Open Thread: Fundamental, Technical or Psychological Factors ?

On CNBC today, someone blamed today’s selloff on the weekend Barron’s piece trashing Phony and Fraudy.

That raises an interesting question: Why would a Barron’s article, with essentially no new information in it, send Fannie down 22%, Freddie down 25%, and whack 2% off of the markets?

Our favorite bulls are going to call "retesting the July lows" but I doubt that is all there is to this.

Putting questions about Efficient Markets aside, what was today’s action all about?  Was it really the Barron’s Bounce Trounce, or was it something else?

My own guess is that Investors are begrudgingly recognizing that the financial system has major problems, real estate is in a secular decline, and that the economy is teetering into a recession — and none of the above is likely to be fixed anytime soon.

~~~

What are your views? Any of the above ring true?

What caused today’s major whackage, how long is it likely to last?

What say ye?

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  1. Jeff commented on Aug 18

    Volume was light due likely to summer vacations but me-thinks that we’re headed for another significant leg down the markets below the July 15th low water mark. Once the summer unofficially ends on Labor Day, we’ll know for sure in the following 4-8 weeks.

  2. nades commented on Aug 18

    I think its people pulling their heads out of their asses and realizing we all might be faaked… (pardon the french)

    Of course that’s my opinion and not much more! :)

    (I think that would count ad Fundamental!)

  3. Bluzer commented on Aug 18

    The PPT ran out of checks. Not to worry. Lots more on the way.

  4. Mich(^IXIC1881) commented on Aug 18

    Markets are like a headless chicken, don’t have vision to see where they should be running. Actually they know it will end a lot down but no clear idea “when” it will be heading down, so people are day trading in herd mentality trying to make a buck up a buck down.

    Eventually it will test new lows, then go up and test new lows again, all the way to sub2000s for nasdaq (at which time I will remove IXIC1881 from my name)

  5. Penguin commented on Aug 18

    My two cents…
    1. Present: Current fundamental economic conditions are, simply put, negative.
    2. Moving forward: Overall economic trends are also negative. Check out the unemployment graph; clearly wrong direction.
    3. Not at the bottom yet.
    Cheers~

  6. scorpio commented on Aug 18

    range is spy 120-130 and could not break above 130 convincingly so down we go. demand destruction is going to include a lot more than oil, commodities, over-priced housing etc

  7. Pat G. commented on Aug 18

    Maybe the market’s are starting to wise up to the dog and pony show for what it really is and who it really involves. Problem is; so are many of our foreign creditors.

  8. Jim Haygood commented on Aug 18

    “Our favorite bulls are going to call ‘retesting the July lows’ but I doubt that is all there is to this.”

    I don’t think the July lows get tested till next July. Falling oil prices and Treasury note yields under 4% are a bullish dream.

    I’m gonna load the boat later this week, after this petite selling squall is over. Barron’s is ALWAYS WRONG. I will fade those ink-stained Dow-Jokes MEDIA SUCKERS till the cows come home. And I will make long green doin’ it.

    If journalists could trade they way out of a paper bag, they wouldn’t be scribblin’ for THE MAN. Nor would they have frayed collars and cuffs. I rest my case.

  9. John commented on Aug 18

    hmmm… let’s seeeee…

    “The market” is primarily over testosteronized males. I’d say “the reason” is because the testosterone level was reduced from last months highs. Probably because:

    `merca is looking a bit weak.
    The future is looking a bit dim.
    The other “trading males” aren’t participating in as many “high-five dances”.

    So, just males issues. Don’t worry; the stupidity will come roaring back. All we need to do is invade somebody.

    Dude, like totally, dude, we’re gonna kick their azzes. Like, yeah dude, TOTALLY! Let’s buy some stocks dude, this war is gonna, like – totally, rock dude! (high-fives all `round!)

  10. larster commented on Aug 18

    My view is that most of the up days are program driven, so there is little there, there.

    The fundamentals are worrisome (to say the least) everywhere you look. If this isn’t bad enough our two candidates are talking to a power mad evangelical, venting testoserone over Russia, and otherwise ignoring the financial crisis. If one sits back and looks at all this how can you be positive?

    There is also a fear that this “whackage” is merely the first spank in a long spanking session. Besides Spitzer, this prospect does not cheer anyone.

  11. cap commented on Aug 18

    from Hussman “…blowout in credit spreads, now extending beyond financials and into a broader range of corporate debt…”

    and the credit markets have been out in front of the equity markets for about a year.

  12. Mich(^IXIC1881) commented on Aug 18

    OT but I thought I would share…after the fake fireworks, fake singing, now it is reported that…

    – The always smiling girls at the ceremony apparently were stripped naked during recruitment, their bone measurements taken (shoulder, legs, breast). They were asked to be able to smile extended times and be cute
    – The soldiers were given diapers

    Human rights, anyone? Neah, not in China.

  13. dblwyo commented on Aug 18

    More than with the rest of the commenters. Besides payrolls turning negative YoY (and ignoring the B/D adjustment) the BLS just updated real wages and the weekly is down -3.1% ! That’s a real big deal – even if inflation dampens down. In my estimation we’re already in a growth recession, define as YoY growth less than 2%. Well guess what – despite the headlines Q2 was 1.8%. But..with wages plus employment turning negative we’re crossing a major tipping point. Laid out the charts for all this in this post: http://tinyurl.com/6r6pwm
    which walks thru the major components and takes many of them back to 1960. IMHO though most still see none of this clearly. Wrong instruments and foggy panels.

  14. steve roy commented on Aug 18

    Folks are waking up to the fact that … it’s 1973 all over again!

  15. Barry commented on Aug 18

    My friend Paul asks me “you’re not being serious about the Barron’s article, are you? no new information?”

    Yes — I believe what that article did was force more contemplation of previous knowns, and it was therefore psychological, not informational. At the very least, Barron’s can legitimize a viewpoint that might not have been seriously considered before.

  16. Paul Kedrosky commented on Aug 18

    At least in a psychological sense, that constitutes news. markets move on memes, and there is a meme taking hold that Freddie/Fannie’s likelihood of a shareholder washout is rising from 75% to 95%

  17. HCF commented on Aug 18

    I see a pattern developing during this credit crisis:

    1) [As markets are falling]: The markets are way too low. The economy is strong.
    2) Oh crap, maybe this isn’t good [markets continue to fall]
    3) Markets aren’t going to zero, therefore it should be going to infinity [markets rally]
    4) Wait, these companies don’t have a business model and aren’t making money! [markets fall]

    LATHER, RINSE, REPEAT.

    I don’t think this ends until the companies at the epicenter (I-Banks, FNM/FRE, Homebuilders, etc.) start to prove that they can consistently start making money again… Meanwhile, I won’t hold my breathe

    HCF

  18. Rajesh Raut commented on Aug 18

    The administration is clearly leaking stories about a takeover of the GSE’s to prepare the markets. The Baron’s article is just one part of the information campaign.

    Step 1. No, we won’t.
    Step 2. We need authority to but we won’t.
    Step 3. We could but we won’t.
    Step 4. We won’t unless we need to but we don’t need to.
    Step 5. We won’t unless we need to but it is not likely that we will need to.
    Step 6. We will if we need to but it is not likely that we will need to.
    Step 7. We will if we need to but we don’t need to right now.
    Step 8. We will if we need to.
    Step 9. We have…

  19. Mike M commented on Aug 18

    The facts don’t matter until they do.

  20. Andy Tabbo commented on Aug 18

    It’s always technical.

    The move from the July lows is taking the shape of a rising wedge type formation. Not good. It would take an extremely powerful rally very soon to negate the rising wedge formation.

    Today’s action looks like it took out the lower trend line of the rising wedge, but it’s not decisive, yet. Any more downside tomorrow and it will look very, very bad.

    From the Elliot Wave perspective, I think we’re about to launch into a Wave 3 within a large degree Wave 3. I personally hope for the U.S. that is not what we’re facing. It suggests a move to 1000 on the SP500 with a few months. In other words, hide the sharp objects and shower curtains.

    Use a break below 1270 for shorter term sell stops. If 1243 – 1225 zone doesn’t provide support, then get the women and children off the streets….it will get very, very ugly.

    – AT

  21. esb commented on Aug 18

    Make certain that you are looking out of the correct window.

    If you are, what you are seeing is an almost hourly back and forth between Medvedev (as mouthpiece for Putin) and Rice as Russia probes (by refusing to actually pull back) the weakness of the United States (lame duck Cheney Admin., exhausted army and busted economy).

    This is dangerous and the market does not like it at all.

    Really dangerous if an impasse results in which Rice issues an ultimatum of some sort, Putin calls the bluff and Cheney does somethin’ stupid.

  22. rww commented on Aug 18

    Random event. Like most days. Anyone in the market who hasn’t seen reality yet is likely never to.

  23. Namazu commented on Aug 18

    Barron’s has become nearly as good a contrary indicator as Business Week. Some of Phony/Fraudy equity holders may have noticed the widening CDS spreads over the weekend, which to me is much more intriguing than 20% moves in single-digit stocks. I think a literal interpretation of Treasury’s statements admits the possibility of allowing some MBS to default–and after last week, the thought of stiffing the Russians must have crossed somebody’s mind.

  24. Boris commented on Aug 18

    Hi, I thought we already am in a recession. You know, whenever we have bad news, the bulls say that is the bottom… Everytime my shorts go in the black, the market goes up…

  25. Mark E Hoffer commented on Aug 18

    non-linearity is the new volitility.

  26. The Financial Philosopher commented on Aug 18

    Fundamental, Technical or Psychological?

    A psychological thread always runs through market movements. If we assume otherwise, then that would be a psychological decision as well… to some degree.

    “… Wall Street never changes, because human nature never changes.” ~ Jesse Livermore

  27. Joe commented on Aug 18

    I wonder if throughout this bear market we have basically been seeing spurts of people throwing in the towel, finally realizing that this is a true blue recession and that the housing market is f’ed for at least a couple more years.

    So yeah, maybe the Barron’s article convinced another spurt of people that this isn’t going to be done in time for the holidays …

    One day soon, we will likely see the Mother of All Spurts, when everyone gives up, and then finally we can get some real valuation and look for a real turn around.

  28. Scott commented on Aug 18

    Deflation is coming like a locomotive down the track. The credit markets, both those functioning and those seized, have been telling us this for 18 months. Are we ready to listen.

    Beyond a doubt this is fundamental. Technicals are never more than context, not catalyst; although, technicals with psychology may give brief reprieves from the decline.

  29. Mark commented on Aug 18

    Well, I’m going to upset the 17th-century Newtonian types, but so be it: the universe is not causal…and that includes the stock market. Put another way, it’s not “cause and effect”…it’s “cause-effect.”

    From a purely technical perspective, the Russell 2000 index gapped up and sold off on Friday. Either you ‘get’ that, or you don’t.

    Be well.

  30. Jerry commented on Aug 18

    I think all that weekend reading’s startin to pay off for people. I read that Lehman’s is gonna sell $40 billion of real estate. But I keep readin about a crashing real estate market? So instead of buyin some LEH today I decided to wait and see what they get for that property.

    Mastercard(MA) at $240 I read is a great buy after this $80 correction. But I wondered how many homeowners in trouble or close to it might have tapped into their Mastercards a little. But surely they wouldn’t walk away from a credit card. How the hell would they eat lunch?

    So I decided to be prudent I’ll place a limit order on MA at $160. And I did.

    I read too about several big brokers and investment bankers are gonna make investors of CDO’s and some other kind of Os whole again to the tune of several 10s of billions$. I had to wonder for a second where they might get that kinda dough. I see their stocks are goin up though…somebody knows somethin.

    Probly they’re gonna use 2009 profits to pay those investors back for those O things that went down so much. That’s why their stocks are moving up…that’s it… big profits are comin in 2009! Yeah because the stock market looks forward somethin like 9 months – I read and heard that many times.

    But then I looked at a stock chart of LEH over on Yahoo! And followed it back about 9 months and it said $66 a share…hmmm. So I thought , well one miss don’t mean anything. So I looked at MER… $62 a share…and then AIG was $60 a share.

    So I just decided that somethin’s different this time and that maybe I just ought to sit tight and wait for things to get back to the way they use to be. So I am.

  31. wpepper commented on Aug 18

    Don’t believe the selloff today had anything to do with Barron’s. I agree with the first poster that we are heading for another leg down. The Utilities ($UTIL) has a huge head and shoulders pattern which looks ready to break.

    To quote Richard Russell
    “In a bear market, everyone loses, and the winner is the one who loses the least.”

  32. SteveC commented on Aug 18

    I use a purely technical method of trading, much like a quant program. My system said on Friday we’re ripe for a sell-off, if we get a catalyst. I do think we’ll eventually retest the yearly lows, but not for several weeks.

  33. spirokeet commented on Aug 18

    Anyone got an up-to-date forecast from the spiral calender guys?

    Maybe it’s just….. time?

  34. Mark E Hoffer commented on Aug 18

    do you rememberthe part of the Enron story where the Insiders/Officers could sell their ENE, but the employees, long in their 401(k) plans, couldn’t–they were ‘locked out’ by Plan Administrator(who was that, btw?)…A: In October, in connection with a long-planned change in recordkeepers, the plan implemented a “blackout period” freezing participant accounts. There is disagreement over how long this blackout period lasted — the company claims 10 days, participants who are suing claim it was a longer period. Some of these participants also claim that the blackout period began immediately after the announcement of quarterly earnings and the resignation of Enron’s CFO (in connection with charges of accounting irregularities).

    When the blackout period ended — and participants could get out of any Enron position — Enron’s stock had further declined in value. Enron filed for bankruptcy protection on December 2, 2001. Several class actions have been brought on behalf of Enron participants, suing Enron and Enron officials, Enron’s accountant Arthur Andersen, and Northern Trust, the plan’s administrator. No doubt other defendants will be named.”
    http://www.jpmorgan.com/cm/Satellite?c=JPM_Content_C&cid=1159307685433&pagename=JPM_redesign%2FJPM_Content_C%2FGeneric_Detail_Page_Template
    nice url..

    to sum up, the kind of whack that ENE holders took, should be widely expected..

    differently, I always thought it strange that 401(k)holders are always told that options, that could insure their exposure, are too risky.. maybe that’s just me/experience.

  35. rickrude commented on Aug 18

    fundamentally speaking, US financials
    have zero value and therefore should not
    be listed. Let Bernanke do what he
    pleases.
    Let the financials die so they don’t continue to stink up the whole market and affect
    energy stocks.
    I say delist Fanny and Freddy now
    along with all the other crap out
    there in the US financial sector.

  36. chuck commented on Aug 18

    Yes it was probably best to publish the article when most traders are on vacation thus the low volume.

    And of course after the expiration of the Short Seller deal last week….

  37. Fredilicious commented on Aug 18

    I guess I will be the buyer here.
    Here’s why: Notwithstanding a total collapse in earnings expectations for Q3 the S&P should show positive earnings growth this quarter, q-o-q and y-o-y. For Q4 and 2009Q1 it would be virtually impossible for the S&P not to have huge y-o-y earnings growth. I think you will see a bottoming of the stock market and a move up as the financial press and Wall St. tout up the earnings. Beyond 2009Q2 is anyone’s guess.

  38. Joe Baressi commented on Aug 18

    I know just enough technical analysis stuff to be a little bit dangerous…this market could fall to 10,000 any day now…let us just hope that people don’t panic and that the market stabilizes there…if we break through the support at 10,000, then…then I don’t want to think about that.

  39. touche commented on Aug 18

    “Really dangerous if an impasse results in which Rice issues an ultimatum of some sort, Putin calls the bluff and Cheney does somethin’ stupid.”

    Dr. Strangelove was always one of my favorite movies.

  40. Bruce commented on Aug 18

    Well, I have been investing for myself for the last 31 years. I have at times been 100% in stocks, and often in very aggressive positions. I have at other times been 100% out of stocks. For some time now I am 100% out of stocks, and see no reason for change anytime soon.

    For what it is worth, up to this point at least, I am quite happy with my investment history.

    Bruce in Tennessee

  41. jason in charlotte commented on Aug 18

    It’s the Oil.

    One of the primary factors supporting the rally over the past couple of weeks has been the decline in the price of oil. Given the equity markets direct relationship with oil for a number of months, I can understand why traders would view oil’s decline as a reason to rally.

    I think what we saw today and will likely see in the weeks to come is that the fundamental factors driving down the cost of oil are not bullish for stocks. The same things the put pressure on oil will pressure stocks as consumers are out-of-cash in the developed world and growth is slowing in the developing world.

  42. ECONOMISTA NON GRATA commented on Aug 18

    All of the above rings true….

    Reality sucks man…..

    We need to remember that this is a Nation that elected GWB, not once, but twice, if that doesn’t speak to you, I don’t know what does.

    No offense is intended to anyone, however, I mean, really, please.

    Ain’t we exactly where we should be….? Or, perhaps some expected divine intervention of some sort. Will Hank be able to facilitate the parting of the Red Sea….? Will Ben turn water to wine…? I hardly think so….

    Best regards,

    Econolicious

  43. VennData commented on Aug 18

    The market went up today because of the growing realization of the inevitable awe with which history will look upon the Bush presidency.

    When told about today’s market-moving information, White House staffers reminded the President he needs to keep defending his policies even after leaving office, because you can’t receive the Noble Peace Prize posthumously (which he so obviously covets.) Bush re-assured them he was smart enough to know he couldn’t get one by telling mailman jokes.

  44. Spike commented on Aug 18

    I admit it sounds a bit Kudlowian (cringe) but maybe the Street has figured out that the next President is either crazy Uncle Teddy from “Arsenic and Old Lace” or the smarty pants black kid from grad school. Traders figure they lose no matter what.

  45. Tora Tora commented on Aug 18

    It’s just 1999 all over again. All the cubies that used to pop their heads up, “I just made $1000!” are hunkered down now, waiting for the boss to leave, shivering for that pink slip, watching their mountains of bills climb ever higher, their credit card statement jacking upward at 30% a year compounded, last week it was precious metals, people dumping all their hedges, all running to the same side of the ship, Red Team, Blue Team, who cares, it’s every man for themselves now … dive, dive, dive!! Compounding the lemming market hysteria is
    Dubai Land, a gynormously huge black hole, sucking everything towards it, all concrete, all steel, all aluminum, all glass, all energy, the great pyramids rising once again, topped by greedy green-golden eye of Mammon. All hail the new pharoahs. Bow.

  46. Stuart commented on Aug 18

    So much leverage to be unwound. Who knows. One thing we have learned is that most of us have seriously overestimated the amount insight and reasoned thought of the major players and traders behind market behaviour. They all act more like a 5 year old kid than a thoughtful university professor. People can kiss the efficient market theory out their wazoo.

  47. Hal commented on Aug 18

    I saw on ecomment about SPX earnings and that person stated earning swill rise.

    I did not know earnings were up.

    I thought earnings were down–we know retail is down, financials-still a large part of spx are down. Industrials down–energy might still be up. Restaurants are mostly down (Unos lower sales and margins did not help its overleveraged situation-this is what happens when OPM is used to an extreme)

    But if earnings are trending down as I have observed, then reduced PES are coming.

    Hmm–a lower PE on lower earnings does not make for a strong equity market.

    I think small caps are most at risk–too leveraged, not enught sales or repeat sales.

    go9ng back to PE–just “what if” we returned to a more normal PE of say 10 (based on higher interest rates that companies and consumers pay, excluding banks and a growth rate more realistic of US economy–like 2% if that).

    If we are at 17 PE now and spx at 1278-thats 75 earnings, so if earnings fall to just 65 at 10 PE you can see the potential.

    I think folks are just beginning to figure this out. Many have the time, being unemployed

  48. Mike in NOLa commented on Aug 18

    We have some really eloquent people here.

    I don’t think it was the Barron’s article; it was Barry’s validating it :)

  49. A Dash of Insight commented on Aug 18

    A Great Question from Barry Ritholtz

    At “A Dash” we have often noted that The Big Picture highlights the question of the day. The prolific Barry Ritholtz points readers to many key topics. We sometimes disagree with the conclusions, but never the agenda. Regular readers note the diffe…

  50. Matthew Camp commented on Aug 18

    Well, I would like to add one thought to the mix, especially in re: the posit about the price of oil, and that is this: how is it that when we see the price of oil drop this is “good for the markets”?

    I understand the rationale: lower oil prices means less cost for producers to get the goods to market and less cost for consumers to get to the goods.

    But take it one step further: why didn’t oil just continue it’s upward rise? Because at some point, cost kills demand. Fair enough.

    But what if it isn’t just cost? What if the demand has been removed by the generally acknowledged global slowdown? What if, maybe, cost had become irrelevant because so many other factors were at work and regardless of price we would have seen this demand destruction?

    I don’t know about you but I live in Los Angeles and the cost of filling my Nissan Murano went from $80 to $74 over the last month; the difference doesn’t even buy me 3 cheap beers at Happy Hour on Venice Beach, I doubt it keeps me from shopping for a new fridge or some snapy duds at Sears.

    OK, snappy duds and Sears doesn’t really work, but neither does “demand destruction” and “market rally”.

    There may be more here than we immediately see.

    My $.02? As we used to say on the trading floor: it’s not shoot yourself time, but it’s definitely get the gun out and clean it time.

  51. Simon commented on Aug 19

    I don’t know what is going to happen next!!!!

  52. Brian commented on Aug 19

    I have two kids under 16 months so I don’t have time to read all the comments (or spell check, etc…).

    I would assume you have all seen the movie Titanic? If you remember, the unsinkable boat hit the iceberg but the party continued because the passengers had no idea of the severity of the problem. As you may also remember, their was a limited number of life boats on the Titanic. If you intend to make the boats, you’d best sell your equities now and get there early. Those that try and be cute with the bear market rallies are going to lose a lot of money. Risk is very high.

    This credit problems we are facing today only has two recent parallels, 1930s or Japan in the late 1980s (and ongoing). Either way, you don’t want to be long either market.

  53. chris commented on Aug 19

    Barry love your site. I have been a reader for a couple of years.I would like to know what signs in the Economy or Gov”t policies would push you to think we are out of this mess..banking,real estate debt ect. and declare the USA has turned the page and now a new trend will form?

  54. MS commented on Aug 19

    financial companies made a mint off of providing credit to companies and consumers. Consumers borrowed based on future earnings (including real estate wealth) but they are now tapped out and real estate wealth is disappearing. Leverage was great on the way up.. and its going to suck big time on the way down. As for what the future holds.. to quote David Lee Roth, “It ain’t rocket surgery” –

  55. constantnormal commented on Aug 19

    When the magnitude of the liabilities at Freddie & Fannie was revealed/illuminated/explained (quite a while ago), sure, SURELY no one expected them to survive, did they?

    And when Congress gave Paulson the authority he asked for, to essentially nationalize Freddie and Fannie, did ANYONE actually think that wasn’t going to be used?

    The wonder is that they hung out there in the open air, with no visible means of support, for so very long.

    Kind of a Wile E Coyote moment.

  56. Matt commented on Aug 19

    @HCF – your 8:20 post was almost classic “Yes, Minister”.

    Perhaps someone can locate this brilliant piece of political economy and make it available.

    And if anyone thinks that high-level discussions in private or public sector are qualitatively different, you’re frankly subprime. Learn and trade up.

    M

  57. shayre commented on Aug 19

    World’s Most Accurate Leading Indicator:

    Hand basket sales have gone parabolic!!

    We’re on a highway to …..

    Cheers,

  58. shayre commented on Aug 19

    Hand basket sales go parabolic:

    Whoops, forgot to mention that, it looks like those dastardly speculators have cornered the market.

  59. 401k trader commented on Aug 19

    there was also that NYT magazine cover story thsi weekend on “Dr. Doom”, NYU economics prof. who correctly called the housing bubble, along with inv. banks going belly up. He was predicting more gloom…

    “You either nationalize the banks or you nationalize the mortgages,” he said. “Otherwise, they’re all toast.”

  60. cielo commented on Aug 19

    the plunge protection needs another injection of cash. Wont be long.

    Protects us oh protector of plunges.

  61. lunatic fringe commented on Aug 19

    Do fundamentals even matter? In my book, not so much. The fundamentals have sucked for well over a year and the market as the “all knowing pricing machine” has sucked balls.

    News like today’s may last for an hour, tops. It’s totally technical. I agree 100% with what Andy T said.

  62. esb commented on Aug 19

    Russia just “took” Poti.

    So much for an “early” withdrawal.

    “Sorry, Condi, it was an accident. Won’t happen again.”

    Your move, Dick.

  63. flipspiceland commented on Aug 19

    All we can say with any certainty is what will NOT happen. With 100% probability, then we need not speculate about these certainties, write them in granite: The dow will never reach 20,000 by December; Gold will never reach 2,000 by January; Oil will never reach 500 a brl in our lifetimes; Bush will not be re-elected, nor will he ever qualify for a good trade; those who control the dollar printing presses will never hit the “OFF” button; there will never be peace in the Middle East until the last two Semite brothers there are extinct; AIPAC will always control the outcome of our elections, or the elected once in office; the markets will never cease to fluctate; one day the Outer Banks will be underwater, beachfront will begin in Philadelphia; financial reporters will never be right enough times to make book on their recommendations; China, Japan, Scandinavia,UAE,and some other countries are monoclonal. They have no diversity, and therefore are subject to the same fatal flaw as any clone: one relatively benign punch can knock out millions of ’em; Lucy will never let Charlie kick the ball; everyone, everywhere lives in denial of some (or all) aspects of reality, of something very significant within it, e.g., no god; the idiocy of oncoming drivers whether or not on cell phones; conspiracy at the top. Therefore, a solid reality, while it does exist, it does not ‘exist’. There is only and merely our collective imagination, an omnipotent fiction, that can be manipulated within each of us to suit the circumstances (see Deniability above).

    re: departure from linearity comment:

    “Time is a room, not a rope”.

  64. Rob P commented on Aug 19

    No real news was out, so I’d have to say since it’s the end of earnings season that the rose is coming off the next quarter from readjustments of next qtrs earnings. (I just keep waiting for the second half to be all it was suppose to be… ;) Since Mid-July I think it’s been the Bulls last stance for a major move downward… Com’on General Custard Give’em Hell!

  65. valuespeculator commented on Aug 19

    Not to state the obvious, but this is either a washout before a final move higher for this bear market rally or the resumption of the bear market.
    If the bear market resumes here it will be unlike any other of the past bear market rallies. This time the market never got overbought and the sentiment never got exuberant. That could be because we didn’t get a great washout.
    However, if we do rally this should be the one that sucks everyone in. The easy trade would be to wait for that rally to materialize and short it. If the bear market resumes here nothing lost.

  66. valuespeculator commented on Aug 19

    On the subject of the Barrons article, maybe people thought that a little bird whispered in their ear.

  67. GreenAB commented on Aug 19

    i attribute yesterdays drop to the FT story on rising refinancing costs for big banks.

    though it was not new news, some market participants could have woken up to the issue:

    ” Mohamed El-Erian, co-chief executive of Pimco, the asset management group, said: “If banks keep borrowing at these levels, you will get a repricing of credit for the whole economy.” ”

  68. VoiceFromTheWilderness commented on Aug 19

    The Greater Fools Robot Mfg’ing plant got hit by a price hike, and couldn’t borrow any more cash for the required expansion so they were forced to cut back on production of GreaterFool2008 (mark 2) the resulting ripples were felt immediately throughout the pond.

  69. sanjosie commented on Aug 19

    Linear Thinking by the lets-filch-you-by-getting-fees-for-loosing-your-capital crowd, LFYBGFFLYC, gets all the rejoicing going during interludes when reality has finished one dousing of truth and the next dousing is due. Inflation didn’t just rush to its’ heights in the ’70s, it built, insidiously. The blood-suckers in the financial media are shilling for their major advertisers, financial companies. Capital Preservation should be the watchword now. There are huge pools of cash created as the consequence of the Federal Reserve’s loose policies. After a big flood fetid pools remain behing polluted by breached cesspools. The Fed created the flood (Noah you listening?). The sovereign wealth funds, hedge funds, and preivate equity funds are the fetid pools. And the financial institutions are the breached cesspools.

    There is a lot of capital destruction to come because the capital is in the fetid pools contaminated by the financials’ sludge. A Big Cleansing has to occur.

  70. DL commented on Aug 19

    I think we’ll get a correction in September, but I don’t think that this week’s action is the start of it.

  71. Coler commented on Aug 19

    Wouldn’t it be interesting if we could “shut off” all of the media, for just one day and observe what the markets would do?

    There are too many people with too many agenda’s to single out one cause (psychology, technicals or fundamentals). They’re all involved. No one can quantify which one dominates at any given moment – unless you’re God.

    So that is an impossible question to answer, BR.

  72. Robert commented on Aug 19

    Barry:

    CAPITAL PRESERVATION
    CAPITAL PRESERVATION
    CAPITAL PRESERVATION

    THE PROBLEM IS WHERE TO PUT YOUR CAPITAL TO PRESERVE IT…..US TREASURIES,
    FOREIGN MONEY FUNDS, EUROS, ETC.

    IT’S A SCARY THOUGHT THAT THERE MAY BE NO SAFE PLACE TO EVEN PREVERVE ONE’S CAPITAL.

    ANY IDEAS OUT THERE.

  73. Greg0658 commented on Aug 19

    “if we could “shut off” all of the media, for just one day”

    I wonder if the ringing in my ears would disappear or if a great weight would lift from my bodies physiology

  74. Mark E Hoffer commented on Aug 19

    “Time is a room, not a rope”.

    Posted by: flipspiceland | Aug 19, 2008 6:39:16 AM

    fsl,

    a few web searches turned up little to follow-on, would you care to elaborate?

  75. Mich(^IXIC1881) commented on Aug 19

    Mark,
    I took his message and the “time, rope, room” saying to mean:

    The best one can do to forecast markets is remove all impossibilities and let nature take its course. So time (markets) is not a one dimensional (rope) that you can review history and extend the trendline to forecast future. Rather, it is 3 dimensional (room) and may chose out of many possible routes.

    That said, other than sounding philosophical, how would that be any different than saying “have some common sense when dealing with markets”? I don’t think that much different in practice.

  76. Mark E Hoffer commented on Aug 19

    Mich,

    Thanks for the thought input. This: “remove all impossibilities ” to me, stuck out.

    It’s, like, why BR, y otros, get hated-on for reflecting what they see with their own two eyes.

    Former ‘Impossibilities’ are crumbling in front of the plainly obvious, though, previously, denied.

    And, if you did get the right channel with that guy, some of these price charts, as we’ve seen, are going to go through the floor, and some, far fewer, through the ceiling, very few are going to steady-state out the looking glass in the wall..

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