[SunW]

I'm going to be careful how I write things, especially in this thread because the implication of a mystery of market cycles, disaster, danger, or crash are all incorrect.

When a market has too much debt that grows out of control, a correction is to be expected. As the correction occurs, more people with debt face trouble and must liquidate too - this is why after a 10% or more fall, you can sometimes see a massive fall - people who borrowed to get in that position must now either liquidate or come up with capital.

All of that is healthy; it's flushing out the debt and foolish money. As the old saying goes, "A fool and his money are soon parted." Fools were rushing in the market at all time highs while earnings weren't growing; look at all the idiots who rushed into oil when it hit $50 a barrel, while we were seeing increased output, in addition to the oil companies who borrowed huge amounts of money that will be forced to continue supplying to pay their debts, or default, causing a massive amount of supply to hit the market. Bankruptcy to capitalism is Hell to Christianity, as Kyle Bass puts it; these events separate those with good ideas, plans and action from those with bad ideas, plans and actions. These corrections ultimately make us all winners because we all benefit from good ideas.

This won't last forever, though. Once the correction is done - and corrections do finish - you'll see huge shortages in many of these commodities in the future. People are quick to forget how little oil comes from fracking, how much of the droughts are hurting our food supply, etc. We're seeing lower prices right now only because the debt is being flushed out of the system. We'll see much higher prices in the future.

Again, this correction is very healthy. People will cry and ask the Fed for money (and it might give it to them), but that will only make things ten times worse. If we should be afraid of anything, we should be afraid of the Fed trying to bail out companies, engage in more QE, or keep interest rates low. Let's separate the chaff from the wheat.

[HighSpeed_LowDrag]

I want to ask people following this thread what they think the possibilities are of the following scenarios:

1) The Fed hikes interest rates at its next meeting (September 17)
2) The Fed hikes interest rates by the end of the year
3) No interest rate hike by end of 2015
4) Fed institutes QE4 in a desperate attempt to save the stock markets

Right now I'm guessing that we see no rate hike for the rest of the year - and likely not until the (planned) coronation of Hillary next year.

[SunW]

Currently, 3 seems most likely. If the markets continue to drop this week, then 4 becomes more likely - but the drop must be enough to spook people, like 10-15% more of a drop. A 1-2% is unlikely to do anything.

Another question: what number of QE (QE4, QE5, etc) will start hyperinflation, when investors completely lose confidence in the markets and begin to snatch up hard assets permanently and completely ignore central banks?

[Peregrine]

http://www.armstrongeconomics.com/archives/36343

Quote:

The first possible target in time coming out of the 2009 low was 2015.75 for the Dow to reach a Phase Transition and then a crash and burn. We stated in 2011 that the market was off to new highs and even Barrons covered that forecast more as a curiosity. We have constantly warned that the Phase Transition was not yet confirmed.

Indeed, the Phase Transition clearly shifted back in 2014 and appeared as we have been warning to be postponed into 2017. The three price targets were 18500. 23000, and the 30000-40000 extreme target. At the beginning of 2015, we warned it did not appear to be likely that the market would exceed 18500 on the Dow and it looked like it would crawl along resistance forming a high in May. So far that has been the pattern.

Now the question which confronts us is how long of a contraction do we see. Such a False Move must take place with a minimum of 2 month to 3 months which suggests an August low. If we see lower lows intraday or September closes lower than August with a new intraday low in the Dow (not NASDAQ), then we may have a different pattern ahead. Nonetheless, if this pattern with an August low holds, then we may be off to the Phase Transition coming out of the hole. This would be confirmed by electing Monthly Bullish generated from an August low.

In terms of price, we should be aware of this pattern development by exceeding 18500. The next hurdle will be 23000. Exceeding that level and we are now into the Phase Transition with the target in the 30000-40000 level with a really disastrous outcome. This would most likely be coupled with gold as all tangible assets rise driven by the shift from public to private.

This is the pattern and the requirements to see that unfold. It is not a forecast and should not be seen as a promotional forecast like gold promoters. If you do not understand this type of analysis, you are not ready for the professional level so go back to your normal viewing channels. This blog is obviously not for you. You belong in the guru follower circuit.

It appears that it's all eyes on September. I'll be covering my Dow shorts around the 15500 level.

[tarquin]

That's an interesting link, Peregrine, but unfortunately his terrible grammar makes me think he is a crazy person.

[The Beast1]

I've been doing a day to day play involving CHAD and YANG. They're two inverse Chinese ETFs. I put $2000 right after the July 4th pop. YANG i was averaged around 94$ a share and was proceeded to be made the markets b!tch for a little bit.

However, it appears my patience has paid off. Now YANG is priced at $140 up 20% in pre market alone today. I sold 2 shares last friday for some modest profit taking. I'm curious how high this little bugger will go given the bad news out of China.

[Sonsowey]

Throughout the years my various friends have implored me to get into the stock market.

"I know nothing about it, you have been studying it for years, and many have been studying it for years longer than you. Why would I get in? I would be at a disadvantage compared to literally everyone"

"Ahh you just read up you'll do fine you're smart"

"No thanks."

Glad I'm not involved in it directly.

[Tex Pro]

Me watching the Dow today:

[CleanSlate]

900 point sell off in the Dow as of now... let's go bargain hunting!

Anyone know of some good cheap stocks with strong fundamentals or high paying dividends?

[SunW]

(08-24-2015 08:46 AM)Tex Pro Wrote:  

Me watching the Dow today:

One of the greatest GIFs on RVF.

This is what's fascinating (like last week):
- US indexes are currently down.
- The US dollar is currently down.
- Gold is up.

The markets aren't expecting an interest rate increase (otherwise, why would the dollar be down?), so why are the markets down if the Fed isn't going to be raising interest rates?

Very fascinating.

[Dr. Howard]

(08-24-2015 08:46 AM)CleanSlate Wrote:  

900 point sell off in the Dow as of now... let's go bargain hunting!

Anyone know of some good cheap stocks with strong fundamentals or high paying dividends?

buy defense stocks if they are crashing. Trump or Hillary are both on track for more military regardless of markets.

Stock crashes are great for those of us that stay out and invest in other things. Get ready for great consumer deals if you've got the cash this fall. Cars, 'black friday' specials, real estate. Also the currency spread is widening. CAD/USD has already spread a penny today.

[CleanSlate]

I'll look into some defense funds for my Roth. Thanks, Dr. Howard.

It's interesting that it was expected the Fed would start raising rates this year. Just when they're about to do that, the global market throws a tantrum and the Dow goes on a meltdown.

Hmm... curious?

[lavidaloca]

Fairfax Financial Holdings seems well positioned for a crash.

[Peregrine]

Quote:

The markets aren't expecting an interest rate increase (otherwise, why would the dollar be down?), so why are the markets down if the Fed isn't going to be raising interest rates?

Because whether the Fed raises rates is not the only, or even most significant, reason for market movements.

[robreke]

The stock market has been rallying the last two days but on decreasing volume.

Decreasing volume usually means lack of enthusiasm by the big ( read smart) money; The institutions such as mutual funds, pensions, endowments, etc . These are the entities that establish the long term trends.

If you were lucky enough to buy some stocks at 'bargains' during the pullback earlier this week and last week, I'd seriously consider booking profits. I don't think this rally will last.

After this bounce fades, look for another fall. Possibly a gut wrenching one. At best, I think we'll form a giant "W" shaped correction in the market meaning, after another fall, it will bounce again around its previous lows and possibly form a new uptrend.

At worst, the market will eventually pierce it's recent lows with high volume and conviction. I would interpret this as the market pricing in a recession. This most likely would translate to a bear market.

Funny how the "Global Recession Thread" falls off the first page of the "Everything Else" forum when the market rallies nicely for two days. When the market was dropping like a hammer, it was a popular thread. I'd look for that thread to be up near the top very soon.

Time will tell.

[tarquin]

I bought puts for October DJX 165 this morning. This is fun money, so if I crash and burn on this one I'm not going to feel it.

[robreke]

I'm beginning to think this is probably a correction that won’t be a prolonged bear market. That would be the most optimistic and "hoped for" scenario. If this is true, we'll get a base building period in the market for a few months, new set ups ( in future leader stocks) will occur and opportunities for new longs will be there.


Reasons why this is most likely a correction and not the beginning of a new bear market:

There's a few things that leads to bear markets that are not occurring now:

Inverted yield curve are often present before a bear market…fed tightening: We do not have that now and the likelihood of it happening soon is decreasing.

By comparison,in 87 fed raised rates 1% before the crash. There is no rate increase now

Rising inflation very often occurs before or going into a bear market - The inflation rate is currently going down. It is not rising, though obviously anything is subject to change.

Overvaluation of stocks and the indices occurs at bull market tops, before bear markets begin which is shown by very high PE (Price to earnings ratio ) which means stocks have become over valued.….the current forward earnings PE of the S&P 500 is "only" in the average area of around 16. We are not overvalued here.

Extreme deflation often occurs before bear markets - Deflation is not bad now.

The Fed will fight tooth and nail to keep this economy going which means more stimulus if they have to. Every time the Fed has ceased stimulus we've had a correction. Look for the high probability for more stimulus which would most likely mean a continuation of the uptrend eventually.

Of course, one could argue, all this manipulation by the fed and , to be sure, world governments in general propping up their markets with money creation, will eventually collapse and correct itself to the mean, but so far, they've been successful with keeping this party going and kicking the can down the road.

One of the dangers here in trying to trade this market is a volatile whipsaw action like we're going to continue to see for some time can wear you out, you just give up and get tired of taking losses and you won’t be ready when the market truly is ready to rally which could be months.

It maybe as much as half a year or more. Trying to trade this market is akin to trying to fight a maniac. My policy is don’t try to fight the maniac, but wait for a sustainable trend to develop.

Here are the 3 scernios I see that are going to occur now from most likely to least likely:

1. The market will back and fill and build a base. This process will take at a minimum of a few months to as much as half a year: Most likely
2. The market will test or undercut the low: From that point, it would still build or base OR resume a downward trend.
3. Stocks are entering a bear market: lowest probability for the reasons stated above.

Serious damage has been done to stocks and the market from a technical standpoint and, if this is only a correction, it's going to take some time to repair the damage and build a 'launching pad' from which the general long term bull market uptrend can continue.

If you've made some trades and made money with this volatility good for you. I would think one would have to be incredibly lucky to do it with consistency in this environment going forward.

As the saying goes "There’s old traders and there's bold traders but not many old bold traders"

If you must trade and need that action, trade small: Lock 80% or more of your money away, keep it in cash and trade with a small percentage. Save your big money until the market works itself out and is in a proper position to go higher.

[jj90]

Here's my 2 cents:

If you don't know what you are doing or don't have the inclination to learn to invest, buy SPY at preset intervals and don't worry about it/the market.

For those that do know what they are doing, and I define that by those individuals that have been doing this long enough and make actual money and have above average annualized performance regardless of investing/trading method, keep on trucking.

Last point and I'm guilty of this as well: check your ego at the door. If you made a few thousand and think you are the shit, you should look at how much serious market participants really make and how long they do it. Getting into the NFL is easier then posting Buffett's track record.

[Chengiz88]

preach jj90!!!

[cosworth]

Not sure if its been mentioned , but Zerohedge is a good website for market news and the odd tip . Bit pessimistic and some of the stuff is rubbish but you get the odd gem.
I've traded most things over the years with variations of success.

Currently trading US crude oil CL intra day scalping using volume profile software. It's the hardest thing I;ve ever done in my life that's for sure !

[DVY]

Im setting up my end of year tax liability and credit card "float" payment stuff up, but I am itching to buy some more new.

GE, DEO, ANAT, NWLI, JGW, GNW. (Safe ----> speculative)

Genworth is a mind-trip considering that it is worth more dead than live but it can't be broken up reasonably w/out AM Best or some other regulatory agency tearing Genworth a new asshole and downgrading their credit standing. Ill probably pick more up in late Jan/Feb.

I am on a bit of margin, because of positive cash carry trade through the dividend aristocrats/insurance companies. Borrowing margin @1.6% getting divvy of 3.25%+.

[jj90]

@DVY: Nice portfolio. I'd check JGW's exposure to ST rates given their margins, the business model is solid but they could be squeezed if rates tick up faster than expected. GNW has been on my watchlist for awhile now.

[Sourcecode]

What do yall think of defense and aerospace stock and funds.

I like both Oshkosh and Booz Allen in terms of defense stock.
There is a new generation Humvee coming out, made by Oshkosh and Booz Allen is swiping up Air Force and Navy Contracts left and right -Cyber security and communications.

But I'm also funds for diversification.

The one I'm looking at is:
XAR SPDR S&P Aerospace & Defense ETF
Their top holding are things like, Lockheed,Northrup,General Dynamics.
But they don't hold either OSK or BAH.


On the otherhand:
PowerShares Aerospace & Defense (ETF)
Holds the big companies and OSK and BAH..just in smaller percents.



Which do you think would be a better pick.
Going with individual picks.. or going for the funds?

[The Beast1]

Hey guys so this week the FOMC meets to determine interests rates. My gut is telling me to expect a rate increase.

What can we expect from this? I'm almost tempted to speculate against the market, but something tells me the algos are just going to push things up even higher.

[Peregrine]

(09-14-2015 07:07 AM)The Beast1 Wrote:  

Hey guys so this week the FOMC meets to determine interests rates. My gut is telling me to expect a rate increase.

What can we expect from this? I'm almost tempted to speculate against the market, but something tells me the algos are just going to push things up even higher.

Whether they raise or don't raise, the markets are currently in a precarious position at best. Kind of like the beginning of WWI - Ferdinand's assassination is the official cause, but conditions were ripe for it already. If it's not a token rate hike, it'll be something else.

I would feel comfortable (and frequently am) speculating against the S&P and DJIA. But before you do, have a serious think about your risk tolerance. I'm a degenerate gambler.