Imminent and severe market correction

[dhukka]

A daily free newsletter by Chuck Butler (Everbank), can find through the Kitco site, often discusses the job numbers among many other Forex trading matters. Only a few months back the job number was 260,000 as compared to the 70,000 you quote. The issue that is glaring if one looks deeper is the rhetorical spin from Wall street prior to the release of such figures. If the number to come out is a drop Wall Street pundits will bandi about an expected number some 20 or 30% below the actual so that when the news is released the headline "Much Better than Expected" takes centre stage and away the market goes again.

In these uncertain times it is worth while listening to some of the news releases directly rather than through the full media filter to your home newspapar. I tend to keep a lot of past figures and charts on my wall above the computer screen for refence. Watch the bugg-rs.

Was listening to ABC radio business roundup this morning and commentator saying that he thought probably US would not go into recession. Spare may days, if you follow the figures properly they have been in it for some months and the situation is dire. If you dont' wake the sheep up we may be able to slaughter the lot of em without a sound.

explod,

I don't know where you get your numbers from but NFP's have not been 260k or more since February 2006. Employment growth has slowed considerably in the last 12 months. A jobs number of anything less than 70,000 for December would mean a less than 1% growth in employment in the last 12 months. Still if you are looking for an economic indicator that points to recession employment is a horribly lagging one.

I agree that the writing has been on the wall for some time. I have been saying there will be a US recession in 2008 on my blog since early August 2007.

I think it is common knowledge that Wall Street sets bars that it can step over rather than jump. As you say looking beyond the hype is key to understanding the real picture.

 

[Kauri]

The general consensus of economists has been a figure of 70,000 for the Dec NFP, but after the ADP a lot of chatter has suggested a number around 40-50,000... to such an extent that if the figures print at 40-50,000 it will possibly be seen as a positive for the $US.. ah well I guess I will read about it tomorrow as I am off to the airport late tonight for a week or so away..
Cheers
.........Kauri

 

[dhukka]

18,000 was a very weak number for nonfarm payroll growth. Again it should be remembered that it is subject to large revisions. The fact the unemployment rate jumped 0.3% is significant. As can be seen from the chart below, since 1960, everytime the unemployment rate rose 0.5% or more a recession ensued. The US unemployment rate has now risen 0.6% from its low of 4.4% in October 2006.

This one data point is not meant to suggest that a recession is a certainty but together with other weak economic data of late strengthens the case for a US recession.

 

[Uncle Festivus]

As Maxwell Smart would say, would you believe, 18000? How about a revision next month to a negative number? These figures (employment data) are a croc as explained previously, possibly in reality much much worse.

U.S. seasonally adjusted nonfarm payrolls rose by 18,000 in December, the weakest job growth since August 2003, according to a survey of thousands of businesses, the Labor Department reported Friday.
Private-sector payrolls fell by 13,000, the first decline in more than four years.

My crystal ball says zero US effective interest rates, US recession, and global economic contagion, including China, and the dire consequences for Australia's reliance on superannuation, being held above water by as little as 30 of the top companies in the ASX, and they are capitulating now.

The perfect financial storm alluded to for several months now is gaining strength as the domino effect takes hold through out the worlds banking and derivatives systems.

Debt is death.

Cash is king.

Gold is real.

 

[dhukka]

As Maxwell Smart would say, would you believe, 18000? How about a revision next month to a negative number? These figures (employment data) are a croc as explained previously, possibly in reality much much worse.

My crystal ball says zero US effective interest rates, US recession, and global economic contagion, including China, and the dire consequences for Australia's reliance on superannuation, being held above water by as little as 30 of the top companies in the ASX, and they are capitulating now.

The perfect financial storm alluded to for several months now is gaining strength as the domino effect takes hold through out the worlds banking and derivatives systems.

Debt is death.



Cash is king.

Gold is real.

A revision lower is a real possibility. Remember next month we get the annual revision to the Birth/Death adjustment which is going to show how much the BLS has been overestimating employment growth in 2007. I think the US Fed funds rate will have a 2 handle before they are done.

It will be interesting to see if the RBA thinks they need to raise interest rates in Feb. My bet is if they do they will be taking it back before the end of the year. It seems commodities are having the last gasp in this current bull market.

 

[ithatheekret]

There's always the slightest chance that next week we could see a move back up the ladder in the US , as the companies start reporting , Wed or Thurs I think .

To be honest I would see it as an opportunity to sell into strength , given the fact that we have been fed crap all through 2007 . The heebee geebees are in place and will take a bit to shake people out of , including the funds that all went diving into a bull trap .

Cynically looking back at all the calls , especially the Bears Stearn buy now or miss out calls just to mention one of them for example . One has to ponder the reasoning behind such calls and then shuffle with amazement that they can get away with it .

It's obviously in the administrations interest to let them continue .

The only persons that should be interested in Bears Stearns and the likes , should the Dept. for Public Prosecutions or the Attorney Generals Dept. or whomever it is their duty to do so . But I don't expect much , more than an out of court settlement with the government . You see its tends to be good business to break the law .

 

[hacheln_mice]

https://www.aussiestockforums.com/forums/showpost.php?p=167474&postcount=318

It is always fun to go back to old posts and see how 'forecasts' are coming along. So far so good.

No hindsight there!!! *cough*

 

[Wysiwyg]

For now I'm neutral/bearish on the markets. Longer term, I'm still very very very very bullish.

Nice work hacheln_mice, now i would like you to come away from that wall socket with the knife and tell me if you are still v.v.v.v bullish long term?
Reason being is my eyes tell me a `continuous` slide on indices is happening with the majority swinging to a bearish mind set.More than just a few month decline sort of thing.
Is it time, in your opinion, for bull run traders to learn the patterning of bear market trading?


p.s. if you don`t answer honestly i`ll know

 

[Lucky_Country]

Well with qtrly production and half yearly profit reports out this month or early next we may see some good sentiment return.
Iron ore set too rise as is coal and oil.
Big mining projects coming onstream are driving the AUS economy am more concerned about China and India than whats happenng in the US and have very little to be concerned about in the near too medium term.
US related stocks will struggle but will not turn the market into a bear more like slow the upward trend.
Hopefully by the end of 2008 we shall see a better sentiment from the US but it has too hit the bottom before climbing again and it hasnt hit that yet !

 

[dhukka]

Big mining projects coming onstream are driving the AUS economy am more concerned about China and India than whats happenng in the US and have very little to be concerned about in the near too medium term.

Australian mining profits fell to their lowest levels since Decemeber 2005 in the Sep 2007 quarter. 1H08 profits for Australian mining companies will be less than stellar. You don't think what happens in the US effects what happens in China?

US related stocks will struggle but will not turn the market into a bear more like slow the upward trend.

Which uptrend would that be? The one in place since 1860? I agree wholeheartedly.

Hopefully by the end of 2008 we shall see a better sentiment from the US but it has too hit the bottom before climbing again and it hasnt hit that yet

Ahh, there it is, that magical word, 'hope.' I'm hoping it doesn't rain tomorrow so I can wash my clothes and hang them out.

 

[prawn_86]

I have to say that the deeper and harder I look, the more bearish i become.

I still like the resource story, but as i have said before, after the Olympics this year, I will be very wary as i think China may slow down, and possibly 'let' their market crash. They do not want any economic trouble before then, and due to their political structure, can manipulate the markets fairly well imo.

My biggest concern, is how central banks have gone from facilitating a market, to creating a false market by pumping in heaps of liquidity, rather than letting a recession take place. ASX.G touched on it in another thread, that recession is seen as 'natural' in parts of Europe.

IMO this can only end in one ow two ways:
1. Big crash etc etc
2. Countries says to each other "oh well we are all in massive debt, lets just reset to 0 and start again " and then everything will be peachy (this isnot likely)


I know this has probably all been said before but i thought i would add my

 

[hacheln_mice]

Nice work hacheln_mice, now i would like you to come away from that wall socket with the knife and tell me if you are still v.v.v.v bullish long term?
Reason being is my eyes tell me a `continuous` slide on indices is happening with the majority swinging to a bearish mind set.More than just a few month decline sort of thing.
Is it time, in your opinion, for bull run traders to learn the patterning of bear market trading?


p.s. if you don`t answer honestly i`ll know

Please do not take my words for the gospel. Unfortunately, I'm only human and I'm therefore prone to making errors, especially in regards to unforeseeable events.

If you haven't noticed, my post was made before the 'credit crunch' started chomping on the bull's right testicle. I guess I can't be 'vvvvv bullish long term' now can I? My time machine is broken for the time been so I don't have anything valuable to offer right now other than this and probably this.

Now, I would like you to come away from that time machine of yours and tell me where your time machine was 6 months ago.



In response to learning 'bear market trading', I say no. If you want to save yourself from a bear market, learn to hedge. Note that there will always be a bull market somewhere - even during bear markets - you just have to look harder. While we're on the topic of bull markets, please stand aside and let me enjoy my monstrous gains in Incitec Pivot (IPL).

 

[ithatheekret]

Comrades , Hach does have a point and we must be objective and open minded . Logic say it is right , but time is the issue .

I'm sure we can all agree that the charts posted are linear , I took note of that 5800 , because some will remember it was one of the levels I mentioned during my 6200 test mutterings , some will also note from the ASX chart that it contains the other levels I mentioned , but you will notice the bottom of the pennant is pointing to 5800 , pray we don't get there , personally I think we'll could but , regard 6100 and 5940 as the bottoming areas . We are headed up , but it will take time for confidence to come back , even for top grade stocks that aren't tangled in the US mess . I have a lower area of 5300-5400 , but these would take a total cut back in exports . That ain't going to happen , we are going to sneeze and puke due to snuggling up to the US , but London is going to cop it worse than we will .

I also have a view that a sneaky French provincial old fox , is going to have the last laugh , when it comes to monetary policy in M2 and M3 ..... and I don't mean the commo glamour boy at the French helm .

Abbey Cohen is right the Dow will go to 15000 , but only after the Dow has been reshuffled with the stocks that make it up and a bit longer time than we will have to wait for 7000 . I have an estimate ( note that as I have only got considered stocks as replacements on the Dow) on the Dow , with a peak of somewhere around 14700-14800 by 2010 . Most will also remember , I'm after cheap banks with solid security that can see it ride the stuff ups out , at present the only bank management I like is in Singapore and I've only found one there . The St. George here I believe made a sound call with the malls as security from Centro , they are in control there and St.s will recieve penalties on the loans , even if Centro manages decent refinancing or get a swag of malls dirt cheap . Some of the smaller banks in the US will get swallowed up by larger European banks or Aussie and US banks with enough cash with to expand after the writedowns , which I would expect to grow this quarter and the next .

Just to throw a spanner in the works , I've mentioned to friends who the only ones I offer advise to , they are professionals whose fields I use for free , so they get mine the for the same . I called shorting the market above 6300 as 6280 was the calculated peak with each stock attracting various premiums .

The premium is bade on projected earnings per share and projected organic growth , not relying on the same pile of money riding around a continent in circles which has zero growth rates , but for those who get to hold onto the biggest piles . This is one of the US problems , same cash revolving around , with a reliance on cheap 28 day money to turn a quick profit on if they can manage that .......

In conclusion , even the DH James Glassman who spruiked the Dow will go to 36000 was partly right , but his time frame was well off , by two maybe three decades from now . The dotcom collapse proved him an idiot , George Bush has just sent the same DH to deal with his middle east allies . So what's that say about George that we didn't already know , he's just sent the best salesman he has to close deals on loans , that's what , after 30 odd years I think most would have forgotten what he said , it comes with the C.R.A.F.T. bug .

Truthfully now ...... How many of you remembered that Malcolm Turnbull had tried to run for a N.S.W. Labor Senate seat , then thought he'd get to be leader of the Liberal Party , I did and vocally reminded my member who was on the way to the airport to clean out his office , when I pulled him up .

 

[theasxgorilla]

Nice work hacheln_mice, now i would like you to come away from that wall socket with the knife and tell me if you are still v.v.v.v bullish long term?

If you've been studying finance long enough, and MANY of us have, you'll have noticed that its actually relatively easy to pick faults with what has come to pass. I mean what the hell was the Federal Reserve Bank creation all about anyhow? Privatisation of money creation...sick.

While we've had the last 4 decades to analyse the Apollo missions with all our modern day cleverness and technology the people who actually made it happen back then with their arcane means, actually MADE IT HAPPEN. My point being that its important to remember that whilst there are always bunches of smarties sitting around trying to pick when things will finally go wrong there are probably just as many people with their heads down and bums up just getting on with it. These are the people who shape history. The remembered 'I told you so' people are few and far between.

I can see the change in sentiment across world markets and the faults within the monetary system and the cracks that have opened up recently as a result of them...I see it just as clearly as anyone else who has studied it. Still, it hasn't stopped me or many others making money whilst other people with higher IQs and sharper perceptiveness were calling for tops. Whether you've tried to preempt the change in sentiment as many of us have, or not, I still see this current move as sideways. Time passing as opposed to price rocketing (as it has) or falling (as many here reckon it already is). Time passing = waiting. There are still plenty of parachutes left to go around. Although, wasn't Friday night on the US markets rather entertaining?? Can't wait to see if a real support level is actual broken.

Bring it on.

(ING Direct 6%+ loving) ASX.G

 

[treefrog]

worth noting - Chip Anderson"s musings
S&P BULLISH PERCENT GIVES THE BIG PICTURE
Hello Fellow ChartWatchers!

Welcome to 2008! The start of a new year is always a good time to look for the big-picture perspective on things and few things say "Big Picture" better than the Bullish Percent Indices. By condensing the technical picture for 500 important stocks down into just one number, the S&P 500's Bullish Percent value ($BPSPX) gives you a great indication of the overall health of the market. Check it out:



Starting in 2004, the BPI settled down into a nice little pattern - rallying after hitting 50% (green arrows) and then reversing soon after passing 75% (red arrows). It repeated this pattern four times as you can see. At the start of 2007 however, something changed - the BPI bounced between 70% and 80% a couple of times, then fell sharply and didn't bounce at 50% for the first time in years (blue arrow). When it finally bounced in September, the BPI was down around 33% (purple up arrow) which was its lowest reading since March 2003. The biggest warning sign came soon afterwards when the BPI was only able to rally back up to 70% before falling again (purple down arrow). That was its lowest "peak" in years and a real sign of weakness. The weakness was confirmed in December when the BPI only rallied back up to 56% - a very troubling sign indeed.

Remember, these numbers represent the charting "health" of the 500 biggest stocks in the market - and the diagnosis isn't looking promising right now.

 

[sam76]

2308 GMT [Dow Jones] Australian economy is better placed in 2008 to absorb any U.S. recession than in 2001, says Commsec chief equities economist Craig James. Corporate profits at 16-year year highs, bank bad debts near record lows, unemployment rate 4.5%, two points below 2001 recession level; says main concern for Australia is knock-on effects of U.S. slowdown on global economy, reducing demand for Australian exports, but RBA "well placed" to cut interest rates. Any cut in rates would have "powerful" effect in lifting residential building, boosting spending and maintaining growth.(EGC)

 

[dhukka]

2308 GMT [Dow Jones] Australian economy is better placed in 2008 to absorb any U.S. recession than in 2001, says Commsec chief equities economist Craig James. Corporate profits at 16-year year highs, bank bad debts near record lows, unemployment rate 4.5%, two points below 2001 recession level; says main concern for Australia is knock-on effects of U.S. slowdown on global economy, reducing demand for Australian exports, but RBA "well placed" to cut interest rates. Any cut in rates would have "powerful" effect in lifting residential building, boosting spending and maintaining growth.(EGC)

Thanks Mr Craig, points out the obvious, James. All the stats on the Australian economy that he cites look great no doubt. The only interesting point in that paragraph is that he is starting to talk about the possibility of a US recession. If the US does go into recession James certainly didn't anticipate it.

Maybe he has a better handle on the Australian Economy, although you wouldn't think so from the last sentence. Does he really think that RBA rate cuts will be passed entirely on to homeowners? The US has now cut 100 bps and 30 year mortgage rates are at about the same level they were a year ago.

As he notes, the big unknown is the extent of the knock-on effects from a slowing US economy. Talking about cheaper housing is of little solace if people start losing their jobs.

 

[Uncle Festivus]

US related stocks will struggle but will not turn the market into a bear more like slow the upward trend.
Hopefully by the end of 2008 we shall see a better sentiment from the US but it has too hit the bottom before climbing again and it hasnt hit that yet !

I'm not sure the US markets are trending upward, if double top's are anything to go by, as per my thread -

https://www.aussiestockforums.com/forums/showpost.php?p=237680&postcount=972

Going back to the start of monetary debasement on a quarterly chart shows a distinct lack of ' conviction' in strength of the second top advance.

Just can't see any long term drivers to breach new highs on any index in this cycle, which is turning down, with a very long resolution time to turn positive again.

 

[Sean K]

I'm not sure the US markets are trending upward, if double top's are anything to go by, as per my thread -

Isn't the double top target from that set up around 0!

That's some correction......

 

[ithatheekret]

The Bush recue plan does not provide any liquidity, it is a simple rate freeze applied to a marginal number of households and will have a negligible effect.

Negligible , ........... that's the nice way to put it .

Could you imagine the casualty list if they were doctors , DOA , DOA , DOA .... whoops there's one we missed , BANG , DOA , DOA , DOA ......