“This is a bullshit rally!”

Fascinating and instructive conversation with a few of our traders/clients this afternoon, including a hedge fund momentum gunner who asked me "if this rally really mattered."

The answer is simply if it goes against you, it matters to your bottom line and/or your clients net for the year. If you were long going into this you made money, you showed a better P&L, your assets under management grew, your clients are happy. If you were short, you got your nuts squeezed, and that’s that.

More importantly, the S&P cleared key resistance, the spread triple top so many technicians have been talking about is now toast (See chart at bottom). If this breakout holds holds the next couple of days, that will inform of us about the technical strength right here, and if it fails, that will also be quite instructive. Indeed, this is shaping up to be quite an important rally. 

So to answer the original question, yes, this rally matters.

"This is a bullshit rally"  he said.

I asked him Why? Specifically, I ask:

"Do you disagree with this because you were positioned improperly, or because you cannot find a rational basis for today’s move? Do either of those things matter?"

No answer. He then asks me, "What did you think of today’s Retail data?"

Sigh. . . I said it was weak, that most retailers were doing only fair, that in addition to anyone home-related (i.e., Home Depot (HD) and Sears (SHLD)), we saw the Department stores doing poorly, Macy’s (M) and JCPenney  (JCP). We already heard Target (TGT) was at the low end of their range.

Here comes the money shot:  "And Wal-Mart" he asked?

Mediocre. They don’t break out food (as they do energy), but we can draw some assumptions from their breakdown between Wal-mart and Sam’s Price Club (see our earlier post), as well as what BJs said. As we learned today, Food sales at Wal-Mart, Sam’s, Cost-Co (COST) and BJ’s Warehouse (BJ) were robust.

Here’s the key line from BJ’s report:

"Sales of food increased by 6% and sales of general merchandise increased by
approximately 1%."

So to answer all of his queries: yes, today’s rally mattered. Yes, the retail sales data was weak. Yes, it was essentially a celebration of higher food prices.

However, if you are looking for a rational basis for the day to day movements of markets, if you seek to find a degree of serenity by understanding why markets do what they do short term (A/K/A noise), well then you are going to drive yourself insane.

 

Here’s that chart mentioned above:

SPX Breakout Triple Top

Spx_breakout

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What's been said:

Discussions found on the web:
  1. SINGER commented on Jul 12

    well put…

    warning hind sight pontification below:

    “usually” when prices jump like they did from the march low… and then tightly form a flag…

    neither breaking out over 13700 nor going under 13250…it’s not really a triple top… but a consolidation where prices would tend to continue to go in the direction the were going upon entering the aforementioned consolidation…

    THE KEY WAS NOT TO SELL UNTIL IT BROKE DOWN DECISIVELY UNDER 13250…

  2. Kp commented on Jul 12

    Hedgies(1.0E666) vs. Shorts(0)

  3. GerryL commented on Jul 12

    I believe that inflation is higher than the government numbers. However, is the growth at Sams, BJs, Costco, etc really mostly food inflation? If so, inflation is a whole lot worse than I thought.

  4. Werner Merthens commented on Jul 12

    Well, whether this was a valid breakout or not, or whether the trend followers pile on from here on out does not really matter.
    Up to today, the bullish position was correct and all bears were wrong!

    The probabilities favor the bullish stance for the foreseeable future, notwithstanding one or the other pullback.

    The famous perennial pessimist writing for a famous Wall Street weekly is usually wrong, no matter whether he obsesses about subprime loans, CDO’s or anything else.

  5. Fred commented on Jul 12

    Very well penned Barry. The psychology got wound into a tailspin of negativity…and we’re seeing the results of that crowded belief.

    I strongly suggest reading Lewis Sanders’ piece, “Last Risk Premium Standing” (Alliance Bernstein).

  6. bam commented on Jul 12

    I’ll take a bullshit rally any day.

  7. Brig commented on Jul 12

    With inflation rising, the dollar tanking and the Fed stuck because of housing, shouldn’t that be good for the market?

    The worse place to have your money at the moment is under the mattress. At least stocks have some degree of intrinsic worth.

  8. econ101 commented on Jul 12

    yesterday morning dudley doright was pumping the money in. merrilly and goldiman were buying the futures from the getgo yesterday late morning and all day today. If those two want the market up, they can easily move it up. the tail wags the dog.

  9. kensdad commented on Jul 12

    the mantra of this market is that “liquidity trumps all.” so, the real question is what is the source of that liquidity and how long will it continue to pump up the market. there are some signs that the sources of liquidity are drying up a bit. yields are rising, spreads are widening, credit standards are tightening, the swiss franc (carry trade) has rallied and the japanese yen is at least looking like it might rally, too… but more than anything liquidity is a function of psychology and the willingness of traders and investors to take risk. days like today will surely keep the risk-takers happy, but psychology is a fragile thing, so we shall see… (shout out to barry: love your website and what you have to say on the markets. keep up the great work.)

  10. shauncy commented on Jul 12

    barry, i think it’s funny how you imply that fundamentals don’t matter, but insist on using them to predict the direction of markets.

    ~~~

    BR: I use Economic fundamentals as one factor of many many different elements — psychology/sentiment, trend, monetary/taxation, market internals/technicals, liquidity, interest rates, momentum — to look forward 6 to 18 months.

    Not that I have a clue what’s going to happen, but I know the early signs to look for to let me know slightly ahead of time.

    But the day-to-day jinks and jags? Pure noise . . .

  11. johntron commented on Jul 12

    the spx-tlt ratio is right at June’s high….the last piece of resistance. if this is broken, are we going the see that parabolic penultimate rally that some are looking for?

  12. Michael C. commented on Jul 12

    shauncy said:

    >>>barry, i think it’s funny how you imply that fundamentals don’t matter, but insist on using them to predict the direction of markets.<<< I think it's funny how you base your conclusion on your own false assumption. Now that's funny.

  13. SPECTRE of Deflation commented on Jul 12

    I have noticed that we rise on falling volume and fall on rising volume, which all things being equal, ain’t good. Still the chart says the flying pig may have a bit further to fly before it makes the Bar-B-Q.

  14. sid falco commented on Jul 12

    My pet theory is that today’s Bank of Japan decision keep its benchmark interest rate at 0.5% is a major source of liquidity for US equities. My surprise was that the BOJ appears unlikely to ratchet rates upward in August.

    Otherwise, I am puzzled at the exuberance in the face of Moody’s and S&P’s downward rating of RMBS.

    I am confused, but glad that my bet on gold miners is working out well. Appreciate all the musings, Barry.

  15. Steve C. commented on Jul 12

    Too many traders, both pro’s and amateurs, were leaning the wrong way. Mass capitulation on the short side today. What causes people to short a rising market is beyond me. It’s good way to get your head handed to you.

    Rule #1: the trend is your friend. Rule 2: Never forget Rule #1.

  16. Arnab Dutt commented on Jul 12

    No I don’t fathom it either , but I screwed up a couple of months ago shorting the market. I decided to see what was in front of me and join in a few weeks ago and have made a pile. Yes my intellectual pride has taken a battering as my wife looked at me today and said “looks like your financial knowledge,life experience and fundamental analysis based on years of academic study is a bit crap” I pointed out that todays silliness paid for our summer vacation. Do I beleive it will all end in tears – yes – am I stupid enough to call the top -NO.
    Good luck all – poor Doug Kass!

  17. Assassin commented on Jul 12

    Of cause it was a bullshit rally. It depends on how you define the bullshit.
    The bears have been bullshitting about subprime bonds B.S., “the market is overdue for a 10% correction B.S.”, etc… As a result of heavy shorting and overstretching the market with the record short interest (the highest in history NYSE short interest and NYSE specialists short interest), the market was artificially depressed (below the mean and where it should be)

    Shares Sold Short NYSE – this week 12467283 (prior week 11761191)
    NYSE Specialist Short Ratio – this week 7.16 (prior week 0.00)

    The market was heavily shorted and artificially depressed by the bears. Today, the bullshit that the bears were spreading was hitting the fan and the market snapped back up to the mean causing this bullshit rally. (Bullshit rally because the bullshit was flying back to the bears, aka Short Squeeze Rally)

  18. Barry Ritholtz commented on Jul 12

    I suspect Assassin is partly right. This rally is disbelieved and heavily shorted. At the same time, fundamental structural issues are worsening as the US consumer slows a bit.

    Regardless, strength overseas, relatively low interest rates, and above all liquidity trumps all else.

  19. ac commented on Jul 12

    The economy will have to support it in Q3. IMO growth will be dissappointing in Q2 with the weakened PCE. If it doesn’t improve in the 3rd quarter, or gets worse, the game is over. I think a temp pullback is in due because this rally’s cover was overdone. That isn’t news however. If the economy does rebound that is another year of equity growth amid the raising rates. Maybe not huge growth, but growth. Very interesting how this is like the late 60’s after artifically low rates gave way after the 66/67 slump and the 68 growth surge. Will we see the same thing in 2008?

    Rates are low because the US economy is sluggish and has been since last Augest. Once payroll revisions are in, we will find how much.

    If the economy does pick up speed again, so will higher rates and possibly higher FED rates. That is the danger when you over-liquidate the system. The housing busts decline is slow, but you force rates up worldwide eventually strangling the beast.

  20. Winston Munn commented on Jul 12

    I think Sid Falco has it right – the yen carry trade is alive and well.

    It is rather amazing to watch this wheel of liquidity go round and round – as soon as one source has problems another steps up to take its place.

    Of course, that is by necessity as Ponzi finance such as this requires monetary expansion simply to tread water.

    In the meantime, relying on meaningful data and fundamental measures is like trying to teach your son the dangers of alcohol consumption during a frat party.

  21. Hieronymous B commented on Jul 12

    Can you tell us when we’re going to party like it’s 1929?

    I agree with the guy that said it’s a bs rally.

  22. Mich35.5 commented on Jul 12

    Rally = BOJ inactiveness on rate-hike + (WM+COSC+BJ+SAM’S)

    BOJ Inactiveness = Continuing Carry-trade = cheap money = liquidity = wheel of fortune continues

    WM+COSC+BJ+SAMS = People moving from convenience to discount stores. People can buy more with the same $100 at a Sam’s than at Target. To me it shows, middle america is really tightening its belt and decided they should travel more to pay less.

    Even though I was mostly short this market for the last two months now, I always assumed Nasdaq could see 2700 before it crashed. Why couldn’t I wait then? Because it shouldn’t have seen 2700. But now that it did, I love my position even more, it will pay back what it has lost and make more.

    Add another couple of points for tomorrow being Friday, but that is that. 2701+Tomorrow’s points is the highest we we will ever see this market for the next few years.

  23. ac commented on Jul 12

    “I think Sid Falco has it right – the yen carry trade is alive and well”

    The carrytrade is vastly overblown. Even if the USD crashed, Japan has already indicated they would literally destroy what is left of the Yen to keep pace with the dollar.

    The endgame to me is the housing bust’s decline infecting prime loans next year and builders bankrupting in droves while rates rise. That is the game over signal IMO. Destroying Subprime/Alt-A only infects a chunk of the market. So it drops new home sales for example to .650. Historically that is a solid number. Damage to prime loans would probably mean a new home sales drop to record lows.

  24. David Pearson commented on Jul 12

    So much derision thrown at the poor shorts. Someone has to defend them.

    HB’s, non-prime lenders, community banks: not so hard to find a bear market, if you could stand the volatility. The problem is most can’t. If you’re short, shorts are your worst enemy. Today proves that in spades. FWIW, here’s what you have to be willing to do to make money as a short:

    -buy volatility when everyone is selling it.

    -ride out countless takeover rumours (with occassional call protection).

    -ignore countless pops on less-than-cataclysmic earnings results.

    -remember that getting the driver right (i.e. the credit cycle) is more important than picking the timing or catalyst.

    -be prepared to be laughed at for stating the above.

    -never, never short on weakness.

  25. jules commented on Jul 12

    Is there an investor around that is not aware of a slowing housing sector, subprime loan problems, or the Iraq war?

    These negatives are discounted and the shorts are now taking it in the shorts.

    Our markets will catch up with the rest of the world.

  26. jules commented on Jul 12

    Barry…I’m impressed by your pragmatic candor on this rally. Most here would paint you incorrectly as a perma bear.

    I see you with wide eyes.

    Do you feel we fail at a certain level higher. Is 14000 “all’s she got”?

    ~~~
    BR: I emailed you the answer, but it bounced (you gave me a bogus address). Get me a real email address and I will send you the data

  27. kensdad commented on Jul 12

    sorry to be disagreeable, ac, but the carry trade is underestimated, not overblown… remember what happened back in Feb when there was just a momentary whiff of fear that the JPY may rally? the carry trade has grown even larger since then. if it starts to unwind, even those hapless bureaucrats at the BOJ will be unable to stem the tide. it will be a full blown disaster of epic proportion (and that’s why they are clinging stubbornly to their “zero rate policy” because they are stuck and they know it!)

  28. Si commented on Jul 12

    Some great reason given for why the market should be struggling…but look at it, its rallied through every bit of negative data thats some along this year. I love how people are talking about the summer rally being here, its rallied all f*cking year.
    I do think its people like us, realists? that provide the fuel for the market to go higher. I’ve even seen guys who post on here high fiving because the Dow was down 100 pionts on the day. The fact that I/they missed most of the rally doesn’t seem to matter, they just want to be right.
    I’ve been wrong on the market but the blathering from bullish commentators every time there is a drop in the market no matter how small is really starting to piss me off. The noise thats gonna hit from these guys if a real correction occurs is really going to be something to see/hear.

  29. BuffaloT commented on Jul 12

    I wish I were amazed at this last hurrah, but I am not. The pending crash is going to be a site to see, I just hope I have not puked up my DXD when it comes. I am a tad early on the short side but I felt going in that there was 5% left on the up and 25% or so on the down. 14,000 seems to be the light to the mosquito… will it make it there before it gets zapped?

    What is the risk return here for new longs? This is nothing but hedgies gunning for stops and ‘sold to you’ campains to garner the last few performance points before the music stops.

    It is going to be nasty when the music stops even the bulls know it hence the move we are witnessing now.

    BR – Are you looking for a price point or a time point such as late summer for this thing to end?

  30. sam commented on Jul 12

    barry
    if that was noise, I would love to hear thunder.

  31. sam commented on Jul 12

    buffalo
    techinals have been smoked across major indices.
    Means enjoy the paraolic rise. Market knows, barnanke’s rates are too low and enjoy as long as it lasts. And it can till 2008 (chinese olympics)

  32. Si commented on Jul 12

    I also believe that despite people like Barry doing great work, that the fundamentals just don’t really matter anymore. I call it the science of speculation. We’ve seen it before in the housing market and in stocks before that. It doesn’t really matter anymore what the reality of any situation is as long as you have people willing to continue to speculate then its all good.
    Thats the kind of world we live in, fundamentals are just so 20th century.

  33. Steve Barry commented on Jul 12

    Didn’t hear much on CNBC about the Conference Board CEO Survey from yesterday…per Comstock Partners:

    The Conference Board Business Confidence Index fell 8 points to 45 in the 2nd quarter, down from 70 two years earlier. Even more disappointing was the fact that expectations of CEOs for their own industry over the next six months dropped 13 points to the lowest level since the 4th quarter of 2000 and that only 22% expected profits to increase. Studies by Ned Davis Research indicates that falling business confidence is highly correlated with lower capital expenditures and falling earnings.

  34. Hieronymous B commented on Jul 12

    Off topic, the Canadian dollar has almost pulled even with the US dollar since March when it was 15% difference.

    Good economy in Canada with Vancouver doing 10% growth y2y if I remember correctly.

  35. Red Pill commented on Jul 12

    It is clear that this is a game to a great many people: bulls, bears, and pure cold-hearted speculators. It is crystal-clear from the fundamentals that the patient is very sick, maybe even cancer. Now, you can give the patient crack-cocaine and the patient will feel great….for awhile. But, the patient is still very ill.

    I am planning on participating in this economy for another 40 years, if my fortune holds. I don’t give a &#$% if I make a boatload in the next half year only to watch things tank. What kind of future are we building? &$%#, what a bunch of self-centered #@$%s.

  36. BuffaloT commented on Jul 12

    sam-

    some would say it has been parabolic since they propped it up last year before the elections

    I mean we can all live a great life so long as we are all wearing Crox shoes and Under Armour gear, eating at Buffalo Wild Wings, checking email with our crackberries, and jamming to tunes with our Ipods while the rest of the economy falls to shit.

    Technicals don’t matter to this market just as fundamentals don’t. More punch anyone?

  37. Gary commented on Jul 12

    Folks it’s very simple the big money is buying this market. As long as they are buying the market is going to continue up. When they start selling the market will go down. Its as easy as watching the COT reports every week to find out what the big money is doing. I post the results every week on my blog if anyone wants to keep track. Right now they are big buyers.

  38. Robert commented on Jul 12

    Well, I was pretty frickin impressed yesterday. I’ve only been investing for a year now, and have never seen a 2% one day gainer. I guess that’s what the late 90%s must have felt like, eh?

    I think the rally was due to a few things – shorts covering, carry trade liquidity injection, and market tension unwinding… Everyone’s been on the edge of their seat lately due to subprime, falling retail, and to some extent rising oil, so…. yesterday was like a… Hmm. Appears it would be bad form to mention that here… Ah well, you get my drift.

  39. John F. commented on Jul 13

    I plan to celebrate this bullshit rally with some wildly overpriced food (not from WalMart) this weekend.

  40. BuffaloT commented on Jul 13

    Robert – You can mention anything you want here it is opinions most of us like to hear. Some of us just perceive this rally for what it was so perfectly put Bullshit. The more they push it the uglier it will get. They should have left it alone last year but helicopter Ben couldn’t resist his turn at the wheel. M3 exploding, dollar imploding, housing in shambles and only getting worse. Inflation NOT under control, job market pathetic… Yeah all is well. DOW 14,000 do I hear 15,000…

    Example of this looney market. Alcoa announce to buy Alcan – Alcoa gaps up 10% continues to rally another 12- 15% in the following months. Alcoa can’t get the deal done during this time, finally Alcoa gets out bid and wow Alcoa pops again on the news another 5%. So if trying to buy Alcan is worth a 10% pop and failing to buy them is worth another 5% and in between it runs up another 15% Where is the sanity in that? You think someone is going to buy Alcoa??? Hell no. There is no sense to it period.

  41. Camille, CT commented on Jul 13

    This market rally was brought to you by Prozac: Because reality is for losers!

  42. Si commented on Jul 13

    Buffalo, theres a whole TV channel (soon to be more) devoted to this game show thats called the stock market. For many droids out there thats all they see, theres no way in todays climate ‘they’ want that to look bad.
    Its like many things these days, it doesn’t matter if the underlying is shit as long as it looks good…to the majority, those who can read between the lines can go and &^%$.

  43. MDDwave commented on Jul 13

    I get the feeling the one day rally is an artifact of traders that have programed buys when the “big” technical change that will happen in the market. The DJIA broke the historical/recent “resistance”, which signaled a “technical feeding frenzy”. After it over, they will wonder what it was that they were all after.

  44. Sven commented on Jul 13

    Like, where were all the trader-dudes who are usually so worried about inflation and rate hikes?

  45. ECONOMISTA NON GRATA commented on Jul 13

    The only thing I can say about yesterday’s rallly is OUCH! THAT MUDDA FUCKING HURT LIKE A BITCH…..!

    I shorted twice against volume and they caught me like an amature….

    Oh well, today is a new day…. I’ve still got one good leg w/o a foot but it’s a leg just the same….

    I’m still playing the short side of this headline rally….

    Everybody have a great day. Long or short, good luck…

    Econolicious

  46. BuffaloT commented on Jul 13

    Yes as Barry so eloquently put it – my nuts got squeezed. I think one of them is purple.

  47. D. commented on Jul 13

    Maybe this is how it all ends. Wouldn’t it be funny if the blow off came from consumer stocks since the US has transformed the world into a consumer society.

    We all know that 80% of the world can not live the way the US has over the last few decades and we’re trying to convince ourselves that if we just keep an optimistic attitude that anything is possible!

  48. Matt M. commented on Jul 13

    Trade what’s in front of you….define your risk in every trade….get long areas where demand is outstripping supply….sell or get short areas where supply has the upper hand. Have zero emotional attchment to your stance of what should be happening. Realize that position- sizing is the least talked about key to significant returns. And please stop thinking your opinion has any weight with the markets.

    Just some thoughts I thought I’d share that most top traders live by.

  49. michael schumacher commented on Jul 13

    I sort of resent being forced into the market by the actions, or lack of actions by the fed. The are basically giving people no other choice by continuing to devalue the dollar and pour money to the broker dealers. Weak shorts and cheap money is what yesterday was all about. I’m not worried as the shorts I have are in two places that will get hurt regardless of where “they” take the market.

    While I agree it’s bullshit….because today’s (and yesterday’s) retail numbers show that it was created. But it occured and that gives people who do not read or apply basic economic indicators something to cheer about.

    Sam-

    You’ve got the idea of what goes on just about every damn day……sometimes you can set you’re watch to it.

    Matt M.

    totally agree

    Ciao
    MS

  50. Jason M commented on Jul 13

    Interesting post — and comments.

    I’m an amateur investor who has never trusted my money to fund managers. I’ve done pretty well historically, but the last year or so I got a sick feeling about the market and went short.

    As you can imagine I got spanked pretty badly, but I just haven’t had the heart to turncoat and buy in to this rally.

    I feel like I’m either not smart enough or not dumb enough to make money in these market conditions.

    I guess I got my money’s worth on lessons learned. As for the last two days, I’ve been nothing more than a sympathetic spectator.

    Good luck to everyone.

  51. Fred commented on Jul 13

    Jason…(fwiw,imho), you should only short when it’s out of favor to do so. There are record amounts of those bets placed currently.

    You should also use them as a hedge, not a bet on the direction of the market. Buy a globally diversified portfolio of sectors (ETF’s?) that are leading and PROTECT the portfolio with inverse ETFs when things look too stretched, or if you’re scared (sleep better at night). Keep some cash for implosions/disconnects.

    BUY FEAR and SELL GREED.

    I hope this helps.

  52. stormrunner commented on Jul 13

    –I do think its people like us, realists? that provide the fuel for the market to go higher. I’ve even seen guys who post on here high fiving because the Dow was down 100 pionts on the day. The fact that I/they missed most of the rally doesn’t seem to matter, they just want to be right.–

    Of course those of us with a bearish bias would prefer to be correct, I just don’t buy that it stems from arrogance as some here and at other blogs would seem to have it. The point here is that even though we’re paying with “Monopoly Money” it’s as real for now as its ever going to get until it isn’t. Between the FED’s Fiat, PPT, HB&B (Goldman) infiltration of the Treasury and next the World Bank, naked shorting, manipulated government statistics or no stats at all as in the case of M3,(can you imagine the value of the money in your wallet is none of your business) responsible people are becoming indignant. It’s not about being right it’s about an intrinsic aversion for – fraud prevails -. And when it comes time to pay the piper accumulated retirement monies will foot the bill. Are we willing to accept that responsible savings for the future are more a matter of luck than prudence?

    We have an opportunity here to change the guard and return to the constitutional governing our fore fathers left Europe and its corrupt monetary system for.

    Please heed the signals and at spend some time researching Ron Paul for president in ’08.

    http://www.dailypaul.com/
    http://www.ronpaulnation.com/tv.html

  53. Matt M. commented on Jul 13

    The fact that I/they missed most of the rally doesn’t seem to matter, they just want to be right.–(stormrunner)

    That is always the achilles heal for traders. Very few can ever appreciate the other side of the trade (bull&bear).

    The point here is that even though we’re paying with “Monopoly Money” it’s as real for now as its ever going to get until it isn’t.(stormrunner)

    Stormrunner….you get it and then you space out with the rest of your comment. The market is the ultimate reality because what is…is. All the comments on “rigging” and “invisible hand” and GS and “fiat currency” are the terms of strategists….not people running money that are graded every week/month/year by the ultimate chief…performance.

    There are no spaces for “comments” on the performance report. Just numbers.

  54. stormrunner commented on Jul 13

    –Stormrunner….you get it and then you space out with the rest of your comment.–
    The market is the ultimate reality because what is…is

    This is the cop out of the last three generations, constitutionalists were willing to die to remove the threat of Private Central Banks manipulating the money supply in order to push their imperialist agenda removing individual liberty “The Patriot Act” while purporting to spread freedom through out the world. Your comment appears to be rooted in “free market principles” as long as money is created in debt there is no free market. You are also trying to suggest there is no correlation between the “Money Masters” and the Global Investment Firms. The GS thing running both the treasury and world bank, flies in the face of this. This is no longer a case of the invisible hand, the hand is completely visible it’s just impossible to predict -when it will strike. I am merely suggesting that the game is rigged there is ample evidence of this. You are suggesting so what if the rules have been illegally changed ” live with it”. All it takes is some rather vocal intelligent people to understand that we can revert back to the “Law of the Land” as it was, before it morphed through public inattention to what it is now. If the new rules don’t work to the benefit of the people than change them, and not by increasing the control of the state through dependence on the state. History has shown this does not work. Every single penny of taxes collected goes to service the debt the rest of operating expenses are merely printed. The situation is so bad that the rape of the citizen has to be performed by inviting private sector professional manipulators of the highest caliber to bait then stealthily steal to bail the country out. Your comment seems to condone, learn to manipulate what is, for your own benefit (understandably necessary)
    But, why not try to effect change while performing this, for the time being, necessary evil.It would seem imprudent to wait for the voting system that is your “free market” built on a corrupt monetary system to collapse in its bid to return to the mean which has been for centuries “sound money”.

    Monetary reform before chaos and anarchy or worse.

    Ron Paul ‘08

  55. Matt M. commented on Jul 13

    Storm….I don’t even know where to start on your comments, so I’ll drop it. Suffice to say….different opinions are what makes a market. My comments are focused on trading…not political reform. You want political reform….get rid of the PAC’s to start. The political process is owned by specialm interest groups and lobbying firms. There’s not 5 politicians in the whole country that are worth a nickel.

  56. stormrunner commented on Jul 13

    Originally my post was in response to

    I do think its people like us, realists? that provide the fuel for the market to go higher. I’ve even seen guys who post on here high fiving because the Dow was down 100 pionts on the day. The fact that I/they missed most of the rally doesn’t seem to matter, they just want to be right.

    Posted by: Si | Jul 12, 2007 10:22:23 PM

    My comment’s were made to stimulate debate, not as a political tirade. I posted here as investors are the folks who would be most likely to comprehend the gravity of the situation but may not be aware there is beginning a grassroots effort on the part of Ron Paul to effect real reform.

    In the market reality we vote with our wallets, (I do get it) I agree from a trading prices perspective, your only recourse is to play as staged and attempt to understand the political environment effects based on the current Debt Based Monopoly Money System.
    This does not preclude nor do I feel that it is off topic to suggest monetary reform as the “Free Market” is built upon its monetary base. And I think voting here is every bit as relevant as wallet voting.

    I do not consider Monetary issues to be strictly political, they my be changed using political process but they are most certainly the crux of the macro picture which is a substantial part of the “Big Picture” as it relates to purchasing power which is the only point of investing in the first place.

    I believe the disconnect between the real economy and the real market is largely a result of this Debt Money system, and I am fishing here for holes in my reasoning as well as bringing the topic of monetary reform to the table in the recommendation of Dr Paul and his Austrian Economics buddies. I realize that in 200 years a lot has changed but the new system has only been in force since 1913. Not a lot of people even consider that this was not always the defacto system, and has been implemented to transfer wealth from the lower and middle classes in effect creating a Ruling Class which is exactly what the 200 year old experts so patently dissented from. It is no coincidence that unless a candidate has 100 Million + he has little chance for Media coverage and is thus unlikely to maintain the name recognition to prevail. These millions come from the growing ruling class thus the representation is hand fed to the public essentially negating the process. We have a unusual opportunity here with the yet to be regulated internet to level the playing field this may not be long lived.

    Please consider my thoughts.

    http://www.dailypaul.com/
    http://www.ronpaulnation.com/tv.html

  57. Marion Knight commented on Jul 13

    Storm runner,

    Please stop posting “garbage”, I want to read about trading, not your political philosophies. I read the first 2 lines and I had enough.

    Suge Knight

  58. ari5000 commented on Jul 13

    Barry, most of the readers are on to the answer of why it’s ‘bullshit’.

    The most important thing to remember is that the Dow is priced in dollars.

    Notice where the $USD ended (put up multi-year chart) when the Dow ran up 2 percent.

    Google the following: “Zimbabwe stock market chart”

    Anyone who thinks it’s b.s. just doesn’t get what’s going on.

  59. Eclectic commented on Jul 14

    BuffaloT:

    You’re a tall man (or should I say, short man, or should I say woman, tall or short) to admit it.

    Being of an intensely related sub-species of the breed, you may understand the concept of ‘bulling’ with beef cattle, in which females dry-hunch each other when one or more females is in heat.

    This is because they smell the high levels of estrogen in another females urine when it’s in heat, and then even the females take on bull-like behavior. This helps identify a female in heat so she can be artificially bred.

    I’ve recorded two days worth of CNBC and played it back to my cows. I did that trying to identify which cows were in heat without having to have a teaser yearling bull.

    Well, I’ll tell you what happened… regardless of sex, age, size, weight or height, if it had a heartbeat and 4 legs to stand on, it was jumpin’ the bones of every other bovine in sight.

  60. ljoncape commented on Jul 14

    Some saw a triple top, others saw a bullish cup with handle formation (the handle being a healthy consolidation pattern.) The key is waiting to see which side of the consolidation pattern the market broke through.

  61. ljoncape commented on Jul 14

    Don’t try to guess where the wave(market) is going to take you. Just position yourself to get on a wave and ride it for all its worth. Just like surfing, you can’t control the wave, you can only make the most of the opportunity presented to you for the best ride possible! If you keep paddling around trying to find or chase the best waves you will miss every one. You have to be “in the moment” to take advantage of the opportunities(or waves) presented to you in the this or any market. Surf’s up!!!! (for now, enjoy)!

  62. stormrunner commented on Jul 14

    Yesterday, I posted this link from the House Committee on Financial Services,

    http://www.house.gov/apps/list/hearing/financialsvcs_dem/ht062007.shtml

    Topics ranged from China dollar peg, Protectionism, activities of the PPT etc. If these topics are not relevent to the macro investment environment and subject to removal maybe there’s rules related to posting on this board I’m not aware of could someone please eloborate.

    http://www.house.gov/apps/list/hearing/financialsvcs_dem/ht062007.shtml

    I get it its long and boring but it has its moments and those moments are somewhat enlightening.

  63. Marion Knight commented on Jul 14

    Stormrunner,

    Yes, it is boring, no one is going to read that crap. Get a life.

    Suge

  64. stormrunner commented on Jul 14

    Suge

    The question was regarding posts subject to removal, total conjecture on my part but my last very short post was also removed. Maybe you do moderate this board.

    You objectivity is in question the above link references a video stream. It is not reading crap in any sense. But it does illustrate the Government position from the mouths of the players. To arbitrarily dismiss, is what is crap. It is also censorship. You could always ignore the post I do not read all posts either but I would not, could not delete them. I would understand if I had said something offensive. If you believe supporting your ideology is offensive great but censoring is certainly another issue entirely.

  65. Marion Knight commented on Jul 14

    Storm runner,

    Are you even a trader? Are you short, long? Are your traders profitable so far? Share with us. That is ten times more interesting that boring links to the House Committee on Financial Services.

    Suge

  66. Winston Munn commented on Jul 14

    In the end, economics and earnings are the final abitrator of price, but there are changes in today’s world caused by the interlocking dependency of economies. I had believed that today’s environment was simply the same play but being performed on a larger stage; however, I also have to keep in mind that my assessment could be wrong, and therefore the Ponzi financial system could last many more years.

    The one thing Ponzi does not give is a timetable.

  67. stormrunner commented on Jul 14

    The extent of my market exposure is limited to my 401K plan which currently is in GOV Money Markets, I rolled out 5/9/06 (day before last rate hike assumed last straw) and have taken about 9% beating since, at the time I was in Russel 2000 and small cap value funds. I am obviously not a professional trader and did not infer such.
    My purpose in following these blogs was to try to gather some insight as to when to redeploy. If there were a way to retire without playing I would have no use for this info. I’m sure I’m am not alone in this delemma. It is sites like this blog that have led me to believe that there is something inherently wrong with the system. OC CA median incomes of 80k vs 630K 1500 sq ft home prices have led me to wonder even if I do get lucky and am able to retire what about my boy. It would take a doctor or a lawyers salary to afford my home this makes no sense. The common theme on most of these mediums, The Big Picture, Bill Cara, Kirk Report,Puplava, JohnMauldin,Roubini,ITulip,ImplodeOMeter,ShawdowStats Mish, HousingBubbleBust, etc is the game is rigged. Everyone talks about why no one (except Mish) suggests a solution. The info goes on for days on end about the poor mechanics of a sytem that was designed to do exactly what it is doing, decrease the standard of living for productive society while increasing the standard for those pushing paper. This has happened because its the only game in town and were creating a society that realizes the futility of work. Real assets and investment trump, saving is outright stupid. Then along come a guy with a solution – change the system. An opportunity that is not likely to surface again in our life time ( it wont be long before the internet is also regulated) barring a catastophic collapse. Thought maybe someone might be interested I guess not. Your feed back though negative at least that you had to read 2 sentences before flaming me, better than being ignored. The experts here claim to have knowledge of the system, I thought I’d probe for reasons why an alternative would not work, consider it a hobby.

  68. jack commented on Jul 14

    By the number of posters with short squeeze experience here, Barry’s blog is casing unintentional harm. I too held some short positions for a few weeks before June influenced by in big part by my daily reading of this site.

    Fortunately, I finally understood that with the USD falling, shorting is a madness. Barry should be more explicit about it in this blog.

    ~~~
    BR

    Have you been advised to short this market by me or this blog? Send me a URL showing that.

    Reread the post again. The point I made to the hedge fund manager was to NOT fight the tape.

    And, then go read this (Especially section 8):

    http://bigpicture.typepad.com/comments/the_big_picture_disclosur.html

  69. Winston Munn commented on Jul 15

    Jack:

    I increased my portfolio by 11.6% in June and it was all done with shorts and puts.

    The key issue was primary domestic verses multinational – the multinationals are benefitting from the falling dollar; the domestics are being hurt by the slowing economy.

    I sympathize, though. I have been too early before in a short because of negative bias.

    But I only had myself to blame.

  70. The Pig Man commented on Jul 15

    Congrats to the bulls riding global asset inflation on the double digit money supply created throughout the globe. The credit
    markets, however, are saying
    “Game Over” as it seems there is
    now such a glut of crap paper that it is overwhelming the debt
    markets. Good luck selling this
    crap…no one wants it.

  71. Marion Knight commented on Jul 15

    Storm Runner,

    You did not answer the questions I asked. There seems to be something seriously wrong with you. I’m going to assume you’re on margin and have been shorting the market the past few days.

    Suge

  72. stormrunner commented on Jul 15

    Of course I answered your question 100% Gov Money Market earning 4.5% since 5/9/06
    My 401K doen’t include margin options ????
    see stormrunner | Jul 14, 2007 11:22:17 PM

    The extent of my market exposure is limited to my 401K plan which currently is in GOV Money Markets, I rolled out 5/9/06 (day before last rate hike assumed last straw) and have taken about 9% beating since, at the time I was in Russel 2000 and small cap value funds. I am obviously not a professional trader and did not infer such.

  73. Marion Knight commented on Jul 16

    Stormrunner,

    So how much are down this year?

    Suge

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