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BoltonCT's Respiral
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» BoltonCT - An equities market bottom appears to have been completed
After slipping to record lows, down about 10% against other currencies in April, the greenback has recovered in recent weeks, helped in part by expectations that the Federal Reserve's aggressive rate-cutting campaign may be over. The $Dollar is now down only about 6% since the beginning of 2008.
Asian markets were mixed last night but generally a fraction higher. European markets are rallying this morning perhaps expecting the worst is over. US market futures are up modestly this AM. The new indicator we are testing now says the market bottom was completed.
Frederic Mishkin (who wrote one of my class textbooks) said yesterday in remarks at the Wharton School at the University of Pennsylvania in Philadelphia:
"It falls to regulatory policies and supervisory practices to help strengthen the financial system and reduce its vulnerability to both booms and busts in asset prices,'
Central banks should recognize that trying to prick asset bubbles using monetary policy is likely to do more harm than good,'
The Bush fiscal and the FED monetary policies started the bubble that just popped when the market fell in 2000. Mishkin is worried now about the bubble now being fed by the current FED policies in the current housing collapse. I predict that Mishkin will be the next FED chairman and he will be much better than all the previous chairmen.
Both the old S&P Spiral and the old MACD are now bullish. They started turning bullish about March 31 but the old Spiral kept whipsawing bearish.
The NEW Spiral indicator also turned bullish March 31 indicating an opportunity to begin cherry picking into the market. The New MACD now says the market completed its bottom and it is time to hold long in the market.
I have to admit this technical indicator testing creates anxious moments for me because I still see very dismal fundamental problems with the economy. I have not put my money where my mouth is and I am still net short equities. So I am starting to hurt and hope this new indicator fails this time.
If it does not fail I can already see more ways to even improve it.
If it fails it could possibly be made into a successful shorter term indicator say for four or five signals a year rather than the present one or two.
-- posted by BoltonCT
» Normxxx - An equities market bottom appears to have been completed
In response to An equities market bottom appears to have been completed posted by BoltonCT:- I have to admit this technical indicator testing creates anxious moments for me because I still see very dismal fundamental problems with the economy. I have not put my money where my mouth is and I am still net short equities. So I am starting to hurt and hope this new indicator fails this time.
That's an ideal time to hedge. When in doubt... stay out, or hedge. Lots of opportunities. I would cherry pick those really depressed securities which are bound to recover in a couple of years, anyways; preferably paying a rising or, at least secure, dividend, and relatively immune to a long (shallow?) downturn. GE, maybe? I am also accumulating gold here; NOT PMs in general or collectables, just gold.
I would hedge by shorting the more volatile areas of the market: small stock averages. And, I think financials still have a long ways down to go; it may be years before they are again a good investment. But, if a few building majors go belly up this summer, I would begin picking up shares of XHB.
Remember, everyone is deleveraging- so stay away from anything highly leveraged or with lots of debt.
-- posted by Normxxx
» BoltonCT - The Banana Standard.
Asian markets were fractionally higher last night with just China and S.Korea down fractionally. European markets are rallying moderately this morning but Italy is currently down over 2%. US market futures are up modestly this AM. The new indicator we are testing now says the market bottom was completed.
Both the old S&P Spiral and the old MACD remain bullish. They started turning bullish about March 31 but the old Spiral kept whipsawing bearish.
The NEW Spiral indicator turned bullish March 31 indicating an opportunity to begin cherry picking into the market. The New MACD now says the market completed its bottom and it is time to hold long in the market.
Futures were fluctuating chaotically this morning. It seems that economists are hopeful that we can avoid Japan's malaise if only we can get inflation to inflate equities prices and allow the stock market credit to remain stable. With an inflation economy like a banana republic we could go several more years before the dollar collapse. Then perhaps we just introduce a new dollar and go another ten years that way. The Fed loves inflation because it is easy to apply brakes but hard to accelerate an economy. So now they think we can ride the brakes while pumping on the gas pedal. It is called putting the dollar on the Banana Standard. Of course the FED does not worry about what happens when the brakes wear fail.
-- posted by BoltonCT
» Normxxx - The Banana Standard.
In response to The Banana Standard. posted by BoltonCT:- It seems that economists are hopeful that we can avoid Japan's malaise if only we can get inflation to inflate equities prices and allow the stock market credit to remain stable. With an inflation economy like a banana republic we could go several more years before the dollar collapse. Then perhaps we just introduce a new dollar and go another ten years that way. The Fed loves inflation because it is easy to apply brakes but hard to accelerate an economy. So now they think we can ride the brakes while pumping on the gas pedal.
Perhaps; or, it's just as likely an attempt by the CBers to "spread the pain;" -and allow "repayment" of unrepayable debts in lighter coin. A hallowed paractice, as noted here:
A Bubble That Broke The World:
Lessons From The Great Depression When Credit And Debt Are One. ©1932
-- posted by Normxxx
» BoltonCT - International finance for dummies.
International finance for dummies.
The banana standard 101
Surfing the big bubbles 201
Bigger bonuses for producing bigger financial disasters 301
Stocks finished Monday's session mixed after a report on leading economic indicators raised hopes that the economy may dodge a recession.
The Producer Price Index is scheduled to be released at 8:30 a.m. ET. It is expected to show a 0.4% rise in April or 4.8% at an annual rate. Most people will think it is real not the 10% to 15%, as we know the money supply is being inflated.
American equities futures are sinking with a comparison to fair value suggesting a weak open. Retailers, including Home Depot, Target and Staples are slated to release quarterly earnings before the opening bell.
Asian markets dropped sharply last night with China down 4.8% Taiwan down 2.43% and Japan down .77%. European markets are declining and down about 1% at this time. US market futures are up modestly this AM. The new indicator we are testing now says the market bottom was completed.
Both the old S&P Spiral and the old MACD remain bullish. They started turning bullish about March 31 but the old Spiral kept whipsawing bearish.
The NEW Spiral indicator turned bullish March 31 indicating an opportunity to begin cherry picking into the market. The New MACD now says the market completed its bottom and it is time to hold long in the market.
It would take a sharp decline to whipsaw the trend now and make the trend bearish again. But that would not be atypical after all the markets have recovered about half their losses and that is not unusual for a cascade of declines. But a bubble feeds on its own growth trend and it is possible the next bubble has already started.
But Wall Street has put out a new spin. Remember the new business model they came out with in 1999 that said the best companies don't make profit they build market share and then explode into great wealth? But how long did that new model last... about a year?
Well now they are spinning that inflation is good as long as we maintain full employment and ride the next bubble. We have this new economy. The FED has taken up surfing. They wait for the big wave and ride it until the next wave comes.
The problem is how do they keep the waves from getting larger and larger until Norm's tidal wave of debt smashes our economy on the reefs and we become a sunken wreck?
The Fed of course has it all figured out. We need a new course on international finance so people can believe that the world has permanently changed and we now have a golden future because we have switched to a banana standard and we have a new monetary policy because we have learned how to surf the financial debt bubbles. And so Wall Street must be right in telling us they deserve a bigger bonus this year and Grandma will be just fine even if soon she will only be able to afford nutritious canned dog food from China. Don't knock it until you have tried it.
-- posted by BoltonCT
» BoltonCT - New MACD evaluation
Stocks finished Monday's session lower after a report that indicated inflation accelerating and sharp declines in profits of building materials retailers.
American equities futures are sinking suggesting a weak open.
Asian markets were generally down last night with China up 2.93% and Japan down another 1.65% and South Korea down 1.37%. European markets are declining and down slightly at this time.
I discovered an error occurred when I switched following the testing of MACD from Schwab to Yahoo. I realized something was wrong yesterday and checked. The error was because I forgot that with Yahoo the crossover is not with the axis but when the line crosses the histogram. Therefore the New MACD actually was already bullish on February 27 and it was time to cherry pick in then. The NEW Spiral indicator had no problem and turned bullish March 31 and then said the market completed its bottom and it was time to hold long in the market from then. Sorry for that mix-up. The testing of the new indicator performance was therefore more decisive and better than previously reported as it turned bullish on February 27 not March 31. The old MACD was in retrospect whipsawing more than previously reported too.
It would take less of a decline than previously reported to whipsaw the trend now and make the trend bearish again. The uptrend is not as strong as was thought because the MACD is more volatile.
-- posted by BoltonCT
» BoltonCT - Moral hazards still spreading
Banking needs trust to function.
The market is beginning to look more like a top is forming here. The earliest a major New MACD/New Spiral sell signal could occur now is in about five days.
As the first anniversary of the sub-prime scandal approaches one thing is certain. Nothing has changed. Moody's probes into computer data manipulation that gave top rankings to securities that didn't deserve them. Housing scandal continues with no corrective actions yet taken anywhere. Buyers still asking for higher prices and kickbacks so they can get 100% mortgages at no cost. Nothing has changed. Only one thing was learned... the Bush administration can see no moral hazard in anything at all. And the moral hazard is spreading. Brazil, the world's best-performing equity market, now has more companies canceling initial public offerings than any nation except the U.S. after 66 percent of last year's new stocks were money-losers. Who or what in the world can anyone trust in this moral vacuum? Cerberus Capital won control of a mortgage unit supplying a steady stream of cash to finance until the home-loan money disappeared in a flood of subprime losses.
India, China, and Hong Kong all lost more than 1.6% last night while the rest of Asia was down slightly. Outsourcing will be hit first and hardest. American consumers are just beginning to make a major shift in spending habits as real wages erode under inflationary pressures. European markets have given up early gains and are heading lower now with fractional losses at 7AM EST. American market futures indicate the American markets may rebound from recent lows before reality begins to set in. GE share price is beginning to break down again. Stocks linked to the Iraq war have concealed large losses that should have been written off but greed prevented that before. Now with stock prices declining these companies are lining up to take their balance sheet baths.
The old MACD and old Spiral indicators just gave sell signals for the DJI, the S&P... and all the other major American market indexes.
-- posted by BoltonCT
» BoltonCT - Banks and Builders Hit the Skids
From the Zweig Research
Banks and Builders Hit the Skids ... Again!
By Mike Larson 05-23-08
http://www.moneyandmarkets.com/Issues.as...
U.S. stock-index futures fell as investors brace for reports today are expected to show sales of existing homes declined to a record low in April, signaling a deepening of the housing recession.
Asian markets with the exception of Japan declined last night. Japan was up .24%.
European markets have all declined and are down an average of about 0.5% at this time.
The old MACD and old Spiral indicators just gave sell signals for the DJI, the S&P... and all the major American market indexes.
The market is beginning to look more like a top is forming now. The earliest a major New MACD/New Spiral sell signal could occur now is in about four days.
-- posted by BoltonCT
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