Weekend Watering

[FinancePhD]

Guys, let's talk the market over the weekend!

[FinancePhD]

Wasn’t it just a year ago that we had the exact same set-up? Growth was slowing, Greece was close to default and there was unrest in Middle East. I guess one could argue China is no longer tightening policy and Europe is closer to the end of their crisis. On the other hand, earnings growth in the US is now decelerating and likely to get worse over the next several quarters. Furthermore, the political environment in the US has rarely been more charged and bipartisan than it is today. The S&P500 is trading almost exactly where it was at this time last year, but with a lower multiple. This is the direct result of higher earnings in 2011 than 2010 but with the prospect of lower growth going forward. This makes sense to me. Most investors I speak with concur with the view that growth is likely to be below trend for the next several years thanks to deleveraging and a more stringent regulatory environment. However, there is quite a bit of excitement over the probability of QE3 being implemented at some point during 2Q. Exhibit 5 shows just how excited stock investors seem to be getting over this prospect, especially in relation to their fixed income peers. But, this is almost always the case when animal spirits get going. The last time I pointed out such a divergence (October of last year), the SPX had a swift 10% correction over the proceeding 3 weeks. I have no idea whether we are likely to get such a correctly immediately, but I sure can’t rule it out and I am pretty confident you won’t be able to get out of the way unscathed. Just another reason for why I want to be paired off right now.

I’d like to end this week’s note with a quote from Albert Einstein who said “Insanity is doing the same thing over and over again expecting a different outcome.” I feel like this is exactly where we are today with respect to the policy choices being made all over the world. Do we really think the result of QE3 is going to be any different than QE2? Or that the second European LTRO is going to end up resolving Europe’s solvency problems simply because the Fed is now supporting a larger effort via its open swaps line? Didn’t we learn anything from the Japanese experience of the past 20 years! I might be more on board with the program if I thought we were making real progress on the things that matter for sustainable organic growth. Unfortunately, I just don’t see it. While I am watching many things to determine if the facts are actually changing, there is one metric in particular that has to turn for me to get more constructive fundamentally. I am talking about personal income growth excluding government transfers. Until this shows some signs of life, I will remain highly skeptical that additional policy stimulus will end differently than what we have recently experienced. Exhibit 6 tells the sad story of our current plight and how this current rally will likely end. Until then, I will look forward to my next lunch with Adam Parker.

[FinancePhD]

1. The market top is going to be when we’ve had four or five days of successively higher closes on the S&P 500 from today’s close.

2. The market is going to build a trap, and many of the people who are bullish are going to be trapped.

3. The SPX may advance to between 1,330 and 1,345 this month (Dec) before the rally reverses, according to Tom DeMark.

Although the timing of his prediction may be proved to be wrong, but the above three arguments still shine some legitimacy and need our closest attention.

[thanos]

1. The market top is going to be when we’ve had four or five days of successively higher closes on the S&P 500 from today’s close.
Says who? Why does this have to happen? Based on what?

2. The market is going to build a trap, and many of the people who are bullish are going to be trapped.

>What? Build a trap? You are essentially saying the market will pullback and some people are going to lose money. Brilliant!

3. The SPX may advance to between 1,330 and 1,345 this month (Dec) before the rally reverses, according to Tom DeMark.

Oh some guy named Tom DeMark said it...so it must be true.

Although the timing of his prediction may be proved to be wrong, but the above three arguments still shine some legitimacy and need our closest attention.

You call the above "arguments"! LOL. Actual you called them legit arguments! Double LOL!

Don't mean to be rude but why do people put so much trust (and the dumb ones actually invest their money) in some other person's market guesses...because they are guesses you realize that.

I think the market will beginning moving down next week but why believe me my name isn't Tom DeMark! LOL

[FinancePhD]

Why those prediction by this Tom DeMark matters? I know you may believe you are shrewdest, but the general crowd isn't, right? A lie repeated by 1000 times could become the truth. And have you ever heard level-K thinking and Keynes' beauty contest theory? What we believe doesn't matter; what matters is what we know about others' beliefs. If lots of crowd watched his show on Bloomberg, why bother me to use him as an indicator to guess the crowd's thinking?

Ideas are like seeds planted by some seemingly idiot public media. They grow and become the trees. What he said could put some shadow on the crowd and make people nervous when we reach certain height of the market. Besides, he has three timing models to call a top, while you only have "LOL" and "double LOL" to call him an idiot.

1. The market top is going to be when we’ve had four or five days of successively higher closes on the S&P 500 from today’s close.
Says who? Why does this have to happen? Based on what?

2. The market is going to build a trap, and many of the people who are bullish are going to be trapped.

>What? Build a trap? You are essentially saying the market will pullback and some people are going to lose money. Brilliant!

3. The SPX may advance to between 1,330 and 1,345 this month (Dec) before the rally reverses, according to Tom DeMark.

Oh some guy named Tom DeMark said it...so it must be true.

Although the timing of his prediction may be proved to be wrong, but the above three arguments still shine some legitimacy and need our closest attention.

You call the above "arguments"! LOL. Actual you called them legit arguments! Double LOL!

Don't mean to be rude but why do people put so much trust (and the dumb ones actually invest their money) in some other person's market guesses...because they are guesses you realize that.

I think the market will beginning moving down next week but why believe me my name isn't Tom DeMark! LOL

[FinancePhD]

ATHENS, Greece — The representative of Greece’s private creditors said Saturday that talks on a debt swap are continuing even after his unexpected departure from the country.

Charles Dallara, managing director of the Institute of International Finance, told The Associated Press that he is “constantly talking by phone” with Greek officials and that the talks are “coming together.”

Dallara had met with Greek Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos on Friday to hammer out details of a bond swap deal that could potentially lighten Greece’s debt burden by as much as €100 billion ($130 billion).

Greek officials said late Friday that the talks would resume on Saturday.

But Dallara left the Greek capital for a “long-standing engagement” in Paris, said his spokesman Frank Vogl.

Vogl said that IIF’s legal and financial advisers are still in Athens working on several “outstanding issues” with Greek officials and that Dallara will return to Athens “as needed.”

No new date for face-to-face high-level talks has been set, a Greek government spokesman Pantelis Kapsis told The Associated Press.

A European diplomat told The Associated Press in Brussels on Friday that a deal could be reached during the weekend but several eurozone countries still maintain that the proposed interest rate being considered in a bond swap is too high. The diplomat requested anonymity because the talks are confidential.

[stlwater]

The general crowd is usually wrong. The general crowd always misses the start of a trend. Always looks back and thinks, why didn't I get in back there, and then realizes that they were convinced that the market was about to tank with every new high that was made. Trend traders make all the money because, in spite of their fear they place trades when PRICE tells them to. Following the prognostications of some fool on TV is a great way to lose your money. The LOL he typed was for the absolute insanity of "trading by guru".

There have been a lot of tops called, all of which are now below us.. There have been a lot of Elliot wave counts that have ended up in the dustbin as well. Let's also forget the market strength.. We all saw the reaction off horizontal resistance on Friday the 13th. I posted on that day that the charts were telling a different story from the one bears wanted to hear. Most ignored me. Most lost more money. I posted that it is not at all uncommon to see a reversal candle on a gap over resistance and that it should not be trusted, some folks got down right nasty with me. The price action is indicative of a real trend, like it or not.

Breaking through that resistance was SIGNIFICANT. Also significant is the drop-off in volatility. Also significant is the trend starting setups in many equities, also significant is the trend-starting setup for shorting oil. Also significant is the trend starting setup to short bonds, also significant is the sell-off in PMs, also significant is the TRIN levels, also significant is the golden cross, but are these bandied about? Not much. I'm sorry, I really like Cobra, I think he has a great trading style and he knows the pitfalls and tries to avoid them, but the bearish bias around here is holding you back and blinding many to reality, it is becoming an echo chamber, or a "bear cave". C'mon guys, you have to admit the bulls are surprising a lot of you....

Now, if this is the end of a final wave.. I'll lose a little money, most of my positions are now protected (provided we don't get a flash crash). So I'm just going to let it ride.

I'm not here to start fights, just trying to bring a little balance.

GLTA

Why those prediction by this Tom DeMark matters? I know you may believe you are shrewdest, but the general crowd isn't, right? A lie repeated by 1000 times could become the truth. And have you ever heard level-K thinking and Keynes' beauty contest theory? What we believe doesn't matter; what matters is what we know about others' beliefs. If lots of crowd watched his show on Bloomberg, why bother me to use him as an indicator to guess the crowd's thinking?

Ideas are like seeds planted by some seemingly idiot public media. They grow and become the trees. What he said could put some shadow on the crowd and make people nervous when we reach certain height of the market. Besides, he has three timing models to call a top, while you only have "LOL" and "double LOL" to call him an idiot.

1. The market top is going to be when we’ve had four or five days of successively higher closes on the S&P 500 from today’s close.
Says who? Why does this have to happen? Based on what?

2. The market is going to build a trap, and many of the people who are bullish are going to be trapped.

>What? Build a trap? You are essentially saying the market will pullback and some people are going to lose money. Brilliant!

3. The SPX may advance to between 1,330 and 1,345 this month (Dec) before the rally reverses, according to Tom DeMark.

Oh some guy named Tom DeMark said it...so it must be true.

Although the timing of his prediction may be proved to be wrong, but the above three arguments still shine some legitimacy and need our closest attention.

You call the above "arguments"! LOL. Actual you called them legit arguments! Double LOL!

Don't mean to be rude but why do people put so much trust (and the dumb ones actually invest their money) in some other person's market guesses...because they are guesses you realize that.

I think the market will beginning moving down next week but why believe me my name isn't Tom DeMark! LOL

[trendfollower]

Article with some things to consider moving forward in the market:

http://goo.gl/nZPuo

[thanos]

Don't get me started on Elliott Wave but if some can use them to make money all the power to them.

stlwater - you are right.... follow price not people was my point. But who knows maybe one day we will read bloomberg and see the headline "Cobra is bearish on the market!"

peace out

T

[tomsky]

Master Cobra, can you merge the 2 weekend threads ?