Corepuncher's Account Talk

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I know I keep bringing up Karl Denniger's blogs, but that dude has been SPOT ON.

As if today's sell-off wasn't disturbing enough, read this:
http://market-ticker.denninger.net/archives/623-The-Stark-Choice-Now-Facing-America.html

Here is a quote:

We now sit literally days away, with a high probability, of a credit market "dislocation" that will change American finance and decimate the stock market.

That is, worse - far worse - than what has happened thus far.
Try on for size 2-3,000 points down on the Dow from here. 25% more than has been lost thus far, more-or-less "all at once." The probability of this event is now in excess of 70% - within the next few days to two weeks.

If what he says is true about what needs to happen to AVOID this...then we might as well expect that the worst is going to happen because there is no way they will repeal the bailout bill.

I've been itching to get to at least a 50% cash position forever it seems.

We were 1209 about 17 trading days ago. That is NOT very long but it seems like a lifetime to me. My plan is if we rebound and cannot break 985, I'm getting out. If we are up tomorrow, I'm seriously thinking of selling 25% NO MATTER WHAT the market is doing...and 50% if we are up strongly.

If what KARL says is right, we could be looking at an S&P near 500...or lower. Think of it this way, all you folks who are down 40+ %...if you sell today at 900...then you just need to get it down to 643 then go all in in order to BREAK EVEN YTD...essentially because a rise from 643 back to 900 (assumably at some future time) will erase your 40% loss!

This could be the big one...and even the THREAT of the "big one" along with looming deep recession should at least keep the market from rocketing up past 1000 any time soon. So why not sit on the sidelines...or at least sell into rallies.

I know I have changed my tune...been bearish, then SHORT TERM bullish...but now I think I have just been fooled by all this...it's an illusion! The credit markets ARE NOT getting better, because it's the GOVERNMENT who is propping it all up! See how the Dollar has been rocketing up? That is fear. Watch what happens when the DOLLAR tanks. THAT will be fear and the reaction will be frightening. :(

Updated Tracker COB 10/22/08
----------------------------------------------------------------------
2008 YTD Return: -14.39%
Today: -6.07%
Current Allocation: 100C
Tentative Next Move: I got my finger on the trigger
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Corepuncher said:
I know I have changed my tune...been bearish, then SHORT TERM bullish...but now I think I have just been fooled by all this...it's an illusion! The credit markets ARE NOT getting better, because it's the GOVERNMENT who is propping it all up! See how the Dollar has been rocketing up? That is fear. Watch what happens when the DOLLAR tanks. THAT will be fear and the reaction will be frightening. :(
Click to expand...

Good for you. I'm glad you're finally seeing the light. Your unbiased reasoning is to be respected. Unlike the strategies of hope and fate.
 
Next week, there is the FOMC meeting.

What could they POSSIBLY do to make everything "better"? ABSOLUTELY, POSITIVELY, NOTHING!

DOWN DAY FOR SURE!

I HIGHLY recommend being OUT prior to 10/29...not to mention the week of Nov 3rd which has all kinds of major booby traps of economic data!
 
I am trying to think of the market reactions around the FOMC meeting based on different rate cut scenarios. You're right, it does not matter anymore. BTW, I think GDP posting is Oct. 30. :cool:
 
Hey I don't know who this Karl guy is but I'm always open to reading and listening to learn other view points. I know the govt has propping this mkt up.....it only prolongs the agony! Let it crash and then we can go from there.....but they won't! I thought the dollar was rising (which I enjoy cause I'm oversees and it really impacts me here in Asia) cause the other countries....ie Asia, Europe are worse off then us. I always say that if we have a recession in the US; then in Asia's poorer countries it's like a depression.
 
Holy crap am I glad I dumped my S fund a few weeks ago! Look at it compared to everything else...even the Russell 2K. It makes sense when you think about it...if you own anything, it would be the top 500 companies, not companies 501-1000 or whatever LOL.
 
What a ride today. I sold 50% C fund this morning thinking we'd be up...only to see us down over 4% at one point only to close up 1%. Thank goodness for short covering rallies...you are my hero!

Despite the "comeback" today, which was weak, the chart is still broken. We have to close above 985 in order to have ANY hope of a gradual rally.

I firmly believe we will have a downward catalyst within 2 weeks to send us below S&P 800. A failure to breach 985 will be my signal to sell. 750-800 is my target to buy back in.

Oh, from KD's page:
Greenspan said today in his testimony that ALT-A MBS "appetite" (that is, marketability) will likely never return.
This means that any of these "assets" that the TARP (you, the Taxpayer) "buy" will never be resold to anyone. You will eat them, and Hank Paulson's claim that these "assets" will return a "profit" to the taxpayer is false.


That was not the "bottom" the other day...it was a short term bottom, but not "the" bottom. REAL fear hasn't been seen yet. Just wait until everyone's models explode, leaving them with no guidance, like chickens with their heads cut off. We may see a 10-20% 1 day panic decline...a "crash of '87" on top of what we already have. Remember, real market crashes often materialize out of OVERSOLD conditions, not rebounds.

BLOODY NOVEMBER
(and this time I'm taking my own damn advice!)
​
 
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Corepuncher said:
A failure to breach 985 will be my signal to sell. 750-800 is my target to buy back in.

REAL fear hasn't been seen yet. Just wait until everyone's models explode, leaving them with no guidance, like chickens with their heads cut off. We may see a 10-20% 1 day panic decline...a "crash of '87" on top of what we already have. Remember, real market crashes often materialize out of OVERSOLD conditions, not rebounds.

BLOODY NOVEMBER
(and this time I'm taking my own damn advice!)​
Click to expand...

CP - You know your stuff - you really do.

I'm out of the game and staying in G Fund for quite a while (95% out of respect for my wife - and she doesn't even know I did it). But there was certainly a small part that could not blow off REALITY and just sit on my ass while the losses keep mounting.

I'm not even looking for quick term gains at this point but I finally did come to realize no matter how many people say "we're at or near the bottom" we have no clue.
 
Birchtree said:
Stgeady,

You have experienced capitulation and you are certainly not alone.
Click to expand...

....and I think there are plenty more funds to blow up with more forced selling on the way.

Tonight on CNBC they were talking about a hedge fund manager who is up 20% YTD...and even had 1 fund that was up 550% last year. John Paulson was his name I think. Anyway, he is still very bearish on the market, and is 50% cash. That is a HUGE cash allocation for any professional manager. Apparently he has resisted the urge to "bottom pick" and while other funds have been going down, his ship is still afloat.

Updated Tracker COB 10/23/08
----------------------------------------------------------------------
2008 YTD Return: -13.12%
Today: +1.27%
Current Allocation: 50C 50G
Tentative Next Move: Strange, my return went UP today. Feel much better w/ some cash now. Will keep my other 50% in for now, which I bought at 1161 :suspicious:...but if I can buy in lower with my cash I can help make up for it. My break even point (to get to a 0% YTD return), if i remained in a 50/50 stance...would be to put my 50% back in at S&P 719. If I would have sold my other 50% as well today at 908...my break even point would be 802. Of course this number will rise if I can sell my remaining 50% > 908.

For my own bookkeeping purposes:
50G/50C as of 908 = Break even buy 50% at S&P 719
If 100C as of 908 = Break even buy 100% at S&P 802
Sell other 50% at 950 = Break even buy 100% at S&P 857
Sell other 50% at 1000= Break even buy 100% at S&P 925
And...just for grins...
S&P goes up to 1146 by itself...I'm at break even at 50G 50C...yeah right!
----------------------------------------------------------------------
 
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CP, thanks for sharing your thoughts. I went 50G/50C today about 1100. That KD article bugged me all night and I couldn't wait to buy some G today. I think you are spot on in your analysis. I'm not so sure a S&P of 600 is far fetched at this point. I wouldn't have considered it a few weeks ago, but things are really bad once you dig a little below the surface.
 
Taken tonight from:
http://market-ticker.denninger.net/archives/626-To-Our-Government-CUT-IT-OUT-NOW.html

"Now let's talk banks. You know, those things that are supposed to hold reserves against deposits when they make loans? Well guess what - there are no reserves. The non-borrowed reserves have been negative for months - since the turn of the year, in fact, and now total over $300 billion dollars.

What does this mean? Simple - the banks lost (blew, speculated with and got caught on the wrong side of, issued or purchased crap securities with, paid bonuses with, paid the light bill with, etc) the reserves they are supposed to hold against deposits. This would usually result in them being declared insolvent and the FDIC would seize them, but that would be inconvenient. So instad they went to The Fed which loaned them reserves so it appears they have some. It appears they have subsequently lost some of that money as well, because the "non-borrowed" reserve number continues to increase in the negative direction (that is, its a negative number - a very large negative number.)

But wait - where did that money they borrowed come from? Why Treasury issued debt against which was issued money, cranking The Fed's balance sheet up. So in effect, what were bank reserves held back from your deposits are gone (kaput, vaporized, in some banker's yacht at The Hamptons, etc) and have been replaced by debt issued by Treasury against FUTURE tax collections to be levied against you!

That's right - your reserved deposits were lost, and replaced by an IOU from Treasury against YOUR FUTURE EARNINGS.

You not only gave your money to a bank which lost it, they then (by the magic of the Treasury and Fed) then turned around and enslaved you going forward to get it back from your tax payments.

Circle, meet jerk. Isn't life grand when you can lose your customer's deposit money speculating and then recover it by taxing them?"

Read the red one again. If that isn't a statement for the ages, I don't know what is.
 
Corepuncher said:
Taken tonight from:
http://market-ticker.denninger.net/archives/626-To-Our-Government-CUT-IT-OUT-NOW.html

"Now let's talk banks. You know, those things that are supposed to hold reserves against deposits when they make loans? Well guess what - there are no reserves. The non-borrowed reserves have been negative for months - since the turn of the year, in fact, and now total over $300 billion dollars.
Click to expand...

I believe Love2read brought this up a while back and we had a discussion about how bad it was. The Feds shortly gave an explanation saying it was not a big deal and it was just an accounting "thing". Well, they obviously lied, again.

Be careful CP, posting anything other than happy happy, buy buy buy...,will get yourself labeled a "doom and gloomer".:D
 
Holy sheeeeeet am I glad I sold 50% YESTERDAY! Waffled between 25 and 50, finally pulled the trigger at 50.

Limit down this morning, even before the market opens. This is going to be ONE WILD RIDE! G's up ho's down!

Ominous.
 
Corepuncher said:
Holy sheeeeeet am I glad I sold 50% YESTERDAY! Waffled between 25 and 50, finally pulled the trigger at 50.

Limit down this morning, even before the market opens. This is going to be ONE WILD RIDE! G's up ho's down!

Ominous.
Click to expand...

Wild ride huh, Kinda like Jumping from a plane with a two parachute limit.
And the first two were ripped from your body. This will be one to remember. :(
 
The 10 yr bond yield is rocketing up this morning...opposite of what you would expect if there was a flight to safety in treasuries.

TED spreads going up.

Oh but wait...CNBC says existing home sales may be signaling a bottom. I guarantee next months numbers will not be so kind.

L
M
A
O
 
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