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#256 cwd

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Posted 12 August 2007 - 07:11 PM

I guess we wait and watch for what Russ is watching for. That would be permanent adds of agencies and MBS's.  That would be a direct subsidy of the mortgage market. If they are willing to do a few hundred billion it might really help the market in a real way, not just provide psychological support. Of course it would be unfair to take the gangs bad paper and not everyone elses but then who thinks life is fair? 

Let me guess, Countrywide thinks this is a super idea, and why stop there. Every manner of structured financial product could be bought by the Fed.  Or so goes a theory flying around the intertubes I've seen this weekend. The lawfullness of this I'm not sure of but then the law doesn't seem to matter much anymore.

Does the Fed have a  couple of hundreds of billions is my  question? A primer on the source of the Feds purchasing power would be appreciated.  Some say it's unlimited. The old printing press concept.

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I would guess the little guy will no slack, just like the S&L bailout, although a few players went to jail.
Will the Fed then foreclose on all the defaulted loans? Will they force the homeowners out into the street?

How would all of that work?

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#257 Brisbane Bear

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Posted 12 August 2007 - 07:14 PM

OT,

Tiger Woods is the most complete golfer I have ever seen.

Great to watch.

13 Majors is an incredible feat.

B) B)

#258 cwd

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Posted 12 August 2007 - 07:21 PM

Interesting article on Russell.

He got out of stocks two months before the 1987 crash. And again he got out of stocks in late 1999, six months before the March 2000 blow-off. Russell remained stubbornly bearish right through the subsequent 2002 slump, when most advisers were faked into thinking that happy days were here again.


"Question: Russell, do you think we're at the beginning of a primary bear market?"

Russel respond:

Link to interview with Russell

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That article says that, after the 1987 crash, Russell didn't turn boolish again until sometime in 1989, well after the market took off again to the upside.

Turns out he got boolish again right before the markit took another big dump in 1990 and erased pretty much all of 1989's gains. So he stayed bearish too long and turned boolish too early, at least back then. Over time, his newly-boolish stance was proven correct.

Will Russell's pattern repeat?

Note that the 1987 SPX crash, painful as it was, simply retraced pretty much EXACTLY 50% of the gains from 1982-1987. The 50% retrace was 219 and the SPX bottomed after 10/87 right at 216.

Also note that the 1990 SPX panic, which began in mid-July just like 2007's, retraced EXACTLY 50% of the gains from 1987-1990. The 50% retrace was 293 and the SPX bottomed in 10/90 right at 294.

A 50% retrace of the move from 2002-2007 would take the SPX back to 1163, not coincidentally the exact March 2004 peak. However, a milder selloff retracing 50% of the move from 2006-2007 would take the SPX back to 1387. Why is that number familiar? It's LeeWhee's next magick level. :lol:

These 50% retracement episodes crop up over and over again in markit history, especially at inflection points, such as 1987, 1990 and perhaps now again in 2007.

So is 1387 the next "key" bottom? Could be. It certainly fits all sorts of technical criteria. In addition, note that the 61.8% retrace of the 2006-2007 was EXACTLY 1427. Why does that number look familiar? It's the EXACT current low for the move down off the mid-July SPX peak.

So 1387 looks to have some massive technical ramifications:

---It's the EXACT 50% retrace of the 2006-2007 SPX rally

---It's the EXACT 78.6% retrace of the entire 2002-2007 SPX rally

---On a weekly chart, it's the EXACT technical bottom from the March07 low

---It's close to the resistance level (1383) that the SPX tried to recapture in Jan 2001 prior to commencing the 2001-2002 waterfall. The markit ramped right up to this level on the heels of a rate cut, but failed and cascaded down.

---It would represent the first 10%+ SPX correction in five years.

Don't fade the Fibbernachos. :lol:

So not only is 1387ish a big deal, a violation below there would be an even bigger deal. It would open up the likelihood of a much deeper retracement or even the start of an actual bear market.

Watching the action subsequent to a tag of 1387, assuming it occurs, will be crucial in determining the markit's intermediate future.

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Thanks for a great history lesson. :D

#259 cwd

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Posted 12 August 2007 - 07:23 PM

The Fed snaps its fingers, makes a loan to or buys paper from the primary dealers, and voila, it's money.  A central bank's ability to monetize is unlimited. They don't even need a printing press any more. There are no constraints, legislative or otherwise.

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Doc, I really appreciate you and LeeWhee hammering into our peebrains the significance of all this ponzi scheme.

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I will second that. :D

#260 cwd

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Posted 12 August 2007 - 07:27 PM

I am also going to believe that if the banks go down, so does oil stocks, even as strong as some of them have been to hold up under the recent pressure.

ATW
http://www.StockShar..._1186932867.png

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If the banks have funding problems the world financial systems will lock and we are looking at the 1930s, except this time we aren't on the gold standard and we have switched from being the world's largest creditor to the largest debtor. :ph34r:

#261 cwd

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Posted 12 August 2007 - 07:28 PM

We can agree that the 1390 area is an important point on the SPX chart.  The signifance of the monthly key reversal in July may mean the monthly chart holds the key to future support.

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I generally take it one step at a time.

So my eyes are on the 1380s right now. If we find support there, there is plenty of historical evidence to support it as a potential major low.

We'll just have to wait to see what happens subsequently.

Obviously, if the SPX bottoms in the 1380s but is unable to rally to new highs and then undercuts the low, that would be exceptionally bearish and a huge GTFO signal.

Conversely, if the 1380s hold and the SPX goes on to make higher highs, that would be very boolish.

But that's two or three steps away from where we are right now. And we haven't even tagged the 1380s yet.

There have been plenty of "monthly key reversals". They often mean that lower lows await in the near future. But they don't necessarily mean a whole lot longer-term. So we could see a lower low in September in the SPX and then rally for the next three years. Who knows.

In addition, let's assume for the sake of argument that the 1380s might represent an important price low (similar to the 50% retrace in 1987 and the 50% retrace in 1990.) That doesn't necessitate an immediate boner back up to new highs.

For example, after the 50% "crash" retrace in 1987, the SPX was unable to make a higher high until July 1989, almost two years later. And it took until Jan 1991 to fully clear the high, well over three years later.

And after the milder 50% retrace in 1990, it took until March 1991 to make a higher high, nine months later. And it took until December 1991 to fully clear the high, almost 18 months later.

So even if the upcoming low proves important from a price standpoint, we could well be blathering about these levels for another year or three, even if the markit remains "boolish".

Most folks appear to be focusing on memes from 1997 and 1998, when the markit cracked hard and bonered right back up. But those were pretty anomalous in terms of markit history. It was a "bubble", remember?

Going into this year, I felt that the markit would have great difficulty getting through the SPX ATH the first time around, especially if the tag of that level occurred in Jul/Aug. I wrote that I wouldn't be surprised if it took the better part of 6-18 months to clear the ATHs, even if the markit was boolish.

So the sort of action we are seeing surrounding the tag of 1550ish is expected. The fact that all this "newsnoize" has come along to reinforce the volatile action is par for the course.

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i think 1380 s could be seen this week,even tomorrow.if it does,i will buy and close my eyes for a day or 2 and see what happens.i think that area will hold at least for a decent bounce.

the strage thing is that many of the bond etf s i follow,the price has tanked,but the nav has barely moved through all of this.my only holding is a small position in hnw.down 3 bucks in a few weeks,but nav has only dropped 20 cents!

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Are you talking about ETFs or closed end funds? :unsure:

#262 cwd

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Posted 12 August 2007 - 07:46 PM

My bet is that some major mortgage company/bank consolidation announcements are right around the corner.

B of A buys CFC.

WM buys FED, IMB, etc.

Too many mortgage players out there.  A consolidation and restructuring of the industry would probably restore sanity and return underwriting conditions back to normal.

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************

I could not find a list of solvent mortgage companies?

Below is a list of big bank mergers since 1930:

Link to Bank Mergers Since 1930's

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In the S&L banking crisis of the 80s all the big Texas banks except a couple went bust and were taken over and merged into major national banks, although the stockholders were wiped out. I am not sure of what happened to the bondholders. :o

#263 cwd

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Posted 12 August 2007 - 07:49 PM

The Banking index has resolved itself to retest all the way back to the January 2006 timeframe.  It presently looks about 2/3 way to the bigger support around 93.

I may label my chart and log it into my brain that there is 1/3 to go before a reaction to watch for.

BKX
http://www.StockShar..._1186933842.png

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Does that work for the XLF? :D

#264 cwd

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Posted 12 August 2007 - 07:53 PM

Seriously people, scalping this thing is gonna be a bitch. 

The pinball action on tons of small stocks is just dizzying.  I'll post a few here.

Advice?

- Time.
- Limit Risk.
- Do it when you're most scared to go short.

Best.

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Agreed. Here's another one...


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Time it! Read the charts. Friday was an upside churn with insignificant volume. This was pathetic - especially considering the nature of the Fed operations that day. IBD changed their market status back to "correction" after Friday. The Dow undercut its follow-through. We are in a correction - let the trend be your friend.

Somehting to watch: Nasdaq and SP500 are in a position to follow-through any day now. If we do follow-through, Here are some longs I'm watching: CMED, CBST, STP, - all are at buy points; UA is also looking strong at this time.

I doubt were going to start a new rally, though. There isn't enough money flowing into the markets. This looks like a mass exodus. Wait for all the sectors to get wiped. If this is just an intermediate correction, then some stuff will survive (XLE, XLB, XLK, XLI, XLP are still holding up). If there is more selling to go, they will all get spanked. Watch the sectors for clues. Stay short unless trend changes.


I had a client who was having $20k cash bail posted for her this week by a bondsman. The bondsman received a $20k cashier's check and took it to his bank on Monday to get cash to take to the jail. His bank, Wells Fargo, I think, told him to come back on Wednesday for the cash. Don't know if this is unusual.

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If he was asking for hard greenbacks this is because most banks keep $5k or less on hand. I have read numerous tales of people attempting to get a few thousand and having the bank refuse. Under pressure the bank admits that they don't have enough on hand to satisfy the request.

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5k? How can that be!? ATM probably has more much more than 5k.

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I went to Chase on Friday and withdrew $10k. They had it. The only new requirement was needing 2 forms of ID (started on Monday).
I showed them my firearm owners identification. :P


Homeland Security demands banks report  transactions totaling $10,000 and over in a 24 hour period, lesser amount are voluntarily reported by the banks.

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Great - wish I knew that before. Now I'm probably on a government watch list. How the hell does this make me a security threat?!

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How about the tax cheat list? :lol:

#265 cwd

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Posted 12 August 2007 - 08:00 PM

My bet is that some major mortgage company/bank consolidation announcements are right around the corner.

B of A buys CFC.

WM buys FED, IMB, etc.

Too many mortgage players out there.  A consolidation and restructuring of the industry would probably restore sanity and return underwriting conditions back to normal.

View Post


************

I could not find a list of solvent mortgage companies?

Below is a list of big bank mergers since 1930:

Link to Bank Mergers Since 1930's

View Post



Looking at that list says that a lot of the so called mergers of the 80s in Texas were just a transfer of deposits and performing loans to the major banks. The bad loans were placed in the RTC. :unsure:

#266 cwd

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Posted 12 August 2007 - 08:04 PM

My bet is that some major mortgage company/bank consolidation announcements are right around the corner.

B of A buys CFC.

WM buys FED, IMB, etc.

Too many mortgage players out there.  A consolidation and restructuring of the industry would probably restore sanity and return underwriting conditions back to normal.

View Post


Windy - thinking along the same line, maybe take a stab at CFC bonds this week.

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Is there any value in the common? Thanks :D

#267 cwd

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Posted 12 August 2007 - 08:10 PM

Foreclosure list from LA Times.

It's turns out forclosures are WAY UP.

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This adjacent story tells you everything you need to know about what's been going on in the SoCal RE market:

One house's trip through the boom and bust

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The couple took $450k out of the house and had no money. They couldn't cover $13k in back mortgage payments. but they did "buy" another house in Texas somehow. Amazing.

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Is this a great country or not? Walk out on 450k debt and someone just gives them a couple hundred thousand more. :lol:

#268 MrHanky

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Posted 12 August 2007 - 08:20 PM

We can agree that the 1390 area is an important point on the SPX chart.  The signifance of the monthly key reversal in July may mean the monthly chart holds the key to future support.

View Post


I generally take it one step at a time.

So my eyes are on the 1380s right now. If we find support there, there is plenty of historical evidence to support it as a potential major low.

We'll just have to wait to see what happens subsequently.

Obviously, if the SPX bottoms in the 1380s but is unable to rally to new highs and then undercuts the low, that would be exceptionally bearish and a huge GTFO signal.

Conversely, if the 1380s hold and the SPX goes on to make higher highs, that would be very boolish.

But that's two or three steps away from where we are right now. And we haven't even tagged the 1380s yet.

There have been plenty of "monthly key reversals". They often mean that lower lows await in the near future. But they don't necessarily mean a whole lot longer-term. So we could see a lower low in September in the SPX and then rally for the next three years. Who knows.

In addition, let's assume for the sake of argument that the 1380s might represent an important price low (similar to the 50% retrace in 1987 and the 50% retrace in 1990.) That doesn't necessitate an immediate boner back up to new highs.

For example, after the 50% "crash" retrace in 1987, the SPX was unable to make a higher high until July 1989, almost two years later. And it took until Jan 1991 to fully clear the high, well over three years later.

And after the milder 50% retrace in 1990, it took until March 1991 to make a higher high, nine months later. And it took until December 1991 to fully clear the high, almost 18 months later.

So even if the upcoming low proves important from a price standpoint, we could well be blathering about these levels for another year or three, even if the markit remains "boolish".

Most folks appear to be focusing on memes from 1997 and 1998, when the markit cracked hard and bonered right back up. But those were pretty anomalous in terms of markit history. It was a "bubble", remember?

Going into this year, I felt that the markit would have great difficulty getting through the SPX ATH the first time around, especially if the tag of that level occurred in Jul/Aug. I wrote that I wouldn't be surprised if it took the better part of 6-18 months to clear the ATHs, even if the markit was boolish.

So the sort of action we are seeing surrounding the tag of 1550ish is expected. The fact that all this "newsnoize" has come along to reinforce the volatile action is par for the course.

View Post


i think 1380 s could be seen this week,even tomorrow.if it does,i will buy and close my eyes for a day or 2 and see what happens.i think that area will hold at least for a decent bounce.

the strage thing is that many of the bond etf s i follow,the price has tanked,but the nav has barely moved through all of this.my only holding is a small position in hnw.down 3 bucks in a few weeks,but nav has only dropped 20 cents!

View Post



Are you talking about ETFs or closed end funds? :unsure:

View Post

ooops,sorry....i meant closed end funds!hard to think staring at this tiny pda......

Nothing


#269 cwd

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Posted 12 August 2007 - 08:39 PM

Relax everyone, the USD is up one tick, gold down fifty cents, oil up 20c. and the Nickme down 30 points.Everything is COOL and under control :P

#270 alceringa

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Posted 12 August 2007 - 08:53 PM

Nickme getting uturned North after a stutter step open.

Think Brisy went long the close on the AllOrbs Friday.

Nice trade so far. Orbs up 1%+ 30 minutes into trading.
"Americans can always be counted on to do the right thing...after they have exhausted all other possibilities."
Churchill

"You can fool some of the people all of the time."
Lincoln

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."
Jefferson





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