Aloha all, winter is hitting in full force in Hawaii, the
temperature gauge in my shop registered 70F at 8AM.
brrrrr....
The Chart of Charts is expressing "No Opinion".
That said, this market action is obviously either a pause
before a further climb or a top. That is pretty basic, no great
wisdom. But there-in lies a good point--don't overcomplicate the
market.
The market is tricky, but the more you read does not
necessarily help you understand or predict the market. You could
spend all weekend reading blogs in the hope of gaining insight, but
that extreme amount of "research" could actually be detrimental to
a clear view. You are probably better off going to get some
exercise, go on a 4 mile hike through the woods -- clear your head.
And think about staying healthy, because if Primary 3 plays out,
there is going to be some serious SHTF, and your overall health and
energy levels are going to be factors in how well you and your
family get through things.
The fundamentals of the world financial situation are
horrific. Mortgage rate resets on large pools of mortgages are
entering a phase of big increases. None of the bank and risky asset
problems have been solved...at all. Government just transferred
money from tax payers to special interests, without solving any
problems.
That said, we made a "Top Call" on November 21th, review the
Chart of Charts from that era.
S&P closed at 1106 on November 19th. Now it is at 1102
courtesy of that final ramp job to create "Min Pain" to option
writers at expiry.
Distribution continues, from strong hands to weak
hands. Interesting how Calpers just now made it against
the rules for it's investment decision makers to receive gifts from
"Investment Advisors" aka Salespeople.
love your posts. and I agree with your view. simple
price action for me - trade the chart. I have come to the
place where sure more reading gives you more insight, but
may not necessarily change the certainty of the conclusion. I
also like to use the ubiquitous 80-20 rule. 20% of your
effort will generally yield 80% of your objective. It's
that last 20% of the objective that is often difficult
to fulfill and requires 80% of your effort.
@junkie - the market is based on fundamentals? I suppose
that remains true if you categorize trillions of liquidity injected
into the patient from every CB in the world as part of the market
fundamentals. Credit spreads of 1300bp! The cost of
insuring debt is pushing some sovereign risk into fall 2008 levels?
And what can we make of the numbers relating to debt:GDP,
debt:income, unemployment, productivity, capacity utilization,
rate of bankruptcy, # bank failures, collapsing CRE, ballooning CC
debt, currency chaos, asset balloons .... ??? This all
still means to me we still have some serious stall mucking to do,
but maybe not. Anything can happen.
to tahoe: yes, I meant exactly those fundamentals, as crooked
and warped they are. The factors you listed are not all relevant to
the standard stock valuations: number of shares issued, company
revenue, earnings, % of debt, rate of sales change from one quarter
to another. The upcoming stall will come when the gravy train of
injections comes to a halt, but it is some 5 to 7 months from now
(based on what I read). Any war prospects will kill the markets
even sooner.
An interesting review, thanks! You say that the financial
fundamentals are horrible. Yet stock valuations are driven by
present fundamentals, which are improving from very bad to worse...
That's the factor that bears refuse to take into account. We had a
market top in October 2007, well into the subprime crisis for those
who knew the truth about the economy. Yet the fundamentals (P/E
ratios, earnings, etc.) were terrific back then. I was much more
naive back then, yet those were my most successful months on the
market of just playing the trend. Yeah, it's stupidly simple.
I am reading "Reminiscences of a stock operator" now. Jesse
Livermore described his mistake of plunging too early on the bear
side -- anticipating a crash -- as having a telescope view on
reality. I am relieved that he too made that mistake. He makes a
very convincing point of not fighting a trend by avoiding the
costliest 1/8th in a trend: the first and the last. That's for a
trader!The last one is no brainer, but the first one is very hard
to resist.
His other point is to take a vacation after a big win: that is,
not to trade the market all the time, only when the conditions are
right. I am thinking of your 4-mile hike idea for the weekend now.
You live up to his wisdom :-))
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Chart of Charts
Posted by steveo on 19th of Dec 2009 at 01:30 pm
Aloha all, winter is hitting in full force in Hawaii, the temperature gauge in my shop registered 70F at 8AM. brrrrr....
The Chart of Charts is expressing "No Opinion".
That said, this market action is obviously either a pause before a further climb or a top. That is pretty basic, no great wisdom. But there-in lies a good point--don't overcomplicate the market.
The market is tricky, but the more you read does not necessarily help you understand or predict the market. You could spend all weekend reading blogs in the hope of gaining insight, but that extreme amount of "research" could actually be detrimental to a clear view. You are probably better off going to get some exercise, go on a 4 mile hike through the woods -- clear your head. And think about staying healthy, because if Primary 3 plays out, there is going to be some serious SHTF, and your overall health and energy levels are going to be factors in how well you and your family get through things.
The fundamentals of the world financial situation are horrific. Mortgage rate resets on large pools of mortgages are entering a phase of big increases. None of the bank and risky asset problems have been solved...at all. Government just transferred money from tax payers to special interests, without solving any problems.
That said, we made a "Top Call" on November 21th, review the Chart of Charts from that era.
S&P closed at 1106 on November 19th. Now it is at 1102 courtesy of that final ramp job to create "Min Pain" to option writers at expiry.
Distribution continues, from strong hands to weak hands. Interesting how Calpers just now made it against the rules for it's investment decision makers to receive gifts from "Investment Advisors" aka Salespeople.
http://oahutrading.blogspot.com/2009/12/chart-of-charts-121809.html
simple and basic
Posted by tahoe on 20th of Dec 2009 at 08:55 am
love your posts. and I agree with your view. simple price action for me - trade the chart. I have come to the place where sure more reading gives you more insight, but may not necessarily change the certainty of the conclusion. I also like to use the ubiquitous 80-20 rule. 20% of your effort will generally yield 80% of your objective. It's that last 20% of the objective that is often difficult to fulfill and requires 80% of your effort.
@junkie - the market is based on fundamentals? I suppose that remains true if you categorize trillions of liquidity injected into the patient from every CB in the world as part of the market fundamentals. Credit spreads of 1300bp! The cost of insuring debt is pushing some sovereign risk into fall 2008 levels? And what can we make of the numbers relating to debt:GDP, debt:income, unemployment, productivity, capacity utilization, rate of bankruptcy, # bank failures, collapsing CRE, ballooning CC debt, currency chaos, asset balloons .... ??? This all still means to me we still have some serious stall mucking to do, but maybe not. Anything can happen.
I think we spent around
Posted by steveo on 20th of Dec 2009 at 02:03 pm
I think we spent around $10T in reality to get a pop of a couple hundred billion on GDP. An innefficient "investment".
to tahoe: yes, I meant
Posted by junkie on 20th of Dec 2009 at 10:52 am
to tahoe: yes, I meant exactly those fundamentals, as crooked and warped they are. The factors you listed are not all relevant to the standard stock valuations: number of shares issued, company revenue, earnings, % of debt, rate of sales change from one quarter to another. The upcoming stall will come when the gravy train of injections comes to a halt, but it is some 5 to 7 months from now (based on what I read). Any war prospects will kill the markets even sooner.
An interesting review, thanks! You
Posted by junkie on 20th of Dec 2009 at 12:27 am
An interesting review, thanks! You say that the financial fundamentals are horrible. Yet stock valuations are driven by present fundamentals, which are improving from very bad to worse... That's the factor that bears refuse to take into account. We had a market top in October 2007, well into the subprime crisis for those who knew the truth about the economy. Yet the fundamentals (P/E ratios, earnings, etc.) were terrific back then. I was much more naive back then, yet those were my most successful months on the market of just playing the trend. Yeah, it's stupidly simple.
Rejoice in an ability to
Posted by steveo on 20th of Dec 2009 at 01:59 pm
Rejoice in an ability to be a complete idiot at time, and follow the herd, even though you know there is a precipice ahead!
I am reading "Reminiscences of
Posted by junkie on 20th of Dec 2009 at 02:12 pm
I am reading "Reminiscences of a stock operator" now. Jesse Livermore described his mistake of plunging too early on the bear side -- anticipating a crash -- as having a telescope view on reality. I am relieved that he too made that mistake. He makes a very convincing point of not fighting a trend by avoiding the costliest 1/8th in a trend: the first and the last. That's for a trader!The last one is no brainer, but the first one is very hard to resist.
His other point is to take a vacation after a big win: that is, not to trade the market all the time, only when the conditions are right. I am thinking of your 4-mile hike idea for the weekend now. You live up to his wisdom :-))