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The Magic Wand Appears


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#1 wndysrf

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Posted 29 January 2003 - 05:03 PM

Mark’s Market Commentary – January 29, 2003

Once again, the Magic Wand appears out of nowhere. The $U.S. Peso and the stock futures collapsed after the speech last night, and the S & P was down as much as 16 points. But while Al Green was taking a bubble bath last night, administered by Andrea, watching the 42” Plasma screen TV wired to Bloomberg with a 5 second refresh, he saw the carnage and made the usual call on the BatPhone. Yet another miracle comeback was staged at 3:00am, and by the time the market was open, the futures were only down a tad, and the European markets also made a miracle recovery from sure devastation.

As usual, the Program Robots put some heavy bids under MMM, MSFT, IBM. And of course, the 27-year old fund managers were front running the next buying wave by chasing the Supermodels, which were HeatMapped for the 54th time during this bear market, sending the Nasdaq TRIN into the basement.

Buddha watching the action:

“The fix is in. The trend is for short covering into Fed lying and then for market to sell immediately off. Tommorrow, we should see super jamming of price probably from open buying in the S&P futures. This is typically to prop the rapidly fading reputation of the worst money management committee since the Soviets’ 5-year plan under Stalin. The hope this time will be to kick start end of the month fudge packing and try and smear lipstick all over the back end of the January Pig. Al Green; the old, ugly, decrepit, gout ridden, palsied, wart besmirched whore wants to go oy-veying all the way to the grave.”

What is amazing is how during this bear market, each dip is bought with a vengeance, concentrated in the “few select stocks”, and we have yet to experience a string of 90% down days, constant –1000 TICK readings, or any other measure of a panic selling wave.

And every time there is a bounce, the anal cysts immediately turn bullish, and all fear evaporates in less than 24 hours.

Another rare bear market feature, thanks to Al Green’s Productivity Miracle, is the incessant overcrowding of Riverboaters into a few speculative stocks. Remember, the technology miracle placed real time quotes, graphs, and signals on the desk of millions of speculators worldwide. That means that anything that moves, millions of Riverboaters are all over it.

Nobody has any patience to wait for a stock to gradually build momentum in a legitimate bull market. Now its all about catching the spikes and miracle rallies where 10:1 leveraged options positions can create 100% gains daily by putting your entire portfolio in one stock.

Remember the HeatMappers chasing up SOHU, NTES, and SINA? Remember how frustrated Riverboaters who missed the move all decided to pile into CHINA for a 45% move in one day?

And today, RMBS was the speculation of choice. Up 55%. Imagine being a mutual fund manager selling losing positions in AA, HD, and all the rest and putting the entire proceeds into one stock.

Before this bear market is over, barring a geopolitical shocker, I envision a scene where everybody piles into a few stocks. We will see one stock up 200% in one day on 40x normal volume. I envision a day where we see a TRIN reading of .02, because the entire Speculative Globe is buying 3 stocks out of the 3,500 which trade. The Speculative Hysteria is going parabolic. No matter how much money is lost as the broad markets decline, Uncle Al will always keep the Keno Chips flowing for the speculators, and all the banks will leave their credit lines wide open to allow the Agents to Program Trade on margin.

Credit Bubble Update

As we have documented here repeatedly, the Multilevel Marketing Pyramid, operated by The Matrix, organized by the FEED, is desperately looking for new participants.

The newest recruits are on-line college students. Anyone notice the parabolic move in Sallie Mae (SLM), and the recent strength and hysteria upside gaps on APOL, COCO, and CECO? The latest and greatest Credit Bubble creation are student loans for marginal players hoping to obtain business degrees at on-line college.

Imagine one of these guys going into a job interview:

INTERVIEWER:

“How are you currently employed?”

APPLICANT:

“I am an audio technician at Best Buy”

Translation: I install car stereos at Best Buy, so I can get 400 watt amps, DVD flat panels, and Subwoofers at cost for my lowered Honda CRX.

INTERVIEWER:

“And what kind of degree do you have?”

APPLICANT:

“I went to El Camino Community College, but had to drop out because of work commitments. I subsequently obtained an MBA from University of Phoenix Online.”

Translation: I was getting dissed constantly at the nightclubs when explaining to girls the meaning of an “audio technician”. So I knew I better get a fancy business degree. So I borrowed $25,000 with no payments, no interest until 2012 from Apollo Group and was able to phony up a piece of paper that says “Masters of Business Administration”. It was a no-brainer. Gaming the on-line college system is easy. Any hacker can generate a straight A report card. Besides, the on-line classrooms were a cool way to pick up chicks. Easier than using those on-line dating sites.

In the meantime, today’s Wall Struck Journal documents how Sallie Mae is expanding the Ponzi Scheme by offloading student loan securitizations to the retail public here in the U.S.

“SLM Corp pushed ahead with large debt offerings aimed at retail investors by planning sales of as much as $2 billion in $1,000 denominations in order to broaden their sources of funding.”

“Jack Remondi of SLM said the issuance of retail notes will allow SLM to strengthen its credit base, increase its liquidity, and diversify its market presence. Diversification is the top reason companies are turning in increasing numbers to the retail market.”

Translation: European insurers are currently choking on the myriad of securitizations jammed on them the last 3 years, and problems are being made even worse by their equity markets making lower lows. A financial holocaust in the making. The Bermuda HedgeHogs are also looking a gigantic mountain of garbage in their back yard, knowing that any small fire could trigger a maelstrom. Therefore, SLM acknowledges that the traditional channels are overstuffed, and the only place to offload new junk paper is to sell it to the U.S. Consumer, desperate for anything that pays better than a money market.

Insiders can already smell the disaster unfolding. Today’s “Insider Trading Spotlight” shows yet more APOL executives offloading $4.5 million in shares at $45 on January 2. Yep, you guessed it, near the all time highs.

What to Expect Next:

The S & P ran right into the 870 resistance. Tomorrow’s usual post-FOMC Repo Blast might produce a hysteria spike above this level to blow out everyone’s stops. And on Friday, if the GDP numbers are poor, then that could set us up for the next leg to the downside, making an “ABC” down near the October lows, which I expect to hold for now.

If we get a high volume blast past 870, then something else is happening, and we’ll have to cover some positions.

Position Summary:

Shorts to be applied each day the jamming continues…..

Half short on SBUX at $23. Schaeffer says the call interest is sky high and the short interest has declined significantly. Betting on an island top here, or a slow rollover to the downside.

We are 56% short, 32% long, 12% cash.

Half Short:

MBI at $50
KLAC at $41
CYMI at $39
NVLS at $35
INTC at $18
MSFT at $56
WHR at $56
INTU at $49
AMGN at $53
CSCO at $14
ORCL at $12
DELL at $25
SBUX at $23

Quarter Short:

FRE at $68
LEN at $56
COCO at $40
NCEN at $28
CFC at $55

Half Long:

GG at $11
HL at $4.55
BGO at $1.31
PAAS at $5
DROOY at $3.35
GLG at $9
GSS at $1.72
WHT at $1.05
KGC at $2.35
HMY at $16
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The Weimar Run: Bullphoria!!!!

#2 MrHanky

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Posted 29 January 2003 - 05:17 PM

thanks mark,you make a crappy day better


by the way sg...the Q's closed @25.14!!!!!!!!!!!!!!!!!!!!!!!
you are a friggin genious

Nothing


#3 TheDeepBlueSea

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Posted 29 January 2003 - 05:26 PM

"...the worst money management committee since the Soviets’ 5-year plan under Stalin. "

Couldn't agree more.

The idea that a gov't committee (The Magic Wand a.k.a. the FOMC) can decide both the price (interest rate) and quantity (repos) of something (money) is soviet central planning at its absolute worst.

It also violates one of the few laws of economics. That you can't fix both the quantity and price of something.

Not that this has stopped gov't trying and failing to do so down the centuries.

DBS

#4 GregFokker

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Posted 29 January 2003 - 05:37 PM

In yet another mysterious shell game, Al Green drained 2.25B today by only partially refunding the expiring 3.75B repo from yestiddy. The jam must've come from a short covering panic. Or, perhaps the PPT itself, the Working Group on Capital Markets, decided to make an appearance. Or, perhaps the "barely-legal" Onassis heiress decided to deploy some of her billions into the heatmap.

...A declining spenglerian carnival of Colossaalism united with Inflation where the numbers one through 10 are forever banished as worthless arithmetical detritus from a bygone age... - Beardrech

Naturally we believe the govt numbers... and Boobus Americanus sleepwalks off the edge of the energy-crisis cliff clutching his shares of "Crisco", Yoohoo and GooGah munching on his Yum Yums and Ho Hos. Future historians will have a hell of a time figuring out what the hell Americanus neanderthalus was thinking and exactly what brought on his sudden demise... - Henny Penny

Well, good night everyone. I gotta go lube up for tomorrow's regular end-of-week Gold Slapdown and Stock Index Bear Punishment Rally Weekend Greenprint. ...Probably another Shock-and-Awe Gap-Up-Open and Wire-to-Wire Meltup Runaway Bull Charge Mo-Mo Spike to Fresh New All-Time Lifetime Highs, culminating in a 4:15 yelping scalded dog runoff with panic short-covering and legal not-held bad double fills due to fast market conditions, plus quote system freeze-ups and trading platform lock-outs along the way. *yawn* typical gov't Friday. - Shorty


#5 slinger

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Posted 29 January 2003 - 06:23 PM

Let's all thank MXIM (where I once worked) for stating a cautious view tonight. The market will snap back to reality, give it time.

#6 The End

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Posted 29 January 2003 - 06:24 PM

I fart in the markets general direction! :grin: No change in Position.
NONE of what I type, should be taken as financial advice.

And when you loose control, you'll reap the harvest that you've sown
And as the fear grows, the bad blood slows and turns to stone
And it's too late to loose the weight you used to need to throw around
So have a good drown, as you go down, alone
Dragged down by the stone.


--Waters

#7 PileDriver

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Posted 29 January 2003 - 06:30 PM

Ditto

#8 wndysrf

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Posted 29 January 2003 - 06:39 PM

PNRA finally imploded AH.

After two years of fighting this thing, it finally cracked after I covered it at the highs.

Perverted market.
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The Weimar Run: Bullphoria!!!!

#9 MrHanky

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Posted 29 January 2003 - 06:46 PM

my drcvx was down only 3 cents today.....or -.63% so its no big deal

but it should have been up 10-12 cents if this was a "bear" market



I was not told that its a bull market...I guess I should ask krudlow and crammer for advice now.

Nothing


#10 Hypertiger

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Posted 29 January 2003 - 06:52 PM

Wild cornered animal stage won't show up untill it (FED) has cover... The Fed can never have the finger pointed at it...

"They" are still trying to figure out the method and time that will be used for cover... or it's already out there waiting, the final TRAP...
"We are completely dependant on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money (at the request of the consumer) we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." --Robert H. Hemphill, Atlanta Federal Reserve Bank,1938...

#11 Metamucil

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Posted 29 January 2003 - 07:00 PM

Noise, noise, noise.

Neckline resistance held for SPX; I shorted more.


Neckline support (~150dMA; ~977) held for NDX. Grabbed some QQQ shorts and will add more below support.


The internal rot continues. Look at the 'energy' loss, vs today's fake rally.




Short squeeze.....fursure.
hourly QQQ; note money flow divergence; same with SPY and DIA.



The ending is known....and it's bad......for bulls. SPX and DJIA have some serious catching up to do. I have many fewer shorts in NDX now. When tech gets so badly hated, I prefer to game the financially-driven index. After all........
a 4 year top in the BKX makes me salivate...and patient.

monthly

"I know the human being and fish can coexist peacefully"____George W. Bush, 7/29/2000

#12 wndysrf

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Posted 29 January 2003 - 07:15 PM

Metamucil:

Yeah, that bank index can't seem to break out of a 4-year sideways top after all the huge balance sheet expansions and so-called "record profits".

The banks will not fail until the Multilevel Marketing Pyramid collapses. So far, the Matrix Agents have been able to recruit new members. College students today. Who's next?

Men requesting penile extensions?

$10,000 Common cold vaccines financed with no down, no interest, $300/mo. for 15 years?

Nobody knows. This will go down as the all time record for paper explosion and the bull market in liquidity.
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The Weimar Run: Bullphoria!!!!

#13 Metamucil

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Posted 29 January 2003 - 07:27 PM

Nobody knows. This will go down as the all time record for paper explosion and the bull market in liquidity.

Wndy,

2 things:

1. I will NOT miss the collapse of the financial system. That is one muthah of a top and WILL resolve badly.....as you have so eloquently pointed out.

2. I must be able to collect my profits....a genuine concern :grin:
Imagine making a killing and finding the doors shut!! Reverse paranoia :blink: ??

....but all remaining cash is parked in tbills and gold and everbank cds......euros (a concern?).
"I know the human being and fish can coexist peacefully"____George W. Bush, 7/29/2000

#14 buttugly

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Posted 29 January 2003 - 07:28 PM

Look at where wave 5 ends on the Nasdaq!
Off the chart if I am reading this correctly.

http://www.saavycharts.info/

$CPC 21 MA looks like a perfect inverted double top.

Month end window dressing is the last shorting opportunity
before we freefall to Nasdaq sub 1000.

Lock and load.

Today's short stock tip ECL. Don't know the first thing about
it, but my custodial friend told me it's worth a look.

#15 Bearbones

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Posted 29 January 2003 - 07:30 PM

Today was a lot of strutting and fretting signifying nothing. One cannot petition the market with prayer.
As for Al, watch for coupon passes and permanent injections as the repos might not be enough this time. That's what happened in October to form the double bottom.





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