Thursday, April 2, 2009

Time For The Fizzle?

It is interesting to note that the last time the "bear market ended" on November 11, the market retraced 27.37% to its period high on January 6 before crashing and burning. The current retracement from March 6 is now at 26.82%. ZH does not believe in technicals exclusively, but this is a curious perspective.



Additionally, whereas CNBC would chirp every 5 minutes when the Baltic Dry was up, up and away beginning in January, very little attention has been brought to the fact that the BDIY has dropped over 31% over the past month... but nobody cares about the "China factor" anymore, as the US can brave the depression, er, recession (sorry, Cramer corrected me) on its own.



Another datapoint: the 2s10s curve has retraced 75% of the post-QE move. Inflationary worries are overwhelming even the most vociferous government buybacks.



And lastly, IG12 just broke intraday wides at 197/199 to close - a mere 3 inside yesterday's close.

Aside from these points, everything is rosy.
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6 comments:

Anonymous said...

Would love to see your take on the whole MktoMkt debacle. So now corporations who are notorious for having no transparency will be able to further murky the waters by marking to models. And why should the market rally on this. I mean if I have a glass that I think is half empty (because I can not look in) that sells for .40 and now we decide to instead call it half full, should it fetch more?

This is why I let the computers do the trading for me and why I am up 44% this year, the inefficiency in the market is incredible. I think you will see that Q1 2009 is going to be the best year ever for a lot of quant funds, especially the more esoteric ones concentrating on pure price series analysis. It has been a long time since things have worked so well.

I say let the stupidity continue and listen to Cramer everybody because he knows and is on TV. Oh, and BTW, why the f^*k is GS allowed to be a bank holding company. Is there an actual requirement to try to be a bank. I really thought that after those bastards stuck all of us with the Russia 05s and 07s that became our and their GKO investments people would stop dealing with those shysters, but I guess we never learn and they always win.

Sorry had to rant to an intelligent crowd.

Anonymous said...

since this doesn't bother to elaborate on the good news out there ill pitch in:

Fed's TSLF gets $0 bids at its latest auction

For those of you unfamiliar with TSLF, it is a crutch that banks have used heavily during this recession. this is pretty much the first time banks did not need to use it:

"The Term Securities Lending Facility is a 28-day lending facility that offers Treasury general collateral to the Federal Reserve Bank of New York’s primary dealers in exchange for other program-eligible collateral. It is intended to promote liquidity in the financing markets for Treasury and other collateral and thus foster the functioning of financial markets more generally."

TraderMark said...

Hey you stole my Baltic Dry Index line! lol

That's ok, more people read your blog than mine

Boo Yah - don't speak about Baltic Dry Index unless it is going up!

Mark
Fundmymutualfund.com

Anonymous said...

Well this rally doesn't seem to be fueled by much more than dollar devaluation/printing etc., if you compare the Sp500 to the dollar index, you'll notice they inversely correlate from the start of the rally.

I think it will end somewhere around the end of Q2, early Q3 when the current trillions aren't sufficient. Also GM's 60 days could be a large enough credit event. Technically speaking the chart resembles an inverted head and shoulders pattern, so perhaps 900 could be in the cards (also the market has been bouncing off of the 50dma).

I'm not a full fledged technical analyst but if other people use it, it's a good to know (algorithmic traders etc.).

But I agree with you what's going on behind the scenes paints a grim picture of what could be.

Anonymous said...

Be careful getting short of this rally just yet. The Nov - Jan retrace was in a Primary wave 1 down. We are now in a Primary Wave 2 down, which is a counter-trend move. Also, March was a bullish reversal month. This is usually followed by two to six months of general bullish movement. Thus, even though we will eventually see lower lows, it probably won't happen for several weeks to months.
JT

Anonymous said...

By the way, I completely agree with you that the fundamentals are certainly not in place to justify this rally. But, it's happening anyway.
JT