Why the Rollover?

I got 3 calls today from clients, all asking the same thing: "Why is the market rolling over?"

To be blunt, I have no idea. I normally ignore most intra-day moves, as they are primarily just noise —  except for big intra-day reversals (upside or downside). This one seems even more interesting, if only because its the first day back after the Summer.

Oil is still down significantly — about $7 as I write this — so its not that. Perhaps hopes for a Lehman Brothers (LEH) Korean rescue have faded.

No matter. The Dow has given up more than half most of its gains for the dat, the SPOX and nasdaq are in the Red, Semis went from unchanged to negative, and the Russell 2000 — which made its high
of the day at 9:45  — has been falling ever since. Overall breadth is mediocre for a 100+ gainer.

Peter Boockvar notes that "Strength
in the US Treasury market, a big reversal from early morning selling, is worth
noting."

Any ideas as to why the selloff? I’m all ears . . .


Dow Minute Chart, Intraday 2:00 pm9208_dow_chart_2


Dow Minute Chart, Intraday 4:00 pm
9208_dow_chart_2_2

via Big Charts
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=djia&time=1&freq=9

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What's been said:

Discussions found on the web:
  1. cloudy commented on Sep 2

    It’s still a bear market? My question would be why was market so strong out of the gate?

  2. manhattanguy commented on Sep 2

    First of all Lehman story seems to be fake. Korean banks have repeatedly denied they are interested in investing in Lehman.

    Oil tumbling cannot solve our financial mess. Today might be the beginning of another down trend?

  3. bdg123 commented on Sep 2

    The same reason it has sold off seven other times at this level in the past month or so. Ain’t no buyers in the cash market. And, no one surely willing to buy a major gap at the open. Short term traders rule this market. They are bouncing it and selling it at the same levels over and over. I’d suspect this morning’s futures jump was an attempt to put a place marker in the market while the bosses extend their three day weekend into tomrrow.

  4. Mike M commented on Sep 2

    Lower oil is not bullish for stocks. It is a signal; one of a weakening economy.

    This market has been nothing more than hyperactive day trading, with “investors” bouncing in and out of various sectors. Eventually, the reality of a substantially weak economy will be reflected in all asset prices.

  5. Concerned Citizen commented on Sep 2

    Perhaps investors are starting to realize the almost second by second upside bias in the financail news and figure the facade can’t last too much longer.

  6. karen commented on Sep 2

    the price decline in crude oil sparked a rally that institutions sold into. it’s not the first time, and it won’t be the last.

    real weakness has been very evident in the $wlsh, btw

  7. super-anon commented on Sep 2

    Lower oil is not bullish for stocks. It is a signal; one of a weakening economy.

    Well, under typical circumstances falling oil prices might be bullish, but so much of the global economic growth story and it’s positive effects on US exports has been driven by commodities that if the current collapse in commodity prices is sustained it could really drag the economies that are still growing straight into the gutter.

  8. josie the berry picker commented on Sep 2

    could be because i am re-allocating my derivative positions…………

  9. Our man in Helsinki commented on Sep 2

    Volatility is increasing. A good reason is not needed anymore.

  10. pibsen commented on Sep 2

    It looks like the 3rd of 3rd wave is starting.. most elliot wavers would like to retrace to 1320 or even 1350… BUT after a huge move like 230 points up… I would also go super short and surf the most destructive down-wave of the 3 rd wave.. 1200 and lower here we come…

  11. Kirk commented on Sep 2

    I have a longer term theory…

    The market is waking up to the following:

    Now that 2nd quarter earnings are in – the official trailing 12 months earnings on the S&P 500 is now official. $69.79.

    $69 x 17 = 1173

    1173 is 8% BELOW current levels.

    AND…3rd Quarter / 4th Quarter earnings look to be BELOW $17 per share respectively with relatively little reason to believe Q1 or Q2 2009 will be much better.

    THUS…1200 looks to be a CEILING in the S&P 500 in the coming weeks / months. NOT SUPPORT!

    Add to that the growing (still minority – see David Rosenberg of ML) chorus that 2009 will be MUCH worse than 2008 in terms of earnings and you have a recipe for S&P 500 sub 1100.

    One Caveat…the Fed’s will be looking to juice this BS market one last time over the next 6 to 7 weeks.

  12. Kevin commented on Sep 2

    Retail dummies buying in the morning, pros selling the better bids soon after

  13. Peter B commented on Sep 2

    AAPL, RIMM dropped sharply, turning the market big time. Seems like a delayed reaction to the tweisel comments this morning.

  14. NOah commented on Sep 2

    the rally was sold into. Simple as that. And I agree with the “commodity selloff is a sign of a weakening global economy” call.

    PLUS, the dollar rally is NOT GOOD FOR LARGE MULTINATIONAL EARNINGS!

    Recall all the weak dollar is great for the large multinational talk! Well, this has got to eat into earnings when sales in a declining currency eventually get reported!

  15. NOah commented on Sep 2

    One last thing in regards to my “PLUS, the dollar rally is NOT GOOD FOR LARGE MULTINATIONAL EARNINGS!” statement.

    Look at chart for IBM over past few weeks as the US dollar rallied. Things that make you go HMMMMMM!

  16. Aurora Borealis commented on Sep 2

    The market is a little bit pregnant. Gustav is not the father but McCain is anyway going to pay for the consequencies.

  17. Robert commented on Sep 2

    Better question: why did the market go up 200 points?

    The market went up because: Gustav was kindler and gentler than Katrina (hurrah for the guy-hurricanes).
    Oil stocks are overweighted in the S & P 500, and they were down from the opening.
    The beach boys came back from vacation with OPM to spend.
    my choice: the market is phrenetic and unwilling to believe we are entering a near-depression.

  18. Myr commented on Sep 2

    The only question is why is the market up here in the first place? Well, it won’t be this high for very long.

  19. patfla commented on Sep 2

    If you look at the 12 sectors in sector summary at finance.google.com you’ll see that Basic Materials and Energy are killing today’s market. That is, 2 out of 12 sectors.

    I work for an investment mgmt firm which has a quite sophisticated industry model. But as a private holder of AGU for some time, it’s my belief that there are a lot of managers who lump all of Basic Materials and Energy into one basket and have the whole thing trigger off of the price of oil.
    Or if one wants to be more sophisticated, these other managers have slightly more complex models than that. But for some good part of the last 12 mths, their models have had the _effect_ I describe above.

    AGU has correlated vary closely, for some time, off the price of oil.

  20. kp commented on Sep 2

    Supply and Demand.

  21. david commented on Sep 2

    Not directly related to today´s move in the stock market, but i found it very interesting that in july the debit balances in margin accounts relative to NYSE market cap rose above the level, that was last seen at the highs in 2007. That´s unusual, because normally this number decreases when the market falls. Since 1995 there have only been a few months in the spring of 2000 when balances in margin accounts relative to NYSE market cap where bigger than in July. So there still seems to be a bit of deleveraging ahead.

  22. DL commented on Sep 2

    If we get a rally this week, which I think we will, it’ll be an opportunity to get short (for about a month).

  23. Kid Dynamite commented on Sep 2

    why doesn’t anyone ever ask “why is the market up?” which would have been a better question this morning.

    the market is down because of REALITY.

  24. leftback commented on Sep 2

    Looking at Treasuries, gold and oil today, I would say that the smart money is finally getting on board the “D” train.

    D as in Deflation.

  25. Jeff M. commented on Sep 2

    Reality setting in after the unofficial end of summer. Here comes the next big leg down…..

  26. Kirk commented on Sep 2

    DL…you said – “if we get a rally this week, which I think we will, it’ll be an opportunity to get short (for about a month).”

    I was coming into the week with the SAME thought…The quicker it got to 1325+ the quicker I could go short the market was my thinking.

    You do know that MANY MANY people were thinking the same exact thing. And in MOST cases the market makes it very very difficult to get the exact pitch we want…91 MPH fastballs on the outside half of the plate knee high are fairly rare. And that is what I think will happen.

    Either the market TANKS from here and we short wannabees are scared to initiate a big position ALL THE WAY DOWN…OR the market heads down one or two more days and all the shorts that pile in down to 1250 +/-get a short squeezing bounce to 1320 over the course of two weeks or so.

    Bottom line is the fact that EARNINGS do not and will not support stock prices above 1200 for very long.

    1100 to 1200 looks like a reasonable assumption over the next 2 to 5 months.

  27. Mista B commented on Sep 2

    In addition to the fundamental reasons–weakening earnings, already overpriced stocks, no institutional buying, global slowdown–the Dow level is fairly significant. 11,700 was the high back in 2000. It’s also right around where the market bottomed in Feb 2007. It’s now acting as resistance. On top of that, that’s right around where the 200 week m.a.

    We’re clearly in a bear. Rallies, therefore, should be sold.

  28. Kirk commented on Sep 2

    Called Baidu in the LATE Summer 2006.

  29. SteveC commented on Sep 2

    The crash in commodities indicates to me that deflationary forces are taking root. This is not surprising and is very serious. Look at it this way; like a drug addict, we’ve been addicted to monetary stimulus for so long, we’re dependent. We need ultra-low rates to keep growing, or we crash. My prediction right now is the next Fed move, although it might be several months away, is down.

  30. leftback commented on Sep 2

    @Kirk

    I read your frustration about timing – for my money it’s easier in a defined bear market to stay short all the time but vary exposure, e.g. reduce your risk substantially after a big down day, or when you smell a rally (last week, for example).

    What has worked here is to be simultaneously modestly short the commodity stocks and banks/retail, and shift risk in between those two positions and cash. At some point we will reach a commodity floor, however.

    I will take a shot at trading from the long side, but only after big volume high VIX periods culminating in big sell-offs.

  31. 49cents tweeted on Sep 2

    The 1300 handle on the S&P500 was never broached today and it might not be before the end of the week. Employment figures on Friday are key. But there is no question in my mind we have seen a ‘bottom’ psychologically.

    The things I am looking for this fall are a tech rally, particularly bullish about AAPL when it reports earnings in October.

    On macro continued sell offs on gold, oil & foodstuffs with broad strengthening of the USD.

    Whatever happens, on this the first trading day of the new season, you’ve got to LOVE this volatility. I mean the biggest one day trading range ($13) in 22 YEARS in crude oil! More, please!!

  32. market folly commented on Sep 2

    up 200 to begin with was what baffled me. sure oil was down big… but i mean c’mon.

    i don’t think the market touched any major technical levels on the upside either (ie: rally up to the bear market trendline).

    who knows

  33. jw commented on Sep 2

    market dropped sharply when fed minutes were being discussed on cnbc. several members voted for raising rates because they believe inflation is a greater risk than slow growth. cnbc threw up a screen showing the market falling outta bed within minutes of the release….

    not to mention all that other stuff covered in other comments.

  34. Mark commented on Sep 2

    It’s only now just become September…the historically worst trading month of the year?

  35. Winston Munn commented on Sep 2

    When in liquidation mode and while trying to reign in balance sheets, the Primary dealers can’t absorb all the new treasury demand plus pump stocks at the same time.

    It’s hard to have a bull market in a deleveraging environment. And this bubble buster looks to be worldwide, so it seems far from done.

  36. Vermont Trader commented on Sep 2

    Because we are in a bear market and the last sector with postive fundies just broke down……

    Beacause hedge funds are blowing up TODAY.

    Because the problem isn’t oil It’s DEBT.

    As I’ve posted here many times. In a bear market you sell the rallies until it doesn’t work any more.

  37. DL commented on Sep 2

    Kirk @ 2:58:05 PM

    Your analysis is reasonable.
    One way or another, I would love to see a big selloff before the election; if we can get that, I would then go 100% long (on or about November 3rd).

  38. Richard commented on Sep 2

    President Palin?

  39. VennData commented on Sep 2

    Deflation? I’ll give you deflation. The business news of the day is Google is coming out with a new – wait for it – browser. Oh, they’re free.

  40. MW commented on Sep 2

    A sell off in the face of the Republican Convention getting geared up after their Gustav time-out is most interesting.

    Either its that Bristol Palin won’t deliver in time to give us a market messiah in time before the coming crash or the PPT has mis-placed Paulson’s Bazooka.

    Notify the pilots that parachutes are strapped on….wait, the pilots have already jumped….

  41. Al Czervic commented on Sep 2

    Winston,

    Good point but I think that foreign CBs can still handle most of the treasury demand as they run away from Agencies. Perhaps the PDs are forced to divert some of that stock-pumping money to support Agencies?

  42. Eric Davis commented on Sep 2

    First off, oil did bounce back $5…. and there is the potential of a Bear trap.

    Second, No shortage of nuckleheads looked at the monthly market gains, and have seen that the Sept. is the most Losing month…. and they also are surprised that it’s not October.

    So they came in selling.

    Interesting thing is that the Losing period is from mid Sept to mid October. then October usually reverts to the Mean…. and likely rallies. Which is where everyone is looking for a “Bottom”…. If this bottom happens it will be the most forecasted bottom in the history of the market….. and every lemming will make money.(Worth note is this was the most forecasted recession… so why not?)

    Who bets against the Lemmings?

    My bet is the continued roller coaster.

  43. Stuart commented on Sep 2

    Exports have been to a large degree saving the economy’s butt as housing turns down… Kiss that good bye now too with a rising buck. The Govt debt is going to blow the lids off estimates… wow.
    Default or print. Look at the money flow into treasuries… Perfect timing for a Treasury in dire need of cash. Hmmm….

  44. jkw commented on Sep 2

    Anyone watching the hurricane forecasts would have been stupid to be long this weekend. If things had gone just a little differently, Gustav would have been one of the top 5 most powerful storms to ever hit the US. The intensity and track forecasts were jumping all over the place. Entering a long weekend with an unpredictable hurricane entering an unusually warm gulf headed straight for major oil infrastructure provided plenty of reason to not want the overnight risk.

    Here’s some samples of the forecast discussions from this weekend

    Saturday 2:00pm EDT
    http://www.nhc.noaa.gov/archive/2008/al07/al072008.discus.024.shtml?
    SO MUCH FOR A SLOWDOWN IN THE INTENSIFICATION RATE OF GUSTAV. YESTERDAY AT THIS TIME WE CONVEYED THAT RAPID INTENSIFICATION OVER THE NORTHWESTERN CARIBBEAN WAS POSSIBLE…BUT THIS IS A LITTLE MORE THAN WHAT WE HAD IN MIND IN SUCH A SHORT TIME. THE HURRICANE HAS REACHED CATEGORY FOUR STATUS WITH AN INTENSITY OF 125 KT…HAVING BEEN A STRONG TROPICAL STORM JUST ABOUT 24 HOURS AGO.

    Sunday 5:00am EDT
    APPARENTLY…THE INTERACTION WITH WESTERN CUBA TOOK MORE OF A TOLL ON THE HURRICANE THAN EARLIER ESTIMATED.

    If Cuba hadn’t somehow managed to weaken this storm, or if it had moved more slowly over the loop current, it would have been as strong as Katrina and Rita. Oil could have gone over $200.

    So the gap up can be explained by people reopening the positions that they closed to eliminate hurricane risk. The downward movement since then is just a continuation of the market’s natural direction.

    Lower oil prices are not going to help. Oil prices are dropping because people have no money to buy oil. Which also means they have no money to buy anything else.

    Also, we have 3 tropical storms out in the Atlantic, all of which are forecast to become hurricanes in the next 1-3 days. Hurricane season has really just begun.

  45. Jeff M. commented on Sep 2

    I got one that I’m sure will air on Sir Goldilocks’ show – Obama reached 50% (to McCain’s 42%) for the first time in the Gallup poll.

  46. Mysticdog commented on Sep 2

    I’ll sort of echo what some have stated, but add in my own dash of contempt for daytrading playas… A bunch of people came back relaxed from from the long weekend, happy about the Palin gimmick and the weak hit by Gustav, and decided they were ready to buy some stock! When the market got to a certain point, the short sellers could no longer resist the tasty fresh swimmers in the water and sold the crap they had been thinking about selling for a long time.

    There was no analytical reason for today’s gyrations, just people playing the players not the cards.

  47. Bruce commented on Sep 2

    Frankly, I am in the bear camp as to why the market has been gaining…

    The economic news has been dismal…

    Let’s look at what really has happened the last couple of months…

    personal income is falling..unemployment is rising…overseas economies are losing ground…higher taxes are probably coming..our national debt is exploding…one of our major employers, domestic automobiles has fallen and can’t get up…many state budgets are in shambles..only a tiny per centage of funds are in positive territory here…and even with the decline, gas prices are, I believe about 50% higher than a year ago…nearly all foods are significantly higher than last year, and most homeowners are worried about the value of their house even if they are long term owners…

    So oil came down a little…

    Bruce in Tennessee

  48. Steve Barry commented on Sep 2

    How about injection of some sanity? How does Nasdaq trade at 1.8 times sales when the largest debt bubble ever seen has popped? Nasdaq getting cut in half would still be risky. Your clients should be shocked that the market ever can be pumped higher.

  49. leftback commented on Sep 2

    QUESTION: Is a huge October sell-off really telegraphed, or is this group just more aware and less complacent than the rest?

    P/E ratios are very very high, as noted by Bloomberg today – they are actually higher than in many Bull markets. Like VT Trader says, sell the rallies until it doesn’t work.

    I am wondering when forced selling and fund redemptions will impact the market? There is certainly evidence that several hedge funds have been mortally wounded by the oil bust (remember all those very young oil bulls who used to post in June? I suspect they are long gone now, more bubble victims).

    At some point the growing distress in the high end of the housing market may be beginning to cause some additional liquidation of stock portfolios (the sub-prime mortgage holders didn’t have that option). Remember, the folks with the trophy homes will hang on to the house at all costs, but something has to give. Pre-owned Lamborghinis, anyone?

  50. Adam Coleman commented on Sep 2

    OK Barry,

    Here is my estimation:

    1. Having a worse than expected hurricane is never a good reason to buy stocks.

    2.
    The Dow failed to hold up above 11700 even in the buying frenzy, it was only able hold there for a short time. So, the initial surge lower was just a well placed bet that the rally’s legs would wobble on a breach below 11700. The real selling began after the failed attempt to climb BACK above 11700… then it truly sank in, and more and more sell orders.

    The technicians have this thing spot on. You can call it either way:
    11700 on Dow
    1300 on SPX
    Failure of Q’s to maintain their leadership position…

    What was the first to “rollover” today? The Naz 100.
    Where are alot of worried bulls tied up right now? The Naz 100.

    What else is going on?
    Not only failure of Dow and SPX to climb above 50 Day MA resistance… but also failure to break above the resistance of the dominant downtrend.

    Sets up a great short. Enter, Elliot Wavers.

    Its not about oil anymore, folks. If it has anything to do at all with oil, its the fact that energy has been one of the last legs the market has stood upon. Its pretty classic really…
    Not all sectors in bull markets top out simultaneously. We saw housing and financials top out early… it just took commodities, ags, and energy a little longer to top out also.
    Now the real bear market begins, and if I had to guess, we’re only half way down at best.

    Personally, I’m laughing pretty hard at those who have blindly clung to tech, even after the HPQ call… but even moreso at those who have bid up consumer discretionary and retailers of late, blindly hoping for a back to school rally that wont materialize. Classic delusionality.

    Bottom in the financials? Now there’s a crack-your-ribs-in-laughter joke that could only be written by those geniuses over at cnbc.

    Soft landing anyone?

  51. Bob Morris commented on Sep 2

    The Oil Drum is reporting a 40% drop in Gulf production for 30 days because of Gustav.

    “GoM is about 25% of US production, 40% of the GOM’s contribution of 25% is 10% of the total US production.”

    The market seems oblivious to this.

    http://www.theoildrum.com/node/4480

  52. bozo commented on Sep 2

    It is now being recognized that inflation troubles have not vanished despite declines in prices of many commodities.

    Once accepted by the Federal Reserve, there will be a bias to increase interest rates. Traditionally, this will:
    – boost the USD
    – withhold money from the stock market

    Secondary factors include:
    – increased momentum for long dollar/short oil
    – increased threat to margins of leveraged investors

    When viewed against recent popular market expectations, an abrupt change is likely. The notion the US will be first to exit recession because it was among the first to enter is no more than dreaming.

    I have no informed guidance for what information or which persons triggered the change.

    Going forward consumers will head towards becoming net savers as opposed to borrowers, and consumers being 2/3rds of US GDP, a slight change will have broad consequences.

    Until the idea of a systematic shift becomes popular, we can expect more and larger pockets of turbulence.

  53. PeterR commented on Sep 2

    Why the roll-over? You are kidding, right?

    Because every Big Boy hedge fund, mutual fund, and every other mutating assemblage of greedy hedonistic capitalists, are squeezing every last penny out of every minute of trading, effectively turning every day of every week into an eternal Options Week.

    These things too shall pass, when the final “Hair Trigger” is pulled.

    To quote Warren Buffet from years ago:
    ________________________
    “There are more people [like hedge-fund managers] that go to bed at night with a hair trigger than ever before, it’s an electronic herd, they can give vent to decisions that move billions and billions of dollars with the click of a key. We will have some exogenous event, we will have that. There will be some kind of stampede by that herd….

    “When you have far greater sums than ever before, in one asset class after another, that are held by people who operate on a hair-trigger mechanism, then they lend themselves to more explosive outcomes. People with very short time horizons with huge sums of money, they can all try to head for the exits at the same time. The only way you can leave your seat in burning financial markets is to find someone else to take your seat, and that is not always easy….”
    _____________________________________

    http://money.cnn.com/2005/05/01/news/fortune500/buffett_talks/

    Fasten your seatbelts for a wild ride IMO!

    Reminds me of Jackson Browne’s “Before the Deluge.” Give it a good listen again!

    Cheers,

    Peter

    PS — If we are in nested EWT 1-2 1-2 count, things could devolve quickly needless to say. SPY 126.5 support, MA(50) and MA(20) look pretty important here IMO.

  54. Dennis Kneale commented on Sep 2

    Adam Coleman:

    Are you seriously trying to tell me that TECH is not a SAFE HAVEN? THOSE STOCKS ARE CHEAP, I TELL YOU. GROWTH is UNLIMITED !!

    OK, I have to admit that I am actually a glove puppet but I can’t tell you where Larry’s hand is.

  55. odograph commented on Sep 2

    I’m a centrist Republican. I put in an order for a total stock market fund, expecting that the weekend’s election news would depress Wall Street. It’s better (for me) than I expected, but not as bad as it could have been (for Wall Street).

  56. BobC commented on Sep 2

    What I want to know is why the dollar keeps getting stronger. The Fed makes more money available via fancy “loan facilities” and people think the dollar is worth more? I’m confused.

  57. GB commented on Sep 2

    BR – Short covering from Gustav news led into selloff over Lehman’s fund woes I assume.

  58. leftback commented on Sep 2

    Bob C asked;

    “What I want to know is why the dollar keeps getting stronger. The Fed makes more money available via fancy “loan facilities” and people think the dollar is worth more? I’m confused.”

    Because a $ in the hand is worth two in some emerging market fund or commodity fund…. simply put, in a deflationary bust the $ itself becomes worth more than rapidly deflating $ denominated assets.

    The $ will fall again when the next round of reflation begins, but not yet. The Fed can’t risk lowering rates yet, until the winter oil prices are completely under control.

  59. stan commented on Sep 2

    Why a rollover? The market is ready to roll over. Pay attention to what the market says, not what you think, wish, or hope for. The message is obvious… heed it or suffer the consequences.

  60. Pat G. commented on Sep 2

    Could it be foreign owned debt, equities or securities liquidation?

  61. columbia commented on Sep 2

    Tech is starting to show cracks because of the weakening worldwide economy and the strong dollar. Before the recent dollar rally, tech could count on foriegn buyers of their products. Now they face a double hit with the weak worldwide economy and the fact that their products are also getting more expensive in Euro’s and pound’s. Tech sales will probably be lower one year from now.

  62. columbia commented on Sep 2

    Tech is starting to show cracks because of the weakening worldwide economy and the strong dollar. Before the recent dollar rally, tech could count on foriegn buyers of their products. Now they face a double hit with the weak worldwide economy and the fact that their products are also getting more expensive in Euro’s and pound’s. Tech sales will probably be lower one year from now.

  63. rickrude commented on Sep 2

    Bob C asked;

    “What I want to know is why the dollar keeps getting stronger. The Fed makes more money available via fancy “loan facilities” and people think the dollar is worth more? I’m confused.”

    Because a $ in the hand is worth two in some emerging market fund or commodity fund…. simply put, in a deflationary bust the $ itself becomes worth more than rapidly deflating $ denominated assets.

    The $ will fall again when the next round of reflation begins, but not yet. The Fed can’t risk lowering rates yet, until the winter oil prices are completely under control.

    Posted by: leftback | Sep 2, 2008 6:46:52 PM
    ????????????????????????????????????
    guys, this is what seems paradoxical….
    more deflation, more power to Bernanke to
    print more USD.

  64. steve p commented on Sep 2

    Why the Rollover?

    From a technical perspective the why’s are not important. What IS important is today’s action signals an exhaustion move in a number of markets. For stocks, a final retest of resistance that failed with an outside down day; the larger downtrend is ready to resume. For gold and oil, a exhaustion gap retest of an emotional washout low, and more importantly on a news-related item. Buy any upside gap opening in gold and oil stocks tomorrow and add to short stock positions especially in the retail end like Walmart.

    Great site I enjoy your insights.

  65. Whammer commented on Sep 2

    I know it is tinfoil-hat territory, but it is hard to dismiss the idea that the dollar is rallying because of intervention in the currency markets. Can’t prove it….

    But “nobody would expect” that the current Fed would act in a way that enabled the GOP with an election coming up, now would they?

    Alternatively, our very good friends the Saudis could be involved also. Not mutually exclusive, for sure.

    OK, gimme a 7.75 Reynolds Wrap chapeau…….

  66. karen commented on Sep 3

    bobc, leftback, rickrude,

    we’re all latching on to the same subject, but with different angles which is great. IMO, the deflationary angle is a ruse. we’ll keep vigil. $gold is not anywhere near a sell signal (especially if you bot in the 2-3 and 4’s). I heard that a hedge fund had to sell today because of their oil position. Not sure that I believe that. I’ll see what the institutional index did tomorrow. they’ve been selling into strength every rally…

    tomorrow will enlighten us further, i hope…

  67. philipat commented on Sep 3

    Because the market is a discounting mechanism, it is telling us that housing, and the economy with it, is not going to improve anytime over the next 6 months.
    Howver, 1Q09 might be interesting because of the usual lack of understanding of basic math. Reported S&P earnings for 4Q07 were only $7.82 so the comps for 4Q08 are undemanding. Reported earnings for 4Q08 will probably almost double. I can imagine the headlines now. This could result in major tradeable rally?

  68. Bill King commented on Sep 3

    Tuesday was a horrid technical day for stocks – not ifs, ands or buts. When stocks explode to a 240-point DJIA gain within 15 minutes of the open then reverse 300 points without a meaningful rally and close down, serious technical damage was exacted. 1305 on the SPUs once again acted as major resistance.

    Even though oil and commodities collapsed the DJTA declined.

    A collapse in commodity prices and an August ISM of 49.9 with a big decline in Prices Paid (77 from 88.5) fomented almost a two-point bond market rally from low to high. New Orders increased to 48.4 from 45 due to exports jumping to 57 from 54. The employment index declined to 49.7 from 51.9. What will happen to exports now that the dollar has surged?

  69. RW commented on Sep 3

    ref
    the dollar is rallying because of intervention in the currency markets. Can’t prove it….

    A couple weeks ago the Nikkei reported that, in March, Europe, US and Japan CBs agreed to intervene *if* the USD kept going down…markets did their job

    The Tue AM currency markets were down over 3% for the antipodeans, GB down 2%. EUR down hard against the US and JPY.

    I am writing this Wed AM and similar violent moves down (USD up) again….perhaps it would be wise to tighten the chin straps.

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