Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
I will no doubt be proven wrong, but I believe there is more risk in being Long going into the Fed meeting this time than Short. The market has already priced in a .25% cut, and I personally don't see them going .5% this time, since that was more to get ahead of the fact that they felt they should have acted earlier, and that much more of a cut would further hammer the dollar and push up the price of already sky-high oil (i.e. a world economy based commodity whose price is directly affected by the dollar in the foreign exchange market). I guess the market's reaction will all depend on how they are able to craft their words to say they are fighting inflation while at the same time contributing to it, and with all the trouble in the economy that we're not really in all that bad shape.
Hey, I just noticed, we have a double "40 Long" pattern on the Qs 15 min chart. Does that mean anything???
Qs soaring AH. Okay, who forgot to close the gate to the bull pen???
Sort of like dad spending the baby's milk money at the strip club???
And yet, here we are back within spitting distance of the six year high on the Qs.
Looking at the AH action, perhaps the rumors of the death of the bull market have been greatly exaggerated.
Well, Bennie and the Feds threw another $10B on the fire this AM for a net daily add of ~ $7B, so that is a clear message to the bulls that he still has their backs. No surprise the markets are rallying, at least for the day.
Yeah, but food and fuel aren't included in the Government's inflation figures, so they must not really count. But wait, doesn't higher energy costs also increase the price of production and moving goods to market?
Not quite yet. Intraday high of 34.75 on 8/16...
You can't mean that we should live within our means, can you??? That's outrageous, un-American, and just plain wrong. How will the poor credit card issuers survive without slapping their delinquent accounts with all the usurious fees and interest rates???
I've always heard that a mime is a terrible thing to waste...
$7.5B new Fed money this AM, but due to expirations, a net $2B decrease in the O/B.
Sort of makes you sick, doesn't it?
Astrological predictions are right up there with Poker's based on frog entrails.
What is his track record? Has he predicted 10 of the last 3 crashes?
Good call. I hope you were Short as I was. Now, is there more down, or do we bounce to new highs???
Actually, tomorrow *is* Friday. :)
One can only hope. I think I would cry if we reversed and set a new high.
Yes, and I have thought that since QQQQ ~ 48.50.
True, but do you know a failsafe method for picking a top?
Yes, they are still adding, but barely enough to maintain the current outstanding balance. It maxed out about a week ago and although the most recent 10SMA is still near the high, it will require another $9.5B tomorrow to prevent an acceleration of the decrease in the outstanding balance (total sloshing). Of course, they create this money out of thin air, so the sky is really the limit. It is whatever they think the markets need to satisfy their agenda, and inflationary concerns are off the table. It's all good, except for Shorts...
I think these are more the capos in action than the dons (i.e. the PPT). The dons get together periodically and set overall policy, or in case of perceived emergencies, have a conference call and issue emergent guidance, but it is up to the capos to carry those directives out on a daily basis.
Based on all the economic evidence, this sustained move up is simply unjustifiable, IMHO, but is a prime example of what can happen when the Fed through its meddling removes the psychological fear from one half of the market that is so necessary for a level playing field among traders. The bulls are convinced, and the evidence would say rightfully so, that Bennie has their backs and won't let the market go down for more than a day or so, and so they buy on every little dip. A Short will *eventually* work, but perhaps not any time soon, or while you still have a brokerage balance, and we have a long way to go to the 2001 highs.
Some here, including the Papa Bear, think all this Fed stuff is smoke and mirrors, but this is directly from the NY Fed site...
Gathering Information, Preparing to Act
Staff on the Desk start each workday by gathering information about the market's activities from a number of sources. The Fed's traders discuss with the primary dealers how the day might unfold in the securities market and how the dealers' task of financing their securities positions is progressing. Desk staff also talk with the large banks about their reserve needs and the banks' plans for meeting them and with fed funds brokers about activities in that market.
Reserve forecasters at the New York Fed and at the Board of Governors in Washington, D.C., compile data on bank reserves for the previous day and make projections of factors that could affect reserves for future days. The staff also receives information from the Treasury about its balance at the Federal Reserve and assists the Treasury in managing this balance and Treasury accounts at commercial banks.
Following the discussion with the Treasury, forecasts of reserves are completed. Then, after reviewing all of the information gathered from the various sources, Desk staff develop a plan of action for the day.
That plan is reviewed with interested parties around the system during a conference call held each morning. Conditions in financial markets, including domestic securities and money markets and foreign exchange markets also are reviewed at this time.
Conducting Open Market Operations
When the conference call is complete, the Desk conducts any agreed-upon open market operations. The Desk initiates this process by announcing the OMO through an electronic auction system called FedTrade, inviting dealers to submit bids or offers as appropriate.
For a repo operation, the announcement states the auction close time, repo type (repo or reverse) and term of the operation, but does not specify its size. The size of the operation is announced later, after the operation is completed. The dealers' propositions are evaluated on a competitive best-price basis. Primary dealers typically are given about 10 minutes to submit their propositions and are notified of the results about a minute after the close of the auction. Auction results are also simultaneously sent to the Bank’s external website and to the wire services.
Auctions for outright security purchases into the SOMA portfolio are typically arranged later in the morning and follow a similar procedure to repo. The announcement contains the maturity range for securities the Fed is looking to purchase, as well as a list of any securities to be excluded in this maturity range. These operations tend to be open about 30 minutes. Dealers bid on securities, and the Fed compares the relative richness of propositions across securities, accepting the best relative rates from the propositions submitted.
When securities in the SOMA portfolio mature, which happens every week with bills and every month for different maturity notes and bonds, the Desk determines whether to reinvest the maturing proceeds into new Treasury debt issued at primary auction, or to redeem the maturing proceeds. Typically the proceeds are reinvested, which would maintain the size of the SOMA portfolio and therefore the size of the permanent reserve-adding nature of the portfolio. Occasionally, due to portfolio guidelines or reserve needs, proceeds are redeemed, which reduces the size of the SOMA portfolio and effectively drains reserve balances from the banking system.
So, the "submitted" total would then presumably be what the dealers ask for as a result of the morning conference call. Also, note the part about the discussion of "how the day might unfold in the securities market."
I may be the one who has it wrong, but I think the "submitted" is what the member banks are asking for, not what the Fed is offering, and "accepted" is what the Fed agrees to provide.
Which is the same link as in message #11666.
The "submitted" total is not the important figure. Only what is "accepted", i.e. the $35.5B total of the three operations.
Three operations today totaling $35.5B *accepted*, which is the important number.
Here is the NY Fed site...
http://www.ny.frb.org/markets/omo/dmm/temp.cfm
But this site provides more useful information in that it shows you what is expiring and what the O/B is...
http://www.gmtfo.com/reporeader/omops.aspx
Note that the last $9.5B is keyed to the $9.5B expiring tomorrow, so maybe they will go light or do nothing.
The last two TOMOs just posted (0940 and 0950) totaled *$29.5B*, so no Fed induced sell-off today. That actually gets them $4.5B above the recent average OB, so they can go light tomorrow.
Just $6B being added today (so far), so that is a net decrease of ~ $24B from the recent running balance. Now, let's see where the Boys are going to get that Cash...
You really have to look at whether the outstanding balance of TOMOs is increasing or decreasing to get the whole picture. Yesterday's injection of $16B was just to replace the $12.5B that expired yesterday, and to get a jump on a part of the $46B which is expiring today, and without another $30B or so today, there will be a *huge* decrease in the total OB from the ~ $34B they have been running lately. So, if the Fed pumps in anything significantly less than $30B today, look for it to spark a sell-off. Of course, their cover will be the weak retail sales, and the Boys have bid the pre-market futures way up to start the decline from a better level.
http://www.gmtfo.com/reporeader/omops.aspx
What, me worry???
One good thing is that as your losses increase and your position size decreases, an additional loss percentagewise costs you fewer dollars. Of course, you haven't really lost anything unless/until you close your position for a loss.
Up again on ever diminishing volume (albeit yesterday was a Fed holiday), but not even last Fri's blow out could top 2B shares on the Naz, which means there are ever decreasing numbers willing to pay these prices, unless spurred higher by unusually good earnings. Also, the bulls who were early to the party may begin to take some profits.
Even though they may be idiots, if enough idiots believe the market will go up, it will go up.
Also, the exposure of many funds and brokerages to the bad paper of the subprime mess is still not fully understood or quantified, and yet the market seems to have completely forgotten about it. I heard yesterday that Bear Stearns may have as much as $7B at risk, and yet they are telling everyone not to worry and to buy their stock.
Today's high on the Qs was a good 1.50 higher than the July high, where the Bear market that we are presumably now in started. How high do the Qs have to go before the count is broken and/or we are no longer in a Bear market?
Since it is now obvious that the Fed would rather prop the economy than fight inflation, one argument says that the best protection against inflation is to own stocks. However, those that buy into that argument forget than when business spending contracts because the businesses can no longer sell the same quantity of the goods or services they provide, profits will plummet as will the stock prices. The inflation protection of owning stocks will pale in comparison to the decreased valuation brought on by the recession. But, until Joe Sixpack figures that out, the buying spree will continue. Will the market eventually go down significantly? Absolutely, but probably not today, and it could be next week, next month, or even next year. Be Short at your own peril.
According to Hulbert's Financial Digest, Peter Eliades' Stockmarket Cycles method, which is based loosely on stars and planetary alignments, i.e. astrology, has an average annual return of only 4.7% since its 12/31/84 inception while a buy and hold of the Wilshire5000 over the same period yielded an average annual return of +12.4%. Those who make enough predictions will be correct every now and then just based on the law of averages.
We still have one day left, but I don't think we'll get it until next week, and even then not right away, since too many will be expecting it. This Sep has definitely not lived up to the historical reputation for being a bad month for the market, adding over 100 NDX points.