# U.S. stock market on verge of collapse?



## bailx

_Is this the beginning of the end for the bull market in U.S. stocks?_

Global stocks, crude oil and US stocks fell sharply on Monday as investors reacted to the surprisingly sharp slowdown in U.S. jobs growth reported last Friday, which raised concerns about the strength of the world's largest economy.

Even before the jobs report was announced, the markets were reeling right after the markets closed on Thursday, when Egan Jones Rating Company downgraded the US government debt once again, from AA+ to AA, with a negative outlook, citing soaring deficits and the US government failure to come to any workable plan. 

“Assuming the federal deficit for 2013 remains at $1.4T and GDP growth is 2.5%, the total debt will rise to $18.1T and GDP will rise to $16.1T, resulting in debt to GDP of 112%. In comparison, France's and Italy's debt to GDP are 81% and 117% respectively.”

This is an Obama recovery!

Short term the market is now oversold and due for a rebound off the S&P 500 50-day moving average, so this is important test.


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## Knobby22

bailx said:


> _
> This is an Obama recovery!
> _



_

Obama can't raise taxes to the wealthy and can't attack defence spending.
The only thing he can do is further restrict Federal spending on infrastructure and human servises, this will obviously cause a contraction.

It looks like Romney will not be permitted to do anything about these issues either and may in fact get us all in a war with Iran next if he gets elected.

Romney added that he’d restore aircraft carriers to the eastern Mediterranean and Persian Gulf region. And he closed with this stark warning: “Either the ayatollahs will get the message, or they will learn some very painful lessons about the meaning of American resolve.”

All I can think is that too many US politicians are"owned" by powerful interests. Where is the Lincoln equivalent when you need him?_


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## Starcraftmazter

SP500 isn't the greatest distance away from it's all time highs during the dotcom and housing US bubbles. Even if the rally continues, it's not going to last long.


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## Uncle Festivus

Not while ever the Fed pumps/prints $5Billion a day into various priming mechanisms AND interest rates stay low AND there are hints of more QE AND revenue increases AND expenses decrease AND everyone else in the world continues to buy their bonds AND...... 

Then again, reality might triumph, like $18TRILLION in federal debt?

But for some - Reality is merely an illusion, albeit a very persistent one. -Albert Einstein

It's all coming undone.........................


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## CanOz

You know you haven't left the last bear market far enough behind when all the bears come out at the first sniff of a needed correction......

CanOz


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## notting

CanOz said:


> You know you haven't left the last bear market far enough behind when all the bears come out




Not quite out of their caves just yet. 
You'd think we'd have to fall through 1270 ish on the S&P with a bit of volume before the old grinding grizzly bear jaws are hot on our heals. Still a fair amount of hot air between that and where it is now.
The expectations for earnings in the US are not that high, Alcoa has already outdone itself.
If they start debating the US Debt reality to get themselves votes, then it will be a global slaughter house.  It will be interesting to see if the Republicans are that unpatriotic.


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## sammy84

Starcraftmazter said:


> SP500 isn't the greatest distance away from it's all time highs during the dotcom and housing US bubbles. Even if the rally continues, it's not going to last long.




Interesting.....because US is near all time highs that means the rally can't continue. I guess the trend isn't your friend.


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## Starcraftmazter

sammy84 said:


> Interesting.....because US is near all time highs that means the rally can't continue. I guess the trend isn't your friend.




Well the only way it got there last time is through very big bubbles - and still during much better economic times than right now.

So what sense does it make for it to surpass that point in the current situation? I'd bet any amount of money it won't.


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## sammy84

Starcraftmazter said:


> Well the only way it got there last time is through very big bubbles - and still during much better economic times than right now.
> 
> So what sense does it make for it to surpass that point in the current situation? *I'd bet any amount of money it won't*.




So I assume you have used all funds at your disposal for short positions?

I trade with the trend. Highs get taken out or sometimes price bounces of resistance. Position sizing will save me regardless.


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## Starcraftmazter

sammy84 said:


> So I assume you have used all funds at your disposal for short positions?




I haven't taken any unusually large positions, I wouldn't like to call an exact top - but I do feel that this rally does not have long to go.

The US inventory cycle is either already over or almost over, people are waking up to the fact that the Euro mess is only just beginning, and China has produced nothing but bad data for weeks.

I can virtually guarantee that the world stock markets will be lower by years end - assuming no QE3/LTRO2.


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## chrislp

Starcraftmazter said:


> I haven't taken any unusually large positions, I wouldn't like to call an exact top - but I do feel that this rally does not have long to go.
> 
> The US inventory cycle is either already over or almost over, people are waking up to the fact that the Euro mess is only just beginning, and China has produced nothing but bad data for weeks.
> 
> I can virtually guarantee that the world stock markets will be lower by years end - assuming no QE3/LTRO2.




Why bother with that stuff?

I can guarantee you that you won't make money in this market if it's common knowledge. 

Considering the price action in the US/European markets in the last 4 months what do you think has been priced in?


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## Logique

Starcraftmazter said:


> I haven't taken any unusually large positions, I wouldn't like to call an exact top - but I do feel that this rally does not have long to go...



Don't always agree with you Star, but siding with you here. I think the risk is to the downside now. Don't know whether it will be just corrective, or a return of the Bear.


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## Starcraftmazter

chrislp said:


> Considering the price action in the US/European markets in the last 4 months what do you think has been priced in?




I don't know. How do you price in the breakup of the Eurozone? Or a slow landing in China? I suppose by comparison the US will not be catastrophically worse off, but clearly the recession will continue.


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## CanOz

Starcraftmazter said:


> but clearly the recession will continue.




Recession? 

Whats your definition of a recession?

Europe, i would agree....but the US...AT THE MOMENT...i don't think too many economists would argue that they are in a recession.

Australia? Until the next data release Australia is not in a recession....

China, depends on how you define it, anything less than 8% growth?

CanOz


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## Starcraftmazter

CanOz said:


> Recession?
> 
> Whats your definition of a recession?




High unemployment, no real wage growth, little or no opportunities for uni grads.


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## Klogg

Starcraftmazter said:


> High unemployment, no real wage growth, little or no opportunities for uni grads.




I always thought a recession was strictly defined by a decline in GDP for two quarters running, but after jumping on wikipedia I found this:



> In a 1975 New York Times article, economic statistician Julius Shiskin suggested several rules of thumb for defining a recession, one of which was "two down consecutive quarters of GDP".[3] In time, the other rules of thumb were forgotten...




I guess you learn something new every day


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## Starcraftmazter

Klogg said:


> I always thought a recession was strictly defined by a decline in GDP for two quarters running, but after jumping on wikipedia I found this:




That is the way it is defined in Australia. Other countries define it differently. And I responded to CanOz's question of how *I* define it with *my* own definition as per his request.


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## Uncle Festivus

If we are talking about the definition of what a recession is to gauge the health of the system then you can have an apparent healthy system based on positive GDP but still have an underlying 'recession'. 

This is based on the fact that they count Government spending & inventories as positives to the total - absent the governments continued propping up of the figures and US GDP has  been negative for several years already. Now you combine this with the fact that they are now running deficits of $1.3TRILLION annually and it only needs simple maths skills to work out that at some stage the government will have to reduce spending dramatically which will show up as _official_ reduced GDP and recession. It has to happen _sometime_ in the future.....

The irony is that if there really is eventually an actual recovery that interest rates will have to rise and they will then have a massive interest bill as well.

They can only pass the buck into the future by printing money & continually rolling over T Bills to keep rates down for a limited time - eventually the system will break.

Time to update 'The Jaws Of Death'


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## Smurf1976

CanOz said:


> Australia? Until the next data release Australia is not in a recession...



Perhaps the country as a whole isn't, but SA and Tas certainly are and Vic would appear to be damn close.

Tas and possibly SA could be dismissed, but Vic is a rather significant state economically...


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## CanOz

Smurf1976 said:


> Perhaps the country as a whole isn't, but SA and Tas certainly are and Vic would appear to be damn close.
> 
> Tas and possibly SA could be dismissed, but Vic is a rather significant state economically...




Tasmania is Australia's Newfoundland....

Except wait...no greens and now NFLD is Canada's mining boom center....

Now my home province is the Tassie

They measure recession as a national metric, end of story there.

CanOz


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## Starcraftmazter

Australia is most certainly in a recession. Anyone who says otherwise must be a miner or some bigshot executive.


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## sails

Starcraftmazter said:


> Australia is most certainly in a recession. Anyone who says otherwise must be a miner or some bigshot executive.




Or Wayne Swan?


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## Starcraftmazter

sails said:


> Or Wayne Swan?




I wanted to say lunatic, but did not wish to offend anyone


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## CanOz

Smurf1976 said:


> Perhaps the country as a whole isn't, but SA and Tas certainly are and Vic would appear to be damn close.
> 
> Tas and possibly SA could be dismissed, but Vic is a rather significant state economically...




Smurf...Tasmania is to Australia what Newfoundland WAS to Canada...

Except wait...no greenies and now NFLD is Canada's mining boom center....digging lots of big holes in the ground and pumping oil out of the sea bed. Not as big as Alberta...but still.

Now my home province (NB) is the Tassie of Canada....makes me happy though, lots of fish in the rivers still

They measure recession as a national metric for a reason, lots of diversity.

CanOz


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## wayneL

CanOz said:


> Now my home province (NB)




OT, but I want to visit NB one day, especially in the fall.


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## MrBurns

Buggered if I can work it out the US is supposed to be stuffed yet the DOW is st it's highest level for 2 years.


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## bailx

The S&P 500 Composite (SPX: 1,368.71) remains below its 50-day SMA. NYSE volume fell 19%, thereby failing to confirm a modest recovery attempt on Wednesday.

MACD based on SPX fell further below the zero line, fell further below its lows of the previous 3 months, fell further below its signal line, and fell further below its 	high set on 2/9/12, which appears to have been the momentum peak for the rally.

The S&P 500 chart broke down below the rising lower boundary line of a Bearish Rising Wedge on 4/10/12, thereby giving a clear bearish chart signal. This breakdown suggests that stocks could quickly erase all gains since the 10/4/11 low of 1,074.77 on the S&P 500..........


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## CanOz

wayneL said:


> OT, but I want to visit NB one day, especially in the fall.




Take your fly rod and your shotgun! Blast 'n' Cast as we affectionately call it!

CanOz


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## StumpyPhantom

Uncle Festivus said:


> If we are talking about the definition of what a recession is to gauge the health of the system then you can have an apparent healthy system based on positive GDP but still have an underlying 'recession'.
> 
> This is based on the fact that they count Government spending & inventories as positives to the total - absent the governments continued propping up of the figures and US GDP has  been negative for several years already. Now you combine this with the fact that they are now running deficits of $1.3TRILLION annually and it only needs simple maths skills to work out that at some stage the government will have to reduce spending dramatically which will show up as _official_ reduced GDP and recession. It has to happen _sometime_ in the future.....
> 
> The irony is that if there really is eventually an actual recovery that interest rates will have to rise and they will then have a massive interest bill as well.
> 
> They can only pass the buck into the future by printing money & continually rolling over T Bills to keep rates down for a limited time - eventually the system will break.
> 
> Time to update 'The Jaws Of Death'
> 
> View attachment 46712




I hear all this loud and clear.  It's the only logical path.  The question on my mind is when to get completely out of the ILLOGICAL stock market, of which I'm probably already 70% out.

Is any of the stupid money supposedly sitting on the sidelines going to come in first to give it a brief burst or are we done there too?  If it's been sitting on the sidelines for years, you'd think now was a stupid time to put it to work, but then greed does make you stupid!


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## Smurf1976

CanOz said:


> They measure recession as a national metric for a reason, lots of diversity.



Agreed with your point. But I'd argue that if you exclude a single industry, mining, then Australia at the national level is damn close to being in recession.

Anywhere with or near a mine is booming whilst anywhere well away from one is seriously struggling at the moment.

The trouble is, most Australians don't live or work anywhere near a mine. The fortunes of a relative few are skewing the national statistics whilst the majority aren't doing anywhere near as well.


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## bailx

http://www.usdebtclock.org/


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## CanOz

Smurf1976 said:


> Agreed with your point. But I'd argue that if you exclude a single industry, mining, then Australia at the national level is damn close to being in recession.
> 
> Anywhere with or near a mine is booming whilst anywhere well away from one is seriously struggling at the moment.
> 
> The trouble is, most Australians don't live or work anywhere near a mine. The fortunes of a relative few are skewing the national statistics whilst the majority aren't doing anywhere near as well.




There are plenty of spin offs from such a large and diverse industry....it affects so much...it's bigger than manufacturing.

When mining contracts everything contracts.....in my view Australia is starting to struggle because mining has already started to contract....but I also think the bottom is near again....china is starting to loan again...

CanOz


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## Uncle Festivus

MrBurns said:


> Buggered if I can work it out the US is supposed to be stuffed yet the DOW is st it's highest level for 2 years.




If you ran a company in the US you would borrow virtually unlimited amounts of 'priming' money from the Fed @ 0.25% no strings attached. You would then have lot's of money on your books with no productive (like building a factory to create employment) use, so you would initiate share buy backs executive bonus's and the like. Plus changes to accounting rules that got rid of mark to market  to hide all the bad stuff. On the surface all is rosy. Earnings is the one to watch, and not the 'better than expected low balled target'.......



CanOz said:


> There are plenty of spin offs from such a large and diverse industry....it affects so much...it's bigger than manufacturing.
> 
> When mining contracts everything contracts.....in my view Australia is starting to struggle because mining has already started to contract....but I also think the bottom is near again....china is starting to loan again...
> 
> CanOz




Are they loans or 'grants'? The data already suggests that there is a huge chunk of non conforming 'loans' already - the projects are cash flow negative and will probably never show a 'profit'. It's just more of the push priming with debt that the rest of the world has tried and is failing?

China's GDP grew 8.1% in the January to March period,  according to the National Bureau of Statistics, below analysts’  expectations of an 8.3% expansion & substantially below the 8.9% from the last qtr. And that was the official figure - I assume the real figure would be even worse?

Anyway, it's risk off day today as all is bad again apparently, Dow down 100 pts as I type..........it is building up for a big fall........like the San Andreas Fault..........


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## Uncle Festivus

Where did that 180 pt gain go? Down 140 with volume sellers.......


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## Logique

Logique said:


> Don't always agree with you Star, but siding with you here. I think the risk is to the downside now. Don't know whether it will be just corrective, or a return of the Bear.



A weekly chart of the VIX, comparison with SPX which generally travels inversely (check the % compare indicator). The VIX is nudging 20 and looking higher. Could be  just a blip like March 2011, don't know yet.


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## CanOz

Uncle Festivus said:


> If you ran a company in the US you would borrow virtually unlimited amounts of 'priming' money from the Fed @ 0.25% no strings attached. You would then have lot's of money on your books with no productive (like building a factory to create employment) use, so you would initiate share buy backs executive bonus's and the like. Plus changes to accounting rules that got rid of mark to market  to hide all the bad stuff. On the surface all is rosy. Earnings is the one to watch, and not the 'better than expected low balled target'.......
> 
> 
> 
> Are they loans or 'grants'? The data already suggests that there is a huge chunk of non conforming 'loans' already - the projects are cash flow negative and will probably never show a 'profit'. It's just more of the push priming with debt that the rest of the world has tried and is failing?
> 
> China's GDP grew 8.1% in the January to March period,  according to the National Bureau of Statistics, below analysts’  expectations of an 8.3% expansion & substantially below the 8.9% from the last qtr. And that was the official figure - I assume the real figure would be even worse?
> 
> Anyway, it's risk off day today as all is bad again apparently, Dow down 100 pts as I type..........it is building up for a big fall........like the San Andreas Fault..........




Sure UF, I agree that debt is bad and all that, bad loans etc., but they have no other choice. They must reinflate.

I stand by my call, this is a correction.

I'll even throw in my early call for the top, hehe.....since I found some confluence in an issue of Stocks & Commodities yesterday.......

December 17th ..... Then I can get bearish

CanOz
FWIW - I really am not too concerned about which way the market moves, as long as it moves! Just enjoying the banter.


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## notting

Looks like it's going to be a battle between *old world* restructuring and new * one world social media/carrier/hardware provider* - boom.


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## ishakeel

really???


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## notting

ishakeel said:


> really???




Yep. I climbed up the mountain and God himself carved that comment in stone tablets and handed it to me to share with u here.
That's real! 
Oh ye of little faith.
So endeth thy speculation


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## Uncle Festivus

Look out below...................?




Then QE3?


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## CanOz

Interesting how the MACD histogram showed divergence on the last two tops, but show convergence on this one.

A rally in May, a new low in June, the top in December.


CanOz


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## Joules MM1

Warren Buffett betting on real estate recovery

video

http://live.wsj.com/video/why-buffe...47.html#!432BAEE2-88DB-4382-9496-2DA9F86E3047



> What does Warren Buffett see that no one else does? He just made an outsize bid on ResCap loans, the latest example of his bet that the housing market represents a great investment opportunity. Joe Light has details on The News Hub.


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## tech/a

CanOz said:


> Interesting how the MACD histogram showed divergence on the last two tops, but show convergence on this one.
> 
> A rally in May, a new low in June, the top in December.
> 
> 
> CanOz




Simply means that this time momentum going into the top was stronger than last time.
2 averages.



Joules MM1 said:


> Warren Buffett betting on real estate recovery
> 
> video
> 
> http://live.wsj.com/video/why-buffe...47.html#!432BAEE2-88DB-4382-9496-2DA9F86E3047




Makes sense
Was way above the mean
Now way below the mean.
Not here--at around the mean.


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## CanOz

CanOz said:


> Interesting how the MACD histogram showed divergence on the last two tops, but show convergence on this one.
> 
> A rally in May, *a new low in June*, the top in December
> 
> 
> CanOz




June 04 / 2012


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## bailx

I'm surprised the U.S market is staying a float as I thought it would certainly sink.

Quote:

The U.S. government debt, which topped $16 trillion for the first time at the close of business on Friday, now equals approximately $136,260 for every household in the country.

Just since President Barack Obama was inaugurated on Jan. 20, 2009, the debt has increased by $45,848 per household””or about 50 percent per household.

As of Friday, the debt was 16,015,769,788,215.80. According to the Census Bureau, there were approximately 117,538,000 households in the country in 2010. Thus, the current debt equals about $136,260 per hour.


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## notting

bailx said:


> The U.S. government debt, which topped $16 trillion




Yeah, their left hand owes their right hand a lot of money:silly:


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## wayneL

tech/a said:


> Simply means that this time momentum going into the top was stronger than last time.
> 2 averages.
> 
> 
> 
> Makes sense
> Was way above the mean
> Now way below the mean.
> Not here--at around the mean.




What do you mean by the mean?


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## tech/a

wayneL said:


> What do you mean by the mean?




Longterm average


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## Joules MM1

Joules MM1 said:


> Warren Buffett betting on real estate recovery
> 
> video
> 
> http://live.wsj.com/video/why-buffe...47.html#!432BAEE2-88DB-4382-9496-2DA9F86E3047





    September 5, 2012, 1:01 PM

*Home Sales Move Faster, Asking Prices Rise*
By Alan Zibel
http://blogs.wsj.com/developments/2012/09/05/home-sales-move-faster-asking-prices-rise/?mod=e2tw



excerpt 







> With buyers acting more quickly, sellers have been able to boost their listing prices. Asking prices were up by 2.3% in August compared with the same month last year, according to real-estate website Trulia. It was the seventh straight month in which sellers hiked their asking prices, and 68 out of the 100 largest U.S. metropolitan areas reported asking price increases.
> 
> Not including foreclosed properties, asking prices were up 3.8% from a year earlier, Trulia said. The biggest gains were in the Southwest, which has been rebounding from the housing bust, with asking prices up by more than 24% in Phoenix.



http://blogs.wsj.com/developments/2012/09/05/home-sales-move-faster-asking-prices-rise/?mod=e2tw


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## Aussiejeff

Collapse 

Bond boom, boom....


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## Uncle Festivus

Memo from US Fed & Treasury (affectionately known as Goldman Sachs ) to Plunge Protection Teams (A through to Z), The Presidents Working Party For Financial Stability (Units A through to Z), and to misc bots - 

"Please ensure Dow is above & remains above 13300 until at least after THE election"

"Also note, there will be timed and coordinated announcements/promises from Central Bank presidents every time the markets remotely look like falling"

"As the NFP figures, and all other government controlled data, will be 'better-than-expected', please front run ALL markets with impunity and surety"

"Note - all of the above is reliant on the actual global economy recovering and sovereign and bank insolvency being eliminated"


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## Trembling Hand

Oh Unc, its a lonely sad life once you know the truth hey.


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## Uncle Festivus

Trembling Hand said:


> Oh Unc, its a lonely sad life once you know the truth hey.




Mmmmm.......well put it this way........if all it took was "to buy government bonds in unlimited quantities" then why wasn't such a brilliant idea enacted 2,3 years ago when it could have nipped it in the bud so to speak???

Then the second part of the 'promise' is who will pay for it? Oh I forgot - it will all be 'sterilised' - money in = money out = brilliant solution with no losers.......

All part of humanities reversion to mean I guess............

PS it's a lot less lonely now that the masses have the info to make somewhat informed opinions these days thanks to the internet etc (and a basic grasp of simple arithmetic)

Unfortunately it just means there are a lot more sadder people about too


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## Aussiejeff

Uncle Festivus said:


> Mmmmm.......well put it this way........if all it took was "to buy government bonds in unlimited quantities" then why wasn't such a brilliant idea enacted 2,3 years ago when it could have nipped it in the bud so to speak???
> 
> Then the second part of the 'promise' is who will pay for it? Oh I forgot - it will all be 'sterilised' - money in = money out = brilliant solution with no losers.......
> 
> All part of humanities reversion to mean I guess............
> 
> PS it's a lot less lonely now that the masses have the info to make somewhat informed opinions these days thanks to the internet etc (and a basic grasp of simple arithmetic)
> 
> Unfortunately it just means there are a lot more sadder people about too




Don't feel sad Unc...

Now the ECB has effectively declared it can pay the entire planet's debt orf with endless Bazooka Bond purchases, what's to worry about?

Free ride and endless wealth for all.

Let's just go mad & rejoice! :bananasmi


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## Uncle Festivus

> SAN FRANCISCO (MarketWatch) -- Egan-Jones Ratings Co. said Friday it downgraded its U.S. sovereign rating to AA- from AA on concerns that the Fed's new round of quantitative easing, or QE3, will hurt the U.S. economy.
> 
> The ratings agency said the Fed's plan of buying $40 billion in mortgage-backed securities a month and keeping interest rates near zero does little to raise GDP, reduces the value of the dollar, and raises the price of commodities.
> 
> "From 2006 to present, the US's debt to GDP rose from 66% to 104% and will probably rise to 110% a year from today under current circumstances; the annual budget deficit is 8%," Egan-Jones said in a note.
> 
> *"In comparison, Spain has a debt to GDP of 68.5% and an annual budget deficit of 8.5%."*




Which country is the economic basket case?


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## Uncle Festivus

> The Dow Theory, for those of you unfamiliar with it, is the oldest market timing system still in widespread use today. Though the theory’s originators never codified it into a precise set of rules that could be mechanically and unambiguously applied, there is broad agreement on the three prerequisites for a sell signal:
> 
> . A significant correction off of market highs must take place ”” significant both in terms of the magnitude of the drop as well as the duration
> 
> . In the subsequent rally attempt off of the correction lows, either the Dow Industrials or the Dow Transports, or both, must fail to surpass the highs they attained prior to the initial correction
> 
> . Both Dow averages subsequently must drop below their lows set at the bottom of their initial corrections
> 
> What is particularly relevant to recent market action is the second of these three steps.




A bit of divergence here - one index is way ahead of itself?

Dow = green, transports = white


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## explod

Uncle Festivus said:


> A bit of divergence here - one index is way ahead of itself?
> 
> Dow = green, transports = white




So its not hard to figure where a lot of the new paper is going.

Ben the Prop


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## Uncle Festivus

One more post on the transports non-confirmation............what's coming down the track......


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## IFocus

I am just wondering how much the feds action will distort markets and how useful some of the old market indicators will be as a result.....still a chart is a chart.


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## explod

Lets look at the bigger picture of the Dow:

http://bigcharts.marketwatch.com/ad...rsToggle=false&chartStyleToggle=false&state=9

Early 90's the Dow was sluggish so we had stimulus and up we went;

.com problem, we had stimulus and up she went again;

crash of 08, stimulus and, jeeezz your clever, up she went again.

Of course around the 05/06 period where the Dow flat-lined we had the Lehman Bros., et al housing problem so the taxpayer bailed that out and up she went again on the peoples stimulus.  Or is all this paper printing the people's in the end anyway.

So in my view from the early 90's the value of the market is a pretty big mix of probably not a lot and its true value in a crash could well be back at about 4000.  Could actually overshoot of course (where's Tech) on sentiment to the old support at 2000.  But then ....who would support that?

Anyhow, the veggies are going well and so have decided we are going to add chooks and ducks.  Oh and the down hill neighbour has volunteered all the water we want from his dam.  And you wont believe this, there is an old Southern Cross windmill there to pull it as well.


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## Uncle Festivus

IFocus said:


> I am just wondering how much the feds action will distort markets and how useful some of the old market indicators will be as a result.....still a chart is a chart.




They can't distort intrinsic demand - the transports are telling us that demand is falling -  the next phase down has started already?

"The market" hasn't priced this in yet?

Transports down 2.8% today.....


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## Porper

Uncle Festivus said:


> A bit of divergence here - one index is way ahead of itself?
> 
> Dow = green, transports = white
> 
> View attachment 49027
> 
> 
> View attachment 49028




Everybody and their dogs are watching the non confirmation of the Industrials and Transports. It is headline news around the world which makes me suspicious in regard to the expected sell-off. Remember, the herd is usually wrong. U.S indices in general are looking strong and the XJO is posturing for an attempt at overcoming resistance...time will tell whether the attempt will be successful. I know what I think.

Perhaps the DOW is ahead of itself, but maybe the Transports will play catch up?


----------



## CanOz

Porper said:


> Everybody and their dogs are watching the non confirmation of the Industrials and Transports. It is headline news around the world which makes me suspicious in regard to the expected sell-off. Remember, the herd is usually wrong. U.S indices in general are looking strong and the XJO is posturing for an attempt at overcoming resistance...time will tell whether the attempt will be successful. I know what I think.
> 
> Perhaps the DOW is ahead of itself, but maybe the Transports will play catch up?





Another great reason why trend following or other algorithmic systems can beat the market time and time again.....they don't try and perceive. 

I enjoy the interpretation of indicators as much as the next person, but I don't bet on them.

CanOz


----------



## Porper

CanOz said:


> Another great reason why trend following or other algorithmic systems can beat the market time and time again.....they don't try and perceive.
> 
> I enjoy the interpretation of indicators as much as the next person, but I don't bet on them.
> 
> CanOz




Mechanical systems with a positive expectancy have a big advantage in many areas...removing emotion being the no.1 i.m.o.

However they aren't for everybody and a discretionary system can be just as profitable, arguably more so in a bull market. Obviously that isn't the case for our market at the moment. I personally trade both.


----------



## CanOz

Porper said:


> Mechanical systems with a positive expectancy have a big advantage in many areas...removing emotion being the no.1 i.m.o.
> 
> However they aren't for everybody and a discretionary system can be just as profitable, arguably more so in a bull market. Obviously that isn't the case for our market at the moment. I personally trade both.




Yeah me too, when I'm trading lol! 

I need to train someone to take the flipper trades for me, my wife is not interested yet....I'm stuck out in the middle of nowhere with little Internet access.

Anyway, the markets will always be there.

CanOz


----------



## Joules MM1

*How Fast Are U.S Economic Fundamentals Fading?*


> We don’t know the how or when, and expect the powers that be try to keep the tape elevated through the election, but the charts below suggest there is risk of a seismic downtick lurking in the equity markets.
> 
> “Stunning divergence in TRAN relative strength (daily and weekly) now greater than before the top in 2007″ – Beachcomber











http://bikinianalytics.com/wordpress1/2012/09/20/how-fast-are-u-s-economic-fundamentals-fading/


----------



## Uncle Festivus

Porper said:


> Everybody and their dogs are watching the non confirmation of the Industrials and Transports. It is headline news around the world which makes me suspicious in regard to the expected sell-off. Remember, the herd is usually wrong. U.S indices in general are looking strong and the XJO is posturing for an attempt at overcoming resistance...time will tell whether the attempt will be successful. I know what I think.
> 
> Perhaps the DOW is ahead of itself, but maybe the Transports will play catch up?




Must have missed those headlines 

I agree, the herd is usually wrong, so apart from the omnipresent Bernanke FED/Treasury backstop for the DOW there is little fundamental reason for the level it's at, apart from a perceived future 'recovery' actually materialising.

The difference for the TRAN is it gives a more reflective feedback for what is actually happening in the real economy - ie whether or not various policies are working & the trickle down liquidity is getting through.

As can be seen by the 'hard' data from Fed-Ex and Norfolk Southern Corp, and is reflected in the TRAN, there is a negative trend for transporting 'stuff' around the country.

There is probably one last hurrah for equities - if the Dems & GOP agree to postpone the fiscal cliff. Put it off for someone else to deal with down the track? In the meantime put a dress on it and apply some lippy.....

It's getting ugly and going to get uglier - market optimists will be disappointed.....realists won't be surprised at all.


----------



## Porper

Uncle Festivus said:


> It's getting ugly and going to get uglier - market optimists will be disappointed.....realists won't be surprised at all.




Yes but who are the realists?

Those that think armageddon is around the corner  and are confident this time "will be different" or those that subscribe to history which shows us clearly that the world financial system has and always will survive and prosper?

So the choice is...collect your cans of spam and get ready for the turmoil that is supposedly inevitable or get on with life, be happy and do your bit for the human race. Tough decision!!


----------



## namrog

Wouldn't those charts be distorted anyway by the fact that the worth of companies within the Dow being measured in US dollars, has more to do with a dollar that's loosing value due to all the QE, than the intrinsic value of the companies themselves within the Dow..

I guess what I'm trying to say is how would the dow chart compare to other indices when measured in say something like gold ounces.

Just a thought, & maybe way off track...!


----------



## Joules MM1

namrog said:


> I guess what I'm trying to say is how would the dow chart compare to other indices when measured in say something like gold ounces.




try this:

https://twitter.com/JamesGRickards/status/246385759932780544/photo/1

there's a truck-load on the interweb

...this ones prob aprop for this thread:

http://www.elliottwave.com/freeupdates/archives/2012/02/27/Stock-Market-Bull-Real-or-Phony.aspx


----------



## explod

namrog said:


> Wouldn't those charts be distorted anyway by the fact that the worth of companies within the Dow being measured in US dollars, has more to do with a dollar that's loosing value due to all the QE, than the intrinsic value of the companies themselves within the Dow..
> 
> I guess what I'm trying to say is how would the dow chart compare to other indices when measured in say something like gold ounces.
> 
> Just a thought, & maybe way off track...!




Yes a good point.  Another is that companies that go belly up are no longer in the index which corrects to the upside by taking away the downside.  A bit like the banks assessing debt an asset.


----------



## Uncle Festivus

Porper said:


> Yes but who are the realists?
> 
> Those that think armageddon is around the corner  and are confident this time "will be different" or those that subscribe to history which shows us clearly that the world financial system has and always will survive and prosper?
> 
> So the choice is...collect your cans of spam and get ready for the turmoil that is supposedly inevitable or get on with life, be happy and do your bit for the human race. Tough decision!!




Realists are those who can do basic maths and can see, for countries like Japan, UK, US, Spain, etc etc, that expenses are greater than income and rely on 'loans' to fill the gap. When even that is insufficient their central banks resort to printing new money ie QE etc 

"history which shows us clearly that the world financial system has and always will survive and prosper?"

Well that's just it - financial systems over the ages have not survived, they all eventually fail.

It's looking like the peak for this current 'system' was back in 2000 or so, as per below......

Talking about 'this time being different', have a read of this - 

http://www.economics.harvard.edu/files/faculty/51_This_Time_Is_Different.pdf

It would actually be _ab_normal for the current global financial system in it's current state of malaise to survive against the odds of history........

namrog - the illusion of 'wealth"?


----------



## Uncle Festivus

Looking a bit shaky here??


----------



## Porper

Uncle Festivus said:


> Looking a bit shaky here??
> 
> View attachment 49278




Could be a retracement of short duration but would hardly call it shaky??????????????

A 31.0% advance since October 2011 is bullish whichever way you look at it. Nearing all-time highs...need I go on?

The market doesn't appear to think the end is nigh like some. And yes we've all seen the bearish charts measured in Gold and know it's all false hope and a ticking time bomb...blah blah blah. The fact is markets are heading higher so why try and fight it? One negative session doesn't reverse the trend. Get a week or two of the same and then we'll be talking deeper correction.


----------



## Uncle Festivus

Porper said:


> The fact is markets are heading higher........




It is a fact? Why?

The Dow hasn't gone anywhere since QE3 was confirmed 3 weeks ago. So that's what $3Billion a day buys - a flatline Dow?


----------



## CanOz

Uncle Festivus said:


> It is a fact? Why?
> 
> The Dow hasn't gone anywhere since QE3 was confirmed 3 weeks ago. So that's what $3Billion a day buys - a flatline Dow?




We are due for a pullback, both technically and seasonally. This is still a pretty strong trend though and a bit early to call a top IMO.

Agree Porper...

CanOz


----------



## notting

Reporting season and an election in the US over the next month.
Doubt too many are going to be throwing the bucket in right now.
After that *companies* should be in the clear! :car:


----------



## Joules MM1

notting said:


> Reporting season and an election in the US over the next month.
> Doubt too many are going to be throwing the bucket in right now.
> After that *companies* should be in the clear! :car:




of course, he could simply ask; are they all waiting for the election to pass?

sittin' onna lo' o' company dosh guvna

http://www.zerohedge.com/news/2012-...nesses-quietly-preparing-financial-apocalypse

always with the apocalypso theme


----------



## Joules MM1

here's an interesting imf point of view

*Fiscal policy
Let go of the brakes*

Oct 9th 2012, 6:01 by R.D. | TOKYO




		HTML:
	




http://www.economist.com/blogs/free...al-policy?fsrc=scn/tw_ec/let_go_of_the_brakes

new zealand took a hit.....and looking forward, not so bad...


----------



## Porper

Uncle Festivus said:


> It is a fact? Why?
> 
> The Dow hasn't gone anywhere since QE3 was confirmed 3 weeks ago. So that's what $3Billion a day buys - a flatline Dow?




Just goes to show that QE3 was expected and added nothing to an already bullish stockmarket. The same will probably happen when QE4 is announced although markets will probably be at substantially higher levels by then


----------



## Joules MM1

always enjoy a good theorists hyperbole thread.....add this:

* The Jobless Claims Market*
Thursday, October 11, 2012 at 11:44AM 



> The weekly Initial Jobless Claims reading has done a pretty good job mirroring the movement in the US stock market since the bull market began in 2009.  Below is a chart of the S&P 500 versus the inverse of the Initial Jobless Claims (seasonally adjusted) reading since March 2009.  With the inverse of the claims reading making a new bull market high this week, will the S&P 500 now follow?




http://www.bespokeinvest.com/thinkbig/2012/10/11/the-jobless-claims-market.html

(_and_ a radar date today 12/10/12........lulz.....more majical theory numbers)


----------



## Joules MM1

and wot about this one:

http://product.datastream.com/dscha...c8-f3bf-4f84-8d9a-bf06c10efb7f&action=REFRESH


> Rick Harrell ‏@MacroRico
> 
> Is a rebound in global trade around the corner? Global PMI's showing a tentative trough. Chart: http://bit.ly/OFkDiH





to see the original jpeg click the link


----------



## aliceconer

Standing from the point of today, the U.S. stock market is still bullish. The Dow has risen nearly 9%; the Nasdaq Composite has climbed nearly 17% and the S&P 500 index has climbed nearly 14%.


----------



## Uncle Festivus

Joules MM1 said:


> and wot about this one:




I recall vaguely recently that someone decided to add up all the global import & export numbers the result being that someone has been telling porkies coz it didn't net out? Probably our usual suspect, the kingdom of 'data to order'?


----------



## Uncle Festivus

Porper said:


> Just goes to show that QE3 was expected and added nothing to an already bullish stockmarket. The same will probably happen when QE4 is announced although markets will probably be at substantially higher levels by then




There won't be a QE4 because, as you know from the FOMC minutes, QE3 is esentially open ended - the 'whatever it takes' Bernanke buckstop? Trouble is they've already spent some $60Billion and the market is 300 pts lower. I'm sure American taxpayers are happy with the value for money they are getting 

So in the absence of any reasoning to substantiate the statement "The fact is markets are heading higher so why try and fight it?" I will just do a quick bit of arithmetic and become a disciple of blind believing, and come up with a Birinyi 'target' of another 31% by Oct 2013, for the Dow at 17000?? Is that how it works?

Of course this is all in jest coz I know you can't be serious - are you


----------



## Porper

Uncle Festivus said:


> There won't be a QE4 because, as you know from the FOMC minutes, QE3 is esentially open ended - the 'whatever it takes' Bernanke buckstop? Trouble is they've already spent some $60Billion and the market is 300 pts lower. I'm sure American taxpayers are happy with the value for money they are getting
> 
> So in the absence of any reasoning to substantiate the statement "The fact is markets are heading higher so why try and fight it?" I will just do a quick bit of arithmetic and become a disciple of blind believing, and come up with a Birinyi 'target' of another 31% by Oct 2013, for the Dow at 17000?? Is that how it works?
> 
> Of course this is all in jest coz I know you can't be serious - are you




Obviously I'm joking Uncle because you are correct. All data out of the U.S, Europe & China is all tweeked to look better than it is. 

You are also correct in suggesting "this time is different" and the end is nigh...if I was you I'd go and jump in your bunker before the world implodes. Last comment by me on the subject as I am just going to go and hang myself


----------



## Porper

Uncle Festivus said:


> I will just do a quick bit of arithmetic and become a disciple of blind believing, and come up with a Birinyi 'target' of another 31% by Oct 2013, for the Dow at 17000?? Is that how it works?




Before I head off to the dungeon of life...you may be correct in your prediction there Unc. 17,000 a little too high but should get close.


----------



## Joules MM1

oh, blame Jack Welch for all this good news.....

*This Is The Biggest Economic Story In The World*
Joe Weisenthal	| Oct. 17, 2012, 1:45 PM

Read more: http://www.businessinsider.com/consumer-comeback-2012-10#ixzz29ux8pRee

great charts.....


----------



## ROE

Porper said:


> Obviously I'm joking Uncle because you are correct. All data out of the U.S, Europe & China is all tweeked to look better than it





Good figure data to a pessemist is manipulation of data
Bad indicator figures are true data and not manipulated

just like stock, if you invest and stock goes up, you are a genius you know your stuff
but if it tanks, damn manipulations, shorters and HFT that cause it 

bad headlines in mass media websites is true but good headlines, they are just main stream, they dont know their stuff must look at blogs and  independent sites and youtube, those are true source of information....


----------



## Uncle Festivus

Porper said:


> Obviously I'm joking Uncle because you are correct. All data out of the U.S, Europe & China is all tweeked to look better than it is.




No, it's not tweaked - it's the methodology & assumptions that are flawed - a big difference.


----------



## Uncle Festivus

Joules MM1 said:


> oh, blame Jack Welch for all this good news.....
> 
> *This Is The Biggest Economic Story In The World*
> Joe Weisenthal	| Oct. 17, 2012, 1:45 PM
> 
> Read more: http://www.businessinsider.com/consumer-comeback-2012-10#ixzz29ux8pRee
> 
> great charts.....




Then why open ended QE if things are so good??

Several data show record highs already - to go higher would be bubble territory?

Company earnings already peaked = 200 pt tickle down or BTFD?

The last hurrah.........


----------



## white_goodman

Uncle Festivus said:


> Then why open ended QE if things are so good??
> 
> Several data show record highs already - to go higher would be bubble territory?
> 
> Company earnings already peaked = 200 pt tickle down or BTFD?
> 
> The last hurrah.........




they need to re-inflate the housing market and further reduce unemployment, theyve been quite open about this


----------



## Uncle Festivus

Sell before the 'fiscal cliff'?

http://www.bloomberg.com/news/2012-...to-sell-for-gains-before-unfriendly-2013.html



> Tax cuts first enacted during George W. Bush’s presidency and extended in 2010 are set to expire Dec. 31. Unless Congress acts, the tax increases along with automatic federal spending cuts will combine to form the so-called fiscal cliff. Taxes on the top 1 percent of U.S. households would increase by an average $120,537, according to a study by the nonpartisan Tax Policy Center.
> 
> Federal taxes on ordinary income will rise to as much as 39.6 percent from 35 percent. Long-term capital gains rates will increase to a maximum 20 percent from 15 percent, plus an additional 3.8 percent for high-income earners as a result of the 2010 health-care law.
> 
> The opportunity for individuals to transfer up to $5.12 million --- or $10.24 million for couples -- free of estate taxes and gift taxes also is set to expire at the end of the year and drop to $1 million. Legislation enacted in 2010 raised the lifetime estate-and-gift-tax exclusion for 2011 and 2012.
> 
> With about 10 weeks left in the year, taxpayers waiting for a decision from Congress before making investment moves may run out of time. Lawmakers won’t address tax and spending issues until they return to Capitol Hill after the Nov. 6 election.


----------



## Uncle Festivus

white_goodman said:


> they need to re-inflate the housing market and further reduce unemployment, theyve been quite open about this




25% of house sales is 'distressed', and they are the properties that actually make it to market - there is still a massive amount of distressed properties on banks 'off-ledger' books.

House prices inflated by luxury sales....

Employment - 



> ....in nearly the four years, since President Obama took office in January 2009, only 827,000 people have been added to the labor force, while during that same time period, 8,208,000 have been added to those not in the labor force.
> 
> "These figures reveal several troubling trends: That the jobs market is not keeping pace with U.S. population growth; that not enough younger Americans are joining the labor force to account for retirement among an ageing population; and that a large number of workers have become so discouraged that they simply stopped looking for work and left the labor force entirely. These factors pose serious fiscal challenges for the United States. A historically low labor force participation rate””together with an ageing population and a record number of people drawing federal welfare benefits””puts severe strain on the federal budget in both the near and long term."
> 
> UPDATE: Senator Jeff Sessions, the ranking member of the Senate Budget Committee, comments: “The essential point of this chart is not simply how many people are employed or unemployed, but to illustrate that more and more people are simply not part of the U.S. labor force. This confirms that we are on the wrong track. It is unsustainable to have such a large and growing number of people who are not part of the productive economy. This is not a political argument, but a description of the underlying instability in our economy that has so many Americans worried about the future. The question is what can we do to reverse these trends and start moving in the right direction.”







Longer term -


----------



## Uncle Festivus

Corporate profits have peaked?




Corporate Profits as a share of GDP. It's a pretty rough approximation of corporate profit margins, and it shows that margins are very close to an all-time high. Not only are they at an all-time high, but they're way out of line with recent decades.

Read more: http://www.businessinsider.com/fisc...te-profits-and-deficits-2012-10#ixzz29zU2KPxA


----------



## Knobby22

Uncle Festivus said:


> Corporate profits have peaked?
> 
> View attachment 49411
> 
> 
> Corporate Profits as a share of GDP. It's a pretty rough approximation of corporate profit margins, and it shows that margins are very close to an all-time high. Not only are they at an all-time high, but they're way out of line with recent decades.
> 
> Read more: http://www.businessinsider.com/fisc...te-profits-and-deficits-2012-10#ixzz29zU2KPxA




Is that what it really means? or is it just that they control more of GDP than in the past. e.g. even sandwich shops are corporate now (subway).


----------



## white_goodman

how quaint...

the reduction in the participation rate is what would be expected with an ageing boomer population, starting a graph at 2009 the start of the crisis is pretty dumb and doesnt represent the story whatsoever... unemployment is coming down in the US, you can argue over the figures however you want, but Unemployment Rate = LF - E/LF.
Regarding property theres a hell of a lot of inventory in some of the hardest hit areas, no argument. Look at MBS pricing, housing starts, housing finance, active involvement of the Fed at the long end of the curve.. the objectives are clear... The Fed is TRYING to inflate out of the mess, the arguement is whether it will work. My opinion is that it will until it wont, they are sitting on too many assets (bonds) that its going to be ugly when it hits the market.

looking at your next post it is true govt deficit spending/monetary stimulus has been a large driver of current corporate profits, looking at Richard Koos hypothesis, this was needed with regard to the amount of corporate/personal deleveraging.. However the assumption here is when deficit spending falls we are all effed, which may be true however corporates are sitting on so much cash which is parked on the sideline due to expectations/confidence. When deficit spending starts decreasing id logically expect this to be in light of growing business investment, deploying capital etc, ie govt saving offset by private investment


----------



## Uncle Festivus

white_goodman said:


> how quaint...
> 
> the reduction in the participation rate is what would be expected with an ageing boomer population, starting a graph at 2009 the start of the crisis is pretty dumb and doesnt represent the story whatsoever... unemployment is coming down in the US, you can argue over the figures however you want, but Unemployment Rate = LF - E/LF.



Huh?? The second chart starts at 1975! The first chart was just Obamas' effort.

U3 doesn't tell the real story, more of a political metric. If that's the figure that makes you happy then go with with it, but it's not what is happening in the real world.......even U6 is still 15%.....






white_goodman said:


> .. However the assumption here is when deficit spending falls we are all effed, which may be true however corporates are sitting on so much cash which is parked on the sideline due to expectations/confidence. When deficit spending starts decreasing id logically expect this to be in light of growing business investment, deploying capital etc, ie govt saving offset by private investment




They may have more cash but they are still net debtors. Only a handfull, of the SP500 companies at least, are net creditors. Why wouldn't they take advantage of essentially 'free' cash? It's just a pity it goes into buy-backs & bonuses rather than productive assets?

The problem will come when inflation takes hold, as per the charts in Joules MM1 Jack Welch post, and the Fed will have to reluctantly start raising rates. That is, unless the NBER realises they are already in a recession......


----------



## white_goodman

Uncle Festivus said:


> Huh?? The second chart starts at 1975! The first chart was just Obamas' effort.
> 
> U3 doesn't tell the real story, more of a political metric. If that's the figure that makes you happy then go with with it, but it's not what is happening in the real world.......even U6 is still 15%.....
> 
> View attachment 49412
> 
> 
> 
> 
> They may have more cash but they are still net debtors. Only a handfull, of the SP500 companies at least, are net creditors. Why wouldn't they take advantage of essentially 'free' cash? It's just a pity it goes into buy-backs & bonuses rather than productive assets?
> 
> The problem will come when inflation takes hold, as per the charts in Joules MM1 Jack Welch post, and the Fed will have to reluctantly start raising rates. That is, unless the NBER realises they are already in a recession......




facepalm.jpg..

did you expect the non labour force to decrease over a period of 40 years when the population increased? Do you even understand the numbers and what they represent? This is the participation rate for the US:

PR= LF/Total working age Population






and what im saying is the natural decrease as was the natural increase prior is largely attributable to age demographics.. Now youve showed me a chart where unemployment rate (Unemployed/LF) has been reducing, which is exactly the plan of the Fed, Bernanke has largely abandoned inflation/price targeting more for economic central planning.. which is bad long term, and imo quite different from the practices of our own RBA (acknowledgement of imperfect knowledge/unintended consequences)

The problem isnt so much reluctantly raising rates its having to raise rates and game the market whilst slowly offloading all its long end treasury exposures.. I have large doubts


----------



## Uncle Festivus

white_goodman said:


> facepalm.jpg..
> 
> did you expect the non labour force to decrease over a period of 40 years when the population increased? Do you even understand the numbers and what they represent? This is the participation rate for the US:
> 
> PR= LF/Total working age Population




What are we talking about - the participation rate or Not in labour Force figures?? My charts refer to NiLF......?


----------



## Joules MM1

http://www.exxonmobilperspectives.c...ium=cpc&utm_campaign=Perspectives_-_Full_Site

*A billion-dollar daily shot in the arm for the American economy *
August 17, 2012 | Posted by Ken Cohen

excerpt



> The story notes that Merrill Lynch claims raw gains from domestic energy supplies were $900 million per day in April – a 1,300 percent increase from $70 million per day in January 2010. By the end of 2012, Merrill Lynch expects the daily gains from domestic supplies to be over $1 billion.
> 
> Unfortunately the report is not online, which is too bad because the authors provide valuable detail about what they see as the great economic contribution of the current energy revolution. They peg that contribution at 2.2 percent of U.S. gross domestic product – an astounding figure in a $15 trillion economy.


----------



## CanOz

Joules MM1 said:


> http://www.exxonmobilperspectives.c...ium=cpc&utm_campaign=Perspectives_-_Full_Site
> 
> *A billion-dollar daily shot in the arm for the American economy *
> August 17, 2012 | Posted by Ken Cohen
> 
> excerpt




More great stuff from you mate, well done...great link!

CanOz


----------



## white_goodman

Uncle Festivus said:


> What are we talking about - the participation rate or Not in labour Force figures?? My charts refer to NiLF......?




not in labour force as a stock means nothing...that graph basically just shows the population increase over that time.. the dip recently in the participation rate which actually shows the real effects of those not in the labour force.. show any western world country (thats had population increase) over the last 50 years and you will get the exact same graph, the analysis is in unemployment rates and participation rates.. this is very basic economics


----------



## Joules MM1

oh, you Baby Doomers are going to enjoy getting your cynical teeth into this one......

http://www.businessinsider.com/an-e...tton&utm_medium=social&utm_campaign=moneygame

*The Economy May Be Going Into A Phase That's A Complete Reversal Of The Last 3 Years*



Joe Weisenthal|Oct. 23, 2012, 9:01 AM


Read more: http://www.businessinsider.com/an-e...and-housing-weak-stocks-2012-10#ixzz2A8BXxROv


----------



## Uncle Festivus

It was fun while it lasted.......





Just need the 3pm Benny Bump........

]
	

		
			
		

		
	

View attachment New Picture (1) - Copy.bmp


----------



## Porper

Funny how the doom and gloom brigade appear when the market heads lower by more than 1.0%.

We may well be in for a retracement... but it would actually be positive after the massive rise. Markets don't head higher in a straight line movement. Looking at the attached chart shows clearly that the uptrend is still very strong and showing no signs of a major top.

Theoretically the DOW could head down to 9200 and still be in a bull phase.

 No need to panic yet, not by a long way i.m.o. Dips continue to be bought into so until this changes the bullish case remains.


----------



## white_goodman

Porper said:


> Funny how the doom and gloom brigade appear when the market heads lower by more than 1.0%.
> 
> We may well be in for a retracement... but it would actually be positive after the massive rise. Markets don't head higher in a straight line movement. Looking at the attached chart shows clearly that the uptrend is still very strong and showing no signs of a major top.
> 
> Theoretically the DOW could head down to 9200 and still be in a bull phase.
> 
> No need to panic yet, not by a long way i.m.o. Dips continue to be bought into so until this changes the bullish case remains.




im one of the most cynical people here, and its blatantly obvious that we are in a firm uptrend and we are going higher, dont argue with the Fed and the will of every world institution to inflate their way out of this.


----------



## MrBurns

white_goodman said:


> im one of the most cynical people here, and its blatantly obvious that we are in a firm uptrend and we are going higher, dont argue with the Fed and the will of every world institution to inflate their way out of this.




Probably right......


----------



## white_goodman

MrBurns said:


> Probably right......




all you can play is the playbook theyve put in front of this, as a classical liberal im totally against it, but it is what it is...


----------



## Uncle Festivus

Porper said:


> Funny how the doom and gloom brigade appear when the market heads lower by more than 1.0%.
> 
> We may well be in for a retracement... but it would actually be positive after the massive rise. Markets don't head higher in a straight line movement. Looking at the attached chart shows clearly that the uptrend is still very strong and showing no signs of a major top.
> 
> Theoretically the DOW could head down to 9200 and still be in a bull phase.
> 
> No need to panic yet, not by a long way i.m.o. Dips continue to be bought into so until this changes the bullish case remains.




Hi Porper, welcome back!

'Funny how the doom and gloom brigade appear when the market heads lower by more than 1.0%.' - no, I've been here at every market top 

'No need to panic yet, not by a long way i.m.o.' - where have I heard that before - 

“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929

'Dips continue to be bought into so until this changes the bullish case remains.' - How can you tell this? Didn't get any bounce out of that little sell off, which by the way was caused by some annoying little thing called 'Earnings' being worse-than-expected. Refer to earnings chart above.




Where's the bounce? Forward earnings guidance was the killer though...........


----------



## Uncle Festivus

white_goodman said:


> im one of the most cynical people here, and its blatantly obvious that we are in a firm uptrend and we are going higher, dont argue with the Fed and the will of every world institution to inflate their way out of this.




Yes, that's the popular thinking, but where has the $100BILLION (so far....) or so in Fed QE3 gone? the Dow is down 500 pts during this period? Don't fight the Fed but what if it's not working? What if they are already in recession and earnings have peaked and heading lower? It's an earnings led correction.....not much headroom left?




Where's the volume?

Is it any co-incidence that we get several days of 100 plus plunges and we see news that the Fed is going to bolster QE3?? They are clearly worried about something.........the FOMC meeting will probably be good for about 100 pts or so?


----------



## notting

What the market does after the QE3 announcments is not the way to measure the effects of QE.
What the market does leading up to the announcment is more to the point.


----------



## Uncle Festivus

notting said:


> What the market does after the QE3 announcments is not the way to measure the effects of QE.
> What the market does leading up to the announcment is more to the point.




Well it's clearly been totally ineffective at keeping stock prices up?


----------



## notting

I think the idea is that it is supposed to be a social policy ie get unemployment down from close to 10% to now around %7.8 and falling as well as housing going which is a big driver.  Housing is also showing green shoots and even seedlings! QE is achieving those headlines for the moment.


----------



## Porper

Uncle Festivus said:


> Well it's clearly been totally ineffective at keeping stock prices up?




Not quite sure how you can say the U.S indices are weak? Take a look at my chart above Uncle. Looks pretty strong to me, even if we do see a downturn for a few weeks...still positive . As for QE3...everybody and their dog new it was coming so was built into the prior rise.

All I would say is that if you firmly belive we have reached a major top then short like hell!! Very dangerous i.m.o at this early stage.


----------



## white_goodman

Uncle Festivus said:


> Yes, that's the popular thinking, but where has the $100BILLION (so far....) or so in Fed QE3 gone? the Dow is down 500 pts during this period? Don't fight the Fed but what if it's not working? What if they are already in recession and earnings have peaked and heading lower? It's an earnings led correction.....not much headroom left?
> 
> View attachment 49442
> 
> 
> Where's the volume?
> 
> Is it any co-incidence that we get several days of 100 plus plunges and we see news that the Fed is going to bolster QE3?? They are clearly worried about something.........the FOMC meeting will probably be good for about 100 pts or so?




if you are so convicted you should be short, no?

you may not realise this but you arent a contrarian, as much as that pains you, the retail crowd have largely missed the whole run up


----------



## Uncle Festivus

white_goodman said:


> if you are so convicted you should be short, no?
> 
> you may not realise this but you arent a contrarian, as much as that pains you, the retail crowd have largely missed the whole run up




Conversely, you have been buying,yes? 

It doesn't 'pain' me at all.



> BOSTON (AP) -- Even as stock prices rose again in September, investors withdrew money from stock mutual funds at the fastest pace of the year, marking the seventh straight month that withdrawals have exceeded deposits.



Who's buying then? Insiders are selling....


----------



## Porper

Uncle Festivus said:


> Conversely, you have been buying,yes?
> 
> It doesn't 'pain' me at all.
> 
> 
> Who's buying then? Insiders are selling....
> 
> View attachment 49446




I am fully invested right now and will continue to be until the trend reverses.

As for the "smart money" selling...well all I can say is that this has supposedly been the case throughout the whole of this bull market so far. Volume has been light I agree but the fact that strength continues is a fact that can't be disputed. I just don't see any reason to be looking for a major sell-off here....sorry to disappoint those that crave such a move.


----------



## white_goodman

Uncle Festivus said:


> Conversely, you have been buying,yes?
> 
> It doesn't 'pain' me at all.
> 
> 
> Who's buying then? Insiders are selling....
> 
> View attachment 49446




ive been buying for about a year, its been good...

mutual funds are insiders? interesting..


----------



## Uncle Festivus

white_goodman said:


> ive been buying for about a year, its been good...
> 
> mutual funds are insiders? interesting..




Have you bought this 'dip'? If you've been buying at any time since September 14th then you will be out of the money?

Who said mutual funds are insiders?


----------



## white_goodman

Uncle Festivus said:


> Have you bought this 'dip'? If you've been buying at any time since September 14th then you will be out of the money?
> 
> Who said mutual funds are insiders?





really? do all stocks move in tandem with the index? Ive been buying Telstra steadily on the way up and im still in the money, even those purchased post sept 14..


----------



## Uncle Festivus

white_goodman said:


> really? do all stocks move in tandem with the index? Ive been buying Telstra steadily on the way up and im still in the money, even those purchased post sept 14..




As per thread title - US stock market. 

Though if you want to talk about the ASX then it's had a stellar run too I guess.


----------



## Joules MM1

http://www.uncommonwisdomdaily.com/...n=Feed:+UncommonWisdomDaily+(Uncommon+Wisdom)

*These 3 Charts Offer a Roadmap for a Second Obama Term*

 Sean Brodrick | October 25, 2012

video


----------



## Uncle Festivus

The bigger picture........

Housing starts are nearly back to previous lows




Auto sales are already back to trend


----------



## CanOz

I was thinking as i was looking at my charts yesterday that perhaps the correction is over and its onward and upward into the Santa Claus rally, then i got this perspective from the Technical Speculator this morning. I hadn't noticed the dollar.

We need a bounce this week off support on the Spoos, should be a rally into Christmas!


----------



## Joules MM1

CanOz said:


> I was thinking as i was looking at my charts yesterday




pictures paint a thousand interp's.....

*Solid Seasonal Retail Hiring, Graphs for Duration of Unemployment, Unemployment by Education and Diffusion Indexes*
Posted: November 3, 2012 3:42 pm
By CalculatedRisk




etc etc


----------



## Uncle Festivus

Waiting for the announcement that the 'Fiscal Cliff' has been postponed/avoided to break the trend of uncertainty?


----------



## Knobby22

It will be very interesting to see what effect the US election has.
I feel that we may get a bit of a run from here though if Congress decide to block Obama for another 4 years the sentiment could change rapidly.


----------



## notting

Obama wins. 
Focus turns to imaginary boogy man - fiscal cliff.
Republicans kick it around to punish voters, till it starts to look bad for them too.
Last minute deal saves the day for January rally.


----------



## Uncle Festivus

Ouch!


----------



## Porper

Uncle Festivus said:


> Ouch!
> 
> View attachment 49598




Would be good to see a decent retracement here. Shake out the weak hands and get another cracking buying opportunity.


----------



## bailx

WASHINGTON - President Barack Obama is not ready to accept a new offer from the Republican leader of the U.S. the House of Representatives to raise taxes on top earners in exchange for major cuts in entitlement programs, a source said late Saturday.

What an idiot. 'Guns for hire'?


----------



## Julia

bailx said:


> WASHINGTON - President Barack Obama is not ready to accept a new offer from the Republican leader of the U.S. the House of Representatives to raise taxes on top earners in exchange for major cuts in entitlement programs, a source said late Saturday.
> 
> What an idiot. 'Guns for hire'?



That's a very general comment on what is on offer by the Republicans:  meaningless, really, unless you provide details.


----------



## nysefloortrader

I seriously think the market is gunna surprise us and we get one last rally up into *EARLY - MID january 2013. *

Then we gunna see a nice SELL OFF DIP soon after that. 

I think the S&P is still aiming for 1490 - 1500 very soon!


----------



## Uncle Festivus

Free lunch?




No free lunch??




The bears must be salivating.................


----------



## Miner

*US Stock market on verge of collapse- the title of this thread now should be reversed * !!!!!!!

I could see the Cliff Steroid Injection applied by Dr Obama has pushed the DJ Bull  already to rise more than 300 points. 

Since Bull does not produce milk, I can not say this is a Cash Cow situation for US Stocks. So wait for the typical bull fight scenario.

I have not seen   such a big one day rise in  US Market . I am sure ASX index will be induced by the same steroid on 3rd January opening hours. It has already sniffed some of the medicine yesterday but today will be great. Fundamentally it is more than steriod effect - iron ore price has gone up, gold reserve has diminished, copper reserve has diminished  and will not wonder to see uranium to rise on this occasion. 

Yes, after such a rise the following day always a cooling period. Great start for the US Stocks financial year.


----------



## Uncle Festivus

Miner said:


> *US Stock market on verge of collapse- the title of this thread now should be reversed * !!!!!!!




The Fat (Debt Ceiling) Lady is about to sing


----------



## Julia

From the celebratory rises in markets you'd think they'd actually really solved something.


----------



## white_goodman

Uncle Festivus said:


> The Fat (Debt Ceiling) Lady is about to sing




then you should be short then..


----------



## Trembling Hand

white_goodman said:


> then you should be short then..




again


----------



## Aussiejeff

Julia said:


> From the celebratory rises in markets you'd think they'd actually really solved something.




They have solved _absolutely nothing_. Which is something, I guess... 

Billionaires, place your bets please!


----------



## Uncle Festivus

Trembling Hand said:


> again




Doh...you again!

Foiled again!

Short again 

Humble fact #1 - for every $1 of global GDP created it has taken $4 in debt to do so....
Humble fact #2 - for every $1 of US GDP created it has taken $2.5 in debt to do so....

Giddy up.....


----------



## Uncle Festivus

white_goodman said:


> then you should be short then..




How 'bout we see how we go over 12 months shorting? I could bet $US100, but it would probably be only worth $US1 by then????

Dow = 13400
Dax = 7790
FTSE = 6050

And not forgetting the 'investment' short, the $AU/$US - $1.052


----------



## CanOz

Uncle Festivus said:


> How 'bout we see how we go over 12 months shorting? I could bet $US100, but it would probably be only worth $US1 by then????
> 
> Dow = 13400
> Dax = *7790*
> FTSE = 6050




Start another thread for Year End Index Predictions Uncle...


----------



## white_goodman

Uncle Festivus said:


> How 'bout we see how we go over 12 months shorting? I could bet $US100, but it would probably be only worth $US1 by then????
> 
> Dow = 13400
> Dax = 7790
> FTSE = 6050
> 
> And not forgetting the 'investment' short, the $AU/$US - $1.052




in financial markets you dont have to make side prop bets,

underlying macro-economics does not equal stock market..

im long and think its essentially a house of cards going forward.. you can be right all the way up this bull market in your assessment of the macro picture..

welcome to amateur hour


----------



## white_goodman

Uncle Festivus said:


> How 'bout we see how we go over 12 months shorting?




get short then...


----------



## Uncle Festivus

white_goodman said:


> get short then...




I've hung mine out, show us yours


----------



## white_goodman

Uncle Festivus said:


> I've hung mine out, show us yours




test your theories/hypothesis in the market, we all can.. itll provide feedback that you seek


otherwise hypothetical forecasts mean little


----------



## Uncle Festivus

white_goodman said:


> test your theories/hypothesis in the market, we all can.. itll provide feedback that you seek
> 
> 
> otherwise hypothetical forecasts mean little




I guess it's all hypothetical while ever the CB's are steering?

What I meant was how about some reasoning or data to put forward for the bullish case, and/or where do ppl see the Dow this time next year. Nothing too serious about it, just something to back the bullish sentiment?


----------



## white_goodman

Uncle Festivus said:


> I guess it's all hypothetical while ever the CB's are steering?
> 
> What I meant was how about some reasoning or data to put forward for the bullish case, and/or where do ppl see the Dow this time next year. Nothing too serious about it, just something to back the bullish sentiment?




mine is simple... im long because the CB's/govts wont accept another demolition of pensioner and peoples savings/investments... they will pump money into the economy at any sign of weakness.. 

this unconventional MP is while slushing around extra money and depressing yields/IR's has forced many yield seekers into the stock market. Australia is now starting to see this (look at Telstra and its trajectory) so im longing many dividend stocks, central theme around TLS...

however when yields start to go up as people exit the safe haven of US treasuries (solvency of US budget reasons), all that money that is usually rolled over in short term treasuries, wont be, and will start appearing as inflation in both real estate and stocks globally.

read Cochranes paper 'inflation and debt' 2011 

so while I can agree on the structural problems, the economic playbook is reasonably well known to those who read the BIS and CB papers... the real economy may become more disconnected from the stock market...


----------



## Uncle Festivus

Their wishes may come true so  keep an eye on bond yields taking off......no free lunch.



> Treasury yields were on track for the biggest weekly jump since March as a confluence of fiscal, monetary and economic news worked against investors’ interest in U.S. debt.






> The U.S. government reached its $16.4 trillion borrowing limit on Monday, according to the Treasury Department.
> Treasury Secretary Timothy Geithner informed congressional leaders in a letter Monday that the government has begun employing "*extraordinary measures*" to avoid default as it bumps up against the borrowing cap.
> Geithner said his agency is beginning a "debt issuance suspension period."
> 
> Geithner said in the letter that the government has *suspended investments* in a pair of government retirement funds, a move commonly employed by the Treasury when it bumps up against its borrowing cap. Federal retirees and employees will be made whole after the limit is raised




"made whole" when they are allowed to continue printing money to pay to live beyond their means...


----------



## Uncle Festivus

Uncle Festivus said:


> Their wishes may come true so  keep an eye on bond yields taking off......no free lunch.




Long-term Treasurys, considered among the safest assets in the investment world, lost 3.07% of value in the early days of 2013””more than wiping away their annual 3% yield in one week.

The dynamic underscores what BlackRock calls "the danger in safety" and highlights the perils of buying even the best-rated investments in an era of rock-bottom rates.

"The first couple of days of the year have been a warning sign for interest rates," said Tim Gramatovich, co-manager of the AdvisorShares Peritus High Yield exchange-traded fund.


----------



## CanOz

Uncle Festivus said:


> Long-term Treasurys, considered among the safest assets in the investment world, lost 3.07% of value in the early days of 2013””more than wiping away their annual 3% yield in one week.
> 
> The dynamic underscores what BlackRock calls "the danger in safety" and highlights the perils of buying even the best-rated investments in an era of rock-bottom rates.
> 
> "The first couple of days of the year have been a warning sign for interest rates," said Tim Gramatovich, co-manager of the AdvisorShares Peritus High Yield exchange-traded fund.




Market manipulation on the highest order...forcing money into the equity market.


----------



## tinhat

CanOz said:


> Market manipulation on the highest order...forcing money into the equity market.




Whether your observation is correct or not, there is no doubt that buying bonds with an effective negative real return is a risky business. They are only risk free if you are prepared to hold until maturity (knowing that the real value is diminishing exponentially along the way). No sane person could not expect interest rates to rise at some point. Furthermore, at some point a more sensible re-rating of risk/return was going to have to be taken by the share market making bond prices quite exposed to downside risk. Add in the substantial upside risk to inflation over the medium term...

In short, if prices of bonds have been pulled into a bubble by excess demand such that the real rate of return is negative, surely at some point you would expect bond prices to fall?


----------



## CanOz

tinhat said:


> surely at some point you would expect bond prices to fall?





Absolutely....but to do that yields MUST rise and there is a snowflakes hope in he** of that happening.

CanOz


----------



## white_goodman




----------



## Uncle Festivus

CanOz said:


> Absolutely....but to do that yields MUST rise and there is a snowflakes hope in he** of that happening.
> 
> CanOz




They won't have to rise that much to make an impact though because of the compounding debt? (Warren Buffett must have forgotten about that one?)

At some stage the faith in USD's will be tested, possibly over the next few weeks with the debt ceiling & resultant credit rating cut when they raise it again?

Some perspective and deviation from the mean......




Althouugh from the extreme bull chart any serious 'profit taking' or correction in equites will slosh back into bonds - rinse repeat.......until someone neutralises all those freshly printed dollars ie someone is eventually going to take a big hit from being overleveraged with Fed liquidity........JPM was just a test?


----------



## Uncle Festivus

Classic.......

The Rising Wedge is a bearish pattern that begins wide at the bottom and contracts as prices move higher and the trading range narrows. In contrast to symmetrical triangles, which have no definitive slope and no bullish or bearish bias, rising wedges definitely slope up and have a bearish bias.


----------



## CanOz

Keep calling it Uncle, sooner or later you've got to be correct!

CanOz


----------



## boofis

I can tell you the buyers that just took out my stop loss on both the 30 yr and 10 yr ( I was short lol! ) weren't very bearish at all haha.


----------



## Uncle Festivus

CanOz said:


> Keep calling it Uncle, sooner or later you've got to be correct!
> 
> CanOz




Well even by that pattern (multi-year at that) it still has several months to resolve so just something to think about........isn't that the purpose of forums - dissemination of opinions? But when it does, hot air aint gonna hold it up any more.......too much leverage going on with OPM. 

As you can see, April has been a top for the last 2 years, but debt ceiling may bring that forward a bit this year?


----------



## white_goodman

Uncle Festivus said:


> Classic.......
> 
> The Rising Wedge is a bearish pattern that begins wide at the bottom and contracts as prices move higher and the trading range narrows. In contrast to symmetrical triangles, which have no definitive slope and no bullish or bearish bias, rising wedges definitely slope up and have a bearish bias.
> 
> View attachment 50494




I assume youve backtested rising wedges and shown that there is some edge in them playing out?
Or are we finding any pattern to confirm a bias... up = bearish, down = bearish

im afraid to break it to you, you arent a contrarian


----------



## Uncle Festivus

white_goodman said:


> I assume youve backtested rising wedges and shown that there is some edge in them playing out?
> Or are we finding any pattern to confirm a bias... up = bearish, down = bearish
> 
> im afraid to break it to you, you arent a contrarian




As usual, you are right again - perhaps you should change your user name to 'Right Goodman' 

This might be more to your liking - perhaps they should do the same to the US economy........and get a similar result?


----------



## white_goodman

Uncle Festivus said:


> As usual, you are right again - perhaps you should change your user name to 'Right Goodman'
> 
> This might be more to your liking - perhaps they should do the same to the US economy........and get a similar result?
> 
> View attachment 50508









being bearish on the economy isnt a niche contrarian view, try again


----------



## Uncle Festivus

white_goodman said:


> being bearish on the economy isnt a niche contrarian view, try again




I'm not sure why you are obsessed with this contrarian angle you keep pushing or does that come with you being smarter than everyone else?

PS who's the bloke next to you?


----------



## white_goodman




----------



## boofis

white_goodman said:


>





lol damn you for distractions!


----------



## Uncle Festivus

Let's get 'real'


----------



## Uncle Festivus

We have lift-off.......




Thanks to Transports.......




and a few other facts.......


volatility is at its lowest reading since June 2007, the month that a pair of Bear Stearns hedge funds blew up.

by at least one composite measure, aversion to risk is presently at a three-decade low. 

global debt issuance just staged a record year.

leverage at hedge funds just hit the highest level to start any year since at least 2004

at the New York Stock Exchange, margin debt among member firms rose in November to the highest level since February 2008””a month before Bear Stearns collapsed

Mom & pop investors want a piece of the action now - all is safe, come back into the water.........


----------



## Aussiejeff

How can the US stock market collapse with NO MORE DEBT LIMIT?

Ooorah! Oodles of cheap debt for all!

So, having _eliminated_ the debt ceiling limit for 3 months the US stock market will undoubtedly soar to new giddy heights. 

Guess what. 

At the end of those 3 months of cheap debt for all, Congress will decide the experiment has been such a success at artificially buoying the financial market that they will agree to eliminate (ie forget about) debt for a further 3-6 months....then so on ad-infinitum - since by then the real debt level will be so HUGE - to think otherwise would be downright "damaging to markets".

Y'all just gotta love greed. That magic human condition that will lead us all to endless wealth creation.

Enjoy the ascent...


----------



## Vader

Aussiejeff said:


> How can the US stock market collapse with NO MORE DEBT LIMIT?
> 
> Ooorah! Oodles of cheap debt for all!
> 
> So, having _eliminated_ the debt ceiling limit for 3 months the US stock market will undoubtedly soar to new giddy heights.
> 
> Guess what.
> 
> At the end of those 3 months of cheap debt for all, Congress will decide the experiment has been such a success at artificially buoying the financial market that they will agree to eliminate (ie forget about) debt for a further 3-6 months....then so on ad-infinitum - since by then the real debt level will be so HUGE - to think otherwise would be downright "damaging to markets".
> 
> Y'all just gotta love greed. That magic human condition that will lead us all to endless wealth creation.
> 
> Enjoy the ascent...




This is the 75th time the US have raised their debt ceiling since the 1960's (or there abouts, just going off figures I read in the paper a few weeks ago)... so they're getting pretty good at kicking that can down the road.

Don't worry about the debt ceiling... it's just a number  it'll become really interesting once inflation starts taking hold, but until that starts getting to scary heights, there's no reason for the sky to fall down just yet (IMO).

(that's not to say there won't be market corrections, but total collapse is still some way off I reckon).


----------



## Uncle Festivus

Bitter AAPL


----------



## CanOz

Vader said:


> it'll become really interesting once inflation starts taking hold, but until that starts getting to scary heights, there's no reason for the sky to fall down just yet (IMO).
> 
> (that's not to say there won't be market corrections, but total collapse is still some way off I reckon).




Inflation = less debt


----------



## white_goodman

CanOz said:


> Inflation = less debt




what happens to interest rates and what happens to the short maturity debt when its rolled over at higher yields?..


----------



## sinner

CanOz said:


> Inflation = less debt




Your equation is missing a few variables there CanOz, specifically the GDP/Debt ratio.

http://www.lighthouseinvestmentmana...ze-this-the-fed-is-not-printing-enough-money/







> The dotted black line is the marginal utility of debt (right-hand scale). Think of it like this: how much additional GDP do you get out of one dollar of additional debt (in %). In 1992, for example, you get $0.30 in additional GDP for every additional dollar of debt.
> 
> Problem: this marginal utility of debt has trended lower and lower over the years, and actually reached zero in 2009.
> 
> Meaning: you can add as much debt as you want, and it still won’t give you any additional GDP.
> 
> To repeat: no amount of additional debt seems to be able to get economic growth going again.
> 
> That is a dramatic revelation. We might have reached the maximum debt-bearing capability of the economy. If true, no growth is possible unless debt-to-GDP levels fell back to sustainable levels (in order to restart the debt cycle). This could take years.
> 
> At this point, the only way to reset the debt cycle is to get rid of debt.
> 
> Ray Dalio correctly describes the three options available:
> 
> 1. Austerity: this would be painful and take quite some time (the Europeans are going down this path)
> 
> 2. Restructuring: requires write-downs and losses for bond investors (which are not being allowed to happen for fear of systemic risk)
> 
> 3. Printing money: Inflation. Better yet: hyper-inflation. *You have to destroy the value of debt fast enough before debt service costs, due to rising interest rates, drive the government into insolvency.*


----------



## CanOz

thanks for the clarification Sinner!


----------



## boofis

sinner said:


> Your equation is missing a few variables there CanOz, specifically the GDP/Debt ratio.
> 
> http://www.lighthouseinvestmentmana...ze-this-the-fed-is-not-printing-enough-money/




3. is intriguing, thanks for the quick link and run through.


----------



## Uncle Festivus

The GDP side of the ledger......


----------



## white_goodman

Uncle Festivus said:


> The GDP side of the ledger......
> 
> View attachment 50606




worth noting on the BRIC portion its only C holding them up..


----------



## white_goodman

grab this post from another site...

"A sell-off would be required to keep the long term bullish channel going. All sustained trending markets require corrections and retracements - it's a must. In fact, it looks like a probablility that we will sell off given where the market is in relationship to the upper channel line. There will certainly be serious buyers in the 143-145 range at the bottom of the channel. But the sell-off will not deter the bulls until we fail off from the current long term bullish channel - which would be in the 130-ish range. If we spend serious time under the channel, the longs will liquidate and fresh shorts will develop - that would be the scenario that reverses the trend underway since early 2009. The bear trap in mid-2011 left a big mark.

Timeframes. It's all about timeframes. A sell-off opportunity to the retail trader is a buying opportunity for the institutional investor.

Retail types have alot of animosity towards trends, largely because they think they know what a trend is but in reality not so much.

For every upleg in this trend there has been a downleg. And every downleg is the beginning of a bear market proclamation from the retail set. But in the space of three years we went from 70 to 150. Higher highs and higher lows. Classic bullish trend channel.

Maybe the smart thing to do is to let the market fail off on this trend channel and then call it a bear market. That's all I have ever said about this. I'm not hindsight bullish - I am presenting the reality of how the collective prices this market and what they think is fair value. The market is not telling us that it is selling off at the moment. The market is not telling us that a bear trend is upon us. Price is truth."


----------



## Uncle Festivus

Paying for the 'free' lunch?


----------



## Uncle Festivus

Don't blame it on the sunshine
Don't blame it on the moonlight
Don't blame it on the good times
Blame it on the QE



> The economy in the U.S, unexpectedly shrank in the fourth quarter, restrained by the biggest plunge in defense spending in four decades and dwindling inventories as household purchases picked up. Gross domestic product, the volume of all goods and services produced, dropped at a 0.1 percent annual rate, weaker than any economist forecast in a Bloomberg survey and the worst performance since the second quarter of 2009, when the world’s largest economy was still in the recession, Commerce Department figures showed today in Washington.


----------



## white_goodman

Uncle Festivus said:


> Don't blame it on the sunshine
> Don't blame it on the moonlight
> Don't blame it on the good times
> Blame it on the QE
> 
> 
> 
> View attachment 50698




a more up to date indication...


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## >Apocalypto<

white_goodman said:


> a more up to date indication...
> 
> View attachment 50753




following the money is the best idea if you are trying to make money most of the time...

http://www.theage.com.au/business/m...5year-peak-on-strong-data-20130202-2dqta.html

http://www.theage.com.au/business/w...factories-hit-9month-high-20130202-2dqtc.html


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## Uncle Festivus

white_goodman said:


> a more up to date indication...




How did you get that, do you have a sub?

Now for all the breathlessness of hitting the nominal 14k, it's still only 350 pts higher than the previous high back in September, or at a 'cost' of, 4.5 X $85B = $385B for 350Pts, = $1.1B per point? Plus private equity. Good value? Year end close at $85B X 11 = $935B = Dow @ 15030  This is getting easy now - should I hand back my economics degree and just buy a printer?

Just think the experiment has to work with everything pricing to perfection, without any sort of financial or economic set back, because there are no backstops now eg zirp - can they/we tolerate even a recession now or in the future?


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## white_goodman

Uncle has gone quiet now that we are at new highs..

love the averaging up strategy on directional markets


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## Uncle Festivus

Structural global recession.


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## >Apocalypto<

white_goodman said:


> Uncle has gone quiet now that we are at new highs..
> 
> love the averaging up strategy on directional markets




Turn a 5 year daily DOW chart upside down and this thread makes total sense.....


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## Whiskers

Recent revelations that the US Justice Department is more concerned about the repercussions (as in renewed financial instability) of prosecuting senior exec's of the big banks for criminal acts such as fraud, than simply following their charter to prosecute criminal behaviour when and where it happens is a further engredient of the recipe for politicial, economic and social disaster in the US. 

It seems from a Four Corners report that no charges have been laid against any big shots in relation to the GFC citing  a lack of evidence  and the unlikelyhood of the cases suceeding. Apparently little criminal investigation has been carried out. Private citizens and lawyers have apparently found plenty of whistle blower witnesses (that the justice department couldn't find) as part of, or an aside to civil suits, but still the Head of the justice department shows no interest in persuing criminal charges against them.


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## explod

white_goodman said:


> Uncle has gone quiet now that we are at new highs..
> 
> love the averaging up strategy on directional markets




Yeh, not tomorrow, lolliepops, roses and a solid Dow.  A bit toppy does not register anymore.

A leter from a citizen in Cyprus via "The Road To Roota" this morning (Aww could never happen to us):



> I received an email from a long time Road to Roota subscriber who actually LIVES in Cyprus. He is an English national but retired to Cyprus about 10 years ago. Although his email may seem unimaginable to those of you in "financially stable" countries that false sense of stability will not be around for long...
> 
> 3/20/2013
> 
> Hi Bix -
> 
> 
> Just a note from a very loyal subscriber to say THANK YOU...thank you for sticking to your guns when everyone else said you were crazy. I'm a long time follower of yours going back to your GATA days and took your advice to withdraw all my money from "the system" back in 2009. Friends and family who followed my subsequent advice over the years are very happy they did the same.
> 
> Those who did not listen are coming to the realization that there are no scenarios where they will ever get their money back. Although they are looking for people to blame they are also mad at themselves for waiting so long to take any action. I was tempted to give them a loud "I TOLD YOU SO" for mocking me all these years, but I find myself feeling very sorry for them and lending them cash to get by the best they can.
> 
> A few observations... The purchasing power of physical cash is rising as not many have any and folks are trying to stock up on essentials. Bartering should be kicking in soon as nobody (shop owners included) wants to part with their real goods and also nobody knows what our future "cash" will be if we leave the Euro. There are many rumors that they are going to tax or nationalize all retirement account as well.
> 
> I know Cyprus is not a huge country but we have all been violently awoken to reality over the past few days. You have always said that the end will come quickly and boy were you right in our case! Cypriots have come to realize that no fractional banking system can survive when the required blind faith in the system is lost.
> 
> There is no doubt that this same realization will hit the rest of the world very soon so tell all your subscribers that ROOTA WAS RIGHT ALL ALONG!
> 
> Bless you and all those who are fighting the Bad Guys.
> 
> Stephen Xxxx
> Paphos, Cyprus
> 
> Thank you Stephen and we will heed your advice.




http://www.roadtoroota.com/public/1133.cfm?awt_l=ATt92&awt_m=3mSuNMCuHdAZ85B


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## explod

This is part of an article in the New York Times this week.  Turning some heads and getting some big stick.  Picked it up via "the Privateer Newsletter 5/04.



> As the federal government and its central-bank sidekick, the Fed, have groped for one goal after another ”” smoothing out the business cycle, minimizing inflation and unemployment at the same time, rolling out a giant social insurance blanket, promoting homeownership, subsidizing medical care, propping up old industries (agriculture, automobiles) and fostering new ones (“clean” energy, biotechnology) and, above all, bailing out Wall Street ”” they have now succumbed to overload, overreach and outside capture by powerful interests. The modern Keynesian state is broke, paralyzed and mired in empty ritual incantations about stimulating “demand,” even as it fosters a mutant crony capitalism that periodically lavishes the top 1 percent with speculative windfalls




This is just a small part of a very stark and enlightening article.  Interesting that the Times editors let this one through.  Maybe it is a sign that the tide on our current buyant markets may soon turn.

The full article:

http://www.nytimes.com/2013/03/31/opinion/sunday/sundown-in-america.html?hp&_r=1&


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