Is the stock market going to tank?

[4matic]

I'm loaded up on FAZ too.

FAZ and FAS have reverse splits due tomorrow.

[Stu Gotz]

In other news, John Meriwether has blown up his Nth hedge fund.

Back to you, Jim.

[Moeghoul]

TIMBER!!!!!!!!!!!!!!!!!!!!!!!

[4matic]

TIMBER!!!!!!!!!!!!!!!!!!!!!!!

The lows from Tuesday have held so far and the Q's are significantly off their lows; up on the day in fact. While todays news is indeed dreadful holding support at SP00 870 is important. IMO todays trade is an important juncture technically.

[Moeghoul]

The lows from Tuesday have held so far and the Q's are significantly off their lows; up on the day in fact. While todays news is indeed dreadful holding support at SP00 870 is important. IMO todays trade is an important juncture technically.

It's still early. Not much to watch until 3-4PM.

[4matic]

900 SP00 is significant. A volume move through 900 and we should get a test of the previous high at 950.

"Analyst Meredith Whitney said that hard-hit Bank of America Corp. could also have value. Investors latched on to Whitney's comments because she has for years offered one of the more pessimistic -- and accurate -- assessments of the banking business. While she still remains cautious about the industry over all, the shift in tone gave investors a jolt."

[Brock Landers]

Goldman goes down within the next 90 days.

http://online.wsj.com/article/SB1247...ml#mod=testMod

Not likely

[Moeghoul]

900 SP00 is significant. A volume move through 900 and we should get a test of the previous high at 950.

"Analyst Meredith Whitney said that hard-hit Bank of America Corp. could also have value. Investors latched on to Whitney's comments because she has for years offered one of the more pessimistic -- and accurate -- assessments of the banking business. While she still remains cautious about the industry over all, the shift in tone gave investors a jolt."

Futures were in the shitter all Sunday nite/ Mon AM, then Whitney made the buy call, lol. Nice short squeeze yesterday.

http://online.wsj.com/article/SB1247...ml#mod=testMod

Not likely

It is highly remote with that much clout and cache.

[skiwithcharlie]

..........

[4matic]

Futures were in the shitter all Sunday nite/ Mon AM, then Whitney made the buy call, lol. Nice short squeeze yesterday.

.

Intel crushed after hours. Futures are up big. A move through 910 SP00 and we're off to the races. After hours is typically a ruse but tomorrow could be a big day and or a reversal day.


http://www.minyanville.com/articles/...ex/a/23536/p/1

"Conclusion: If the S&P meaningfully regains 910, it's theoretically possible that a melt-up move into the end of the week is on. But I’ll believe that when I see it."

[Brock Landers]

"Conclusion: If the S&P meaningfully regains 910, it's theoretically possible that a melt-up move into the end of the week is on. But I’ll believe that when I see it."

Too many "ifs", "theoreticals", "possibles" for me

[Stu Gotz]

Wall Street is looking for ~$56 in earnings for the S&P 500 in 2009. So forward p/e is ~16x. That seems a bit rich if Meredith Whitney's call for 13-15% unemployment is to be believed.

[4matic]

Too many "ifs", "theoreticals", "possibles" for me

I didn't write that..

Overall, I'm optimistic for a 50% retracement of the entire move down sometime this year.

[4matic]

Wall Street is looking for ~$56 in earnings for the S&P 500 in 2009. So forward p/e is ~16x. That seems a bit rich if Meredith Whitney's call for 13-15% unemployment is to be believed.

I don't think high unemployment is a deterent to the stock makerket. On the contrary. Cost cutting will help the bottom line for earnings.

[Benny Profane]

I don't think high unemployment is a deterent to the stock makerket. On the contrary. Cost cutting will help the bottom line for earnings.

Where do you think money is made in a 70% consumer economy? Besides, we're probably at an effective 15% unemployment with all the underemployment out there, which has been going on since the eighties. There's some MBAs making lattes in every town.

http://www.nytimes.com/2009/07/15/bu...1&ref=business

"In California and a handful of other states, one out of every five people who would like to be working full time is not now doing so.

It is a startling sign of the pain that the Great Recession is inflicting, and it is largely missed by the official, oft-repeated statistics on unemployment. The national unemployment rate has risen to 9.5 percent, the highest level in more than a quarter-century. Yet it still excludes all those who have given up looking for a job and those part-time workers who want to be working full time."

I think it's almost obscene that everyone is so excited about the banks. Has anybody learned anything, or are we just going to go head to head with the rest of the world's banks to see who will control the world's capital in ten years, damn the torpedoes?

[4matic]

Island gap on the Q's. Very bullish:

http://www.marketwatch.com/investing...&optstyle=1013

I'd rather not see it fill that gap. It should accelerate higher and I suspsect 930 SP00 before it slows down.

[Stu Gotz]

Such a strange thing. Dell spits the bit. Intel's quarter is full of holes. Efficient market my ass.

[Benny Profane]

WSJ

OPINIONJULY 16, 2009
The Bernanke Market
We won't get real growth until Congress and Treasury get policy right.
By ANDY KESSLER

I remember once buying the stock of a small company and I couldn't believe my luck. Every time my fund bought more shares the stock would go up. So we bought even more and the stock kept climbing. When we finally built our full position and stopped buying the stock started dropping, ending up at a price below where we started buying it. We were the market.

Just about every policy move to right the U.S. economy after the subprime sinking of the banking system has been a bust. We saved Bear Stearns. We let Lehman Brothers go. We forced Merrill Lynch, Wachovia and Washington Mutual into the hands of others. We took control of Fannie and Freddie and AIG and even own a few car companies, pumping them with high-test transfusions. None of this really helped.

We have a zero interest-rate policy. We guaranteed bank debt. We set up the Troubled Asset Relief Program (TARP) to buy toxic mortgage assets off bank balance sheets. But when banks refused to sell at fire sale prices, we just gave them the money instead. Dumb move. So we set up the Public-Private Investment Program to get private investors to buy these same toxic assets with government leverage, and still there are few sellers. Meanwhile, the $1 trillion federal deficit is crowding out private investment and the porky $787 billion stimulus hasn't translated into growth.

At the end of the day, only one thing has worked -- flooding the market with dollars. By buying U.S. Treasuries and mortgages to increase the monetary base by $1 trillion, Fed Chairman Ben Bernanke didn't put money directly into the stock market but he didn't have to. With nowhere else to go, except maybe commodities, inflows into the stock market have been on a tear. Stock and bond funds saw net inflows of close to $150 billion since January. The dollars he cranked out didn't go into the hard economy, but instead into tradable assets. In other words, Ben Bernanke has been the market.

The good news is that Mr. Bernanke got the major banks, except for Citigroup, recapitalized and with public money. June retail sales rose 0.6%. Housing starts jumped 17% month to month in May and will likely be flat for June. Second quarter GDP may be slightly up. And he was successful in spreading a "green shoots" psychology throughout the media. But the real question is, now what? Government interventions are only meant to light a fire under the real economy and unleash what John Maynard Keynes called our "animal spirits." But government dollars can't sustain growth.

Like it or not, the stock market is bigger than the Federal Reserve and the U.S. Treasury. The stock market anticipates only future profits and prosperity, not government-funded starter fluid. You can only fool it for so long. Unless there are real corporate profits from sustainable economic growth, the stock market is not going to play along. It's the ultimate Enforcer.

In mid-May, Mr. Bernanke's outlook seemed to change. Maybe he didn't approve of the sharp housing rebound -- like we need more houses! Maybe he saw inflation in commodity prices -- oil popping to $72 from $35. Or, more likely, he finally realized that he was the market and took his foot off the money accelerator, as evidenced in the contracting monetary base (see nearby chart). Sure enough, things rolled over -- the market dropped 7.5% from its peak, oil prices dropped almost 17%, and even gold has lost some of its luster. But in July, the Fed started buying again and the market rallied.

Can the U.S. economy stand on its own two feet without Mr. Bernanke's magic dollar dust? Eventually, but apparently not yet. Unemployment stubbornly hit 9.5% in June, according to the Bureau of Labor Statistics. Housing prices are still dropping, albeit at a slower pace, and foreclosures are still rampant.

But I think what really bothers the market is that the structural problems that got us into trouble in the first place still exist. We took the easy way out and, with the help of Treasury Secretary Tim Geithner's loose "stress tests," swept banking problems under the carpet. We waved off mark-to-market accounting and juiced bank stock prices to help them recapitalize, but all those toxic mortgage assets on bank balance sheets are still there as anchors on lending. All the pump priming and stock market flows didn't get rid of them.

Hats off to Mr. Bernanke for getting the worst behind us. He'll be pressured politically to keep pumping out dollars, but he should resist the urge. The stock market will ignore his dollars if it doesn't believe they'll turn into real profits. Green jobs and government health-care clerks do not make a productive, sustainable economy. That can only come from innovative companies with access to growth capital. The stock market won't turn bullish until it sees that type of economy.

Again, when it's clear that you are the market you have to stop buying and begin tackling the hard stuff. By not restructuring banks, by not getting bad loans off bank balance sheets, by not standing up to the massive increases in government debt crowding out private capital, the Fed and Treasury are holding back real economic growth.

Mr. Kessler, a former hedge-fund manager, is the author of "How We Got Here" (Collins, 2005).

[4matic]

New closing recovery highs: COMPQ, Nasdaq 100, S&P 500. Roubini turns sanguine, IBM beats and Google meets. Monthly expiration tomorrow. If Google breaks $450 we'll get another leg up but GOOG is very weak in the aftermarket.

[Moeghoul]

Nice call on the technicals, 4matic.

[woodstocksez]

Quote:

As one of the traders I talk to put it, "Unless Intel is going to hire 6 million Americans, it doesn't do shit."

I'm having trouble understanding the wisdom of that comment. Can you help?

[Benny Profane]

I'm having trouble understanding the wisdom of that comment. Can you help?

I'll bite. He meant that the fundamentals of the economy are so bad, led by unemployment, that Intel making a nice quarter doesn't do squat for a long term investor.

[woodstocksez]

I'll bite. He meant that the fundamentals of the economy are so bad, led by unemployment, that Intel making a nice quarter doesn't do squat for a long term investor.

Maybe the fundamentals are bad. Obviously, good results from Intel are interpreted as indicative of improving economic health far beyond Intel. Whether that's correct or not is certainly debatable, but dismissing that point of view simply by observing that unemployment is high seems empty to me, and a facade of insight, rather than the actual thing. Doesn't unemployment follow bad economic fundamentals, rather than lead them? Things go bad, then people get laid off, not vice versa. Similarly, things get better and people are hired, not vice versa.

And if we're concerned with investors, I expect you probably already know this, but reductions in unemployment historically lag improvement in equity prices. According to my understanding of historical norms, improvement in corporate results is a leading indicator of a stock market upturn, while improvement in employment numbers is a lagging one.

[Benny Profane]

Maybe the fundamentals are bad. Obviously, good results from Intel are interpreted as indicative of improving economic health far beyond Intel. Whether that's correct or not is certainly debatable, but dismissing that point of view simply by observing that unemployment is high seems empty to me, and a facade of insight, rather than the actual thing. Doesn't unemployment follow bad economic fundamentals, rather than lead them? Things go bad, then people get laid off, not vice versa. Similarly, things get better and people are hired, not vice versa.

And if we're concerned with investors, I expect you probably already know this, but reductions in unemployment historically lag improvement in equity prices. According to my understanding of historical norms, improvement in corporate results is a leading indicator of a stock market upturn, while improvement in employment numbers is a lagging one.

Well, you're painting a big picture with one brush there. I'm not privy to the conference call from Intel, but one quarter up results could be almost anything, including some slick accounting. My guess is that they have their production dialed well, and shut it down nicely, while getting some orders from some other direction (servers?) to fill the void. But, wtf do I know. Well, I know that we're descending back down to at least 1997 or so.

[woodstocksez]

Well, you're painting a big picture with one brush there.

No, I'm not. At all. Though I did identify some general relationships that historically have commonly occurred.

I'm not privy to the conference call from Intel, but one quarter up results could be almost anything, including some slick accounting. My guess is that they have their production dialed well, and shut it down nicely, while getting some orders from some other direction (servers?) to fill the void. But, wtf do I know. Well, I know that we're descending back down to at least 1997 or so.

I didn't argue that Intel's improved quarterly results (and I don't know the details either, just the cursory stuff I saw in the headlines and maybe a news story or two) mean the overall economy is improving. I have no idea what the significance of their results is. In fact, that's just my point about almost all of the economic (or financial market, for that matter) analysis that you see here or in the news: people consider one or two or several parameters and extrapolate meaning to the overall economy based on that. A system like the U.S. or world economy is a big, complicated machine with a lot of moving parts that interact with each other in lots of different ways, known and unknown. Analyzing cause and effect in a system like that is difficult and imprecise, at best, even for those with a lot of relevant knowledge and understanding. I don't think most "analysis" here or in the media even comes close to being meaningful.