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Market Talk / June 25 - July 1
- Thread starter Spaf
- Start date
W
Wizard
Guest
By the end of the week the best performing fund (other then the L funds) for the year could be the G fund.
I fund should take it to the kidneys tomorrow. Japan down 2% AORDs down 1.4% and should see short covering in the USD in preps for the fed rate hike.
I fund should take it to the kidneys tomorrow. Japan down 2% AORDs down 1.4% and should see short covering in the USD in preps for the fed rate hike.
Brett
Member
I should know, but I don't. If the Fed raises the interest rate 25 points as expected and for the 17th time in a row, what historically been happening to the market the days proceeding and following. It's sort of like you know a beloved relative is dying, but when it happens, it's still a shock.
Mike
Active member
Pre-rate hike: volatile and lighter volume.
Post-rate hike: tough to say. We already know the hike is coming, so it's not really about that. The real issue here is how much further the Fed will go and whether or not that additional monetary tightening will wipe out economic growth and corporate profits.
I think the idea of trying to raise rates to keep an arbitrarily low inflation rate is sheer lunacy, particularly when it comes at the expense of economic growth. Given the global economy we are in, which is a bigger risk: 5-6% inflation or a recession? I think the latter is far more problematic, particularly for countries like China that must continue to have huge growth just to keep up with the large number of people entering the workforce. I read in an article a few days ago that the "break even" growth rate for China and India is somewhere around 7% annually for the next decade. Now that is some serious pressure to perform...
If nothing else Brett, always remember the market is very forward-looking. The guys on wall street don't really give a rip what happened last month or last year. It's the next 3-6 months that concerns them. This is why you'll often see a report that doesn't make a lot of sense: company XYZ reported earnings that beat the analyst estimates, but the stock sold off. Why? Usually it's because they issued an accompanying statement warning the next quarter's profits would be lower than originally expected. We've got the same thing going on with interest rates on a generic market-wide level. We already know about the last hike, and we pretty much know we're getting one this week. What we don't know - and want to know - is what the next FOMC meeting will produce. This is one reason why the market can bounce around quite a bit in response to some random Fed official's speech - traders are looking for some indication of what's going to happen in the future.
Post-rate hike: tough to say. We already know the hike is coming, so it's not really about that. The real issue here is how much further the Fed will go and whether or not that additional monetary tightening will wipe out economic growth and corporate profits.
I think the idea of trying to raise rates to keep an arbitrarily low inflation rate is sheer lunacy, particularly when it comes at the expense of economic growth. Given the global economy we are in, which is a bigger risk: 5-6% inflation or a recession? I think the latter is far more problematic, particularly for countries like China that must continue to have huge growth just to keep up with the large number of people entering the workforce. I read in an article a few days ago that the "break even" growth rate for China and India is somewhere around 7% annually for the next decade. Now that is some serious pressure to perform...
If nothing else Brett, always remember the market is very forward-looking. The guys on wall street don't really give a rip what happened last month or last year. It's the next 3-6 months that concerns them. This is why you'll often see a report that doesn't make a lot of sense: company XYZ reported earnings that beat the analyst estimates, but the stock sold off. Why? Usually it's because they issued an accompanying statement warning the next quarter's profits would be lower than originally expected. We've got the same thing going on with interest rates on a generic market-wide level. We already know about the last hike, and we pretty much know we're getting one this week. What we don't know - and want to know - is what the next FOMC meeting will produce. This is one reason why the market can bounce around quite a bit in response to some random Fed official's speech - traders are looking for some indication of what's going to happen in the future.
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Birchtree said:
Birch, be careful with Frank's perspective. He's been embarrasingly wrong on some major calls as of late and can get lost with his Tehnical Analysis. They're pretty charts and useful distractions but don't provide any useful information about the players who define and make up those trends. You seem to be swimming against a worldwide CB induced tsunami. I wish you and many who follow you, much luck.
W
Wizard
Guest
roguewave said:
My personal favorite was the go short gold in late December when it was $490 because $500 would be major overhead resistance/seasonility, crap, crap, etc, etc. Gold went up $80 in two weeks.
:nuts: That means you got trashed for $160 in two weeks because you were on the wrong side of the trade - 33%.Or the go long INTC the first week of January. It fell 20% in two weeks. :nuts: Now only down 32% for the year. :embarrest:
BTW: Rogue you are missing the point. Franky is saying what Birchy wants to hear. Reality is not a hinderance. Can't ya smell the manure?
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W
Wizard
Guest
Pilgrim said:
Short covering in preps for the fed rate hike. I mentioned that last night.
Guess who is on the right side of that trade?
mlk_man
Banned
If you think semi's are headed back up any time soon, it might be worth investing some in it. Here is a 5 year chart of INTC versus SMH (semi holder):Wizard said:
http://ichart.finance.yahoo.com/z?s=INTC&t=5y&q=l&l=on&z=m&c=SMH&a=v&p=s
W
Wizard
Guest
INTC is losing market share and has to much inventory on hand. They are going to have to write that off sooner or later - when they do they will have net lose for a quarter.
INTC is at the same price it was 10 years ago.
Good thing they just started paying a dividend or it would be even bigger dog then it is now.
Stay away from this one. IMHO.:blink:
BTW: The stock is going up today because they sold a unit off. This a great place to short it.
INTC is at the same price it was 10 years ago.
Good thing they just started paying a dividend or it would be even bigger dog then it is now.
Stay away from this one. IMHO.:blink:
BTW: The stock is going up today because they sold a unit off. This a great place to short it.
Market Update:
12:30 pm: Indices bounce off their worst levels but not enough to get overly excited about as market gains remain minimal. The S&P 500, which slipped into negative territory yesterday is putting together the best showing among the majors, but a gain of only 0.2% amid limited participation and ahead of the Fed lends little conviction behind the broader market's recovery attempt.
http://finance.yahoo.com/mo
12:30 pm: Indices bounce off their worst levels but not enough to get overly excited about as market gains remain minimal. The S&P 500, which slipped into negative territory yesterday is putting together the best showing among the majors, but a gain of only 0.2% amid limited participation and ahead of the Fed lends little conviction behind the broader market's recovery attempt.
http://finance.yahoo.com/mo
Market Update:
1:00 pm: More of the same for stocks as there still isn't a lot of conviction on either the bullish or bearish side of the aisle. The lack of investor confidence has been further evidenced in the A/D line, as advancers outpace decliners on the NYSE by a slim 8-to-7 margin while declining issues on the Nasdaq hold a 4-to-3 edge over advancers. A split ratio of up to down volume at the Big Board and the Composite also paints more of a mixed picture.
http://finance.yahoo.com/mo
1:00 pm: More of the same for stocks as there still isn't a lot of conviction on either the bullish or bearish side of the aisle. The lack of investor confidence has been further evidenced in the A/D line, as advancers outpace decliners on the NYSE by a slim 8-to-7 margin while declining issues on the Nasdaq hold a 4-to-3 edge over advancers. A split ratio of up to down volume at the Big Board and the Composite also paints more of a mixed picture.
http://finance.yahoo.com/mo
W
Wizard
Guest
Mike said:
If you don't own stay away.
If you own sell now.
There is only risk to the downside.
Wait until after the foreign central banks are down raising rates.
W
Wizard
Guest
5 year treasury auction was a dud only 18.3% indirect bids. 
Spaf
Honorary Hall of Fame Member
Daily Yak
Yak, Doodles, Tea Leaves & The Tin Box
Kingdom Yak:
Pro-Yak...................................Bargain hunters buy socks!
Con-Yak..................................Lube holds above 72.
Doodles:
Socks [$SPX] Closed at..............1246.00, up +6.80
Volume (CMF) (money flow).........-0.033, decreasing.
Averages (MACD) (trend)............-8.797, increasing.
Momentum (S-STO) (signal).........55.50, increasing.
Strength (RSI) Overbought/sold....[70] 45.22 [30]
Lube (NYM) Closed at..................72.19, up +0.27
Oil Markers................................<70= ok, 70-75= worry, >75= panic.
Tea Leaves:
Charts & Stuff............................Yellow / Yellow [doodles +4-1, Lube > 70]
Tin Box:
Position.....................................100% socks
Stops [$SPX]..............................Alert: 1243 [restored]. Trail: 1230.
The Kingdom of TSP
Daily Edition
June 28, 2006 Closing
Daily Edition
June 28, 2006 Closing
Yak, Doodles, Tea Leaves & The Tin Box
Kingdom Yak:
Pro-Yak...................................Bargain hunters buy socks!
Con-Yak..................................Lube holds above 72.
Doodles:
Socks [$SPX] Closed at..............1246.00, up +6.80
Volume (CMF) (money flow).........-0.033, decreasing.
Averages (MACD) (trend)............-8.797, increasing.
Momentum (S-STO) (signal).........55.50, increasing.
Strength (RSI) Overbought/sold....[70] 45.22 [30]
Lube (NYM) Closed at..................72.19, up +0.27
Oil Markers................................<70= ok, 70-75= worry, >75= panic.
Tea Leaves:
Charts & Stuff............................Yellow / Yellow [doodles +4-1, Lube > 70]
Tin Box:
Position.....................................100% socks
Stops [$SPX]..............................Alert: 1243 [restored]. Trail: 1230.
robo
Well-known member
Stocks: Strange Sentiment in a Fed-Obsessed, Rangebound Market
The market regained about half of its Tuesday losses Wednesday, but remains stuck in the trading range and obsessed with the Fed's statement to be released Thursday afternoon. While most expect the Fed to raise rates 25 basis points (¼%), the language in the statement will be dissected with fine-toothed combs to divine future rate changes.
Actually, when all is said and done, the Fed really should pause here. The economy is cooling off, inflation due to higher commodity prices is on the decline and the effect of prior hikes has yet to be fully reflected in the economy. In fact, recent signs of a weakening economy, such as a nearly-inverted yield curve and slumping repo balances, suggest that the prudent course for the Fed would be to pause to assess the risks.
But, of course, the Fed would be roundly criticized for being prudent, so with their hands tied to the rate hike lever, the Fed will hike rates once again. That's despite the fact that rate hikes actually exacerbate inflationary pressure until it becomes evident that the weight of higher interest rates is causing the economy to slump, at which point the Fed realizes it has gone too far and starts pumping liquidity into the economy at a furious pace. It's called a "vicious cycle."
Peter Eliades of http://www.stockmarketcycles.com/ has pointed out that, historically, whenever the Fed raises the discount rate to current levels, severe bear markets almost always occur in the stock market. And, many of those bear markets have been associated with recessions. Given the projected path of the yield curve, a recession beginning in the middle of 2007 appears virtually certain. With this rate hike, the yield curve is on track to fully invert over the next several months as the 10-year rate plunges below the 90-day T-Bill rate. If that inversion persists for a full 90 days, it signals a recession beginning one year later.
The sentiment readings are strange here. The OEX crowd is, as is typically the case, bearish, which is contrariwise bullish, of course. But, the QQQQ crowd is wildly bullish, which is contrariwise bearish. Does this mean the market could be stuck in a trading range for months? We shall see, but we expect extreme dips and rallies on Thursday after the Fed announcement. Then, we expect the market will frustrate the bulls and bears and close unchanged on the day.
http://marketclues.blogspot.com/
The market regained about half of its Tuesday losses Wednesday, but remains stuck in the trading range and obsessed with the Fed's statement to be released Thursday afternoon. While most expect the Fed to raise rates 25 basis points (¼%), the language in the statement will be dissected with fine-toothed combs to divine future rate changes.
Actually, when all is said and done, the Fed really should pause here. The economy is cooling off, inflation due to higher commodity prices is on the decline and the effect of prior hikes has yet to be fully reflected in the economy. In fact, recent signs of a weakening economy, such as a nearly-inverted yield curve and slumping repo balances, suggest that the prudent course for the Fed would be to pause to assess the risks.
But, of course, the Fed would be roundly criticized for being prudent, so with their hands tied to the rate hike lever, the Fed will hike rates once again. That's despite the fact that rate hikes actually exacerbate inflationary pressure until it becomes evident that the weight of higher interest rates is causing the economy to slump, at which point the Fed realizes it has gone too far and starts pumping liquidity into the economy at a furious pace. It's called a "vicious cycle."
Peter Eliades of http://www.stockmarketcycles.com/ has pointed out that, historically, whenever the Fed raises the discount rate to current levels, severe bear markets almost always occur in the stock market. And, many of those bear markets have been associated with recessions. Given the projected path of the yield curve, a recession beginning in the middle of 2007 appears virtually certain. With this rate hike, the yield curve is on track to fully invert over the next several months as the 10-year rate plunges below the 90-day T-Bill rate. If that inversion persists for a full 90 days, it signals a recession beginning one year later.
The sentiment readings are strange here. The OEX crowd is, as is typically the case, bearish, which is contrariwise bullish, of course. But, the QQQQ crowd is wildly bullish, which is contrariwise bearish. Does this mean the market could be stuck in a trading range for months? We shall see, but we expect extreme dips and rallies on Thursday after the Fed announcement. Then, we expect the market will frustrate the bulls and bears and close unchanged on the day.
http://marketclues.blogspot.com/
