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crashmonitor

Independent: After The Recent Bull Run...correction Soon?

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Buy the dips.

The bigger the dip the better the buying opp. 6000 or 5xxx would be just fabulous but obviously an outlier so unlikely unless we have a panic dislocation somewhere.

It's a shame FreeTrader no longer updates his excellent thread comparing the current cycle with the prior cycles and wages. That set out part of the context very clearly I thought.

Edited by R K

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He's at it again....now it's not a question of it.........BUT WHEN....

http://www.independent.co.uk/news/business/comment/hamish-mcrae/hamish-mcrae-us-inc-is-pretty-chipper-but-there-will-be-a-correction-to-the-stock-market-before-too-long-9639028.html

edit. Very grateful to the Independent and indeed Telegraph for keeping their business links open to everybody....not so the Times and FT.

Edited by crashmonitor

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When the mainstream media is telling you that there is an imminent crash (or anything for that matter), then you know that there isn't one coming any time soon.

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So we've seen the first real test of the Taper this week. With US Treasury supply now forecast to run at around $60bn/month in net new paper but QE reduced to ~$30bn/month the dealers no longer have enough free cash from the Fed to cover their monthly purchases for the first time in nearly two years. Seems like they're struggling to hold the dunny upright! :D

Buy the dip? Sell the rip!

U.S. stocks resumed a selloff, wiping out yesterday’s rebound and sending benchmark indexes to the lowest close since May, as energy shares tumbled and concern increased over escalating tensions in Ukraine.

The Standard & Poor’s 500 Index slipped 1 percent to 1,920.18 at 4 p.m. in New York, the lowest level since May 29. The index climbed 0.7 percent yesterday after the biggest weekly loss in two years. The Chicago Board Options Exchange Volatility Index jumped 9.7 percent.

Selling accelerated after the S&P 500 slipped below last week’s closing level of 1,925.15 and yesterday’s intraday low of 1,921.20. The gauge has lost more than 3.4 percent since reaching a record high of 1,987.98 on July 24 and is about 70 points from erasing its gain for the year.

http://www.businessweek.com/news/2014-08-05/u-dot-s-dot-stock-index-futures-are-little-changed-as-aig-gains

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So we've seen the first real test of the Taper this week. With US Treasury supply now forecast to run at around $60bn/month in net new paper but QE reduced to ~$30bn/month the dealers no longer have enough free cash from the Fed to cover their monthly purchases for the first time in nearly two years.

Um, but with such a huge gap between the two surely, well, surely the Fed will just 'un-taper' or come up with some other money printing.

If what you say is true - and I don't doubt you - who buys the new paper? What happens?

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Guest The Relaxation Suite

When the mainstream media is telling you that there is an imminent crash (or anything for that matter), then you know that there isn't one coming any time soon.

Exactly. When was the last time a mainstream media conduit successfully predicted an economic turn and enriched the masses in so doing? These outlets are owned by the top, and it is rarely in their interests to share their insider tips with millions of plebs. As far as access to the information is possible, and mostly it is not, the key to prediction is watching what the members of the patrician class do, not what they say.

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Sprint just pulled out of buying T-Mobile as well.

Either they fear being the CEO laughed at for buying at the top... or they fear that something might be coming down the tracks... and that it is all going to collapse soon.

Or something else.

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Exactly. When was the last time a mainstream media conduit successfully predicted an economic turn and enriched the masses in so doing? These outlets are owned by the top, and it is rarely in their interests to share their insider tips with millions of plebs. As far as access to the information is possible, and mostly it is not, the key to prediction is watching what the members of the patrician class do, not what they say.

Nassim Taleb in "the black swan" lays out how professional economists and financial journalists have never, ever, ever predicted a single recession. Not a single time, without a single exception.

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The S&P 500 is either going to take 2000pts as a new support or resistance level. We'll find out in the coming weeks. I would say it would be a new floor once we are safely above lets say 2100pts whic is a good distance away. A bull market climbs a wall of worry, but no guarantees.

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I just had a look. The best cash ISA I can find is: [drum roll] 2.2% over 5 years.

I will take my chances on the stock market. If I lose I lose Just put £3000 more in yesterday because of a dip and earning nothing in my current account.

On a very simplistic view. If interest rates are going to be half what they were in the passed shouldn't the stock market be double.

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Um, but with such a huge gap between the two surely, well, surely the Fed will just 'un-taper' or come up with some other money printing.

If what you say is true - and I don't doubt you - who buys the new paper? What happens?

The Primary Dealers will buy the Treasury paper because they're obliged to make a market for all govt debt. For the past two years, in fact for most of the last five, these purchases have been comfortably covered by the monthly amounts of QE cash they've been receiving from the Fed. This is no longer true. This month, for the first time in two years or thereabouts, the issuance of new Treasury debt will exceed the monthly QE handout. The Primary Dealers still have to buy the paper but will now have to finance it themselves. The simplest way for them to do so is to partially liquidate their equity positions.

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I sold some shares last week. As a LTBH fanatic this is a truly remarkable event. OK, it was only 5% of my equity holding but it's still remarkable. I sold Marks & Spencer (for a decent profit - but why on earth did I buy those fools? (answer: diversification)) and a couple of tiddler companies that had had a stupidly profitable run over the past two years.

Excluding the value of a DB pension, I'm now at 67% equities (40% if you count the pension as a bond). This is low exposure for me and I expect to buy back to 80-85% over the next year or so. Trouble is, I can't see much in the way of appetising value just now. I think I'm suffering from "anchoring" - I did a lot of buying 2009/2010.

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David Stockman makes a compelling case for the short side.

http://davidstockmanscontracorner.com/market-maven-warns-feds-3rd-bubble-this-century-heading-for-20-tumble/

...ZIRP has fueled the most massive carry-trade speculation ever recorded. Indeed, zero money market rates inherently tilt the scales toward relentless gambling in risk assets by essentially eliminating the carry cost of speculative positions. At the same time, the Fed’s implied “put” under the market has generated a relentless “buy on the dips” reflex among fast money traders and computerized algos. Accordingly, as the stock market bubble has inflated to ever more precarious heights since March 2009, the dips have become increasingly shallow and short-lived, as dramatically illustrated by the S&P 500 chart below:

Obama5yrTurnaroundSP500.jpg

The meaning of this pattern is straight forward. This parabolic rise would never occur in an honest capital market unless the underlying economy was going through a surge of growth that has no precedent in recorded history. In fact, the US economy is impaled in more nearly the opposite condition—-that is, real GDP growth since the era of bubble finance hit full stride in 1999-2000, has been the lowest in modern history. Compared to a trend rate of 3.3% in the last half of the 20th century, real GDP growth has averaged just 1.8% per annum during the last 14 years. And that’s based on the understated GDP price deflators published by the Washington statistical mills. The true rate of growth is surely far lower, if positive at all.

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Premium bonds now paying 1.4%, you could stash your £2k in there and be a millionaire in a hundred years time.

Don't premium bonds double every 7 years :lol:

It's going into Zopa.

Edited by TheCountOfNowhere

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Premium bonds now paying 1.4%, you could stash your £2k in there and be a millionaire in a hundred years time.

You could have made 1.4% today alone on a 2x short.

My intermediate (6-8 weeks) cycle targets are now 6420 and 3425. B)

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IIRC, 3425 would be below the 2009 "icicle" low. Surely you need a :ph34r: not a B) .

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IIRC, 3425 would be below the 2009 "icicle" low. Surely you need a :ph34r: not a B) .

Sorry, my bad. The second one's the FTSE All-Share.

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