James48843
TSP Talk Royalty
- Reaction score
- 909
Beginning to look at lot more like this could be a case of......
THE DEAD CAT BOUNCE
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This Week in Stocks: 7/28 - 8/3/07
- Thread starter Show-me
- Start date
- Status
weatherweenie
TSP Legend
- Reaction score
- 179
Lookin like a dead cat splat.
robo
TSP Legend
- Reaction score
- 471
S&P SPDRS (AMEX: SPY) Again At Critical Support
The exchange-traded fund S&P Depositary Receipts SPDRs (AMEX: SPY) reached the Fib 61.8% retracement-support level last Friday. On Monday, SPY rallied with strength from that support level. On Tuesday, SPY declined again and stopped, again, right at this support level.
Tuesday’s decline was on lower volume than previous selling days and the second lowest volume day this summer (other that the July fourth holidays). Partly this is because so many traders are on summer vacation, but it also is because although the sellers are in control, they are not likely to stay in control. Volume is decreasing and fear is growing. This all points to a bottom very soon.
If support, at SPY 144.00, holds, look for another rally attempt. If we close decisively below support, we are likely to move lower to the next Fib support level at SPY 140.86.
http://timing.typepad.com/timer/
The exchange-traded fund S&P Depositary Receipts SPDRs (AMEX: SPY) reached the Fib 61.8% retracement-support level last Friday. On Monday, SPY rallied with strength from that support level. On Tuesday, SPY declined again and stopped, again, right at this support level.
Tuesday’s decline was on lower volume than previous selling days and the second lowest volume day this summer (other that the July fourth holidays). Partly this is because so many traders are on summer vacation, but it also is because although the sellers are in control, they are not likely to stay in control. Volume is decreasing and fear is growing. This all points to a bottom very soon.
If support, at SPY 144.00, holds, look for another rally attempt. If we close decisively below support, we are likely to move lower to the next Fib support level at SPY 140.86.
http://timing.typepad.com/timer/
Show-me
TSP Legend
- Reaction score
- 104
From Dan Denning at the Old Hat Factory
--Hang on. Maybe the painless recovery from the 5% correction won't be so painless. Investors on Wall Street fled the Dow in late afternoon New York trading. The index closed down 150 points on the day, with all of that loss coming after one o'clock.
--Why are investors so jumpy all of the sudden? Is it too much caffeine? Not enough yoga and meditation? Or could it be the realization that the credit markets are no longer free and easy? Has the east-money punch bowl been thrown out the window?
--"There is not one signal that says the credit markets are okay; there is a tremendous amount of uncertainty, and it is going to take some time for confidence to return to the market," says Mike Malone, trading analyst at Cowen and Company. Who owns the suddenly toxic mortgage risk? And how much are those mortgage-backed bonds really worth?
--A strong distress signal, maybe even a mayday, came from American Home Mortgage Investment Company-the tenth largest mortgage lender in the U.S. The company shares were halted on Monday. When they resumed trading on Tuesday they fell by 90%, from $10.47 at the open to $1.04 at the close. The firm says it will have to liquidate assets to meet margin calls from nervous lenders.
--And if that is not enough bad news for one day from the credit markets, Bear Stearns is at it again. Early this morning the Wall Street Journal (soon to be owned by Rupert Murdoch) reported that Bear Stearns, "already forced to shut two hedge funds that bet heavily on the risky subprime-mortgage market, is now facing big losses in a third fund that has roughly $900 million in mortgage investments, according to people familiar with the matter." The company has halted redemptions on the fund.
--Does any of this American meltdown have anything to do with Australia? Yes. Bloomberg reports this morning that, "Macquarie Bank Ltd., Australia's largest securities firm, said investors in some of its high- yield funds may lose as much as 25 percent of their money amid the fallout in U.S. subprime mortgages. Macquarie Fortress Investments Ltd. was forced to sell assets and use the proceeds to reduce borrowings and comply with lending covenants, it said in a statement. Investors may lose A$300 million ($255 million)."
--This follows the decision by Absolute Capital Group Ltd. to suspend withdrawals from two of its funds last week. And then there's Basis Capital Fund Management, which hired the Blackstone group to negotiate with its bankers to limit losses. It turns out this slow-boiling subprime crisis has spread further and deeper than many expected.
--Where to from here? Macquarie's Peter Lucas says that none of the assets in the portfolio in question have defaulted, and that interest and principal payments are still being made. The trouble is the assets fell 4% in value in July. Lucas says the assets could fall by another 20-25% in value.
--And here's the scary thing, the assets in the Macquarie fund were not subprime loans. They were secured corporate loans. But it doesn't seem to matter much these days. The entire market is having a quick re-think over the quality of securitised and collateralised assets. Investors are selling.
--Unable to sell these loans on the market, banks will have to hold them on their own balance sheets. They will be forced to eat their own cooking, instead of serving it up as slop to hedge funds, pension funds, and insurance companies. This means banks will be making fewer loans, having to hold capital in reserve against the loans on the books. Do you hear that crunching sound? That's the sound of credit being smashed up into little crunchy pieces.
--Meanwhile, the bonds of investment banks like Bear, Merrill Lynch, and Lehman Brothers have lost US$1.5 billion according to data from Moody's. That gives them junk status, unofficially. It's a pretty simple trade now, isn't it? Sell financials and buy tangibles.
--Speaking of tangibles, oil futures are in backwardation. That simply means near-term futures contracts are much higher than longer-dated contracts. Even more simply, it means the market thinks oil will be more expensive in the next three months that it will be in six or nine months. Accordingly, crude futures in New York closed at a record high of $78.21. "There's significant growth in global energy demand and production isn't keeping up," says our old friend Peter Schiff.
--With all this talk of tighter global credit, the exact opposite is going on in Australian household credit. The Reserve Bank reported yesterday that household credit grew by 1.8% in June, higher than expected. And over the last twelve months, the growth rate was 15.4%. Broad money supply growth (M3) clocked in at 14.1% in the last month.
--Does this mean a rate rise is in the cards? It depends on why people are borrowing. Are they borrowing, as the RBA speculated, to contribute money to super before the expiration of the June deadline? Or are people borrowing money to meet living expenses that can't be met with wage increases..because wage increases are not keeping up with the real cost of living? You tell us.dr@dailyreckoning.com.au
--Hang on. Maybe the painless recovery from the 5% correction won't be so painless. Investors on Wall Street fled the Dow in late afternoon New York trading. The index closed down 150 points on the day, with all of that loss coming after one o'clock.
--Why are investors so jumpy all of the sudden? Is it too much caffeine? Not enough yoga and meditation? Or could it be the realization that the credit markets are no longer free and easy? Has the east-money punch bowl been thrown out the window?
--"There is not one signal that says the credit markets are okay; there is a tremendous amount of uncertainty, and it is going to take some time for confidence to return to the market," says Mike Malone, trading analyst at Cowen and Company. Who owns the suddenly toxic mortgage risk? And how much are those mortgage-backed bonds really worth?
--A strong distress signal, maybe even a mayday, came from American Home Mortgage Investment Company-the tenth largest mortgage lender in the U.S. The company shares were halted on Monday. When they resumed trading on Tuesday they fell by 90%, from $10.47 at the open to $1.04 at the close. The firm says it will have to liquidate assets to meet margin calls from nervous lenders.
--And if that is not enough bad news for one day from the credit markets, Bear Stearns is at it again. Early this morning the Wall Street Journal (soon to be owned by Rupert Murdoch) reported that Bear Stearns, "already forced to shut two hedge funds that bet heavily on the risky subprime-mortgage market, is now facing big losses in a third fund that has roughly $900 million in mortgage investments, according to people familiar with the matter." The company has halted redemptions on the fund.
--Does any of this American meltdown have anything to do with Australia? Yes. Bloomberg reports this morning that, "Macquarie Bank Ltd., Australia's largest securities firm, said investors in some of its high- yield funds may lose as much as 25 percent of their money amid the fallout in U.S. subprime mortgages. Macquarie Fortress Investments Ltd. was forced to sell assets and use the proceeds to reduce borrowings and comply with lending covenants, it said in a statement. Investors may lose A$300 million ($255 million)."
--This follows the decision by Absolute Capital Group Ltd. to suspend withdrawals from two of its funds last week. And then there's Basis Capital Fund Management, which hired the Blackstone group to negotiate with its bankers to limit losses. It turns out this slow-boiling subprime crisis has spread further and deeper than many expected.
--Where to from here? Macquarie's Peter Lucas says that none of the assets in the portfolio in question have defaulted, and that interest and principal payments are still being made. The trouble is the assets fell 4% in value in July. Lucas says the assets could fall by another 20-25% in value.
--And here's the scary thing, the assets in the Macquarie fund were not subprime loans. They were secured corporate loans. But it doesn't seem to matter much these days. The entire market is having a quick re-think over the quality of securitised and collateralised assets. Investors are selling.
--Unable to sell these loans on the market, banks will have to hold them on their own balance sheets. They will be forced to eat their own cooking, instead of serving it up as slop to hedge funds, pension funds, and insurance companies. This means banks will be making fewer loans, having to hold capital in reserve against the loans on the books. Do you hear that crunching sound? That's the sound of credit being smashed up into little crunchy pieces.
--Meanwhile, the bonds of investment banks like Bear, Merrill Lynch, and Lehman Brothers have lost US$1.5 billion according to data from Moody's. That gives them junk status, unofficially. It's a pretty simple trade now, isn't it? Sell financials and buy tangibles.
--Speaking of tangibles, oil futures are in backwardation. That simply means near-term futures contracts are much higher than longer-dated contracts. Even more simply, it means the market thinks oil will be more expensive in the next three months that it will be in six or nine months. Accordingly, crude futures in New York closed at a record high of $78.21. "There's significant growth in global energy demand and production isn't keeping up," says our old friend Peter Schiff.
--With all this talk of tighter global credit, the exact opposite is going on in Australian household credit. The Reserve Bank reported yesterday that household credit grew by 1.8% in June, higher than expected. And over the last twelve months, the growth rate was 15.4%. Broad money supply growth (M3) clocked in at 14.1% in the last month.
--Does this mean a rate rise is in the cards? It depends on why people are borrowing. Are they borrowing, as the RBA speculated, to contribute money to super before the expiration of the June deadline? Or are people borrowing money to meet living expenses that can't be met with wage increases..because wage increases are not keeping up with the real cost of living? You tell us.dr@dailyreckoning.com.au
- Reaction score
- 2,476
Memories of late nineties and early 2000's. Volatility is back. I can't remember the last time we saw the S&P futures down 1700 overnight. It used to be more common to have them limit down or up. I don't even know what the limit is anymore, 5% maybe?
James48843
TSP Talk Royalty
- Reaction score
- 909
I think we'll see some very heavy movement down during the day, perhaps 140 to 160 during the day, but it will come back towards the close. I think it will still end up down 40 to 60 for the day, but this should be about the last large down day for a while. We're about to hit some resistance points here.
Show-me
TSP Legend
- Reaction score
- 104
Paulson says impact of sub-prime largely contained
Wed Aug 1, 2007 8:18AM EDT
BEIJING (Reuters) - Treasury Secretary Henry Paulson said on Wednesday that the market impact of the U.S. sub-prime mortgage fallout is largely contained and that the global economy is as strong as it has been in decades.
The recent volatility in global stock and currency markets reflected a repricing of risk and the unwinding of market excesses, Paulson said.
He also repeated his call for China to let the yuan strengthen more quickly and said that Beijing agreed on the direction of reform but differed from the United States on the pace of that reform.
Paulson was speaking to reporters before leaving Beijing, where he met President Hu Jintao, Vice Premier Wu Yi and other top officials to press them to speed up appreciation of the yuan and other economic reforms.
Wed Aug 1, 2007 8:18AM EDT
BEIJING (Reuters) - Treasury Secretary Henry Paulson said on Wednesday that the market impact of the U.S. sub-prime mortgage fallout is largely contained and that the global economy is as strong as it has been in decades.
The recent volatility in global stock and currency markets reflected a repricing of risk and the unwinding of market excesses, Paulson said.
He also repeated his call for China to let the yuan strengthen more quickly and said that Beijing agreed on the direction of reform but differed from the United States on the pace of that reform.
Paulson was speaking to reporters before leaving Beijing, where he met President Hu Jintao, Vice Premier Wu Yi and other top officials to press them to speed up appreciation of the yuan and other economic reforms.
350zCommTech
TSP Legend
- Reaction score
- 71
Yeah, the impact is largely contained to the housing industry, mortgage industry, financial industry, and maybe the overall economy. Btw, don't worry about a few hedge funds blowing up in other countries around the world.
In other words, he is basically saying, "don't expect us to come to the rescue". Not yet anyway.
Show-me
TSP Legend
- Reaction score
- 104
I struggle with the whole sub-prime nightmare. Paulson is a damn cheerleader cheering the party line. He make a comment like this the morning after AHM rolls over and this little piece of news.
Reports that a third Bear Stearns (BSC) hedge fund with about $900 mln in mortgage investments has suspended investor redemptions and expects huge losses is taking a toll on sentiment. Australia's Macquarie Bank Ltd. saying that investors in two of its funds may lose as much as 25% due to the subprime fallout in the U.S. has been another source of anxiety fostering a more risk-averse mindset among investors.
Seems to me to be serious damage control. How much money are they printing now?
IMO this is the tip of the iceberg. Lending standards WILL get much tighter. You WILL need some serious cash to get a loan and you credit history had better be spotless.
And that means less people will qualify for loans. Less homes will be sold new and existing. More people will not be able to afford the house they are in, meaning delinquencies and foreclosures. Mortgage funds will get beat down. More people will only be able to rent, because we are not a society of savers to save enough for a down payment.
Consumer confidence will wain and durable goods spending will slow.
The Midwest lags the coasts and we are starting to see fire sales in real estate. Nice homes cheap, cheap.
Reports that a third Bear Stearns (BSC) hedge fund with about $900 mln in mortgage investments has suspended investor redemptions and expects huge losses is taking a toll on sentiment. Australia's Macquarie Bank Ltd. saying that investors in two of its funds may lose as much as 25% due to the subprime fallout in the U.S. has been another source of anxiety fostering a more risk-averse mindset among investors.
Seems to me to be serious damage control. How much money are they printing now?
IMO this is the tip of the iceberg. Lending standards WILL get much tighter. You WILL need some serious cash to get a loan and you credit history had better be spotless.
And that means less people will qualify for loans. Less homes will be sold new and existing. More people will not be able to afford the house they are in, meaning delinquencies and foreclosures. Mortgage funds will get beat down. More people will only be able to rent, because we are not a society of savers to save enough for a down payment.
Consumer confidence will wain and durable goods spending will slow.
The Midwest lags the coasts and we are starting to see fire sales in real estate. Nice homes cheap, cheap.
Show-me
TSP Legend
- Reaction score
- 104
St. Louis Fed Prez. Poole said the same thing yesterday at the U of MO. Basically NO HELP FROM THE FED! You made your bed now sleep in it. It has to get a lot worse before the Fed steps in.
350zCommTech
TSP Legend
- Reaction score
- 71
Yup, how can they lower rates when they just reported GDP at 3.4%? I'm a strong believer that they will try to save the dollar first. When all else fails, they will eventually lower rates. But by that time, it will be too late.
James48843
TSP Talk Royalty
- Reaction score
- 909
Well, we only saw 79 points of the 140 down in morning trading I was expecting to.
Now the question is...will we get back to the "only down 40 to 60" that I am expecting by the time the market closes--or will we end up in postive territory for the day.
Could be an interesting afternoon. I think we may retest the morning low before inching our way back towards neutral, and still think we'll end up down between 40 and 60 for the day.
350zCommTech
TSP Legend
- Reaction score
- 71
I forgot to add the auto industry. Today, they all reported that sales were down. GM down 18%. Toyota down 4%.
ATCJeff
Market Veteran
- Reaction score
- 26
You and 12 been hanging out together?
We retested this mornings lows and are now head north again. May end up in positive territory.
FundSurfer
TSP Pro
- Reaction score
- 39
Yeah, that was quite the late pop. Must have been news we haven't heard yet.
USNAVYRETIRED
TSP Strategist
- Reaction score
- 2
More like the shorts lost their shorts! LOL!
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