Market Bottoms

[qldfrog]

Morning Mr Frog,

Some of the 'big' banks report this week. If there are no disasters, FAS should do very nicely. Given that these chaps are TBTF and would receive bailouts etc, it is a pretty safe bet down the road irrespective of what earnings are like this week.

jog on
duc

And thanks Duc for highlighting the history and so relative safety of the instrument itself.not talking about price which could collapse but i can assume that risk.

 

[ducati916]

And thanks Duc for highlighting the history and so relative safety of the instrument itself.not talking about price which could collapse but i can assume that risk.

My pleasure Mr Frog.

jog on
duc

 

[sptrawler]

There seems to be a general upbeat tone in the media ATM, more talk of when we are going to start the economy back up, rather than if the economy will start up.
Could we be seeing a bottom ATM, with the bad news factored in to the prices, or is it the calm before the storm?
I get the impression a lot depends on the next round of earnings news, the miners don't seem to be cutting back on production, China's manufacturing grew in March.
I think with the virus under control and the Government looking at starting to relax the control measures, we may possibly have seen the worse of the market drop.
The double dip we have been looking for, may not be as drastic as we first predicted, well this is my thinking ATM.
What is the general feeling of other members? Are my thoughts just wishfull thinking?

 

[Iggy_Pop]

There seems to be a general upbeat tone in the media ATM, more talk of when we are going to start the economy back up, rather than if the economy will start up.
Could we be seeing a bottom ATM, with the bad news factored in to the prices, or is it the calm before the storm?
I get the impression a lot depends on the next round of earnings news, the miners don't seem to be cutting back on production, China's manufacturing grew in March.
I think with the virus under control and the Government looking at starting to relax the control measures, we may possibly have seen the worse of the market drop.
The double dip we have been looking for, may not be as drastic as we first predicted, well this is my thinking ATM.
What is the general feeling of other members? Are my thoughts just wishfull thinking?

I am inclined to agree but think we will still see a dip soon, but not back to the 23rd March lows, though we might go close. Agree will depend on earnings out looks during reporting season, and it is different to the GFC. While travel and tourism shares have been hammered, banks have taken a hit due to potential bankruptcies, consumer staples, materials and health companies have not been impacted.
The federal and state governments have responded well to reduce the bankruptcies with the job seeker, job keeper allowances and rental support so will be interesting to see what the banks report.
A successful vaccine would be the real game changer.

And some wishful thinking mixed in there

Iggy

 

[$20shoes]

For the S&P500 the technicals over the last week have been indisputably bullish. We can look at 2934 as a 0.618 retracement and see how bullish we look at this zone. On technicals alone you could well argue that a sustained low is in place. And a lot of Duc's fundamental data paints a bullish picture.

But I can't help but think that there may be broader implications that are unfathomable or at least difficult to assess.
At a societal level, is Covid19 going to cause a disruption to how we function for some time - does this cause a yawing gap between the haves and have nots, the cans and cannots and will neoliberal capitalism become anathema and give rise to a revised capitalism?

Will international borders ever truly open, will stadiums ever be truly full again? Will you ever be able to safely visit your elderly loved ones? Indeed, if we were to live like this for 6 months will people have a yearning to work less and idle more? Will we lurch from periods of business as usual to periods of lockdown?

Outside of economics, these are interesting points to ponder and I think the market has priced in a beachhead created by the FED and other like institutions. But these two articles raise some interesting points (actually the MIT articles have been a good read - worth the free email subscription)

https://www.technologyreview.com/20...a-world-with-covid-19/?itm_source=parsely-api

https://www.technologyreview.com/2020/04/08/998785/stop-covid-or-save-the-economy-we-can-do-both/

From an Elliott perspective I do feel like we are close to a precipice and I might play some short term momentum, but im tipping to bearish at 2934. Though liekly that this leg may be part of a complex larger B wave that factors in a lot of the uncertainty and hesitancy we can expect for the next 1-2 quarters.

Was Feb 2020 a major top? I think so, until proven wrong.

 

[$20shoes]

For the S&P500 the technicals over the last week have been indisputably bullish. We can look at 2934 as a 0.618 retracement and see how bullish we look at this zone. On technicals alone you could well argue that a sustained low is in place. And a lot of Duc's fundamental data paints a bullish picture.

But I can't help but think that there may be broader implications that are unfathomable or at least difficult to assess.
At a societal level, is Covid19 going to cause a disruption to how we function for some time - does this cause a yawing gap between the haves and have nots, the cans and cannots and will neoliberal capitalism become anathema and give rise to a revised capitalism?

Will international borders ever truly open, will stadiums ever be truly full again? Will you ever be able to safely visit your elderly loved ones? Indeed, if we were to live like this for 6 months will people have a yearning to work less and idle more? Will we lurch from periods of business as usual to periods of lockdown?

Outside of economics, these are interesting points to ponder and I think the market has priced in a beachhead created by the FED and other like institutions. But these two articles raise some interesting points (actually the MIT articles have been a good read - worth the free email subscription)

https://www.technologyreview.com/20...a-world-with-covid-19/?itm_source=parsely-api

https://www.technologyreview.com/2020/04/08/998785/stop-covid-or-save-the-economy-we-can-do-both/

From an Elliott perspective I do feel like we are close to a precipice and I might play some short term momentum, but im tipping to bearish at 2934. Though liekly that this leg may be part of a complex larger B wave that factors in a lot of the uncertainty and hesitancy we can expect for the next 1-2 quarters.

Was Feb 2020 a major top? I think so, until proven wrong.

The MIT sign up page is here if anyone is interested.

https://forms.technologyreview.com/coronavirus-tech-report/

 

[Dona Ferentes]

There seems to be a general upbeat tone in the media ATM, more talk of when we are going to start the economy back up, rather than if the economy will start up.

Could we be seeing a bottom ATM, with the bad news factored in to the prices, or is it the calm before the storm?

What is the general feeling of other members? Are my thoughts just wishful thinking?

I'm thinking it's the phoney war. This is a nasty nasty virus. Even these (drastic) measures aren't fully working, sure the curve has been flattened, but vaccines are a way off. And what if it mutates (others did)? But a seized up economy is beyond disastrous; food kitchens and social breakdown?

 

[Garpal Gumnut]

Uncertain times.

Not the time to be picking a bottom.

gg

 

[sptrawler]

I'm thinking it's the phoney war. This is a nasty nasty virus. Even these (drastic) measures aren't fully working, sure the curve has been flattened, but vaccines are a way off. And what if it mutates (others did)? But a seized up economy is beyond disastrous; food kitchens and social breakdown?

That is at a social level, but I'm seeing a lot of light engineering still operating in W.A around the Canning Vale area, it seems to be hitting retail, hospitality and tourism mostly.

Fully agree on the the virus being nasty and it wont be got rid of easily IMO, but there may be a possibility a vaccine might not be developed the reported re infections aren't a good sign and it may be one of those things we have to live with.
Just a thought.

 

[ducati916]

1. There seems to be a general upbeat tone in the media ATM, more talk of when we are going to start the economy back up, rather than if the economy will start up.

2. Could we be seeing a bottom ATM, with the bad news factored in to the prices, or is it the calm before the storm?

3. I get the impression a lot depends on the next round of earnings news, the miners don't seem to be cutting back on production, China's manufacturing grew in March.

4. I think with the virus under control and the Government looking at starting to relax the control measures, we may possibly have seen the worse of the market drop.

5. The double dip we have been looking for, may not be as drastic as we first predicted, well this is my thinking ATM.

What is the general feeling of other members? Are my thoughts just wishfull thinking?

1. With the media I try and distinguish just opinion from data that indicates improvement. There are charts on this thread that look at media involvement historically.

2. Might be, might not be. No one really knows. We are all just guessing. The important thing is: do you have a plan.

3. Economies will reopen. That will happen even if there is a wave 2 and increased deaths.

4. The virus will burn out of its own accord irrespective of what government does/does not do. This problem should have been addressed certainly in 2009 if not long before.

5. I am trading 'as if' the bottom is already in. Whether that is right or wrong will only be known in time. However, if I believe circumstances are changing, I'll change my position.

jog on
duc

 

[ducati916]

I am inclined to agree but think we will still see a dip soon, but not back to the 23rd March lows, though we might go close. Agree will depend on earnings out looks during reporting season, and it is different to the GFC. While travel and tourism shares have been hammered, banks have taken a hit due to potential bankruptcies, consumer staples, materials and health companies have not been impacted.
The federal and state governments have responded well to reduce the bankruptcies with the job seeker, job keeper allowances and rental support so will be interesting to see what the banks report.
A successful vaccine would be the real game changer.

And some wishful thinking mixed in there

Iggy

The bad news was front and centre. Everyone and their dog understood that GDP, earnings, etc were going to take a bad hit. Hence the speed of the decline. If things are worse than first expected and more 'prolonged' could be a qualifier, then possibly we go lower than current lows.

The speed of government intervention (whether you agree with it or not) has been similar to 1987. In 1987 the government via the Fed stepped up very quickly, as they have in this current crisis. Think back to 2008, they actually let LEH fail before they started to realise the extent of the issue. They came very late to the party.

Market events are in part, liquidity events. Liquidity is an issue a Central Bank can solve.

jog on
duc

 

[ducati916]

1. For the S&P500 the technicals over the last week have been indisputably bullish. We can look at 2934 as a 0.618 retracement and see how bullish we look at this zone. On technicals alone you could well argue that a sustained low is in place. And a lot of Duc's fundamental data paints a bullish picture.

2. But I can't help but think that there may be broader implications that are unfathomable or at least difficult to assess.

3. At a societal level, is Covid19 going to cause a disruption to how we function for some time - does this cause a yawing gap between the haves and have nots, the cans and cannots and will neoliberal capitalism become anathema and give rise to a revised capitalism?

4. Will international borders ever truly open, will stadiums ever be truly full again? Will you ever be able to safely visit your elderly loved ones? Indeed, if we were to live like this for 6 months will people have a yearning to work less and idle more? Will we lurch from periods of business as usual to periods of lockdown?

5. Outside of economics, these are interesting points to ponder and I think the market has priced in a beachhead created by the FED and other like institutions. But these two articles raise some interesting points (actually the MIT articles have been a good read - worth the free email subscription)

https://www.technologyreview.com/20...a-world-with-covid-19/?itm_source=parsely-api

https://www.technologyreview.com/2020/04/08/998785/stop-covid-or-save-the-economy-we-can-do-both/

6. From an Elliott perspective I do feel like we are close to a precipice and I might play some short term momentum, but im tipping to bearish at 2934. Though liekly that this leg may be part of a complex larger B wave that factors in a lot of the uncertainty and hesitancy we can expect for the next 1-2 quarters.

7. Was Feb 2020 a major top? I think so, until proven wrong.

1. For the current situation, I would agree, the technicals are bullish.

2. Also true. But we can only trade or not trade and have a plan to deal with circumstances or developments as they play out. Hence the look back at various bear markets: not so much to predict (although we all try anyway) but rather to see what is possible and to formulate a plan to deal with your positions if it all goes Pete Tong.

3. I would say almost certainly. Look at the US Democratic candidates. Socialism. Should Saunders be elected, we could have another US market imbroglio with falling prices as a result.

4. I would say yes and faster than you think. We (as a species) have incredible optimism to our own invulnerability.

5. I'll read them later, ta.

6. Not my cup of tea, but, we'll see. However the secular forces of this bull market are still in place. What we have currently is a cyclical bear driven by a specific event. These secular forces have been in place since 1982. They are however, very long in the tooth.

jog on
duc

 

[ducati916]

I'm thinking it's the phoney war. This is a nasty nasty virus. Even these (drastic) measures aren't fully working, sure the curve has been flattened, but vaccines are a way off. And what if it mutates (others did)? But a seized up economy is beyond disastrous; food kitchens and social breakdown?

Which is why, at some point irrespective of deaths, the economies re-open. Suicide is not an option.

jog on
duc

 

[ducati916]

Uncertain times.

Not the time to be picking a bottom.

gg

Which is certainly a valid viewpoint and for many newer traders, absolutely the correct one. It will be a tricky and treacherous market.

jog on
duc

 

[ducati916]

That is at a social level, but I'm seeing a lot of light engineering still operating in W.A around the Canning Vale area, it seems to be hitting retail, hospitality and tourism mostly.

Fully agree on the the virus being nasty and it wont be got rid of easily IMO, but there may be a possibility a vaccine might not be developed the reported re infections aren't a good sign and it may be one of those things we have to live with.
Just a thought.

Just to provide the historical context:

jog on
duc

 

[frugal.rock]

Uncertain times.

Not the time to be picking a bottom.

gg

We have seen a bottom, whether it's thee bottom, is the question.
For intraday or short term trading, it's been a good bottom. There's been good bounces. Closed out my record highest profit trade today, so it's not all bad.
A thought occurred, it seems that there may be a growth of interest in trading and the stock market in general. New money.
Maybe some people are cashed up and nowhere to go style of thing?
We have seen increased interest and newer newbies on the forum...

In my case, the portfolio doesn't tell me the bottom is in, but have nearly got it back to 0% drawdown overall by actively trading, and I know I started late due to fear.
For the intraday future, I have fomo ATM.

We all generally accept that this may or may not be thee bottom, however the instos and richies will be sure to create another one...or 2.
The great divide?

F.Rock

 

[ducati916]

So Wells Fargo (WFC) reported today:

NEW YORK (AP) — Wells Fargo's profits plunged nearly 90% in the first quarter as the bank set aside billions of dollars in preparation for consumers and businesses defaulting on loans due to the coronavirus pandemic.

The company said Tuesday that it boosted its loan loss provisions — or the money set aside to cover potentially bad loans — to $3.83 billion from $845 million a year ago as borrowers suddenly face the possibility of going broke because the U.S. economy has effectively shut down in a matter of weeks. Wells' earnings dropped to $653 million, or 1 cent per share, from $5.9 billion in last year's first quarter.

“We all know we haven’t seen anything like this before,” Wells Fargo CEO Charlie Scharf said on a conference call.

The San Francisco-based bank said it had revenue of $17.1 billion in the quarter, down from $21.6 billion for the same period in 2019. The numbers fell well short of Wall Street expectations; however, those targets became considerably less reliable as analysts struggled to assess the impact of the shutdown.

And look what happened:

Essentially, nothing. Now we will need to see how it develops, but I'm thinking not much more. Everyone knew earnings were going to be bad.

This is time to take the 'big bath' and throw everything bad into this Q's earnings. Get it all off the books. Then moving forward, red roses.

jog on
duc

 

[ducati916]

And JNJ

Johnson & Johnson, anticipating significant impact from the COVID-19 pandemic, slashed its 2020 sales forecast by billions of dollars and cut its profit expectations by about 15%.

It's one of the first major U.S. corporations to report first-quarter earnings and likely a harbinger of things to come as the outbreak disrupts the global economy.

The world’s biggest health products maker on Tuesday said it now expects 2020 revenue of $77.5 billion to $80.5 billion, down from its January forecast of $85.4 billion to $86.2 billion. It also forecast adjusted earnings per share of $7.50 to $7.90, down from the January forecast of $9 to $9.15 per share.

Despite that, the company increased its quarterly stock dividend, for the 58th consecutive year, from 95 cents to $1.01 per share.

jog on
duc

 

[qldfrog]

It is a dilemma.i am overall bull in the USA, bear here
Australia economy is mining,tourism, education aka selling $degrees to o/s future migrants, coffee making and real estate.
We remove 3 of these what is left
Mining does not employ many people and output will have to slow due to less demand for our export.
I can wish RE will hold but the odds?
So it will be a carnage economically here, more than elsewhere
How can the asx even try to parallel the US market is beyond me, but i have been wrong so often

 

[wayneL]

It is a dilemma.i am overall bull in the USA, bear here
Australia economy is mining,tourism, education aka selling $degrees to o/s future migrants, coffee making and real estate.
We remove 3 of these what is left
Mining does not employ many people and output will have to slow due to less demand for our export.
I can wish RE will hold but the odds?
So it will be a carnage economically here, more than elsewhere
How can the asx even try to parallel the US market is beyond me, but i have been wrong so often

I think if RE craters it will be exceptionally bad here and already (if we look past Corelogic's creativity) there are signs of big trouble.