocks, like 700,000 shares of one particular stock sold. Yet the next week, some other fund makes a huge buy on the same stock.

 

The amount of money flowing around from one stock to the next is amazing.

 

With all of the IDB "Breakouts" featured every day, it would seem that at least a couple of funds would have positions in the majority of these winners and be able to report a positive return.

 

Where is the fund that bought AZO, FRX, IGT, COCO, TTWO, COH, PNRA and was able to sell these stocks at or near the top?

 

There is no such fund.

 

The Holy Grail of the mutual fund manager is to be featured on the cover page of the Mutual Fund section in Barron's. Because none of the funds are able to significantly outperform the index, so the only way to get the incoming calls into "Customer Service" is to be prominently featured on Page M1 in full living color.

 

Last weekend's featured fund was the Smith Barney "Mid-Cap Core" fund (SBMDX), run by some guy named Lawrence Weissman, who looks like a former claims adjuster for State Farm, and Susan Kempler, a retired Ann Taylor model. Their picture is posted at the end of the commentary.

 

By the way, Kempler has only been with the fund since March Madness. Which stocks did she pick on the way down from that top?

 

I bet that neither have any trading experience. Unlike the spike haired HeatMappers over at Anus Twenty, these two were hired based on their conservative appearance. To provide "comfort" to Joe Sixpack, who think these two are careful strategists and not likely to be big gamblers. They probably have a staff of $175,000 a year research anal cysts who pick the stocks for them. No attention is paid to technical analysis. Stocks are bought arbitrarily. Sell is a four letter word, unless the stock gets "Enroned" and collapses to penny stock status.

 

Note the top 10 positions. We'll examine some of them.

 

ABK. Their largest holding. Why this one? Are these guys unaware of the ongoing bull market in municipal bond issuance and securitizations which is now rolling over from a top? Are they oblivious to the credit bubble? Where did they buy this one? $60? $70?. When will they sell it?

 

 

TEVA. One of the impervious mania stocks during this bear market. A Tel-Aviv based pharmaceutical company. When will they take profits now that the stock just performed the Death Stock Split? Will they sell before or after TEVA's factory gets firebombed by Osama Your Mama?

 

 

GILD. Another bubble stock selling at 22x sales. Hasn't gone anywhere in the last 6 months. Where did they buy? $25 or $40?

 

 

UNH. Of course, this one took off like a scalded dog and never looked back. Until THC spoiled the Health Scare party. Are they out of this stock yet? Or will they simply "wait it out" and let the price catch back up to its phony P/E ratio?

 

 

BEAS. Hard to believe that the funds are still chasing or hanging on to these wrecked stocks. As Buddha, the Color Commentator would say, why are funds so intent in maintaining such a tight grip on these death stars?

Manias die hard.

 

 

Of course, this fund's performance has been better than average. Down 18% so far this year, and down 3% the last three years. Better than the S & P.

 

But why pay a 5% back end load for this piece of garbage if it has negative returns?

 

Can you believe that there are 7-figure salary managers running these funds?

 

Who pays for those expensive suits?

 

Who pays for that outrageous rent on a Park Avenue office?

 

Who pays for those designer finished cement floors and stainless steel handrails in the lobby?

 

Why are there so many of these funds with billions invested?

 

Where did the money come from?

 

Why hasn't the money been pulled out?

 

So many shares traded.

 

So much wasted commissions.

 

So much anxiety.

 

So much mediocrity.

 

So much hope that some advisor will randomly pick your fund as part of some blind asset allocation decision.

 

How is it that so much money can remain in such a mediocre asset class?

 

Why hasn't there been more redemptions?

 

How come we haven't seen a major run on these funds?

 

How come there haven't been any major fund closures, mergers, or failures?

 

The agents of The Matrix have done an exceptional job in keeping the sheep in their pens. Nobody is selling. Nobody is redeeming. The Reliquifaction Blender simply churns out more and more recycled trade deficit and spread trade dollars to jam into the mutual fund complex.

 

Otherwise, we would see the fund industry shrink and see much lower stock prices.

 

As for today's action, we got some decent price destruction. But the volume was too light.

 

Lack of buyers? Or are the sellers waiting for the inevitable "bounce" before bailing?

 

But as we have documented during this bear market, the deeper we go, the greater the hope hysteria.

 

The lower we go, the higher the "Now, More Than Ever" psychology.

 

Today, there was evidence of "Now, More Than Ever" action. The put/call ratio this morning was in the basement despite the decline in the broad index.

 

Now, More Than Ever, nobody is going to sell, for fear of selling at the bottom.

 

Now, More Than Ever, everybody is going to drag out their TA textbooks or "Timing Cubes" to load up with full positions on the dip.

 

Now, More Than Ever, shorts will avoid entering new positions until some type of "confimed lower high" is established

 

This is exactly what happened after the "double bottom" in December 2000 and January 2001. Everyone was so convinced that the bottom was in, when the late January 2001 rally rolled over, there were all buyers and regular short covering at the following points:

 

The 38% retracement of the move.

 

The 50% retracement of the move.

 

The "triple bottom".

 

Shorts dared not enter any positions.

 

And of course we all know that the Nasdaq was smoked to the April 4 lows. An uninterrupted decline that lasted for weeks.

 

Are we seeing a repeat?

 

If there is going to be a "third of a third" wave decline, how will it start? Who will recognize it first?

 

We'll have to wait and see. Selling volume needs to accelerate. Otherwise, another failed run for recent highs is in order.

 

Buddha the Color Commentator is acutely aware of the habits of the Program Robots. Here's his take on tomorrow's action:

 

"A gambler looks at todays action and sees no bounce and high trin close equals bounce coming Tuesday. No need for exhaustive research, lines, charts, breakdown proclaimations, sudden murmurs of impending apolcalypse and doom. No. This stuff rarely is worth ones time. Merely ask "in which direction is money now made easiest in the short term?". I suggest the direction is up but then it is a call made merely for the sake of gamblers, addicted gamers, and program schemes. Most especially if the close is textbook high TRIN with no bounce than out come the bears and up goes the index tommorrow."

 

"I would definitely look for some jam and manipulation by Wednesday following the Pontiffs remarks. There is Macd positive divergence on the 5 day chart and we are sitting right around the 50 day bounce area as far as I can tell. Time for another squeeze coming soon. Mxim and Klac and Qlgc and the rest of the usual fast money subjects. Whenever this market spends a day in high trin with no bounce it gets a terrific case of blue balls and then boners straight up soon enough. The real loss is in the time it requires to hover mindlessly over the monitor waiting for the Matrix Buy Orders to begin flooding in."

 

"Alice in Wonderland prevails, black is white, white is black and the March Hare truly is Mad as a Hatter. Do not look for reasons beyond the paranormal and know that money will always rotate in the Market short term in the direction of least resistance. Time and again we have seen breakdowns and breakouts fail and trigger reversals. Will it happen this time? Who knows, but I wouldn't pile in short just because the textbook says so. The herd is all reading the same stuff, the real question is when do the Matrix Jammers show up to blow out another round of shorts? No one can ever answer that, thats why short term trading is gambling, no more and no less."

 

 

.............................

 

Position Summary:

 

No new positions. Still waiting for a bounce.

 

We are 53% short, 12% long, 35% cash.

 

Half Short:

 

LOW at $42

KSS at $66

INTU at $53

C at $38

IBM at $85

TGT at $34

 

Quarter Short:

 

FRE at $68

CFC at $49

MBI at $54

KBH at $49

LEN at $56

TOL at $27

NCEN at $30

BBBY at $35

COCO at $40

 

Half Long:

 

BGO at $1.31

HL at $4.10

PAAS at $5

DROOY at $3.35

GG at $10

GLG at $9

[brian4]

Over the weekend-a FEW-not many-thought -that the Soldier, Piledriver, Lightening and Aussie were nuts to be full short-we gave our side-they gave their side-well after today we've got one word for you-KACHING! You saw my positions last nite-you do the math!-have I sold anything in a word-NO! With 45 minutes to go when the dump accelerated there was a reason for it. Prechter called it right on the button Friday nite any break of 895 SPX and 8501 Dow-3rd wave down! From the moment those numbers were taken out the minus ticks went to the top and stayed there and the grind down turned into a rout. Now a lot has been said about Prechter and I agree with most of it-his calls are generally early and his individual stock shorts are in my opinion abysmal and yes he is plain wrong sometimes but hell they all are from time to time. The important thing is he always comes thru in the end and time proves him right. Now having said today was a great call so was Doc's so cycles and waves were in synch. 3rd wave declines are vicious for the Bulls because support means squat-3rd waves down stop when they want to so buckle up and enjoy the ride! To those who were long and unhedged no sympathy from me you play with the bull you get gored by the horns-this is a BEAR MARKET and we have now entered phase two. A 3rd wave decline is the point of recognition for investors the point where the fundies and the big and little guys realize it's OVER on the long side and we finally get capitulation. NOW is it the final, final capitulation??-we will know in about a week. For us the Xmas Bear FEAST came early make MONEY and Trade Safe! BIG GRIN!

[Hypertiger]

"They" better do somthing tomorrow or "they" are in trouble...

[sweefraapp]

12/09 17:34

Silicon Valley Stocks Decline, Led by IBM, Maxim Integrated

By Vivien Lou Chen

 

San Francisco, Dec. 9 (Bloomberg) -- Stocks of Silicon Valley companies fell, led by International Business Machines Corp., as the Dow Jones Industrial Average and Standard & Poor's 500 Index had their steepest losses in four weeks.

 

The Bloomberg Silicon Valley Index dropped 15.21, or 4.5 percent, to 319.58. Stocks of companies that declined led those that gained 34 to one. The index has lost 32 percent this year.

 

``We are in a low-growth environment where earnings expectations still need to be adjusted down,'' said Richard Turgeon, director of research at Victory Capital Management, which oversees $65 billion in Cleveland.

 

IBM, the world's largest computer maker, declined $2.73 to $79.59 in trading of 8.84 million shares. Its shares have dropped 34 percent this year.

 

Intuit Inc., the world's biggest maker of software used to prepare income-tax returns, slipped $2.64 to $49.26 in trading of 4.18 million shares. Chipmaker Maxim Integrated Products Inc. fell $2.37 to $35.54 in trading of 9.34 million shares.

 

The only stock that rose was Varian Medical Systems Inc., which makes radiation machines used to treat cancer patients. Its shares advanced $1.25 to $48.35 in trading of 810,000 shares.

 

The Bloomberg Silicon Valley Index, a price-weighted index of technology stocks with major operations in the area, set a 52-week high of 519.72 on Jan. 9. It reached 250.73, the lowest level since Dec. 17, 1998, on Oct. 8.

[martialcomp]

My take is this. Today, institutional action was very limited.

 

Perhaps the last couple of months was Custer's Last Stand. Fund managers attempted to prevent 3 down years in a row.

 

Could it be that they finally ran out of cash?

 

Or, it is so freaking cold throughout the country that many of them stayed home today in front of the fireplace?

 

Not sure, but the volume was pathetic.

 

This week, I visited my grandfather in AZ. I showed him the balance sheets on many large, important US companies like Ford, GM, JPM, Citigroup, Bank of America and GE. He was surprised to see how much debt these companies have.

 

In the end, he was deflated by the conversation.

 

I wish we could start a thread labeled "Debt Watch" showing the current running totals of many of the companies in the Dow 30 as well as some of the telecoms.

 

2003 will almost certainly be deflationary.

 

Wage deflation.

Housing deflation.

Automotive deflation.

Computer and electronics pricing deflation.

[wndysrf]

Sorry for the mess.

 

The Matrix is sending hackers into CapitalStool and for a brief moment, they attempted to scramble the Mark To Market column to make it illegible.

 

But we have our own X-Box gamers who can intercept and fix these technical difficulties in rapid time.

 

The Color Commentator's comments have been added to the end of the commentary.

 

Sorry for the late post and the reading confusion.

[Goldmember]

Some puts I bought WAY back during the mid-term elections for December I sold today for a 40%profit. Took the money, which I had pretty well written off, and that cash is on the sidelines for an entry somewhere. Some other CRAP I also bought a month ago just needs a little more continued slide. Some are near where I bought them and need further sliding to recover dollars. May let some run if the market continues to slide, which I think will happen. Awesome day today! :grin:

[sweefraapp]

I'll be looking at this one for puts - when the 60 min hits upper trend line..

Blue line is 41 week ema.

Notice the declines come very fast.

[GregFokker]

Pretty light volume on today's decline, but she sure looks like a stinker, Sweef.

[sweefraapp]

GF: thats a weekly chart so only Monday is included.

[sweefraapp]

"NO SOUP FOR YOU!" Is on the Super Station (WTBS).

[GregFokker]

Tanks, Sweef- Fokker must be gettin old

[midnite lightning]

Oh boy!

 

United they stand divided they fall in a bunch of pieces to be bought by their competition. I?ve lived the same fate and seen it first hand. Just makes you feel sick.

 

Very sad day the 2nd largest airline went TU, they have been around for years and years. This is only a glimpse of what is about to come. As you can see the market didn?t like it.

 

Looked over the employment numbers which might be old hat to some but some interesting things pop out to me.

 

The economy slashed 40,000 jobs last month and the consensus was for 33,000 jobs created. Boy talking about missing it by a wide margin.

 

Almost every holiday season the retail sector adds a bunch of jobs for the increased shopping demand. Last month the retailers cut 39,000 jobs. I bet we all know what the retail numbers will look like.

 

The manufacturing sector had the biggest cuts, 45,000 jobs out the window. This pretty much tells us the manufacturing sector is in the sh#tter.

 

The government sector is the only one which added jobs. Over the last 4-months, the government sector was responsible for creating 59% of the jobs. Mind boggling.

 

Challenger Gray & Christmas which have no ties to the government reported 157,508 corporate job cuts which are almost twice as much as august. Don?t look good from here.

 

Watching those mm?s at the close and very very heavy volume going out the door which usually means the market is south bound.

 

Should be an interesting week. Looks like the weekly indicators will turn south this week.

This is what I have been waiting for. Their 2-month rally built on quicksand is going down. Should be a riot hearing all the bs why this is going down.

 

Be careful.

 

CYA

[Bearbones]

The 90s officially ended last quarter when the ratio of houshold net worth to income gave up all its gains made during that decade. The average mutual fund dollar is hovering at cost even after all the feeding and jamming while household net worth has declined for three straight years even with the housing price bubble!

People have been getting poorer but have not been allowed to feel poorer courtesy of massive credit growth. That's the mushroom in Mark's Alice In Wonderland story.

And "they" are starting to eat fewer mushrooms. Consumer credit only up slightly while the savings rate is rising.

As you read this our President is picking out a pair of earrings to make this pig of an economy look like something more than, well, a pig!

This is a new bull market-in financial masochism.

[torah man]

Today was a taste of things to come. I am still holding puts on spx, qqq, and klac.

 

holding bgo and hmy, but may dump on the next jump in gold. i may just sell a covered call on the hmy and keep it for a while.

 

new rabbi-like thread in the theology stool area:

http://www.capitalstool.com/forums/index.p...ct=ST&f=8&t=166

 

see you there.