Imminent and severe market correction

[MS+Tradesim]

Should turn soon I hope, volume has started to come in.

I hope not. I started shorting on Friday.

 

[Uncle Festivus]

So is this what you call a stunned mullet market - a severe case of denial - US GDP preliminary figure falls WORSE-THAN-EXPECTED -6.1% and the market futures go up? Wait for the revision into the -7's then? When will all the talking bobble heads on the various TV news shows finally admit it's a DEPRESSION out there people!

WASHINGTON (MarketWatch) - The U.S. economy contracted violently again in the first quarter of the year as business investment declined at a record rate, the Commerce Department reported Wednesday.

Real gross domestic product - the inflation-adjusted, seasonally adjusted value of all goods and services produced in the United States - fell at a 6.1% annualized rate in the first quarter, nearly matching the 6.3% decline in the fourth quarter of 2008.
The two-quarter contraction is the worst in more than 60 years. Since the 1947, the economy had never contracted by more than 4% for two consecutive quarters. With a 0.5% drop in the third quarter of 2008, it's the first time the economy has contracted for three consecutive quarters since 1975.

http://www.marketwatch.com/news/story/GDP-falls-61-record-drop/story.aspx?guid={F4F6A5E6-B2F9-43B4-876E-57D2DBC107F5}

 

[Rick_Hunter]

The markets have been really weird lately. Let's start guessing what the 'catalyst' needs to be for it to fall back to reality!

You'd think if it wasn't for the 'out of the blue' Flu case lately, that the S&P500 would be trying to break 1000 by now....

I wouldnt be surprised that May 6th announcement coming up about Stress Testing banks gonna give Wall St another reason to rally, with Government putting a positive spin on any results they get.....

 

[Sean K]

So is this what you call a stunned mullet market - a severe case of denial - US GDP preliminary figure falls WORSE-THAN-EXPECTED -6.1% and the market futures go up? Wait for the revision into the -7's then? When will all the talking bobble heads on the various TV news shows finally admit it's a DEPRESSION out there people!

Perhaps the market's not in denial, but has been expecting this, UF? The bad news has been flowing for months now. Even GM going into bankrupsy is mostly factored in perhaps. Or, perhaps we're all mullets? Whatever the case, been some great trading opportunities the past 2 months.

 

[doctorj]

Allegedly expectations were at -4.9%.

If you look into the detail, inventories were down significantly. This is either positive (less inventory means less overhang and more jobs in the near future as production begins ramping up again) or negative (companies are predicting the woes will continue for some time) depending on how you look at it.

Either way, the unexpected fall in inventories would have had a material downward impact on the GDP. I guess the market is buying into the good story at the moment.

 

[Aussiejeff]

Allegedly expectations were at -4.9%.

If you look into the detail, inventories were down significantly. This is either positive (less inventory means less overhang and more jobs in the near future as production begins ramping up again) or negative (companies are predicting the woes will continue for some time) depending on how you look at it.

Either way, the unexpected fall in inventories would have had a material downward impact on the GDP. I guess the market is buying into the good story at the moment.

All you have to do is replace "market" in the abouve sentence with "bailed-out, cashed-up big banks" to understand what is primarily driving "the market" right now.

Big bailed out banks with loads of taxpayer cash buying up bigtime into their own and each other's stock portfolios.

Why?

(1) They are under backroom pressure by gummints to lend, lend, lend and to actively "support the markets" (how else other than buying into each other' stock portfolios?) following their humongous bailouts.

(2) They know they can afford to gamble virtually unlimited amounts on stocks atm because of the unprecedented level of sworn gummint protectionism & guarantees. Wouldn't you?

IMO it is completely logical that such a "gummint guaranteed & manufactured" rebound can occur with massive media support in the face of continuing bleak economic & unemployment data.

 

[Sean K]

Crysler goes into bankruptsy, Dow up 1%.

Might get a 2% jump if GM goes under.

 

[Bobby]

Crysler goes into bankruptsy, Dow up 1%.

Might get a 2% jump if GM goes under.

Not sure how to take that second part

Hope your well & happy but

 

[Sean K]

Not sure how to take that second part

Hope your well & happy but

Not happy, Peru is closing flight to and from Mexico where I was supposed to be going tomorrow. Maybe it's for the best, but the Yukatan Peninsula does not have any cases of flu. It's like cancelling flight to Melbourne because Perth has a cold.

In regard to the GM comment, I think it's factored in that they will go into bankruptsy and if it's announced and Obama stands up and says the Gov has a plan to save all the workers and transform the company etc, like he has for Crysler, then the uncertainty will be gone and people will be happier. Maybe a 3% jump for GM bankruptsy! LOL

 

[Bobby]

Not happy, Peru is closing flight to and from Mexico where I was supposed to be going tomorrow. Maybe it's for the best, but the Yukatan Peninsula does not have any cases of flu. It's like cancelling flight to Melbourne because Perth has a cold.

In regard to the GM comment, I think it's factored in that they will go into bankruptsy and if it's announced and Obama stands up and says the Gov has a plan to save all the workers and transform the company etc, like he has for Crysler, then the uncertainty will be gone and people will be happier. Maybe a 3% jump for GM bankruptsy! LOL

AT least your living a adventure , hope the cancellation is best in the long run.
Still not sure about the GM part , getting back to whats what I have that gut feel its all going to zoom down kinda sudden..

 

[ivant]

Not happy, Peru is closing flight to and from Mexico where I was supposed to be going tomorrow. Maybe it's for the best, but the Yukatan Peninsula does not have any cases of flu. It's like cancelling flight to Melbourne because Perth has a cold.

In regard to the GM comment, I think it's factored in that they will go into bankruptsy and if it's announced and Obama stands up and says the Gov has a plan to save all the workers and transform the company etc, like he has for Crysler, then the uncertainty will be gone and people will be happier. Maybe a 3% jump for GM bankruptsy! LOL

Dang about the flight! Bad luck! I don't think GM filing would go so well. Chrysler isn't really going under. They will still merge with Fiat. this is just a way of getting rid of debt. they will go under. the US creditors will be paid out through the government, the chinese creditors no one cares about, and we all go back to producing SUV's. It's a great circle of life

 

[Uncle Festivus]

What a wonderful bit of last minute window dressing that was from the Goldman Sachs boy's - this will make an interesting candle? Maybe instead of 15 min of fame it's 100 days of smoke & mirrors & 'yes we can' speaches, without actually doing anything?

Irrational ignorance at it's finest?

Expect the worst then it's all better-than-expected??

 

[Aussiejeff]

Crysler goes into bankruptsy, Dow up 1%.

Might get a 2% jump if GM goes under.

More like "Chrysler goes into hiding behind Michelle Obama's skirt". LOL

This is a "faux bankruptcy". Hubby Obama promises this will be an "efficient" & "quick" process that will see Chrysler arise like a Phoenix from the ashes. Well, it's a turkey, Mr President.

Like Pontius Pilate washing his hands of guilt, Chrysler are allowed to wash their hands of private debt and place that debt into the hands of struggling taxpayers.

What sort of champagne-popping Ponzi scheme system do you call that?!!

Actually, I think the whole Global Response by gummints is nothing more than [size=+1]The Biggest Legalised Public Ponzi Scheme Ever In The History Of The Earth[/size].

Fair dinkum, how many corrupt/failed/mis-managed large/medium/small companies that DESERVED to go under have been bailed out worldwide so far with Trillion$ of current and future taxpayer money so far?

Thousands?

Hundreds of thousands?

Millions?

Meh....

 

[sam76]

ha ha ha ha!

looks pretty pathetic now...

 

[Aussiejeff]

ha ha ha ha!

looks pretty pathetic now...

Yep. Some new headlines might read...

"Mass Cull Of Bears Shocks Markets!"

or,

"Big Bust Goes Boom!"

 

[Sean K]

Bank of America only needs around $35b, stock up 10%.

Market doesn't seem to need good, or bad, news. It just needs news.

BOA at $12 up from $3 lows.

What a trading opportunity.

And what an opportunity it's been back here. If you had have picked the oversoldness (is that a word?) of the coal sector and jumped in, you'd be a rich man. Was a severe and imminent buying opportunity.

 

[doctorj]

Keep an eye on the cable and GBP/EUR cross for an indicator of people's willingness to take risk. It's been a pretty good indicator over the past few months.

By all accounts Q1 numbers coming out of a lot of banks are generally looking pretty darn good. It'll come down to how much Mr Market cares about this vs the real economy...

 

[metric]

Insiders Selling At A Furious Pace

Joe Weisenthal|May. 5, 2009,
11:19 AM|21
PrintTags: Investing, Stock Market

Last week there was a report that corporate insiders were selling at a faster rate that at any time since October, 2007 -- right near the top of the market.

Well, the market's only raged higher since then and insider selling is only getting more intsense.

The Pragmatic Capitalist ( http://pragcap.com/more-on-insider-selling) has aggregated recent insider transactions. As you can see from his data collected (unfortunately the tables won't fit here, do click over), insider sales dwarf insider buys both in frequency and in volume. Insiders are selling their stocks in multi-million dollar blocks, while the few buys are much smaller.

If nothing else, it means that a lot of executives probably saw the abyss (a violent drop from the ranks of the wealthy to poor) and want to de-risk to ensure that no matter what happens to their stock, they've taken some skin out of the game.

http://www.businessinsider.com/insider-selling-at-a-furious-pace-2009-5

 

[metric]

sells of insiders...

 

[Aussiejeff]

sells of insiders...

This data also shows the number of shares in the list sold by those scaredy-cat "insiders" was generally a miniscule proportion of the total number of shares traded.

With the direction the markets are headed (stratospheric) obviously the far greater proportion of trades were buys!

IMO the "insiders" can sell till the cows come home - as long as significantly more buyers (ie: the big banks with limitless cash) are buying, the "selling insiders" are an insignificant factor.

aj