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posted by Peter Greene
Transcript: Lisa Shalett, CIO Morgan Stanley
10 hours ago
Monday, November 30, 2009
Wednesday, September 16, 2009
Industrial Production - Rewind
As expected, the August rise in industrial production was led by another jump in output of motor vehicles and parts, up almost 6% on the month. But non-auto manufacturing production also strengthened in August, managing its best turnout since the recession began excluding last October, when manufacturing rose following a disruption from hurricanes and a Boeing strike. Although the ISM manufacturing survey is not a precise guide to factory output, the latest readings suggests the pickup in activity is becoming more widespread as inventory cuts moderate and domestic business investment and exports turn higher.
The main driver of the recovery has been that businesses are raising output to close the gap with sales. Production was cut very deeply early in the year, when businesses were assuming a continued fall in demand. With sales firming at a much higher level than anticipated and, more recently, returning to growth, manufacturers are scrambling to raise output and the automotive-led moderation in the pace of inventory liquidation is now giving way to a similar pattern across other industries.
Although the turnaround in manufacturing has generally been stronger than anticipated, at the current pace of growth in industrial production, it would still take around two-three years for capacity utilization to rise to its prerecession level of around 79%. Since this recession has been especially deep and slack is unusually large, the case for low inflation and low policy rates in 2010 is a strong one but may not hold past that.
From Fusion research by Doug Lomma
posted by Peter Greene
The main driver of the recovery has been that businesses are raising output to close the gap with sales. Production was cut very deeply early in the year, when businesses were assuming a continued fall in demand. With sales firming at a much higher level than anticipated and, more recently, returning to growth, manufacturers are scrambling to raise output and the automotive-led moderation in the pace of inventory liquidation is now giving way to a similar pattern across other industries.
Although the turnaround in manufacturing has generally been stronger than anticipated, at the current pace of growth in industrial production, it would still take around two-three years for capacity utilization to rise to its prerecession level of around 79%. Since this recession has been especially deep and slack is unusually large, the case for low inflation and low policy rates in 2010 is a strong one but may not hold past that.
From Fusion research by Doug Lomma
posted by Peter Greene
Wednesday, August 19, 2009
Old Guy Joke
An elderly gent was invited to an old friend's home for dinner one evening. He was impressed by the way his buddy preceded every request to his wife with endearing terms such as: Darling, Honey, My Love, Pumpkin, Sweetheart, etc.
The couple had been married almost 70 years and, clearly, they were still very much in love.
While the wife was in the kitchen, the man leaned over to his host, and said: "I think it's wonderful that, after all these years, you still call your wife those loving pet names."
The old man hung his head. "I have to tell you the truth," he said. "Her name slipped my mind about 10 years a go, -- and I'm scared to death to ask the old bitch what it is."
This is going around the desks today
posted by Peter Greene
The couple had been married almost 70 years and, clearly, they were still very much in love.
While the wife was in the kitchen, the man leaned over to his host, and said: "I think it's wonderful that, after all these years, you still call your wife those loving pet names."
The old man hung his head. "I have to tell you the truth," he said. "Her name slipped my mind about 10 years a go, -- and I'm scared to death to ask the old bitch what it is."
This is going around the desks today
posted by Peter Greene
Government Healthcare Failing Worldwide
Why should we be copying Government Healthcare...Look at this article about how Canada's system is breaking down and looking for a private option to save it...We have a private system now, learn from the neighbours in the north and stop this BEFORE we are in the same boat
Overhauling health-care system tops agenda at annual meeting of Canada's doctors
By Jennifer Graham (CP) – 3 days ago
SASKATOON — The incoming president of the Canadian Medical Association says this country's health-care system is sick and doctors need to develop a plan to cure it.
Dr. Anne Doig says patients are getting less than optimal care and she adds that physicians from across the country - who will gather in Saskatoon on Sunday for their annual meeting - recognize that changes must be made.
"We all agree that the system is imploding, we all agree that things are more precarious than perhaps Canadians realize," Doing said in an interview with The Canadian Press.
"We know that there must be change," she said. "We're all running flat out, we're all just trying to stay ahead of the immediate day-to-day demands."
The pitch for change at the conference is to start with a presentation from Dr. Robert Ouellet, the current president of the CMA, who has said there's a critical need to make Canada's health-care system patient-centred. He will present details from his fact-finding trip to Europe in January, where he met with health groups in England, Denmark, Belgium, Netherlands and France.
His thoughts on the issue are already clear. Ouellet has been saying since his return that "a health-care revolution has passed us by," that it's possible to make wait lists disappear while maintaining universal coverage and "that competition should be welcomed, not feared."
In other words, Ouellet believes there could be a role for private health-care delivery within the public system.
He has also said the Canadian system could be restructured to focus on patients if hospitals and other health-care institutions received funding based on the patients they treat, instead of an annual, lump-sum budget. This "activity-based funding" would be an incentive to provide more efficient care, he has said.
Doig says she doesn't know what a proposed "blueprint" toward patient-centred care might look like when the meeting wraps up Wednesday. She'd like to emerge with clear directions about where the association should focus efforts to direct change over the next few years. She also wants to see short-term, medium-term and long-term goals laid out.
"A short-term achievable goal would be to accelerate the process of getting electronic medical records into physicians' offices," she said. "That's one I think ought to be a priority and ought to be achievable."
A long-term goal would be getting health systems "talking to each other," so information can be quickly shared to help patients.
Doig, who has had a full-time family practice in Saskatoon for 30 years, acknowledges that when physicians have talked about changing the health-care system in the past, they've been accused of wanting an American-style structure. She insists that's not the case.
"It's not about choosing between an American system or a Canadian system," said Doig. "The whole thing is about looking at what other people do."
"That's called looking at the evidence, looking at how care is delivered and how care is paid for all around us (and) then saying 'Well, OK, that's good information. How do we make all of that work in the Canadian context? What do the Canadian people want?' "
Doig says there are some "very good things" about Canada's health-care system, but she points out that many people have stories about times when things didn't go well for them or their family.
"(Canadians) have to understand that the system that we have right now - if it keeps on going without change - is not sustainable," said Doig.
"They have to look at the evidence that's being presented and will be presented at (the meeting) and realize what Canada's doctors are trying to tell you, that you can get better care than what you're getting and we all have to participate in the discussion around how do we do that and of course how do we pay for it."
Copyright © 2009 The Canadian Press. All rights reserved.
posted by Peter Greene
Overhauling health-care system tops agenda at annual meeting of Canada's doctors
By Jennifer Graham (CP) – 3 days ago
SASKATOON — The incoming president of the Canadian Medical Association says this country's health-care system is sick and doctors need to develop a plan to cure it.
Dr. Anne Doig says patients are getting less than optimal care and she adds that physicians from across the country - who will gather in Saskatoon on Sunday for their annual meeting - recognize that changes must be made.
"We all agree that the system is imploding, we all agree that things are more precarious than perhaps Canadians realize," Doing said in an interview with The Canadian Press.
"We know that there must be change," she said. "We're all running flat out, we're all just trying to stay ahead of the immediate day-to-day demands."
The pitch for change at the conference is to start with a presentation from Dr. Robert Ouellet, the current president of the CMA, who has said there's a critical need to make Canada's health-care system patient-centred. He will present details from his fact-finding trip to Europe in January, where he met with health groups in England, Denmark, Belgium, Netherlands and France.
His thoughts on the issue are already clear. Ouellet has been saying since his return that "a health-care revolution has passed us by," that it's possible to make wait lists disappear while maintaining universal coverage and "that competition should be welcomed, not feared."
In other words, Ouellet believes there could be a role for private health-care delivery within the public system.
He has also said the Canadian system could be restructured to focus on patients if hospitals and other health-care institutions received funding based on the patients they treat, instead of an annual, lump-sum budget. This "activity-based funding" would be an incentive to provide more efficient care, he has said.
Doig says she doesn't know what a proposed "blueprint" toward patient-centred care might look like when the meeting wraps up Wednesday. She'd like to emerge with clear directions about where the association should focus efforts to direct change over the next few years. She also wants to see short-term, medium-term and long-term goals laid out.
"A short-term achievable goal would be to accelerate the process of getting electronic medical records into physicians' offices," she said. "That's one I think ought to be a priority and ought to be achievable."
A long-term goal would be getting health systems "talking to each other," so information can be quickly shared to help patients.
Doig, who has had a full-time family practice in Saskatoon for 30 years, acknowledges that when physicians have talked about changing the health-care system in the past, they've been accused of wanting an American-style structure. She insists that's not the case.
"It's not about choosing between an American system or a Canadian system," said Doig. "The whole thing is about looking at what other people do."
"That's called looking at the evidence, looking at how care is delivered and how care is paid for all around us (and) then saying 'Well, OK, that's good information. How do we make all of that work in the Canadian context? What do the Canadian people want?' "
Doig says there are some "very good things" about Canada's health-care system, but she points out that many people have stories about times when things didn't go well for them or their family.
"(Canadians) have to understand that the system that we have right now - if it keeps on going without change - is not sustainable," said Doig.
"They have to look at the evidence that's being presented and will be presented at (the meeting) and realize what Canada's doctors are trying to tell you, that you can get better care than what you're getting and we all have to participate in the discussion around how do we do that and of course how do we pay for it."
Copyright © 2009 The Canadian Press. All rights reserved.
posted by Peter Greene
Tuesday, August 18, 2009
Firm's S&P note
As seen in the S&P 500 research note the index ran into resistance at the 1,020 level but this is still well above its recent range breakout spot near the 950/930 area. So at this point while prices are drifting keeping things in perspective we are still in the middle of a higher level trader range (930/950 to 1,020) after spending the earlier part of the summer locked in the 850 to 950/930 range.
The recent weakness is a combination of the late summer doldrums and a mean reversion of the S&P 500’s 15.20 % run up (measured from its’ recent high from its low on 7/10). Anecdotal sentiment has investors still doubting the rally, under invested and extremely cautious. While this kind of sentiment exists it is hard to expect anything more than a minor pullback (5% – 7 %).
While late summer and fall seasonality trends typically line up in the negative return camp it appears that so many investors are relying on it as gospel that maybe it won’t happen this year.
posted by Peter Greene
The recent weakness is a combination of the late summer doldrums and a mean reversion of the S&P 500’s 15.20 % run up (measured from its’ recent high from its low on 7/10). Anecdotal sentiment has investors still doubting the rally, under invested and extremely cautious. While this kind of sentiment exists it is hard to expect anything more than a minor pullback (5% – 7 %).
While late summer and fall seasonality trends typically line up in the negative return camp it appears that so many investors are relying on it as gospel that maybe it won’t happen this year.
posted by Peter Greene
Monday, August 17, 2009
Firm's morning comments
Markets look to open weaker this morning as investors worry stocks have come too far, too fast. The headline story on CNN.com reads, Stocks headed for sharp fall while on Yahoo Finance their lead story reads Stocks Futures Point to Plunge on Wall Street. All of it sounds a bit dramatic if you ask me, but that is what the media is about reporting what is happening not what may happen.
Certainly given we are in the late summer vacation season and stocks have had a good run in July there is the likelihood for a pullback, However is it anything more at this point than just a retrenchment of the recent rally or are we really headed for a plunge or a sharp fall ? Again it seems a bit premature and dramatic to say that at this juncture. Stocks ebb and flow. Traders overreact on the upside and the downside.
Under the surface of these silly headlines things still remain pretty much the same; liquidity is very strong, investors by and large remain under invested even after a rally of significant magnitude, sentiment while a bit more bullish is not a problem yet and valuations while richer than they were say a few months back still remain constructive.
Actually the headline that caught our eye this morning the most was CalSTRS (The California State Teachers Retirement Fund) is reducing exposure to equities into this rally. Now while we are sure there are many smart people at CalSTRS the fact that they are reducing equities actually makes us more comfortable that the bull trend will resume after a pause. After all CalSTRS like many pensions preached the passive BUY and HOLD strategy forever and got burnt in 2001/2002 and again in 2008 so they do not actually have a great history when it comes to making investment decisions. Now after all these years they are changing their investment mantra and trying to be proactive. Ironically this sounds like a reactive decision after years of making bad moves.
This headline just becomes another part of the sentiment puzzle which outlines how investors keep doubting the recovery and remain scared of stocks. While there are obvious issues about the tenure and durability of the recovery the more doubting thomases that line up the more likely the market is to confound them. There is a reason the old adage, the market exists to confound the majority and reward the minority has been around for a long time - because it typically holds true !
Expect some weakness near term - support on the S&P 500 remains below the market in the 950 area.
Look for a more detailed technical note tomorrow.
posted by Peter Greene
Certainly given we are in the late summer vacation season and stocks have had a good run in July there is the likelihood for a pullback, However is it anything more at this point than just a retrenchment of the recent rally or are we really headed for a plunge or a sharp fall ? Again it seems a bit premature and dramatic to say that at this juncture. Stocks ebb and flow. Traders overreact on the upside and the downside.
Under the surface of these silly headlines things still remain pretty much the same; liquidity is very strong, investors by and large remain under invested even after a rally of significant magnitude, sentiment while a bit more bullish is not a problem yet and valuations while richer than they were say a few months back still remain constructive.
Actually the headline that caught our eye this morning the most was CalSTRS (The California State Teachers Retirement Fund) is reducing exposure to equities into this rally. Now while we are sure there are many smart people at CalSTRS the fact that they are reducing equities actually makes us more comfortable that the bull trend will resume after a pause. After all CalSTRS like many pensions preached the passive BUY and HOLD strategy forever and got burnt in 2001/2002 and again in 2008 so they do not actually have a great history when it comes to making investment decisions. Now after all these years they are changing their investment mantra and trying to be proactive. Ironically this sounds like a reactive decision after years of making bad moves.
This headline just becomes another part of the sentiment puzzle which outlines how investors keep doubting the recovery and remain scared of stocks. While there are obvious issues about the tenure and durability of the recovery the more doubting thomases that line up the more likely the market is to confound them. There is a reason the old adage, the market exists to confound the majority and reward the minority has been around for a long time - because it typically holds true !
Expect some weakness near term - support on the S&P 500 remains below the market in the 950 area.
Look for a more detailed technical note tomorrow.
posted by Peter Greene
Wednesday, August 12, 2009
FOMC Overview from the firm
In contrast with the last FOMC meeting, the August meeting should provide a forward-looking statement that will signal the central bank's next step toward winding down its quantitative easing program.
Some salient points:
· U.S. monetary policy will remain on hold for an extended period.
· The Federal Reserve is not monetizing the federal debt.
· The commercial real estate sector is a growing concern.
The Fed will acknowledge improvement in the economy and the probability of stronger than expected growth in the third quarter, but carefully outline downside risks to both growth and inflation. The committee will maintain its commitment to keeping rates low for an extended period. Policy normalization will be difficult. Improving financial conditions and the pickup in real activity have stimulated demand for an early exit from financial markets. The timing, pace and sequence of policy normalization will have important implications for asset markets. The Fed is aware of the policy missteps it made in 1937, and those of the Japanese central bank in 1997 and 2000 that prematurely terminated economic recoveries.
Deflationary risk, potential problems in the commercial real estate sector and more stress in financial markets should cause policy normalization to proceed in a drawn-out fashion. Moreover, the risk that domestic political tensions will constrain future fiscal stimulus should ensure the central bank moves carefully before articulating an explicit exit strategy.
The FOMC acknowledged in its June minutes that it did not extend its asset purchase program out of fear this would be interpreted as a monetization of U.S. federal debt. The normalization of financial markets has given the central bank leeway to let some of its temporary liquidity programs expire. The Fed is likely to address its $300 billion asset purchase program which is about to expire. The Fed has purchased $243 billion in medium- to long-term Treasuries since the March 18 FOMC meeting. Although the program will end, one would expect the statement will provide enough space for the central bank to re-enter markets again should the financial sector experience more turmoil in the near term.
Some Risks - End the TARP but extend the TALF?
The FOMC will note the improvement but also emphasize risks to the spending outlook. While the improvement in productivity is desirable, firms obtained it by squeezing more out of a reduced workforce. Employee hours fell 7.6% in the second quarter. Outside of a modest increase in hours worked inside the July payroll data, the prospects for wage stabilization remain difficult.
Moreover, the increased prospects for growth in the current quarter come with a risk. The policy success of the auto subsidies is likely to shift consumption that would have occurred over the next several months to the current quarter. In addition, the inventory restocking contains its own risk. It is not yet certain that demand, due to the decline in wage income, is sufficient to absorb the increase in production observed in the current quarter.
Other risks include the shutdown of the $700 billion CMBS market since September 2008. In June, the central bank expanded its Term Asset-Backed Securities Loan Facility to include up to $100 billion in commercial mortgage-backed assets. While the asset purchase program will be allowed to expire, it is increasingly likely that the TALF program will have to be extended to address issues in the commercial mortgage-backed securities market.
Thus, the Fed will be reluctant to rule out additional liquidity measures to address possible turmoil in commercial real estate or additional stress in the banking industry. Commercial real estate prices fell 27% on an annualized basis through March 31 of this year. In contrast with the TED spread and Libor rates, options-adjusted CMBS spreads over Treasuries remain near levels seen at the peak of the crisis. Falling prices and an inability to roll over CMBS may require further unorthodox steps from the central bank.
posted by Peter Greene
Some salient points:
· U.S. monetary policy will remain on hold for an extended period.
· The Federal Reserve is not monetizing the federal debt.
· The commercial real estate sector is a growing concern.
The Fed will acknowledge improvement in the economy and the probability of stronger than expected growth in the third quarter, but carefully outline downside risks to both growth and inflation. The committee will maintain its commitment to keeping rates low for an extended period. Policy normalization will be difficult. Improving financial conditions and the pickup in real activity have stimulated demand for an early exit from financial markets. The timing, pace and sequence of policy normalization will have important implications for asset markets. The Fed is aware of the policy missteps it made in 1937, and those of the Japanese central bank in 1997 and 2000 that prematurely terminated economic recoveries.
Deflationary risk, potential problems in the commercial real estate sector and more stress in financial markets should cause policy normalization to proceed in a drawn-out fashion. Moreover, the risk that domestic political tensions will constrain future fiscal stimulus should ensure the central bank moves carefully before articulating an explicit exit strategy.
The FOMC acknowledged in its June minutes that it did not extend its asset purchase program out of fear this would be interpreted as a monetization of U.S. federal debt. The normalization of financial markets has given the central bank leeway to let some of its temporary liquidity programs expire. The Fed is likely to address its $300 billion asset purchase program which is about to expire. The Fed has purchased $243 billion in medium- to long-term Treasuries since the March 18 FOMC meeting. Although the program will end, one would expect the statement will provide enough space for the central bank to re-enter markets again should the financial sector experience more turmoil in the near term.
Some Risks - End the TARP but extend the TALF?
The FOMC will note the improvement but also emphasize risks to the spending outlook. While the improvement in productivity is desirable, firms obtained it by squeezing more out of a reduced workforce. Employee hours fell 7.6% in the second quarter. Outside of a modest increase in hours worked inside the July payroll data, the prospects for wage stabilization remain difficult.
Moreover, the increased prospects for growth in the current quarter come with a risk. The policy success of the auto subsidies is likely to shift consumption that would have occurred over the next several months to the current quarter. In addition, the inventory restocking contains its own risk. It is not yet certain that demand, due to the decline in wage income, is sufficient to absorb the increase in production observed in the current quarter.
Other risks include the shutdown of the $700 billion CMBS market since September 2008. In June, the central bank expanded its Term Asset-Backed Securities Loan Facility to include up to $100 billion in commercial mortgage-backed assets. While the asset purchase program will be allowed to expire, it is increasingly likely that the TALF program will have to be extended to address issues in the commercial mortgage-backed securities market.
Thus, the Fed will be reluctant to rule out additional liquidity measures to address possible turmoil in commercial real estate or additional stress in the banking industry. Commercial real estate prices fell 27% on an annualized basis through March 31 of this year. In contrast with the TED spread and Libor rates, options-adjusted CMBS spreads over Treasuries remain near levels seen at the peak of the crisis. Falling prices and an inability to roll over CMBS may require further unorthodox steps from the central bank.
posted by Peter Greene
Wednesday, August 5, 2009
Recent firm morning note
Almost like a broken record for the last two weeks we have proposed the idea that the market would keep working higher because investor sentiment was more cautious or doubting than embracing suggestive that many investors still had not deployed a lot of capital.
Over the last several trading sessions this thesis has played out. However what is even more encouraging now is this rally has started to broaden out more. Originally it was predominantly tech and commodity based names leading the charge however in the last few sessions the banks and the cyclicals are starting to catch a bid again as are the transports.
Internals on yesterday's advance once again had a bullish tone with up to down volume on the NASDAQ scoring a ratio of 5.2 to 1, with nearly 2.5 stocks advancing for every one that declined. Over on the NYSE the internals were even stronger with up volume besting down volume by a ratio of 8.69 to 1 with 4.75 stocks advancing to every one that declined.
As the rally has accelerated more aggressively of late the total equity/index put call ratio has slipped suggesting more calls are being purchased than puts. This is not an overly bullish backdrop, however it is a shorter-term indicator as opposed to a more secular indicator. Additionally AAII Bull Sentiment also rose recently to a reading of 47 % last week. While neither of these numbers are alarming just yet as they continue to rise so does the probability of a pullback.
However the overwhelmingly positive market breadth figures and bullish sideline liquidity trump sentiment for the time being and pullbacks remain buying opportunities until sideline cash dries up.
Today we will get another look at AAII Bull Sentiment figures and are expecting a bit of a spike. With the summer vacation schedule picking up steam the market could pause here a bit as for Portfolio managers, the largest net buyers of equities take a temporary siesta.
posted by Peter Greene
Over the last several trading sessions this thesis has played out. However what is even more encouraging now is this rally has started to broaden out more. Originally it was predominantly tech and commodity based names leading the charge however in the last few sessions the banks and the cyclicals are starting to catch a bid again as are the transports.
Internals on yesterday's advance once again had a bullish tone with up to down volume on the NASDAQ scoring a ratio of 5.2 to 1, with nearly 2.5 stocks advancing for every one that declined. Over on the NYSE the internals were even stronger with up volume besting down volume by a ratio of 8.69 to 1 with 4.75 stocks advancing to every one that declined.
As the rally has accelerated more aggressively of late the total equity/index put call ratio has slipped suggesting more calls are being purchased than puts. This is not an overly bullish backdrop, however it is a shorter-term indicator as opposed to a more secular indicator. Additionally AAII Bull Sentiment also rose recently to a reading of 47 % last week. While neither of these numbers are alarming just yet as they continue to rise so does the probability of a pullback.
However the overwhelmingly positive market breadth figures and bullish sideline liquidity trump sentiment for the time being and pullbacks remain buying opportunities until sideline cash dries up.
Today we will get another look at AAII Bull Sentiment figures and are expecting a bit of a spike. With the summer vacation schedule picking up steam the market could pause here a bit as for Portfolio managers, the largest net buyers of equities take a temporary siesta.
posted by Peter Greene
Thursday, July 30, 2009
ALL THE KINGS MEN
Great Article in The Washington Post
Obama's 32 Czars
By Eric CantorThursday, July 30, 2009
"The biggest problems that we're facing right now have to do with George Bush trying to bring more and more power into the executive branch and not go through Congress at all. And that's what I intend to reverse when I'm president of the United States." -- Sen. Barack Obama, March 31, 2008
To say President Obama failed to follow through on this promise is an understatement. By appointing a virtual army of "czars" -- each wholly unaccountable to Congress yet tasked with spearheading major policy efforts for the White House -- in his first six months, the president has embarked on an end-run around the legislative branch of historic proportions.
To be sure, the appointment of a few special officers to play a constructive role in a given administration is nothing new. What is new is the elevation of so many czars, with so much authority on endless policy fronts. Vesting such broad authority in the hands of people not subjected to Senate confirmation and congressional oversight poses a grave threat to our system of checks and balances.
At last count, there were at least 32 active czars that we knew of, meaning the current administration has more czars than Imperial Russia.
The administration has a Mideast peace czar (not to be confused with the Mideast policy czar), a Sudan czar and a Guantanamo closure czar. Then there's the green jobs czar, sometimes in conflict with the energy czar, who talks to the technology czar, who sometimes crosses paths with the urban affairs czar. We mustn't forget the Great Lakes czar or the WMD czar, who no doubt works hand in hand with the terrorism czar. The stimulus accountability czar is going through a rough time right now, as is the TARP czar -- but thankfully they have to answer to the government performance czar. And seemingly everyone falls under the auspices of the information czar. In a government full of duplicative bureaucracies, adding more layers with overlapping responsibilities hardly seems the way to go.
Even Democratic Sen. Robert Byrd (W.Va.) was fearful enough to pen a letter to President Obama in February highlighting his concerns with the administration's tactics. The Constitution mandates that the Senate confirm Cabinet-level department heads and other appointees in positions of authority -- known as "principal officers." This gives Congress -- elected by the people -- the power to compel executive decision-makers to testify and be held accountable by someone other than the president. It also ensures that key appointees cannot claim executive privilege when subpoenaed to come before Congress.
As we move forward, proper oversight of the growing lineup of czars is essential. From orchestrating bailouts to making industrial policies to moving toward government-run national health care, Washington seems intent on sailing into uncharted waters -- and the czars are often steering the ship.
The car czar, who stepped down this month amid controversy over his former firm's role in a scandal, had been managing government's recent takeover of a huge swath of the domestic auto industry and making decisions for auto companies. The pay czar -- also known in White House circles as the "special master for compensation" -- has the power to reject or accept any current and future compensation for the top 100 earners at companies that received, in some cases under pressure, money from the Troubled Assets Relief Program. In the coming months he will decide the fate of $235 million in pending retention bonuses at AIG. And the health czar, meanwhile, has become as influential as perhaps anyone in the Obama administration, spearheading White House negotiations with doctors, hospitals and other health providers. She will play a key role in determining which medicines, treatments and cures are deemed necessary for the public.
The point here is not that President Obama's reliance on czars is illegal (although it does raise significant, unresolved constitutional issues). Nor is it that these czars are bad people. It's that we have not been able to vet them, and that we have no idea what they're doing. It's that candidate Obama made a pledge to keep Congress in the light. Yet less than six months after his inauguration, the president appears intent to keep Congress more and more in the dark. Dozens of czars at a time.
The writer, a Republican from Virginia, is the House minority whip
posted by Peter Greene
Obama's 32 Czars
By Eric CantorThursday, July 30, 2009
"The biggest problems that we're facing right now have to do with George Bush trying to bring more and more power into the executive branch and not go through Congress at all. And that's what I intend to reverse when I'm president of the United States." -- Sen. Barack Obama, March 31, 2008
To say President Obama failed to follow through on this promise is an understatement. By appointing a virtual army of "czars" -- each wholly unaccountable to Congress yet tasked with spearheading major policy efforts for the White House -- in his first six months, the president has embarked on an end-run around the legislative branch of historic proportions.
To be sure, the appointment of a few special officers to play a constructive role in a given administration is nothing new. What is new is the elevation of so many czars, with so much authority on endless policy fronts. Vesting such broad authority in the hands of people not subjected to Senate confirmation and congressional oversight poses a grave threat to our system of checks and balances.
At last count, there were at least 32 active czars that we knew of, meaning the current administration has more czars than Imperial Russia.
The administration has a Mideast peace czar (not to be confused with the Mideast policy czar), a Sudan czar and a Guantanamo closure czar. Then there's the green jobs czar, sometimes in conflict with the energy czar, who talks to the technology czar, who sometimes crosses paths with the urban affairs czar. We mustn't forget the Great Lakes czar or the WMD czar, who no doubt works hand in hand with the terrorism czar. The stimulus accountability czar is going through a rough time right now, as is the TARP czar -- but thankfully they have to answer to the government performance czar. And seemingly everyone falls under the auspices of the information czar. In a government full of duplicative bureaucracies, adding more layers with overlapping responsibilities hardly seems the way to go.
Even Democratic Sen. Robert Byrd (W.Va.) was fearful enough to pen a letter to President Obama in February highlighting his concerns with the administration's tactics. The Constitution mandates that the Senate confirm Cabinet-level department heads and other appointees in positions of authority -- known as "principal officers." This gives Congress -- elected by the people -- the power to compel executive decision-makers to testify and be held accountable by someone other than the president. It also ensures that key appointees cannot claim executive privilege when subpoenaed to come before Congress.
As we move forward, proper oversight of the growing lineup of czars is essential. From orchestrating bailouts to making industrial policies to moving toward government-run national health care, Washington seems intent on sailing into uncharted waters -- and the czars are often steering the ship.
The car czar, who stepped down this month amid controversy over his former firm's role in a scandal, had been managing government's recent takeover of a huge swath of the domestic auto industry and making decisions for auto companies. The pay czar -- also known in White House circles as the "special master for compensation" -- has the power to reject or accept any current and future compensation for the top 100 earners at companies that received, in some cases under pressure, money from the Troubled Assets Relief Program. In the coming months he will decide the fate of $235 million in pending retention bonuses at AIG. And the health czar, meanwhile, has become as influential as perhaps anyone in the Obama administration, spearheading White House negotiations with doctors, hospitals and other health providers. She will play a key role in determining which medicines, treatments and cures are deemed necessary for the public.
The point here is not that President Obama's reliance on czars is illegal (although it does raise significant, unresolved constitutional issues). Nor is it that these czars are bad people. It's that we have not been able to vet them, and that we have no idea what they're doing. It's that candidate Obama made a pledge to keep Congress in the light. Yet less than six months after his inauguration, the president appears intent to keep Congress more and more in the dark. Dozens of czars at a time.
The writer, a Republican from Virginia, is the House minority whip
posted by Peter Greene
Tuesday, July 14, 2009
Firm's S&P morning note
The S&P 500 bounced from aggressively from the lower support area we highlighted in yesterday's S&P 500 note. We still believe the summer will be choppy and we could remain range bound for quite a bit of time. It is also possible we could see some semblance of a retest later this summer or as we approach the fall.That said yesterday's bounce had some vigor to it particularly on the NYSE where up volume beat down volume by a ratio of 10:1 and advancers bested decliners by a 4.5:1 margin.The NASDAQ was close to the task on the up to down volume camp with a 6.45 to 1 ratio, however it has less participation than the NYSE with only 2.7 stocks advancing for every one that declined. While these internals may suggest we can push a bit higher up into the range, we think given seasonal summer weakness the tape won't reward those with multi-month holding periods like it did from March to June, but will favor active trading.As long as the S&P 500 stays above Friday's lows the market still gets the benefit of the doubt.
Best.
posted by Peter Greene
Best.
posted by Peter Greene
Monday, July 13, 2009
S&P comments from the firm
As in the attached research note on the S&P 500, the index is sitting at the lower end of its support zone. Given the index is already qualified as oversold (ie. down 8% from its’ peak) it is even more important that it hold. If the rally off the bottom is still intact then an 8 % sell-off to support should be met with enthusiasm by buyers. If buying doesn’t materialize down here then that tells you a lot about the psychology of traders and then we would likely see the market continue to drift lower. It is really important for the bull argument that the market make some sort of stand here.
Given the summer months and many pm’s and traders hitting peak vacation time (July to August) we would expect trading volumes to taper off a bit making liquidity a bit of an issue.
posted by Peter Greene
Given the summer months and many pm’s and traders hitting peak vacation time (July to August) we would expect trading volumes to taper off a bit making liquidity a bit of an issue.
posted by Peter Greene
Wednesday, July 8, 2009
Consumer credit at 3PM
So the next economic number that may put a wrench in the market is the Consumer Credit number released at 3pm Wednesday. Survey numbers say -8.5 Billion with prior month -15.7 Billion...Will this move us for the close, short answer is YES---market pros will use "any" excuse to trade the news....
Also big news today is Alcoa earnings-always big but for some reason everyone is jumping all over their earnings as a was to tell ALL future earnings for the quarter. Kind of dumb but true.
Below is a quick note from my firm on Consumer Credit:
Total consumer credit balances are shrinking at an aggressive pace. According to the Federal
Reserve, a majority of banks are still tightening their lending standards for consumer loans
and credit cards. Meanwhile, consumer spending is slipping again after an unexpected increase
earlier in the year.
Revolving credit balances are falling at a steadily increasing rate. Consumer spending has slipped in
recent months, although it is still holding up much better than it was in late 2008. Consumers also have
more cash to work with thanks to several months of greater savings, increased transfer payments from
the government, and payroll tax credits. These factors have lessened the need for credit cards, while
consumers also try to dig themselves out of debt.
Non-revolving credit balances are also shrinking, but the recent rate of decline has been slower and
steadier than it has for revolving credit. New vehicle sales remain extremely weak but seem to have
found a floor at an annualized sales rate of about 9 million units. Demand for new non-revolving lines of
credit is very weak, while current borrowers are steadily paying off their existing balances. Consumer
delinquency rates for auto loans remain much lower than they are for other types of credit.
Total consumer credit balances are expected to gradually decline over the months ahead. In particular,
revolving credit balances will fall steadily as consumers hold more cash and look to reduce their debt.
Consumers are not expected to significantly increase spending or their demand for credit until the labor
market begins to firm up in 2010 or beyond. On the upside, reducing credit utilization during this severe
recession will help consumers avoid a longer-term de
.bmp)
cline in credit quality.posted by Peter Greene
S&P review from firm
As seen in the attached research report the S&P 500 Index recently slammed into a convergence of resistance and a downtrend line. After needing a near 44 % rally from the lows just to trade up to the aforementioned resistance area it was hard to imagine the S&P 500 would just blast up though that level. Add to the mix that we recently entered a period that is historically weak for stocks and it makes sense why prices have corrected of late. As we have said a few times recently in other S&P 500 updates the index has most likely set its high point for a while and was likely at best to trade range bound or realistically lower for a while. We also suggested and continue to suggest that stops on remaining long holdings be adjusted/tightened and long exposure be reduced for the time being.
Since the dawn of the markets most if not all bottoming processes have had some sort of testing process after
setting an initial low. In 2002 for instance (our most recent low prior to March of 2008) the S&P 500 tested the
lows on 3 separate occasions (red arrows) before the final lows were ultimately set. So to expect this time things
would be different doesn’t make much sense.
There will be short-term trading opportunities that present themselves during the remainder of the
summer and into the fall however we don’t see any directional bull trend re-establishing itself before
some sort of retest sequence. The only thing that would change this outlook is a high volume move on
strong internals back above the recent highs.
posted by Peter Greene
Since the dawn of the markets most if not all bottoming processes have had some sort of testing process after
setting an initial low. In 2002 for instance (our most recent low prior to March of 2008) the S&P 500 tested the
lows on 3 separate occasions (red arrows) before the final lows were ultimately set. So to expect this time things
would be different doesn’t make much sense.
There will be short-term trading opportunities that present themselves during the remainder of the
summer and into the fall however we don’t see any directional bull trend re-establishing itself before
some sort of retest sequence. The only thing that would change this outlook is a high volume move on
strong internals back above the recent highs.
posted by Peter Greene
Monday, July 6, 2009
Firm's S&P levels
As seen in the attached research note the S&P 500 has been capped by resistance at the 950 level. As we had said in earlier S&P 500 notes we expect this level to mark a high water mark for a good period of time as we enter the seasonally weak period of the mid to latter summer. How deep of a correction we get will depend on the ability of the S&P 500 to hold support near the 875 level.
The best case scenario is we stay locked in a trading range between 950 and 875, while the more alarming scenario is we break back below the 875 region and we have a deeper sell-off as part of a retest of the lows.
posted by Peter Greene
The best case scenario is we stay locked in a trading range between 950 and 875, while the more alarming scenario is we break back below the 875 region and we have a deeper sell-off as part of a retest of the lows.
posted by Peter Greene
Tuesday, June 30, 2009
ISM Chig. and 1 day S&P returns
This chart represents 1d S&P returns on release day for the ISM-Chicago figure. Returns are relatively normal during longer periods of expansion/contraction. But during periods of uncertainty, such as now, returns are volatile on the day of release and tougher to predict. Its sensitivity to Midwest auto manufacturing cycles is likely the current issue to decipher.
posted by Peter Greene
Monday, June 29, 2009
Firm's Oil comments
Crude Oil Weekly Report
Oil was a flat line as the market got pulled in different directions on a confusing mix of market fundamentals. Once again the Chinese are calling for a global currency so they can loosen their dependence on the dollar and talk of more big purchases of oil yet at the same time we have Bank of China Governor Zhou Xiaochuan playing down dollar worries by saying that China’s foreign exchange reserve policy is stable. That kind of talk may give the dollar a boost but the other key question for the oil market is whether or not the Chinese are going to continue their recent strong buying in oil.
Well the answer to that question is probably yes. Over the weekend it was reported that China plans to increase strategic crude oil reserves by 60 percent to 270 million barrels during the next five years by the Nikkei English News citing an unidentified official from China’s National Energy Administration. According to the report China will spend 30 billion yuan ($4.39 billion) for stockpiling facilities with a capacity to hold 169 million barrels. China Petrochemical Corp., China National Petroleum Corp. and other companies will construct and use the storage sites. If China continues to strengthen its reserve then oil will be bought on pullbacks. This should help provide some long term support.
Technicals: Because this is our initial piece on Oil, we decided to show a broader view of the USO (United States Oil Fund, LP) – our proxy ETF for the general crude contract. For the most part, the chart above represents a huge rounding type bottom. Notice the heavy volume at the trough – this is showing the type of volatile activity where money moves from weak hands to strong hands. This is most likely representative of oil bulls finally giving up after buying at much higher prices and new investors popping in feeling that oil was undervalued. Over short term, USO may linger but should eventually retest the $40 region and eclipse that to target the $55/$60 region over the more intermediate term.
posted by Peter Greene
Oil was a flat line as the market got pulled in different directions on a confusing mix of market fundamentals. Once again the Chinese are calling for a global currency so they can loosen their dependence on the dollar and talk of more big purchases of oil yet at the same time we have Bank of China Governor Zhou Xiaochuan playing down dollar worries by saying that China’s foreign exchange reserve policy is stable. That kind of talk may give the dollar a boost but the other key question for the oil market is whether or not the Chinese are going to continue their recent strong buying in oil.
Well the answer to that question is probably yes. Over the weekend it was reported that China plans to increase strategic crude oil reserves by 60 percent to 270 million barrels during the next five years by the Nikkei English News citing an unidentified official from China’s National Energy Administration. According to the report China will spend 30 billion yuan ($4.39 billion) for stockpiling facilities with a capacity to hold 169 million barrels. China Petrochemical Corp., China National Petroleum Corp. and other companies will construct and use the storage sites. If China continues to strengthen its reserve then oil will be bought on pullbacks. This should help provide some long term support.
Technicals: Because this is our initial piece on Oil, we decided to show a broader view of the USO (United States Oil Fund, LP) – our proxy ETF for the general crude contract. For the most part, the chart above represents a huge rounding type bottom. Notice the heavy volume at the trough – this is showing the type of volatile activity where money moves from weak hands to strong hands. This is most likely representative of oil bulls finally giving up after buying at much higher prices and new investors popping in feeling that oil was undervalued. Over short term, USO may linger but should eventually retest the $40 region and eclipse that to target the $55/$60 region over the more intermediate term.
posted by Peter Greene
Madoff to Jail
Bernie had no friends, no character witnesses, nobody no family . With that the judge gave him the maximum 150 years....
Still can't believe this guy is still lying and not helping anything in the investigation...This guy is the lowest piece of scum ever.
posted by Peter Greene
Still can't believe this guy is still lying and not helping anything in the investigation...This guy is the lowest piece of scum ever.
posted by Peter Greene
Firm's S&P note
This week’s trading on the S&P 500 should tell us a lot about the market. The questions likely answered this week are the following: Is this just a pause that refreshes and prices work higher or are we entering into a corrective phase commensurate with the typical seasonal summer weakness ?
As seen in the attached note the market is equally conflicted with this idea as well as the S&P 500 has been fairly directionless since early May oscillating a few percentage points above and below the 920 level. To gain some direction (up or down) the index needs to either break above 923 or below 875 (key intermediate term support).
Sentiment remains the markets friend as most sentiment measures suggest that investors have not endorsed the current rally.
posted by Peter Greene
As seen in the attached note the market is equally conflicted with this idea as well as the S&P 500 has been fairly directionless since early May oscillating a few percentage points above and below the 920 level. To gain some direction (up or down) the index needs to either break above 923 or below 875 (key intermediate term support).
Sentiment remains the markets friend as most sentiment measures suggest that investors have not endorsed the current rally.
posted by Peter Greene
Firm's Gold Comments
June 29, 2009
Gold Market Weekly Report
Last week, spot gold closed at $939.60 per ounce up $5.55 or 0.59 percent. Gold equities, as measured by the XAU Gold & Silver Index (11) rose by 1.52 percent for the week. The U.S. Trade-Weighted Dollar Index (12) fell by 0.54 percent.
Salient Research Points:
• Gold’s investment appeal resurfaced as the dollar came under renewed pressure after China’s central bank reiterated a call to lessen the dollar's role as the world's currency. The European Central Bank’s liquidity injection of 442 billion euros pushed money market rates and Libor to record lows. This marked the first week in four that gold prices recorded a gain.
• Contrary to market expectations, many analysts believe the Federal Reserve is unlikely to begin rate normalization in 2009 because of a negative output gap and tight levels of credit. RGE analysts said that in order to tame rising Treasury yields, the Federal Open Market Committee may later expand quantitative easing.
The chart at right shows what looks to be an ascending triangle forming in the GLD (streetTRACKS Gold Trust Shares). It has successfully held the lower line at the 92.00 region and, with continued dollar weakness, will likely retest the top trendline near 96-97 area. A clear break there will obviously send the metal to new highs likely snapping the previous peaks at 98.99 and 100.44 with ease. Using a pattern price projection, the 112-115 region should be attainable.
posted by Peter Greene
Friday, June 26, 2009
6/26/09 ... Resilient, resilient, resilient ...
What can we say about this tape other than what our title says, Resilient, resilient, resilient ...
Why do we say this ? Well one only has to look at the internals yesterday where the NASDAQ scored an up to down volume ratio of 8.24:1 with over 4 stocks (4.22) advancing for every on that declined. Not to be out down the NYSE scored ratio's of 7.50 to 1 on up to down volume and also had over 4 stocks (4.18) advance for every on that declined. with ratio's like that it is hard to call the recent pullback anything other than that.
Tech remains the most attractive area of the market as its issues have the largest bases (ie. floors) from which to advance off of. Within tech we are seeing a shift towards the largest cap names that have been out of favor for quite some time (ie. CSCO, ORCL, DELL, QCOM, etc … etc…)
As long as internals remain like this it is hard to not honor the uptrend we are still in off the lows.
Several names with bullish set ups (ie. big bases) within the NASDAQ 100 even beyond the names mentioned above are HSIC, ISRG, QCOM URBN and SRCL.
posted by Peter Greene
Why do we say this ? Well one only has to look at the internals yesterday where the NASDAQ scored an up to down volume ratio of 8.24:1 with over 4 stocks (4.22) advancing for every on that declined. Not to be out down the NYSE scored ratio's of 7.50 to 1 on up to down volume and also had over 4 stocks (4.18) advance for every on that declined. with ratio's like that it is hard to call the recent pullback anything other than that.
Tech remains the most attractive area of the market as its issues have the largest bases (ie. floors) from which to advance off of. Within tech we are seeing a shift towards the largest cap names that have been out of favor for quite some time (ie. CSCO, ORCL, DELL, QCOM, etc … etc…)
As long as internals remain like this it is hard to not honor the uptrend we are still in off the lows.
Several names with bullish set ups (ie. big bases) within the NASDAQ 100 even beyond the names mentioned above are HSIC, ISRG, QCOM URBN and SRCL.
posted by Peter Greene
Tuesday, June 23, 2009
S&P Morning note from the firm
As seen in the attached research note the S&P 500 ran into a significant downtrend line near 950 and has subsequently turned down. This area also represented the January 2009 peak before the index legged down to its’ lows. Given the S&P 500 had to rally almost 44 % before it hit this down trend it is only logical the index would stall here.
We would expect sideways and downward price movement with periodic minor rallies throughout the remainder of the summer, however we think for a while 950 will be the high price on the index, thus more defensive postures (ie. such as buying into corrections and selling the recovery bounces) and strategic trading is likely to make more sense than buying and being patient.
Additionally and as we mentioned yesterday as we enter the mid to latter summer seasonality trends also tend to become less bullish as the summer rally gets replaced by the summer doldrums. So the preponderance of evidence suggests continued softening is likely to occur for a while.
Only taking out the aforementioned resistance/downtrend line near 950 would change the picture from cautious to bullish.
posted by Peter Greene
We would expect sideways and downward price movement with periodic minor rallies throughout the remainder of the summer, however we think for a while 950 will be the high price on the index, thus more defensive postures (ie. such as buying into corrections and selling the recovery bounces) and strategic trading is likely to make more sense than buying and being patient.
Additionally and as we mentioned yesterday as we enter the mid to latter summer seasonality trends also tend to become less bullish as the summer rally gets replaced by the summer doldrums. So the preponderance of evidence suggests continued softening is likely to occur for a while.
Only taking out the aforementioned resistance/downtrend line near 950 would change the picture from cautious to bullish.
posted by Peter Greene
Tuesday, June 16, 2009
S&P Levels & Note from the firm
As seen in the attached report on the S&P 500, the index is stalling again and now turning down from the 950 area. Given the large run up off the lows this should not be a surprise to anyone to see the market starting to stall, pause or retrace. However just as the market bottomed and rallied in the face of bad news now we are getting the exact opposite where the news flow is improving or good and the market is selling off. It is this action of selling off on good or less than bad news that troubles us more than anything.
Early warnings of the loss of momentum can be traced back to early May when the S&P 500 broke below two faster accelerating trend lines and then subsequently failed to climb back above them. To keep things in context Monday’s action looks like a small blip so far, however we have to be aware that the S&P 500 has now failed on numerous attempts to get back above 950 and is now testing a less accelerated trend line while its RSI momentum diverges from price. Any movement below that aforementioned trend line level would suggest that market may want to test the next level of support below the market near 875.
At this point the low hanging fruit and easy money has been made and traders/investors need to be more selective while the market corrects the excesses of the run off the lows. It doesn’t mean money can’t be made on the long side or we have to have a full retest, it just means being patient and buying the next corrective wave may make more sense than chasing. To get a renewed bullish outlook 950 is going to need to be taking out on a solid upside breadth day (ie. good advance/decline and up to down volume ratios)
posted by Peter Greene
Early warnings of the loss of momentum can be traced back to early May when the S&P 500 broke below two faster accelerating trend lines and then subsequently failed to climb back above them. To keep things in context Monday’s action looks like a small blip so far, however we have to be aware that the S&P 500 has now failed on numerous attempts to get back above 950 and is now testing a less accelerated trend line while its RSI momentum diverges from price. Any movement below that aforementioned trend line level would suggest that market may want to test the next level of support below the market near 875.
At this point the low hanging fruit and easy money has been made and traders/investors need to be more selective while the market corrects the excesses of the run off the lows. It doesn’t mean money can’t be made on the long side or we have to have a full retest, it just means being patient and buying the next corrective wave may make more sense than chasing. To get a renewed bullish outlook 950 is going to need to be taking out on a solid upside breadth day (ie. good advance/decline and up to down volume ratios)
posted by Peter Greene
Monday, June 8, 2009
OMG- We knew Goverment control of pay was coming.
JUNE 5, 2009
White House Set to Appoint a Pay Czar
By DEBORAH SOLOMON
WASHINGTON -- The Obama administration plans to appoint a "Special Master for Compensation" to ensure that companies receiving federal bailout funds are abiding by executive-pay guidelines, according to people familiar with the matter.
The administration is expected to name Kenneth Feinberg, who oversaw the federal government's compensation fund for victims of the Sept. 11, 2001, terrorist attacks, to act as a pay czar for the Treasury Department, these people said.
View Full ImageAssociated Press
Kenneth Feinberg, who oversaw payouts to 9/11 victims, will keep tabs on executive pay at companies in bailout.
Mr. Feinberg's appointment could be announced as early as next week, when the administration is expected to release executive-compensation guidelines for firms receiving aid from the $700 billion Troubled Asset Relief Program. Those companies, which include banks, insurers and auto makers, are subject to a host of compensation restrictions imposed by the Bush and Obama administrations and by Congress.
Wall Street has been anxiously awaiting more details on how the rules will be applied. "The law is confusing and a bit ambiguous, and so we're looking for certainty as to how to structure pay incentives," said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a trade association.
The move comes amid a series of sometimes-overlapping efforts to curb pay at financial firms following perceived industry excesses that led to the lending boom and bust.
The Obama administration earlier this year issued guidelines that include limiting salary for top executives at some firms receiving TARP funds and requiring that additional pay be in the form of restricted stock, vesting only after the company repays its debt, with interest, to the government. Congress then chimed in with even tougher rules curbing bonuses for top earners at firms receiving TARP money. As part of that effort, lawmakers barred those firms from paying top earners bonuses that equal more than a third of their total compensation.
The White House has been wrestling with how to marry those two efforts, which in combination are more punitive than administration officials had intended.
The government is also pursuing a separate revamping of financial-sector rules that could change industry compensation practices more broadly. For instance, the Federal Reserve is considering rules that would curb banks' ability to pay employees in a way that would threaten the "safety and soundness" of the bank.
Mr. Feinberg is expected to focus on pay restrictions related to firms receiving TARP bailout funds, helping companies to interpret the rules and ensure that they are being followed.
For instance, companies have been confused about whether to pay 2008 bonuses, since restrictions on incentive pay didn't go into effect until early 2009. Some firms have made the payments while others have held off. Many firms are also unsure whether the "top earners" targeted by Congress include rank-and-file employees or just executives.
Journal Community
discuss
“ Obama is establishing a new cabinet of officials who are accountable only to him. This is an unprecedented power grab. ”— Kathryn Reagan
Mr. Feinberg will report to Treasury Secretary Timothy Geithner, but he is expected to have wide discretion on how the rules should be interpreted. Firms likely won't be able to appeal decisions that Mr. Feinberg makes to Mr. Geithner, according to people familiar with the matter.
Mr. Feinberg, founder and managing partner of the law firm Feinberg Rozen LLP, spent several years overseeing payouts totaling more than $7 billion to victims of the 9/11 attacks. He personally reviewed every claim, approving or denying awards and allocating sums to be paid out of the Treasury.
Write to Deborah Solomon at deborah.solomon@wsj.com
posted by Peter Greene
White House Set to Appoint a Pay Czar
By DEBORAH SOLOMON
WASHINGTON -- The Obama administration plans to appoint a "Special Master for Compensation" to ensure that companies receiving federal bailout funds are abiding by executive-pay guidelines, according to people familiar with the matter.
The administration is expected to name Kenneth Feinberg, who oversaw the federal government's compensation fund for victims of the Sept. 11, 2001, terrorist attacks, to act as a pay czar for the Treasury Department, these people said.
View Full ImageAssociated Press
Kenneth Feinberg, who oversaw payouts to 9/11 victims, will keep tabs on executive pay at companies in bailout.
Mr. Feinberg's appointment could be announced as early as next week, when the administration is expected to release executive-compensation guidelines for firms receiving aid from the $700 billion Troubled Asset Relief Program. Those companies, which include banks, insurers and auto makers, are subject to a host of compensation restrictions imposed by the Bush and Obama administrations and by Congress.
Wall Street has been anxiously awaiting more details on how the rules will be applied. "The law is confusing and a bit ambiguous, and so we're looking for certainty as to how to structure pay incentives," said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a trade association.
The move comes amid a series of sometimes-overlapping efforts to curb pay at financial firms following perceived industry excesses that led to the lending boom and bust.
The Obama administration earlier this year issued guidelines that include limiting salary for top executives at some firms receiving TARP funds and requiring that additional pay be in the form of restricted stock, vesting only after the company repays its debt, with interest, to the government. Congress then chimed in with even tougher rules curbing bonuses for top earners at firms receiving TARP money. As part of that effort, lawmakers barred those firms from paying top earners bonuses that equal more than a third of their total compensation.
The White House has been wrestling with how to marry those two efforts, which in combination are more punitive than administration officials had intended.
The government is also pursuing a separate revamping of financial-sector rules that could change industry compensation practices more broadly. For instance, the Federal Reserve is considering rules that would curb banks' ability to pay employees in a way that would threaten the "safety and soundness" of the bank.
Mr. Feinberg is expected to focus on pay restrictions related to firms receiving TARP bailout funds, helping companies to interpret the rules and ensure that they are being followed.
For instance, companies have been confused about whether to pay 2008 bonuses, since restrictions on incentive pay didn't go into effect until early 2009. Some firms have made the payments while others have held off. Many firms are also unsure whether the "top earners" targeted by Congress include rank-and-file employees or just executives.
Journal Community
discuss
“ Obama is establishing a new cabinet of officials who are accountable only to him. This is an unprecedented power grab. ”— Kathryn Reagan
Mr. Feinberg will report to Treasury Secretary Timothy Geithner, but he is expected to have wide discretion on how the rules should be interpreted. Firms likely won't be able to appeal decisions that Mr. Feinberg makes to Mr. Geithner, according to people familiar with the matter.
Mr. Feinberg, founder and managing partner of the law firm Feinberg Rozen LLP, spent several years overseeing payouts totaling more than $7 billion to victims of the 9/11 attacks. He personally reviewed every claim, approving or denying awards and allocating sums to be paid out of the Treasury.
Write to Deborah Solomon at deborah.solomon@wsj.com
posted by Peter Greene
Firm's morning comment
During the very early stages of this advance off the then lows we would watch how the markets reacted to negative news flow. We did this to gauge if all the bad news was already discounted into prices. And similar to many other lows in the past where bad news was widespread this tape also had its' share of scary headline news. And like other lows in the past this market also ignored the bad news every time it came out and managed to work higher. Since markets are a discounting mechanism they try to look ahead. Hence a few months back the markets were likely anticipating the not so bad economic data that we are now seeing. Thus Friday's bullish non-farm payroll actually led to a sell-off after the initial euphoria faded. This selling on good news was most likely because it was already anticipated. Now one day of selling into a rally on bullish news does not make a raging sell signal, however it should at very least make one start watching more closely to see if bullish news in the coming days and weeks leads to more of the same activity (ie. selling the good news) that we saw on Friday.At some point we are likely to get a testing sequence and selling the good news could be an early indication signal to take some chips off the table after a near 50% run off the lows.
posted by Peter Greene
posted by Peter Greene
Tuesday, June 2, 2009
S&P Levels-Post from firm
As seen in the attached pdf the S&P 500 broke back above its 200-day moving average yesterday. While this is more psychological than anything else it does suggest upward price momentum has been persistent, which is a more significant development. The next upside target for the S&P 500 comes into play at the 1,000 level while key downside support remains in the 875 area. As long as the 850 level is not violated the fears of a deep corrective wave remain off the table.
This current run up off the lows is very reminiscent of the run up off the late 2002/03 lows when breadth remained bullish for quite some time and powered stocks higher in rapid fashion without any significant pullbacks, even in with the back drop of periodic high bullish sentiment readings. So far the similarity between the 2002/03 rally and this current rally is the persistence of consistently strong internal readings. However this time around we have not had sentiment reading get bullish even in the face of a price melt up. In fact anecdotally sentiment remains extremely cautious, which is bullish and suggest under investment to equities still exists.
As long as sentiment remains cautious and tape action continues to strong through bullish advance to decline and up to down volume readings then the market can still work higher
posted by Peter Greene
Tuesday, May 26, 2009
: FusionIQ S&P 500 Equity Market Review for May 26th 2009
As seen in the attached research note the S&P 500 after stalling below resistance for much of May the S&P 500 has now slipped below its lower channel line and is testing price support again at the 875 level. If the 875 level is violated the market will become more defensive and expect selling to materialize quickly as traders will look to lock in remaining profits from this rally.
At this point we do believe any selling that materializes on a breaking of the aforementioned support zone would be fairly short-lived and the price drop relatively shallow (10 – 15 %). We further believe if this selling occurs it will be part of a market retesting phase and would set up another buying opportunity since there isn’t a lot of supply left after the near eight months of continuous selling that transpired from August 2008 into the March 2009 low.
Additionally momentum indicators such as the 21-day Rate of Change (ROC) which we mentioned in a recent S&P 500 Review is seeing the rate at which prices are accelerating slow rapidly when compared with the aggressive pace of acceleration seen in the beginning of the advance. This divergence between price and momentum can typically be a warning sign that a near-term trend change will take place.
Since we don’t believe this will be a large sell-off investors can play this potential corrective wave several ways; first, tighten trailing stops on profitable positions or offset long exposure by shorting an equal $ amount to your long exposure of a market ETF or buying an inverse market ETF, second sell all remaining long exposure and wait for a pullback to repurchase names at cheaper prices or last and for only the most aggressive investors sell all long exposure on a support level break and increase short exposure significantly by shorting a market ETF or buying an inverse market ETF (in this option keep stops and drawdown limits tight).
posted by Peter Greene
At this point we do believe any selling that materializes on a breaking of the aforementioned support zone would be fairly short-lived and the price drop relatively shallow (10 – 15 %). We further believe if this selling occurs it will be part of a market retesting phase and would set up another buying opportunity since there isn’t a lot of supply left after the near eight months of continuous selling that transpired from August 2008 into the March 2009 low.
Additionally momentum indicators such as the 21-day Rate of Change (ROC) which we mentioned in a recent S&P 500 Review is seeing the rate at which prices are accelerating slow rapidly when compared with the aggressive pace of acceleration seen in the beginning of the advance. This divergence between price and momentum can typically be a warning sign that a near-term trend change will take place.
Since we don’t believe this will be a large sell-off investors can play this potential corrective wave several ways; first, tighten trailing stops on profitable positions or offset long exposure by shorting an equal $ amount to your long exposure of a market ETF or buying an inverse market ETF, second sell all remaining long exposure and wait for a pullback to repurchase names at cheaper prices or last and for only the most aggressive investors sell all long exposure on a support level break and increase short exposure significantly by shorting a market ETF or buying an inverse market ETF (in this option keep stops and drawdown limits tight).
posted by Peter Greene
Wednesday, May 20, 2009
What Green Shoots?
Some Federal Reserve officials are open to raising the amounts of mortgage and Treasury securities purchase programs beyond the $1.75 trillion that they've already committed to buying, according to minutes from the Fed's April meeting.
Officials, meanwhile, projected an even deeper recession than they expected three months earlier and a more sluggish recovery over the next two years as labor markets remain under pressure. The unemployment rate is expected to end 2009 between 9.2% and 9.6%, and stay above 9% in 2010.
http://online.wsj.com/article/SB10001424052970203771904574177673022851160.html#mod=djemalertNEWS
posted by Peter Greene
Officials, meanwhile, projected an even deeper recession than they expected three months earlier and a more sluggish recovery over the next two years as labor markets remain under pressure. The unemployment rate is expected to end 2009 between 9.2% and 9.6%, and stay above 9% in 2010.
http://online.wsj.com/article/SB10001424052970203771904574177673022851160.html#mod=djemalertNEWS
posted by Peter Greene
Thursday, May 14, 2009
Nasdaq Levels and thoughts From Firm
As seen in the attached report on the NASDAQ 100 chart the index has rallied up to resistance the last few days and then sold off hard from that level. This would be a natural spot for the rally to stall/retrace after rallying 38% from its’ lows. Ultimately we think the index can work above this level after a good pullback/retracement of some magnitude. That said the next level of good support on the index is the 1,284 level. This level coincides with a Fibonacci retracement level as well as support from the earlier range breakout and would be a logical downside target and support level. Ultimately and only mentioned as a frame of reference, should we work eventually above yesterday’s resistance level the next target up would be 1,700, which would be a combination on a downtrend line and the next resistance zone. Though for now we are more concerned with the present which suggest we are in rally correction mode.
Certainly there was some conviction to the selling yesterday as down volume swamped up volume by a ratio of 27 to 1 and decliners bested advancers by a 6.2 to 1 ratio. For now the near-term trade direction is down until proven otherwise via internals improving dramatically and/or yesterday’s resistance being decidedly cleared.
Nimble traders can trade from the short side for a bit while others may want to use an index ETF to grab some temporary short exposure. Additionally for those who have substantial profits in names we would tighten up the stops.
posted by Peter Greene
Certainly there was some conviction to the selling yesterday as down volume swamped up volume by a ratio of 27 to 1 and decliners bested advancers by a 6.2 to 1 ratio. For now the near-term trade direction is down until proven otherwise via internals improving dramatically and/or yesterday’s resistance being decidedly cleared.
Nimble traders can trade from the short side for a bit while others may want to use an index ETF to grab some temporary short exposure. Additionally for those who have substantial profits in names we would tighten up the stops.
posted by Peter Greene
Monday, May 11, 2009
Monday firm morning comments
The market is a bit extended here without any pullback, however as our sentiment piece suggests liquidity remains favorable in terms of the intermediate to long term. So how one chooses to play this really is more about their trading/investment style.
There are several options; first for those who are more flexible they may choose to put on some short exposure by shorting some index ETF's (such as QQQQ or SPY) or buying some inverse leveraged index ETF's such as the QID (which have corrected from $71.00 down to $35.50 (at its recent low) without so much as even a bounce)
Second some others may just choose to ride out what may we believe at present to be a normal, healthy and needed pullback.
And last but not least some may use the weakness (should it materialize) as a buying opportunity.
In the words of famed market analyst Ralph Bloch, "If we could make the market do our bidding," we would prefer to buy some leveraged inverse index ETF's see a 5 - 7 % pullback then unwind those at a profit and then buy back into select longs for a move up to our 950 S&P 500 target.
However we know these dream trades where everything works out exactly as you plan don't unfold to often if ever lol !.
But for the record we like being pro-active with tight stops and after a 40% rally from the lows to have reduced long exposure hedged with some short exposure makes sense for the time being.
posted by Peter Greene
There are several options; first for those who are more flexible they may choose to put on some short exposure by shorting some index ETF's (such as QQQQ or SPY) or buying some inverse leveraged index ETF's such as the QID (which have corrected from $71.00 down to $35.50 (at its recent low) without so much as even a bounce)
Second some others may just choose to ride out what may we believe at present to be a normal, healthy and needed pullback.
And last but not least some may use the weakness (should it materialize) as a buying opportunity.
In the words of famed market analyst Ralph Bloch, "If we could make the market do our bidding," we would prefer to buy some leveraged inverse index ETF's see a 5 - 7 % pullback then unwind those at a profit and then buy back into select longs for a move up to our 950 S&P 500 target.
However we know these dream trades where everything works out exactly as you plan don't unfold to often if ever lol !.
But for the record we like being pro-active with tight stops and after a 40% rally from the lows to have reduced long exposure hedged with some short exposure makes sense for the time being.
posted by Peter Greene
Wednesday, May 6, 2009
Firm morning note
We continue to like the market action yesterday as dips continue to remain shallow and short-lived as buyers line up quickly on pullbacks to buy stocks. These shallow dips reinforce the idea that sellers are not to be found at present (most likely because most capitulated near the lows) and buy side liquidity remains strong. This morning US futures reversed nicely as the ADP payroll Employer service gauge a lower than expected number of workers cut from payrolls in April. It was the smallest drop in payroll cuts since October of 2008.
On the technical front the trend remains up and the S&P 500 broke above resistance near 878. Our next upside target it 950. Sentiment will be the key to determining when to make wholesale reductions in long exposure and right now though those indicators have moderated sentiment has not flashed a contrarian sell signal yet by being excessively bullish.
Please Check Page 2 for some recent shorter term trade ideas and returns...we added two trading names Tuesday
posted by Peter Greene
On the technical front the trend remains up and the S&P 500 broke above resistance near 878. Our next upside target it 950. Sentiment will be the key to determining when to make wholesale reductions in long exposure and right now though those indicators have moderated sentiment has not flashed a contrarian sell signal yet by being excessively bullish.
Please Check Page 2 for some recent shorter term trade ideas and returns...we added two trading names Tuesday
posted by Peter Greene
Tuesday, May 5, 2009
Ford and Renault to merge
RENAULT & FORD TO MERGE
Renault & Ford are working together to build a small car. They are using the Renault Clio & the Ford Taurus as a basis for the new
zippy little car, The "Clitaurus". The car comes in pink, with or without fur on the dash.
posted by Peter Greene
Renault & Ford are working together to build a small car. They are using the Renault Clio & the Ford Taurus as a basis for the new
zippy little car, The "Clitaurus". The car comes in pink, with or without fur on the dash.
posted by Peter Greene
Friday, April 24, 2009
Morning S&P firm comments
As seen the attached S&P 500 report is still below resistance at the 876 level having stalled there now on three separate occasions over the past three months. For prices to extend this rally that level needs to be taken out as it will show buyers are more aggressive and additionally comfortable with paying up for equities.
Volume on the S&P 500 is average and is reflective of indecision after the large rally. However, even with the market chopping around the last week and a half the S&P 500 still remains above its uptrend fan lines. The uptrend falling to the third fan line suggests while the market is moving higher its’ pace of ascent has slowed, which is not necessarily a bad thing. Only a moved back below the fourth fan line (Under 800) would suggest a retest was more likely rather than a rally extension.
On the sentiment front; the CBOE Total Equity/Index put to call ratio, the AAII Bearish Sentiment Survey and the VIX’s deviation from its 50-day moving average have all moderated from constructive levels to more neutral levels. This moderation is expected given the rally, however these indicators are not at levels that would suggest sentiment is overly bullish yet so at present these indicators are not flashing any sell signals.
posted by Peter Greene
Volume on the S&P 500 is average and is reflective of indecision after the large rally. However, even with the market chopping around the last week and a half the S&P 500 still remains above its uptrend fan lines. The uptrend falling to the third fan line suggests while the market is moving higher its’ pace of ascent has slowed, which is not necessarily a bad thing. Only a moved back below the fourth fan line (Under 800) would suggest a retest was more likely rather than a rally extension.
On the sentiment front; the CBOE Total Equity/Index put to call ratio, the AAII Bearish Sentiment Survey and the VIX’s deviation from its 50-day moving average have all moderated from constructive levels to more neutral levels. This moderation is expected given the rally, however these indicators are not at levels that would suggest sentiment is overly bullish yet so at present these indicators are not flashing any sell signals.
posted by Peter Greene
An easy way to understand the AIG Debacle..
Two couples were playing poker one evening. Jim accidentally
dropped some cards on the floor. When he bent down under the
table to pick them up, he noticed Bob's wife, Sue wasn't wearing
any underwear under her dress! Shocked by this, Jim upon trying
to sit back up again, hit his head on the table and emerged
red-faced.
Later, Jim went to the kitchen to get some refreshments.
Bob's wife followed and asked, 'Did you see anything that you
like under there?' Surprised by her boldness, Jim admitted that,
well indeed he did. She said, 'Well, you can have it but it
will cost you £500.' After taking a minute or two to assess the
financial and moral costs of this offer, Jim confirms that he is
interested.
Sue told him that since her husband Bob worked Friday afternoons
and Jim didn't, Jim should be at her house around 2 p.m. Friday
afternoon.
When Friday rolled around, Jim showed up at Bob's house at 2
p.m. sharp and after paying Sue the agreed sum of £500 - they
went to the bedroom and closed their transaction, as agreed. Jim
quickly dressed and left.
As usual, Bob came home from work at 6 p.m. And upon arriving,
asked his wife: 'Did Jim come by the house this afternoon?' With
a lump in her throat Sue answered 'Why yes, he did stop by for a
few minutes this afternoon.' Her heart nearly skipped a beat
when her husband curtly asked, 'And did he give you £500?' Sue,
using her best poker face, replied, 'Well, yes, in fact he did
give me £500.' Bob, with a relieved, satisfied look on his face,
surprised his wife by saying, 'He came by the office this
morning and borrowed £500 from me. He promised he'd stop by our
house this afternoon on his way home and pay the money back..
' As applied to the current financial crisis, the characters in
the above story are represented as follows:
Jim
= Goldman Sachs
Bob
= AIG
Sue
= US taxpayer
posted by Peter Greene
dropped some cards on the floor. When he bent down under the
table to pick them up, he noticed Bob's wife, Sue wasn't wearing
any underwear under her dress! Shocked by this, Jim upon trying
to sit back up again, hit his head on the table and emerged
red-faced.
Later, Jim went to the kitchen to get some refreshments.
Bob's wife followed and asked, 'Did you see anything that you
like under there?' Surprised by her boldness, Jim admitted that,
well indeed he did. She said, 'Well, you can have it but it
will cost you £500.' After taking a minute or two to assess the
financial and moral costs of this offer, Jim confirms that he is
interested.
Sue told him that since her husband Bob worked Friday afternoons
and Jim didn't, Jim should be at her house around 2 p.m. Friday
afternoon.
When Friday rolled around, Jim showed up at Bob's house at 2
p.m. sharp and after paying Sue the agreed sum of £500 - they
went to the bedroom and closed their transaction, as agreed. Jim
quickly dressed and left.
As usual, Bob came home from work at 6 p.m. And upon arriving,
asked his wife: 'Did Jim come by the house this afternoon?' With
a lump in her throat Sue answered 'Why yes, he did stop by for a
few minutes this afternoon.' Her heart nearly skipped a beat
when her husband curtly asked, 'And did he give you £500?' Sue,
using her best poker face, replied, 'Well, yes, in fact he did
give me £500.' Bob, with a relieved, satisfied look on his face,
surprised his wife by saying, 'He came by the office this
morning and borrowed £500 from me. He promised he'd stop by our
house this afternoon on his way home and pay the money back..
' As applied to the current financial crisis, the characters in
the above story are represented as follows:
Jim
= Goldman Sachs
Bob
= AIG
Sue
= US taxpayer
posted by Peter Greene
4-23 post market comments from firm
The S&P 500 slipped back intra-day but still managed to move back into positive territory. So far, ex the sell off on March 20th, the tape has not stayed negative for long when it does move down. We suggest these draw downs have been relatively shallow because sideline liquidity (even after the large rally over the past 30 days) still remains robust. As long as the skew of decliners to advancers and down volume to up volume remain in check the this tape isn't in any serious danger of correcting aggressively.
Below current prices on the S&P 500 there are several support levels with 825 and 814 being the two of closest proximity, while 877 is the upside resistance area the S&P needs to move above to extend the rally.
Sentiment remains neutral but is less constructive than say 30 days ago. We reiterate that techs have the best basing and chart patterns of all market sectors.
EBAY is one name that scored a bullish gap today and on pullbacks looks capable of working higher as the company reported better than expected results and is spinning out its Skype division and refocusing back on the core business.
We will post a list of constructive charts in a pdf for tomorrow morning along with a few new research reports.
Also of note DV shares are very close to breaking critical support near $ 40.00. We highlighted this chart yesterday and shares were down over $ 2.00 today.
Stay tuned ...
posted by Peter Greene
Below current prices on the S&P 500 there are several support levels with 825 and 814 being the two of closest proximity, while 877 is the upside resistance area the S&P needs to move above to extend the rally.
Sentiment remains neutral but is less constructive than say 30 days ago. We reiterate that techs have the best basing and chart patterns of all market sectors.
EBAY is one name that scored a bullish gap today and on pullbacks looks capable of working higher as the company reported better than expected results and is spinning out its Skype division and refocusing back on the core business.
We will post a list of constructive charts in a pdf for tomorrow morning along with a few new research reports.
Also of note DV shares are very close to breaking critical support near $ 40.00. We highlighted this chart yesterday and shares were down over $ 2.00 today.
Stay tuned ...
posted by Peter Greene
Monday, April 20, 2009
S&P thoughts from firm
As seen above, the S&P 500 ran into another spot of resistance (orange lines and purple arrows) at the
875 level. The index still remains above its’ up trend line (green dotted lines), though a trend line that is
less accelerating in nature. A close back below the 850 level is likely put the market on the defensive a bit. On a
violation of 850 the market may look to stabilize at the 825 level, which would be a test of the recently broken
downtrend line (red line).
Volume was better on Friday, however the CBOE Total Equity/Index Put to Call Ratio (not seen here)
slipped back under 0.72. Typically levels near or below 0.70 are short-term negatives. Additionally the AAII
Bearish Sentiment Survey has seen the number of bear’s contract from 70% just 5 weeks back to 35.86% in the most
recent survey. Given the contraction in bears and put/call we would expect some softness to work into the market in
the next few days.
Unlike just several months ago where all stocks were correlated with the market, many stocks are now
not correlated. Thus there is no reason to indiscriminately sell stocks across the board just because the
market may weaken a bit. We would apply unique risk management techniques to each of your names and let
them be taken out (ie. stopped to cash) or not naturally.
posted by Peter Greene
875 level. The index still remains above its’ up trend line (green dotted lines), though a trend line that is
less accelerating in nature. A close back below the 850 level is likely put the market on the defensive a bit. On a
violation of 850 the market may look to stabilize at the 825 level, which would be a test of the recently broken
downtrend line (red line).
Volume was better on Friday, however the CBOE Total Equity/Index Put to Call Ratio (not seen here)
slipped back under 0.72. Typically levels near or below 0.70 are short-term negatives. Additionally the AAII
Bearish Sentiment Survey has seen the number of bear’s contract from 70% just 5 weeks back to 35.86% in the most
recent survey. Given the contraction in bears and put/call we would expect some softness to work into the market in
the next few days.
Unlike just several months ago where all stocks were correlated with the market, many stocks are now
not correlated. Thus there is no reason to indiscriminately sell stocks across the board just because the
market may weaken a bit. We would apply unique risk management techniques to each of your names and let
them be taken out (ie. stopped to cash) or not naturally.
posted by Peter Greene
Thursday, April 16, 2009
s&p Levels
The S&P 500’s minor trend is still moving up within the confines of an up sloping trend channel. Only a close below 835 would violate the lower channel line and put a corrective wave on the table. That said until such an event occurs we have to respect the trend is still up and its upper target of 935 is still the projected forecast.
For the time being dips are still being bought, which suggests liquidity is still ample. We would continue holding long bias with protective trailing stops. Volume trends, while moderating, remain strong enough to maintain upward prices given selling resistance is minimal after six months of continuous distribution prior to this advance.
The combination of deeply oversold conditions resolving themselves with a back drop of strong liquidity continues to be the overriding market theme still. We believe monitoring sentiment will be the best way to determine when the advance may stall and at present sentiment is a neutral factor not a negative one.
posted by Peter Greene
For the time being dips are still being bought, which suggests liquidity is still ample. We would continue holding long bias with protective trailing stops. Volume trends, while moderating, remain strong enough to maintain upward prices given selling resistance is minimal after six months of continuous distribution prior to this advance.
The combination of deeply oversold conditions resolving themselves with a back drop of strong liquidity continues to be the overriding market theme still. We believe monitoring sentiment will be the best way to determine when the advance may stall and at present sentiment is a neutral factor not a negative one.
posted by Peter Greene
Wednesday, April 15, 2009
Why you never Question a Drunk
Why you never Question a Drunk
I was shopping at the local supermarket the other day where I selected:
A half-gallon of 2% milk
A carton of eggs
A quart of orange juice
A head of lettuce
A 2 lb. can of coffee
A 1 lb. package of bacon
As I was unloading my items on the conveyor belt to check out, a drunk
standing behind me watched as I placed the items in front of the cashier.
While the cashier was ringing up the purchases, the drunk calmly stated,
"You must be single."
I was a bit startled by this proclamation, but I was intrigued by the
derelict's intuition, since I was indeed single.
I looked at the six items on the belt and saw nothing particularly unusual
about my selections that could have tipped off the drunk to my marital
status.
Curiosity getting the better of me, I said:
"Well, you know what, you're absolutely right. But how on earth did you
know that? "
The drunk replied, "Cause you're ugly."
posted by Peter Greene
I was shopping at the local supermarket the other day where I selected:
A half-gallon of 2% milk
A carton of eggs
A quart of orange juice
A head of lettuce
A 2 lb. can of coffee
A 1 lb. package of bacon
As I was unloading my items on the conveyor belt to check out, a drunk
standing behind me watched as I placed the items in front of the cashier.
While the cashier was ringing up the purchases, the drunk calmly stated,
"You must be single."
I was a bit startled by this proclamation, but I was intrigued by the
derelict's intuition, since I was indeed single.
I looked at the six items on the belt and saw nothing particularly unusual
about my selections that could have tipped off the drunk to my marital
status.
Curiosity getting the better of me, I said:
"Well, you know what, you're absolutely right. But how on earth did you
know that? "
The drunk replied, "Cause you're ugly."
posted by Peter Greene
Tuesday, April 14, 2009
Firm's morning note
the S&P 500 is well above its’ intermediate term down trend line and still within the confines of an upward sloping price channel. Both of these are positive conditions. However, the index is currently stuck in a bit of a resistance zone with the 873 level coinciding with a 2/3rds retracement of the last peak to trough sell off. Since the whole crystal ball thing is a scam (Lol !) trialing stops and risk management techniques give investors the best ability to do the following here; patient here, keep the upside potential of the market (should it keep rallying) and also lock in gains in the event the market stalls here.
Volume has moderated at present S&P 500 levels, which while not alarming, suggests buyers are being more discriminating and patient about new purchases (versus say just 2 weeks ago). The CBOE Total Equity/Index Put to Call Ratio (not seen in this report) has slipped to under 0.70, typically a short-term negative. Near term these resistance areas may present a minor challenge to overcome, particularly with the CBOE Total Equity/Index Put/Call ratio so low. We would watch closely here how stock’s trade today/tomorrow on this Goldman news to repay TARP. Part of the rally the past few weeks, in addition to other factors, may have been predicated on select investors catching early wind of Wells Fargo’s (WFC) strong quarter as well as Goldman’s (GS) and positioning ahead of it.
Best.
Kevin Lane
FusionIQ
posted by Peter Greene
Volume has moderated at present S&P 500 levels, which while not alarming, suggests buyers are being more discriminating and patient about new purchases (versus say just 2 weeks ago). The CBOE Total Equity/Index Put to Call Ratio (not seen in this report) has slipped to under 0.70, typically a short-term negative. Near term these resistance areas may present a minor challenge to overcome, particularly with the CBOE Total Equity/Index Put/Call ratio so low. We would watch closely here how stock’s trade today/tomorrow on this Goldman news to repay TARP. Part of the rally the past few weeks, in addition to other factors, may have been predicated on select investors catching early wind of Wells Fargo’s (WFC) strong quarter as well as Goldman’s (GS) and positioning ahead of it.
Best.
Kevin Lane
FusionIQ
posted by Peter Greene
Monday, April 13, 2009
Market note from Firm
Another stellar day for the markets on Thursday as up to down volume ratios on the NASDAQ and NYSE were 12.36 to 1 and 14.78 to 1 respectively, while their advance to decline ratios were also correspondingly bullish at 5.10 to 1 and 7.28 to 1 respectively. We always say these metrics are the best gauges of confidence and conviction behind the markets move and help to better handicap a rally's likely staying power as it reflects more participation and commitment by the market largest aggregate buyers; institutions. When a market is up but these metrics aren't as positively skewed it is typically more a sign of short covering, which is not a long lasting liquidity event (buying) to drives stocks markedly higher. However days with internal readings like today's or the ones we highlighted back in early March (when the index was about 17+ % lower than today's close) are signs of significant buying and commitment which suggest a good (i.e. durable) rally is at hand.
For the last few days we have been saying the obvious and easy call was to say the market would stall as the S&P 500 approached resistance. From a common sense as well as a technical perspective even we had to respect that this resistance may be a factor after a 26 % gain from the lows. Playing devil’s advocate in our head and knowing nothing is certain or has to act a certain way we did hold out an alternative and equally likely thesis; a continuation of the rally. We also suggested several blueprints on how to navigate this call of stall or rally.
We suggested that being prepared and then executing a game plan makes one less emotional and makes for better results. Along the vein of being open to the idea that the game changes constantly and like a good coach, a trader/investor needs to adapt (or change) their game plan as new wrinkles occur. In this case the wrinkle was the market could possible move higher and evidence was growing to suggest that.
That evidence we suggested that was altering the original game plan of a likely stall near 850 (after we suggested investor investors buy just above S&P 500 @ 700) was growing anecdotal observations of everyone echoing disbelief in this rally's staying power. We suggested it was pervasive and growing louder and as more and more naysayers and doubters said things such as; "I am in cash and can sleep." or my favourite "I am not worried that I am missing this up move it's not a real move." Pardon my naiveté (Lol !), but the last time I checked a 26+ % rally in several weeks is pretty damn real.
Hearing those "safe in cash" comments now, not after the first 20% or 30 % correction but after a 50 % correction from the peak then adding to the equation negative sentiment towards equities, individual investors and fund managers with lots of cash on the sidelines, a ton of bad news discounted into prices and a global push to aggressively stimulate it made for a pretty compelling backdrop to buy stocks (if not for the long haul at least for a good cyclical rally).
As further supportive evidence to a rally extension theme being likely Thursday we highlighted (see our Sentiment Note under the Research tab then select US Equity Review) that sentiment had not become excessively bullish yet (typically a rally killer) even after the aggressive move off the lows. Therefore we suggested stocks weren't in danger because liquidity (buying power) was not tapped out yet.
Techs, high beta and growth style investing outpaced the market today and continue to be the place and style bias producing the best returns.
Kevin Lane
posted by Peter Greene
For the last few days we have been saying the obvious and easy call was to say the market would stall as the S&P 500 approached resistance. From a common sense as well as a technical perspective even we had to respect that this resistance may be a factor after a 26 % gain from the lows. Playing devil’s advocate in our head and knowing nothing is certain or has to act a certain way we did hold out an alternative and equally likely thesis; a continuation of the rally. We also suggested several blueprints on how to navigate this call of stall or rally.
We suggested that being prepared and then executing a game plan makes one less emotional and makes for better results. Along the vein of being open to the idea that the game changes constantly and like a good coach, a trader/investor needs to adapt (or change) their game plan as new wrinkles occur. In this case the wrinkle was the market could possible move higher and evidence was growing to suggest that.
That evidence we suggested that was altering the original game plan of a likely stall near 850 (after we suggested investor investors buy just above S&P 500 @ 700) was growing anecdotal observations of everyone echoing disbelief in this rally's staying power. We suggested it was pervasive and growing louder and as more and more naysayers and doubters said things such as; "I am in cash and can sleep." or my favourite "I am not worried that I am missing this up move it's not a real move." Pardon my naiveté (Lol !), but the last time I checked a 26+ % rally in several weeks is pretty damn real.
Hearing those "safe in cash" comments now, not after the first 20% or 30 % correction but after a 50 % correction from the peak then adding to the equation negative sentiment towards equities, individual investors and fund managers with lots of cash on the sidelines, a ton of bad news discounted into prices and a global push to aggressively stimulate it made for a pretty compelling backdrop to buy stocks (if not for the long haul at least for a good cyclical rally).
As further supportive evidence to a rally extension theme being likely Thursday we highlighted (see our Sentiment Note under the Research tab then select US Equity Review) that sentiment had not become excessively bullish yet (typically a rally killer) even after the aggressive move off the lows. Therefore we suggested stocks weren't in danger because liquidity (buying power) was not tapped out yet.
Techs, high beta and growth style investing outpaced the market today and continue to be the place and style bias producing the best returns.
Kevin Lane
posted by Peter Greene
Wednesday, April 8, 2009
S&P note from this am
Not much new on the S&P 500 ...
As seen in the attached research note over the last few days we suggested and then watched the market stall (Monday), then get pushed back down off resistance (Tuesday) near 850. My astute trader suggested after the close we may still be in a bearish down sloping trend channel. While it is true the S&P 500 is currently locked in this down channel the jury is still out on whether or not it can break above the upper channel line before testing the lower. If we do indeed test the lower channel line it would undercut the current bear market low. Conversely a move beyond the April 2nd high would restore the bullish trajectory of the current rally.
posted by Peter Greene
As seen in the attached research note over the last few days we suggested and then watched the market stall (Monday), then get pushed back down off resistance (Tuesday) near 850. My astute trader suggested after the close we may still be in a bearish down sloping trend channel. While it is true the S&P 500 is currently locked in this down channel the jury is still out on whether or not it can break above the upper channel line before testing the lower. If we do indeed test the lower channel line it would undercut the current bear market low. Conversely a move beyond the April 2nd high would restore the bullish trajectory of the current rally.
posted by Peter Greene
Nasdaq 100 levels and note
As the year to date return numbers indicate the NASDAQ down only - 0.98 % through 4/7/09 versus the S&P 500 down - 9.71 % (same time frame) acts better than the rest of the market.
From a technical perspective we see this same outperformance with the NASDAQ 100 retesting and holding in line with its’ November lows, scoring a minor double bottom, while at the same time the S&P 500 dropped to new lows.
Similar to the S&P 500 we view the current action in the NASDAQ 100 as a pause/consolidation. This would only change if market internal skews got more negative and more persistent. So like the S&P 500, we would watch the NDX over the next few sessions and track the skew of decliners to advancers and down to up volume. As long as we don’t get ratios of 5 to 1 or better on both indicators then the likelihood of a deep retest becomes lessened. Below we look at a 31-day chart of the NASDAQ 100 for micro levels of support.
So the NASDAQ 100 is pretty cut and dry, the tone remains bullish and this only changes if the double bottom lows near 1,050 are broken.
posted by Peter Greene
From a technical perspective we see this same outperformance with the NASDAQ 100 retesting and holding in line with its’ November lows, scoring a minor double bottom, while at the same time the S&P 500 dropped to new lows.
Similar to the S&P 500 we view the current action in the NASDAQ 100 as a pause/consolidation. This would only change if market internal skews got more negative and more persistent. So like the S&P 500, we would watch the NDX over the next few sessions and track the skew of decliners to advancers and down to up volume. As long as we don’t get ratios of 5 to 1 or better on both indicators then the likelihood of a deep retest becomes lessened. Below we look at a 31-day chart of the NASDAQ 100 for micro levels of support.
So the NASDAQ 100 is pretty cut and dry, the tone remains bullish and this only changes if the double bottom lows near 1,050 are broken.
posted by Peter Greene
4/7 post market note
From the firm, here is last nights post
After stalling yesterday and rallying back some today the market pushed downward, deeper from resistance near 850. I am sure the media will cite Soros calling this a bear market rally or Marc Faber calling for a 10 % correction or Citigroup's Chief Strategist saying to be underweight U.S. equities. For the first two gents I wonder if their funds are currently short and they are trying to jawbone the market in their direction … shocking thought I know lol ! … As for the Citigroup chap thanks for the underweight US equities recommendation after a 50+ % two year thrashing ... nice timing !
Anyway as those of us who follow unbiased market evidence we know the following; the market rallied 27.00 % and slammed into stiff resistance. Clearly this is the more likely reason we witnessed some profit taking/selling interest the last few days. But that wouldn't be sexy enough to say on TV I guess.
Realistically it is too premature to call it a new bull market given the macro landscape, conversely it is probably too premature to say this rally is done/over as well. Remember it is not the point drop (or gain) that matters, rather how they go up or down (internals) that counts. That said while internals were skewed negatively today they weren't nearly as negatively skewed as the positive skew we saw in Mid March which catapulted this current rally. So while there has been some selling of late, the buyers still have control at this point.
In tomorrow's S&P 500 and NASDAQ 100 notes we will look at levels of downside support on the two indices.
If today's action was unsettling we suggest revisiting yesterday's S&P 500 note where we suggested several tactical trading strategies to remove the emotion such as locking in some gains or set trailing risk stops. Being prepared is what makes one comfortable with risk as well as reward. Its' when you don’t lay out a game plan that emotion creeps in and you end up reacting (as opposed to being proactive) and watch like a deer in headlights that you should worry.
FusionIQ
Kevin Lane
posted by Peter Greene
After stalling yesterday and rallying back some today the market pushed downward, deeper from resistance near 850. I am sure the media will cite Soros calling this a bear market rally or Marc Faber calling for a 10 % correction or Citigroup's Chief Strategist saying to be underweight U.S. equities. For the first two gents I wonder if their funds are currently short and they are trying to jawbone the market in their direction … shocking thought I know lol ! … As for the Citigroup chap thanks for the underweight US equities recommendation after a 50+ % two year thrashing ... nice timing !
Anyway as those of us who follow unbiased market evidence we know the following; the market rallied 27.00 % and slammed into stiff resistance. Clearly this is the more likely reason we witnessed some profit taking/selling interest the last few days. But that wouldn't be sexy enough to say on TV I guess.
Realistically it is too premature to call it a new bull market given the macro landscape, conversely it is probably too premature to say this rally is done/over as well. Remember it is not the point drop (or gain) that matters, rather how they go up or down (internals) that counts. That said while internals were skewed negatively today they weren't nearly as negatively skewed as the positive skew we saw in Mid March which catapulted this current rally. So while there has been some selling of late, the buyers still have control at this point.
In tomorrow's S&P 500 and NASDAQ 100 notes we will look at levels of downside support on the two indices.
If today's action was unsettling we suggest revisiting yesterday's S&P 500 note where we suggested several tactical trading strategies to remove the emotion such as locking in some gains or set trailing risk stops. Being prepared is what makes one comfortable with risk as well as reward. Its' when you don’t lay out a game plan that emotion creeps in and you end up reacting (as opposed to being proactive) and watch like a deer in headlights that you should worry.
FusionIQ
Kevin Lane
posted by Peter Greene
Monday, April 6, 2009
Post Market Comments
Unlike the market of months past, where stocks rallied and the sellers quickly materialized to push stocks lower, we are now seeing the exact opposite for the last several weeks as buyers emerge very quickly on dips to push stocks up. This suggest liquidity on the part of buyers remains robust. As we said in this morning’s S&P 500 note many investors we met on our recent west coast trip echoed sentiment such as "glad to be in cash" or "I don't feel like I am missing much not partaking in this rally."
While observed sentiment should never override objective technical indicator evidence there is some value when you open your ears and listen to what perceived novice investors are saying. For instance on the way down I heard many comments such as "this is the bottom" as we dropped lower and lower. Finally at the real lows the constant chorus of "This is the bottom choruses" completely dried up and we really were at the bottom !! So now to hear it is almost a foregone conclusion by many that this rally is not real and the McClellan Oscillator is so overbought that the market has to go done. Love that one every time I have ever said in my career the market "has to do something" like clockwork it never complies.
My point is although it is logical to look at a big rally and an overbought technical condition while running into resistance as a good stalling/selling point, it is not set in stone that it will work. Like any battle/sporting event you have to game plan and reassess strategies as events unfold. As I suggested in today's S&P 500 note there are several strategies that may work in case this market works higher though resistance (and again given that observed sentiment thinks this rally is done, I am leaning towards we may go a tad higher).
One strategy is to make strategic trims (reduce exposure), the second and my favorite is to remains fully invested with trailing stops set on lower cost basis positions (this give you the upside if the market continues higher but also takes you out and locks in profit if in fact we go lower on a re-test scenario) and the last scenario combines making strategic trims and holding a portion of the portfolio with stop losses then if we break above resistance moving back into names trimmed to remain invested. The idea is to pick a strategy your comfortable with, remove the emotion and then have a contingency plan should the market move unexpectedly in a direction you hadn't anticipated.
Kevin P. Lane
posted by Peter Greene
While observed sentiment should never override objective technical indicator evidence there is some value when you open your ears and listen to what perceived novice investors are saying. For instance on the way down I heard many comments such as "this is the bottom" as we dropped lower and lower. Finally at the real lows the constant chorus of "This is the bottom choruses" completely dried up and we really were at the bottom !! So now to hear it is almost a foregone conclusion by many that this rally is not real and the McClellan Oscillator is so overbought that the market has to go done. Love that one every time I have ever said in my career the market "has to do something" like clockwork it never complies.
My point is although it is logical to look at a big rally and an overbought technical condition while running into resistance as a good stalling/selling point, it is not set in stone that it will work. Like any battle/sporting event you have to game plan and reassess strategies as events unfold. As I suggested in today's S&P 500 note there are several strategies that may work in case this market works higher though resistance (and again given that observed sentiment thinks this rally is done, I am leaning towards we may go a tad higher).
One strategy is to make strategic trims (reduce exposure), the second and my favorite is to remains fully invested with trailing stops set on lower cost basis positions (this give you the upside if the market continues higher but also takes you out and locks in profit if in fact we go lower on a re-test scenario) and the last scenario combines making strategic trims and holding a portion of the portfolio with stop losses then if we break above resistance moving back into names trimmed to remain invested. The idea is to pick a strategy your comfortable with, remove the emotion and then have a contingency plan should the market move unexpectedly in a direction you hadn't anticipated.
Kevin P. Lane
posted by Peter Greene
S&P levels from firm this am
The S&P 500 is rallying back into its’ upper resistance zone and minor downtrend line ... The market has now moved 26.37 % off the intraday low set on March 6th 2009. The easy call here is to say, “ Sell everything and lock in the gains from this trading rally and wait for a re-test then buy back in ! ” However as we all know the easy calls are the ones that are so obvious they never seem to work out. As the old traders saying goes, “ The market is here to reward the minority and confound the majority. ” After meeting a lot of investors recently in meetings many feel and I quote “ Safe ” in cash and also “ Do not mind having missed this move.” So anecdotal sentiment observations are this rally is not real. When I hear that from a lot of people it makes me think resistance or not we may have a shot to work higher still. That said we explore a few charts to gain more perspective.
As you will see in the attached research report the S&P 500 is at its’ minor downtrend line as well as its’ upper resistance level near 850. Support and resistance, while not an exact science, do provide us back drops as to where markets are likely to stall or bounce. However when looking at support and resistance one must gauge what buying (and selling) power look like to give them an idea of whether those support(s) or resistance areas are likely to hold. Right now liquidity is strong as evidenced several times of late by the market dipping and roaring back. So while the market could stall here near 850, if liquidity is strong it could pop up to 881, the first Fibonacci retracement level from the 2007 highs to 2009 lows.
posted by Peter Greene
As you will see in the attached research report the S&P 500 is at its’ minor downtrend line as well as its’ upper resistance level near 850. Support and resistance, while not an exact science, do provide us back drops as to where markets are likely to stall or bounce. However when looking at support and resistance one must gauge what buying (and selling) power look like to give them an idea of whether those support(s) or resistance areas are likely to hold. Right now liquidity is strong as evidenced several times of late by the market dipping and roaring back. So while the market could stall here near 850, if liquidity is strong it could pop up to 881, the first Fibonacci retracement level from the 2007 highs to 2009 lows.
posted by Peter Greene
Quick thought on mkt right now.
This 850 level in the S&P is a level that the market has been bumping up to, as you saw in the piece Kevin put out this morning. For a trading account in cash I would hold off until we broke above that level with real volume. With a tight stop.
The scary thing is that there is so much money on the sidelines (institutional as well as the Fed keeping rated at 0 ) this along with the Obama stimulus + budget spending + TARP, TELP, TARP II etc (whether you agree or not with the policies) cannot be ignored. If we do get some bad earning to suppress the market it will not stay low too long- We would still love to see the massive selling to "call the bottom", but after a long recession and the indices still down 40ish% many people have given up already.
posted by Peter Greene
The scary thing is that there is so much money on the sidelines (institutional as well as the Fed keeping rated at 0 ) this along with the Obama stimulus + budget spending + TARP, TELP, TARP II etc (whether you agree or not with the policies) cannot be ignored. If we do get some bad earning to suppress the market it will not stay low too long- We would still love to see the massive selling to "call the bottom", but after a long recession and the indices still down 40ish% many people have given up already.
posted by Peter Greene
Wednesday, April 1, 2009
The Quiet Coup
Good article on The US financial crisis. A big long but really worth the read...
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.
http://www.theatlantic.com/doc/200905/imf-advice
posted by Peter Greene
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.
http://www.theatlantic.com/doc/200905/imf-advice
posted by Peter Greene
Monday, March 30, 2009
New Govt program to Save Most Important Industry
This is an urgent request; since the government has made it their policy to inject endless gobs of cash in industries and companies that they decide as 'too big to fail" OR "too important, and must be saved" I have finally found the groups that must be saved at all costs, even if it means the end of TARP, TELP, TARP II, etc...
The industry I'm talking about is so important, has been an intricate part of America, and the advancement on the whole world. The industry is so interwoven with others; and yes it will lead to saving a few others as well. But, is not the growth of America worth it? Shouldn't we do our best to save the companies that built the middle class, the ones that brought people together and moved us to the industrial giant we are today? There is NO price too high, we must save America...
The industry I speak of is of course the wagon wheel makers. The makers of wagon wheels are specialist and it is not the unskilled labour jobs that will replace them like working at Walgreens or Wendy's. These companies spend a lot of capital to acquire their materials and the other industries that depend on them is nothing short of a long list of pro-American companies.
If we dare to let the Wagon Wheel makers go out of business the ripples in the economy will be felt for a long, long time. Can you even image what can happen?
posted by Peter Greene
The industry I'm talking about is so important, has been an intricate part of America, and the advancement on the whole world. The industry is so interwoven with others; and yes it will lead to saving a few others as well. But, is not the growth of America worth it? Shouldn't we do our best to save the companies that built the middle class, the ones that brought people together and moved us to the industrial giant we are today? There is NO price too high, we must save America...
The industry I speak of is of course the wagon wheel makers. The makers of wagon wheels are specialist and it is not the unskilled labour jobs that will replace them like working at Walgreens or Wendy's. These companies spend a lot of capital to acquire their materials and the other industries that depend on them is nothing short of a long list of pro-American companies.
If we dare to let the Wagon Wheel makers go out of business the ripples in the economy will be felt for a long, long time. Can you even image what can happen?
- First we would lose the Wagon Wheel companies and all their skilled labour out on the streets
- Second, The The Covered Wagon makers from St. Louis to Armadillo would have to shut their doors in a matter of weeks from lack of inventory---all those workers then laid off (NOTE: need more unemployment benefits).
- Third, all of the other suppliers of parts to the covered wagons would stop production because of lack of orders.
- Fourth, The great wagon trains would come to an end. The United States would be a group of isolated areas with very little traveling-
- Fifth, the social havoc that would come next from all those guys named "Cookie" no longer on the trail hanging around living off government assistance.
- Sixth, with no travel by covered wagon we would have no need for frontier towns, gold rush or even the Internet (since we would just be hanging around with no mobility).
- Seventh, the end of the Wagon Wheel Coffee Tables- Without them more marriages would not end in divorce -no need for lawyers (a whole different profession touched by this madness.
- Eighth, Probably the most important industry in the country, one that must never be allowed to fail- The Buggy Whip Makers- will no longer be needed...THIS CAN NOT HAPPEN. Can you imagine a county without Buggy Whip Makers on every corner?
There are countless other industries and parts of the society that will be destroyed as so many groups are on the spokes of the Wagon Wheeler Makers. It is not an understatement to say without these Wagon Wheeler Makers the Country will stop moving forward- a new dark age may come about---your grandchildren will not forgive you if you let them go under and then they are stuck trying to find some solution in their generation.
Please stop the madness and demand that the President Obama and the US Congress nationalize the Wagon Wheel Industry to save us all..
posted by Peter Greene
GM under White House Control
So this weekend the Obama administration took over GM now Government Motors. They will say that they are just giving a few suggestions in order for the company to receive government loan (or bailout I don't know what word they are using today) for what the 2nd or 3rd time in as many months. These types of loans and rules that go with them are normal--IF they come from PRIVATE investors. Now the US Government is the number 1 investor in our companies.
This is a total socialist takeover of private companies, nothing less. I am not some nut screaming against government assistance, for example the FDIC insurance or SEC oversight of companies, or thinking that no rules are needed to keep the playing field level and fair. Heck, that is what I'm asking for -a level playing field. We have lost that now, we have new rules- some companies are "Too Big To Fail" or are too important as a manufacturing through back--this is not a level field of play. It is not capitalism that we have in the United States of America. This nation is the greatest because we all have the same opportunity, not a guarantee...to play favourites is total socialism-if you are on the list of the powerful government you are saved no matter what, if you are not on that list you die...
If GM or Chrysler or the banks can't find investors to back their plans then they need to re-organize, merge or perish...OMG, yes some companies go out of business or evolve. When this happens other small businesses with better ideas, products or way of marketing come along and fill in the gaps left. The problem is everyone things things happen in 24 hour news cycles. Get over it and let the capitalist system that built this country live.
How many people have bitched for years that the big auto companies kept the ideas of electric or some other alternative fuels cars from the public-now we want to save them?
There are a bunch of Buggy Whip makers heading to Washington this morning to get their bail out next!
posted by Peter Greene
This is a total socialist takeover of private companies, nothing less. I am not some nut screaming against government assistance, for example the FDIC insurance or SEC oversight of companies, or thinking that no rules are needed to keep the playing field level and fair. Heck, that is what I'm asking for -a level playing field. We have lost that now, we have new rules- some companies are "Too Big To Fail" or are too important as a manufacturing through back--this is not a level field of play. It is not capitalism that we have in the United States of America. This nation is the greatest because we all have the same opportunity, not a guarantee...to play favourites is total socialism-if you are on the list of the powerful government you are saved no matter what, if you are not on that list you die...
If GM or Chrysler or the banks can't find investors to back their plans then they need to re-organize, merge or perish...OMG, yes some companies go out of business or evolve. When this happens other small businesses with better ideas, products or way of marketing come along and fill in the gaps left. The problem is everyone things things happen in 24 hour news cycles. Get over it and let the capitalist system that built this country live.
How many people have bitched for years that the big auto companies kept the ideas of electric or some other alternative fuels cars from the public-now we want to save them?
There are a bunch of Buggy Whip makers heading to Washington this morning to get their bail out next!
posted by Peter Greene
Friday, March 27, 2009
Firm morning comments 3/27
Not much to say today that hasn't been said the last few days (ie. running into resistance and make strategic trims). Futures are down this AM after the market slammed up into the resistance areas yesterday that we had highlighted in our S&P 500 notes the last few days.We don't expect a deep, deep correction yet and expect the market once it pulls back enough (we will do an S&P 500 report for Monday to highlight levels traders may want to dip their toe back in on the long side) to make another attempt at this resistance level.If this second attempt fails then one could expect a deeper retesting sequence. However we would bet the market will set a higher low and do it on less downside momentum. This would then set the floor for a longer more durable rally.
However as we know market conditions can always change on a dime which is why we track internals constantly. Internal readings such as up to down volume ratios and advance to decline ratios help us handicap the footprint left by large institutions. And though they can be wrong at times when they collectively deploy their liquidity it is a wave you want to ride (on the upside) or avoid (or short) on the downside.
posted by Peter Greene
However as we know market conditions can always change on a dime which is why we track internals constantly. Internal readings such as up to down volume ratios and advance to decline ratios help us handicap the footprint left by large institutions. And though they can be wrong at times when they collectively deploy their liquidity it is a wave you want to ride (on the upside) or avoid (or short) on the downside.
posted by Peter Greene
Thursday, March 26, 2009
Boston Globe to go out of Business?
The Boston Globe , owned by the wildly successful New York Times (sarcasm alert), is in a LOT of trouble. They have over the past few years cut staff, redesigning the paper (read cheaper), and stopped coverings a lot of international/national events (using NYT feeds instead). Now another major round of layoffs this week.
The Globe will soon be gone in my opinion. How can this happen? We can blame the Internet, 24/7 cable news shows, or even the lack of government aid (yup sarcasm again). Buy, how is the cross town rival, Boston Herald, still doing ok and actually increasing distribution??? NY Times just announced pay cuts again and more layoffs...
Now the Herald is owned by same owners as the New York Post (and looks fluffy like it). Globe owned by NYT and their bias is so bad that even liberal bastions like Massachusetts and New York City are running from them. There is nothing wrong with having an opinion, heck I think smart people read different papers to get all sides. However, when every article is not reported as news but as filled with political bias people get pissed and stop reading.
posted by Peter Greene
The Globe will soon be gone in my opinion. How can this happen? We can blame the Internet, 24/7 cable news shows, or even the lack of government aid (yup sarcasm again). Buy, how is the cross town rival, Boston Herald, still doing ok and actually increasing distribution??? NY Times just announced pay cuts again and more layoffs...
Now the Herald is owned by same owners as the New York Post (and looks fluffy like it). Globe owned by NYT and their bias is so bad that even liberal bastions like Massachusetts and New York City are running from them. There is nothing wrong with having an opinion, heck I think smart people read different papers to get all sides. However, when every article is not reported as news but as filled with political bias people get pissed and stop reading.
posted by Peter Greene
Quick S&P thought from firm
yesterday the S&P 500 hit the lower end of our first real significant resistance area near 825. Subsequently this index sold off 3.9 % intraday from that level before clawing back slightly above its mid range. So over the next day or so, especially with the market pointing to a modest up opening, it will be important to see how much the market struggles up here.
What we have currently is a stiff resistance zone from previously broken support and the market up 23.12 % off its lows. This makes for a pretty stiff challenge to overcome and may make sense to sell lower cost basis names that have traded up recently then look to redeploy into those names on a good pullbacks.
posted by Peter Greene
What we have currently is a stiff resistance zone from previously broken support and the market up 23.12 % off its lows. This makes for a pretty stiff challenge to overcome and may make sense to sell lower cost basis names that have traded up recently then look to redeploy into those names on a good pullbacks.
posted by Peter Greene
Wednesday, March 25, 2009
3/24 S&P levels
We always say it is not the point move that matters but rather the sponsorship behind the move that’s most important. That said today’s market move was impressive because internals were stellar behind the scenes of yesterday’s advance. This is the second time in the last few weeks that both the up to down volume and the advance/decline intraday ratios simultaneously both scored very bullish readings. When the two of these metrics are both bullish at the same time it raises the odds that the buying is real and sustainable and not just short covering. That said we do think these bullish internal ratios suggest the market can keep move higher over time, however it won’t go straight up. As seen in the attached PDF the S&P 500 has now run back up into likely short-term resistance near the 823 to the 855 level.
Given there are still a lot of longer-term macroeconomic issues, tactical trading strategies, such as selling lower cost basis purchases made at lower levels over the last several weeks or placing tight trailing stops on profitable positions may make the most prudent strategy as opposed to not having any active sell discipline....
posted by Peter Greene
Given there are still a lot of longer-term macroeconomic issues, tactical trading strategies, such as selling lower cost basis purchases made at lower levels over the last several weeks or placing tight trailing stops on profitable positions may make the most prudent strategy as opposed to not having any active sell discipline....
posted by Peter Greene
3/24 comments
As we have said before it is not the points gained or lost that matter, but rather the conviction behind the move that is most important and Monday's internals did not disappoint with the NASDAQ and NYSE both scoring up to down volume ratios and advancer to decliner ratios that were super bullish. This rally confirms the thesis/comments that we made on March 10th and then again on March 18th.
3/10/09 excerpt from FusionIQ Comments " Market internals (i.e. the number of advancers to decliners and up volume to down volume) on today's advance were the most bullish internal readings seen since the move off the 2002 lows ... " we also added ... "That said we believe today's rally is the start of good move higher (again it may not be the ultimate low - only hindsight will tell us that) however the surge of momentum suggests this rally will be worth participating in."
On 3/18/09 we stated, "So that said we continue to view this current rally as having legs with maybe another 10 - 15 % up from present levels (So buying on dips with appropriate stop losses would make sense for the time being). We also continue to view this as an opportunity to make money on the long side for a narrow window of time (1 to 3 mos)."
That said we think the S&P 500 can still rally in the near term up to the 850 - 860 region on the heels of the unwinding of the deep oversold conditions, the large piles of sideline liquidity and additionally money managers allocating into stocks so as not fall too far behind their benchmarks. At the aforementioned S&P 500 level some more aggressive profit taking is likely to ensue and it may be a good time to take some chips off the table (i.e. lock in some profits)
We would then look to reallocate on the next aggressive pullback. Techs continue to act better than the broader market and should dominate your portfolio more than any other sector at this point.
posted by Peter Greene
3/10/09 excerpt from FusionIQ Comments " Market internals (i.e. the number of advancers to decliners and up volume to down volume) on today's advance were the most bullish internal readings seen since the move off the 2002 lows ... " we also added ... "That said we believe today's rally is the start of good move higher (again it may not be the ultimate low - only hindsight will tell us that) however the surge of momentum suggests this rally will be worth participating in."
On 3/18/09 we stated, "So that said we continue to view this current rally as having legs with maybe another 10 - 15 % up from present levels (So buying on dips with appropriate stop losses would make sense for the time being). We also continue to view this as an opportunity to make money on the long side for a narrow window of time (1 to 3 mos)."
That said we think the S&P 500 can still rally in the near term up to the 850 - 860 region on the heels of the unwinding of the deep oversold conditions, the large piles of sideline liquidity and additionally money managers allocating into stocks so as not fall too far behind their benchmarks. At the aforementioned S&P 500 level some more aggressive profit taking is likely to ensue and it may be a good time to take some chips off the table (i.e. lock in some profits)
We would then look to reallocate on the next aggressive pullback. Techs continue to act better than the broader market and should dominate your portfolio more than any other sector at this point.
posted by Peter Greene
Tuesday, March 24, 2009
Geithner Seeks Broad Power To Seize Firms
The Obama administration will ask Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, White House spokesman Robert Gibbs said this morning.
This is being reported this am from the White House. Geithner also said that many firms outside of AIG are paid too much. It is full salary cap on the country soon.
posted by Peter Greene
This is being reported this am from the White House. Geithner also said that many firms outside of AIG are paid too much. It is full salary cap on the country soon.
posted by Peter Greene
Monday, March 23, 2009
Too Strong
These markets look like they want to close at the high of the day. Trying to keep the 800 level way below us ....may be support if it can...we have been looking for 5-15% rally before we start falling again...
Getting closer..a good trading market.
posted by Peter Greene
Getting closer..a good trading market.
posted by Peter Greene
Morning stronger.
The US Treasury cooked up a new toxic asset plan..soooo financials up and futures up...this is what we had spoken about last Wednesday that there is cash and Institutional pent up demand that will bring this market higher...in the short term...
Tech names continue to look good for trades...
posted by Peter Greene
Tech names continue to look good for trades...
posted by Peter Greene
Friday, March 20, 2009
NCAA killing the market
You would think we had enough action on Wall Street with the banking problems, AIG hearings and a group in DC that want to install Marxist policies in every part of our lives. NO, everyone is focused on the NCAA Basketball Brackets. (ME TOO)
So, as the second day of games starts up the trading volume is falling flatter thank BMO's late night jokes (seriously if he does not have a TelePrompter he is lost? ) ....If you do not have CBS TV on at your office, at least you can watch Uncle Ben babble for the next few hours...
Is it beer time yet???
posted by Peter Greene
So, as the second day of games starts up the trading volume is falling flatter thank BMO's late night jokes (seriously if he does not have a TelePrompter he is lost? ) ....If you do not have CBS TV on at your office, at least you can watch Uncle Ben babble for the next few hours...
Is it beer time yet???
posted by Peter Greene
Wednesday, March 18, 2009
S&P hits 800....
As I said in the post from March 11th the % move looked for an 800 target in the S&P on this rally. We probably will stall for a few (minutes or days ) but the FED had gone nuclear and they are going to print their way out of the banking crisis....Look for another leg higher (as stated in this morning's note) and then a sell-off...
This is a tradeable market and it must be done that way. Do not fall in love with names.
posted by Peter Greene
This is a tradeable market and it must be done that way. Do not fall in love with names.
posted by Peter Greene
Firm's morning comments...
On 3/10/09 we said " Market internals (ie. the number of advancers to decliners and up volume to down volume) on today's advance were the most bullish internal readings seen since the move off the 2002 lows ... "
We also said " When the skew of advancers to decliners and up to down volume is this strong it suggests almost a buying panic on the part of institutions to get back into the market. Additionally these strong internals also suggest that there is a confidence and conviction on the part of institutional buyers"
And last but not least, We said " That said we believe today's rally is the start of good move higher (again it may not be the ultimate low - only hindsight will tell us that) however the surge of momentum suggests this rally will be worth participating in. "
So here we are not many days later and up considerably from where we published those comments and now what ?
We still believe the combination of the market getting really oversold, attractive valuations, excessive negative sentiment, portfolio managers having a lot of cash on hand and the quarter end for many mutual funds coming up (ie. Window dressing time. After all if returns looked poor again more redemptions would follow) (and they last thing they want to show is down another 20+ %) led to a lot of capital redeployment. With the market moving higher quickly even more managers felt they would lag behind their peers and subsequent benchmarks thus even more money (ie. managers chasing the move) came into the market.
In addition was not unrealistic for many to think the stimulus package (no matter what you're thought on its long term ability to be effective or not) will goose the economy to some degree at some point in the not too distant future. So that said we continue to view this current rally as having legs with maybe another 10 - 15 % up from present levels (So buying on dips with appropriate stop losses would make sense for the time being). We also continue to view this as an opportunity to make money on the long side for a narrow window of time (1 to 3 mos).
However, ultimately we think this rally will fade and we will get a retest of the recent lows (check the history books, we almost always get a retest.) How the market handles that retest will tell us a lot in regards to the longer term picture. We believe tech and growth (since they have the best bases and most constructive chart patterns and corrected much less than the broader market during the down draft) still outperform in regards to sector and style bias respectively during this rally/bounce.
In Barron's this weekend, one portfolio manager, Felix Zulauf, made an articulate case that this will be a violent rally (900 on the S&P 500) followed by a move to new lows (450 on the S&P 500) with that ultimate bottom coming in 2011. This certainly in plausible and would anyone doubt it after what we saw in the last 12 months ? especially if this is a multi-year secular bear. However we believe at present the best one can get from this market is to try and dissect it and game plan for shorter horizons such as 1 to 3 months until more macro economic data allows for longer term forecasting comfort. This is a market where traders will continue to dominate and thrive (provided you try to capture return both on rallies as well as declines). For the foreseeable future Buy and Hold strategies should be kept on the shelf if one wished to make return.
Look for our full blown reports on the S&P 500 and NASDAQ 100 tomorrow, which will provide greater insight into levels where they rally may peter out.
As always don't BUY BLIND !! Have an exit strategy before you trade/invest (and stick to it) !!!
Best.
Kevin P Lane
FusionIQ
posted by Peter Greene
We also said " When the skew of advancers to decliners and up to down volume is this strong it suggests almost a buying panic on the part of institutions to get back into the market. Additionally these strong internals also suggest that there is a confidence and conviction on the part of institutional buyers"
And last but not least, We said " That said we believe today's rally is the start of good move higher (again it may not be the ultimate low - only hindsight will tell us that) however the surge of momentum suggests this rally will be worth participating in. "
So here we are not many days later and up considerably from where we published those comments and now what ?
We still believe the combination of the market getting really oversold, attractive valuations, excessive negative sentiment, portfolio managers having a lot of cash on hand and the quarter end for many mutual funds coming up (ie. Window dressing time. After all if returns looked poor again more redemptions would follow) (and they last thing they want to show is down another 20+ %) led to a lot of capital redeployment. With the market moving higher quickly even more managers felt they would lag behind their peers and subsequent benchmarks thus even more money (ie. managers chasing the move) came into the market.
In addition was not unrealistic for many to think the stimulus package (no matter what you're thought on its long term ability to be effective or not) will goose the economy to some degree at some point in the not too distant future. So that said we continue to view this current rally as having legs with maybe another 10 - 15 % up from present levels (So buying on dips with appropriate stop losses would make sense for the time being). We also continue to view this as an opportunity to make money on the long side for a narrow window of time (1 to 3 mos).
However, ultimately we think this rally will fade and we will get a retest of the recent lows (check the history books, we almost always get a retest.) How the market handles that retest will tell us a lot in regards to the longer term picture. We believe tech and growth (since they have the best bases and most constructive chart patterns and corrected much less than the broader market during the down draft) still outperform in regards to sector and style bias respectively during this rally/bounce.
In Barron's this weekend, one portfolio manager, Felix Zulauf, made an articulate case that this will be a violent rally (900 on the S&P 500) followed by a move to new lows (450 on the S&P 500) with that ultimate bottom coming in 2011. This certainly in plausible and would anyone doubt it after what we saw in the last 12 months ? especially if this is a multi-year secular bear. However we believe at present the best one can get from this market is to try and dissect it and game plan for shorter horizons such as 1 to 3 months until more macro economic data allows for longer term forecasting comfort. This is a market where traders will continue to dominate and thrive (provided you try to capture return both on rallies as well as declines). For the foreseeable future Buy and Hold strategies should be kept on the shelf if one wished to make return.
Look for our full blown reports on the S&P 500 and NASDAQ 100 tomorrow, which will provide greater insight into levels where they rally may peter out.
As always don't BUY BLIND !! Have an exit strategy before you trade/invest (and stick to it) !!!
Best.
Kevin P Lane
FusionIQ
posted by Peter Greene
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