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Trump didn't compromise with the Dems? Compromise is a 2 way street. The Dems aren't budging on their $600 extra for unemployment which has been a terrible idea from the beginning. You don't think the Dems are playing political games with the election looming in November?
COVID-19 vs Spanish Flu earnings & market. Check out the chart of the S&P 500 earnings history. Earnings appear to have taken a big hit during the Spanish Flu but markets around the world rallied. Of course, we know what happened a decade later but wondering if this is a guide of what we can expect from the market now. https://www.multpl.com/s-p-500-earnings
Republicans on board with the 2nd stimulus. What they aren't on board with is extending the extra $600 per week for unemployment. It was a mistake the first time and would be a mistake the 2nd time. What motivation does someone have to go back to work if they are making more on unemployment? Businesses can't get people to come back to work and workers can use health risk as an excuse to keep claiming.
I say follow the Yang plan until the is over and just send everyone money every month. They can collect it back from the wealthy or undeserving at tax time.
Maybe optimism has finally peaked and reality is starting to set in?
The other thing this rally had was the mother of all bad news already built in. There was very little that would've surprised the markets... 6+ million weekly unemployment claims, market says I already knew that was coming... low earnings from any company, market says I already knew that was coming... businesses completely shutdown for a while, market says I already knew that was coming. It had to have one of the worst expectations built into the market of all time because it fooled all the experts too. The only potential was for positive surprises as things reopened and potential vaccines were announced. I kept telling myself all of this while I was trying to nibble at shorts because I didn't believe it myself.
At some point, maybe too much good news is priced in and we go back to a point where bad news scares the market. Not sure how long until we get there as this is pure euphoria at this point.
All bad news baked into the market short term. I keep waiting for this market to go down. I think the biggest problem is that there is likely no news bad enough to bring this market down in the short term. Everything is already expected. The market is looking forward and the thing about opening in phases is that there is the "good news" is stretched out. As these announcements to open keep rolling out it is just more good news for the market. Oh, and just when the market looks like it is about to roll over a bogus announcement about a vaccine that sounds like it was premature. However, a well-timed big gap up and now all the bearish patterns all of a sudden look bullish.... coincidence???
Have to gamble and hold overnight to make money right now it seems. Did the market finally scare the shorts out 2 days ago? Back to back big down days out of the gate so if you didn't take a shot the day prior you miss out on the move.
Continued widening of the wealth gap is correct. Workers were finally starting to see an increase in wages with low unemployment. This massive setback puts the companies back in the driver's seat with high unemployment. This will help their bottom line which will also help stock prices. The longer this goes on the more pain there will be when it ends.
What is the opposite of catching a falling knife? I feel like we are fighting a losing battle looking for short positions.
Today feels like it could be a temporary top and at least temporary turning point if not much more. However, afraid to jump out ahead of the Fed announcement tomorrow. Also, the Russell has been outperforming the past week which can bee a bullish sign. The indexes all seem to be at various critical past resistance/support levels from different time points in March.
Two big factors that outweigh common sense when it comes to our opinions on the economy. First, the Fed is pumping in so much liquidity which is a driving factor in prices. Second, so much bad news is already baked into people's minds that any news almost can't be worse than what people were already expecting. With states starting to re-open the economy there is optimism. Will this be a sell the news event or will this drag on as positive news as more and more things open? At some point, this optimism will peak and maybe we are almost there. However, there is also point one about not fighting the Fed.
I've been bearish and thinking we need to go down and retest, but I've also been questioning my bias as the market rises. Realizing once again that it might be bad to have a bias and better to just trade what the market is telling us.
The market is in a battle right now. Do we break down or up? All common sense and almost everyone thinks we need to head back down. Could the market prove us all wrong? Has the government and Fed thrown so much money at this that we can't go down?
That has been my belief as well. However, I've also felt the market has been overvalued for the past decade. I'm trying to take my beliefs and emotions out of this and follow the charts. Remember, the Fed and Government have pumped enormous amounts of money into this. Many people are making more on unemployment than they were working. I'm trying to challenge my stubborn beliefs because the market doesn't care what I think.
2008 collapse ended up touching most sectors as well. There are actually some strong sectors that are thriving through this. I don't know that it was the case in 2008. The hardest hit in this is going to be the little guy, the small business owner. Aside from that, mostly tourism and travel.
2008-2009 was the worst earnings collapse of our lifetime. We will have to see how this plays out. The government and Fed acted much quicker this time. I'm just trying to challenge my thinking because this bounce is much higher than I anticipated and need to remember the market is forward looking and looks out many months. It is still very uncertain how this all plays out, but there is short term positive news as things get better. We might be getting near peak optimism here.
No bad news to bring the market down? I've been with many here thinking the market should be heading down. However, it seems like we may have passed the peak of bad news. We are entering the other side of the curve and Governors are discussing strategies for reopening the economy in different states. Maybe the government's quick action with the stimulus and the massive amount of spending by the Fed was enough to save the market. Don't get me wrong, I see pain ahead and this won't be perfectly smooth but the market is forward looking. Plus, we have lower bond yields now which helps with stock values as well. Are we looking at this all wrong?
So... at this point, what can cause the market to head lower?
Louise Yamada, Queen of TA, says this is a bear market rally.
https://www.bloomberg.com/news/videos/2020-04-08/louise-yamada-says-dow-in-bear-market-rally-video-k8rv5acw
Beaten down small caps outperformed today. Not by a small amount, but by a very healthy margin. The market still seems to be rallying on optimism that this is ending soon. Do others expect a pullback when reality sets in? Even if we end very soon there is still much that isn't going back to normal right away. I don't feel like the market is currently factoring that in.
Probably a good time to short because the market shook my short position from me...lol. I probably bailed at precisely the wrong time but didn't want my position to turn into a loss. Amazing how the market gets you to make the wrong move at the right time. I think today's action is critical to figure out the short term direction. It seems like we are getting a short term boost from positive news surrounding COVID-19.
No black candle since February - I didn't check all the indexes, but the Nasdaq hasn't had a black candle since February. Just an interesting observation looking at today and thinking where we go from here.
Shorted small caps w/ TZA at the close on Monday 3/30. Now, I just need to figure out when to exit the position. As I personally see people being laid off or furloughed I really question the ability for the economy and these jobs to instantly bounce back. Some of them will be permanent. I think we are ultimately heading quite a bit lower.
Best correlating index ETFs? I've frequently used TZA and TNA in the past to go short and long the Russell 2000, but I'm noticing today that they are performing opposite of expected today. What do others use as the best performing leveraged or unleveraged index ETFs for any index.
Anyone worried by the repo market? While the Fed is doing its best to handle the repo market issues, it has still been an ongoing concern. They have done a good job keeping it quiet as the media doesn't discuss it much but I don't see many investors discussing it either. The market and economy seem great and everything seems to be firing on all cylinders, but everything was great in early 2000 until it wasn't. Could this be the cannary in the coal mine?
https://seekingalpha.com/article/4309957-another-repo-hiccup-highlights-year-end-uncertainty
Secular bull usually rises a factor of 10. If you look at the chart, each secular bull has lasted ~20 +/- years and brought the DOW up to the next factor of 10 (100->1000->10,000). We are eventually going to 100,000. It will be interesting to see how smooth and how quickly we get there and then how it ends.
Head & shoulders pattern. Don't you see a head and shoulders pattern forming which would ultimately take us quite a bit lower? Who knows where we go after that, but the risk looks more aligned to the downside right now. I agree with a short term oversold bounce now and maybe for a few days, but it seems like the market wants to go lower and there are head and shoulder patterns all over the place.
TOF ratio crossed negative on 8/23. 5-10-20 timer about to cross negative. Many head and shoulder patterns forming. Looks well timed to blame this on the impeachment inquiry because the public likes to have a reason. If this repo market madness continues that could also add fuel to the fire.
Banks Flood the Fed With Demand for Two-Week Loans - https://www.wsj.com/articles/fed-adds-to-financial-system-in-two-transactions-this-month-11569329248
The liquidity crunch continues. When will we find out the real reason?
Repo market problems continue. I'm surprised this isn't big news yet and you don't hear many people talking about it. This is scary stuff!
https://fortune.com/2019/09/23/repo-market-big-deal-400-billion-bailout-unnerving/
https://finance.yahoo.com/news/repo-markets-liquidity-crisis-decade-110000997.html
Head & Shoulders forming? Anyone else see a potential head and shoulders pattern forming for the Nasdaq?
So far the markets don't like the Fed announcement. We have to give things a day to settle, but I think this Fed has poor communication and decision making. Wrong move last December had to be quickly reversed in January. Let's see if Powell needs to start walking back the wording from their initial release which the markets clearly don't like.
Federal Reserve injects billions of dollars into financial system - Hmmmm..... This doesn't seem insignificant. Cracks in the system?
https://www.ft.com/content/2c11a972-d941-11e9-8f9b-77216ebe1f17
Both Wall Street & Main Street are in good shape. The Fed really has no reason to lower rates at this point other than to keep their promise so that they don't disappoint the market and derail things.
I liked the article you shared. Obviously biased toward the right, but it all make sense to me
Look at long term S&P earnings chart. It is interesting that the sharp decline in earnings happened the decade before the great depression and not during the great depression. 2009 actually looks more like 1921 when you look at corporate earnings. Can this crazy run in corporate earnings continue?
https://www.multpl.com/s-p-500-earnings
Onward & Upward? Everything seems to have reversed course so quickly here with both bonds and stocks. Seems to be mostly tied to the trade talks with China, right? S&P off to new highs and now looks ready to break out instead of break down. We know there are lots of things that could derail this, but this administration seems to be good at navigating them. With the stock market now back in rally mode and most economic data looking good, does the FED once again reverse its stance and not proceed with the expected cut next week?
Thank you. I didn't want to get political, but I was baited into it.
Wealth gap widened under Obama. Trump is focused on bringing manufacturing back to the US and wages are finally rising. He is fighting a much needed battle with China to level the playing field. This actually hurts the wealthiest Americans more than the little guy. Democrats want to expand social programs so they can keep the little guy happy with peanuts while the rich grow richer. Do you really think the Democrats care about the poorest people or the "basket of deplorables" as Hillary called them?
MBS vs Treasury Spreads. I am in the mortgage business and there is something interesting happening which hasn't happened in years. People in the industry are confused why the 10 year is dropping and mortgage rates, while at recent lows, aren't keeping pace. Here is something I posted elsewhere on my thoughts:
I think it is because the Fed has messed with the market over the past decade. There were times were they were focused on by MBS and the spread between FNMA current coupon and 10-year treasuries were almost zero. (http://scottgrannis.blogspot.com/.../the-housing-market...). Now, it looks like the Fed will be focused on treasuries. (https://www.nationalmortgagenews.com/.../fed-to-reinvest...). Treasuries are safer than MBS so the spread can widen during a flight to safety. The spread spiked during the 2008 crisis and was probably only saved by the Fed (the chart in the first link shows this).
An addtional note: The spreads peaked in early 2000 as well.
Trump wins again in 2020. If Trump wins I think the market could avoid a major correction. He is surrounded by people who better understand what moves the market. If the Democrats win we have green deals and new social programs which introduces more uncertainty. It is impressive that the current administration has been able to keep this bull market alive into record length territory.
There is always a reason why people think it is different this time.
I was joking because I've heard some talking heads on CNBC say that the yield curve and inversion don't matter. I believe one of the hosts asked them, "so you are saying it is different this time". That is the classic line that tops are made of!