Technically, we have a very easy set up - Monday on the lows we neared S&P 1100 - yesterday we essentially tested that level. So if 1100 (slightly higher) holds we have the makings of a potential double bottom set up and an intermediate bottom. If it breaks we have another leg down - but we do have a clear line in the sand.
On the sentiment side I have not seen it this bad since 2002 - maybe it is worse now, I can't recall. Aside from that, the 2 biggest bulls on CNBC who have denied recession for the past year and a half finally threw in the towel and acknowledge we are going to recession this morning - Brian Wesbury and Jack Bouroudjian . Congrats guys - denial finally turns into acceptance - a little late (S&P down nearly 25% this year).
I've never seen Cramer so negative in 9+(?) years of Realmoney.com reading.
Buffet says if we don't get the mother of all bailouts passed we are at Economic Pearl Harbor
French Prime Minister says the world is on the edge of abyss
- French Prime Minister Francois Fillon said the world stood on the "edge of the abyss," gripped by a global financial crisis now threatening industry, trade and jobs worldwide. "The world is on the edge of the abyss because of an irresponsible system," Fillon said, alluding to widespread anger over past lax regulation of financial markets and excessive lending. (US investment bankers respond "We'll take that as a compliment")
Around the world, calls came for the House to pass the bailout bill, which would allow the Treasury to buy illiquid debt from U.S. banks to stem a spreading crisis..
The mother of all bailouts bill now looks like it will pass based on Buffet pressure - Paulson can now set a fake price that is too high for all these toxic assets and then the banks can "mark to market", the market being an arbitrary price the former head of Goldman Sachs will set (oh sure some will be auction as well I suppose)
The Federal Reserve is dropping money out of helicopters like no time in history
European leaders are meeting Saturday on the financial crisis (i.e. people are finally starting to "get it" - how bad a crisis we truly face)
- French Prime Minister Francois Fillon, whose country is hosting an emergency summit with Italian, British and German leaders on Saturday, said only collective action could solve the financial crisis. He said he would not rule out any solution to stop any bank failing
A very bad labor report is brushed off by the market
This type of action wants to make one bullish at least in the short run. And with the technical set up, it is a clear set up - north of 1100 (we hold on the S&P and form a double bottom) we can be bullish for a while; if 1100 is broken we have to expect another leg down.
But we have multiple catalysts now at least for a short term move up - don't be surprised by some global central bank moves post House vote and/or Sunday night or early next week
2 comments:
My thought has been for awhile that unless we entered a world wise depressionary environment that commodities would hold up. Now that we see them breaking down I'm getting concerned that this will be more than just a bad recession.
Well as any reader whose been around a while knows I've been one of the bigger bears for a while and early.
I am just making a shorter term trading call on the market
Job losses will accelerate going forward, and the US economy is going to be in a bad shape.
I also think the world will slow but the US will be the worst (along with maybe UK and Spain etc)
Those with the in house housing bubbles will suffer the most. There is still a lot of cash overseas and I continue to argue against those who insist the US will lead the world in a rebound. I continue and will for the next 2 years say the world will drag the US out.
I don't think you can read much in stock prices because you are seeing liquidations. If oil goes back to $60 I will buy your arguement. The stocks are going down far more than the underlying commodities.
But again don't mistake me for a bull. Most of us are Americans so we view the world through our eyes and situation. A place like Germany has it a lot better off than we will the next few years from a structural point of view.
I do believe we are in (and have been) in for some deflation, its just a matter of degree. We will know by late this winter if all the central banks and world governments moves offset some of the deflation.
So the good news is within 3-5 months we'll have a very clear idea of how the next 2-3 years will turn out.
At least people worldwide have finally come to my (and a few others) view. You can't fight a problem until you acknowledge there is one. That is finally happening.
Now we have to sit back and see how their solutions work.
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