8/26/10: The Bear Bus must move on without me

[brosin]

Don't get me wrong - it's been awhile since I've attended Bear Jamboree, but after looking at the lineup this year, I'm not going to waste the money on it. There will be other Jamborees with better lineups that I'd rather save up for. I did make the mistake of underestimating how good the May Jamboree was going to be, which I'm a little upset about given how bearish I was all April. But that lineup didn't look so good to me either.

I do have reasons to go:
- We had a 300 pt dow up day (one of my personal "tells")
- We did not make a new spx high for the 2nd straight FOMC meeting Aug 10
- The Treasury market, which I know you are supposed to trust more, has exploded and the yield curve is dangerously flat
- Many stocks I watch have clearly broken all trends and sit in limbo ready to have the bottoms fall out
- I do not expect the 1040/50 horizontal support that I had marked as my line in the sand quite a long time ago to hold (now the 2nd break of it)
- We are nearing an election and I anticipate the market wanting a Divided Government situation, which would imply the Dems will lose seats; a lower market would be a means to that goal
- Very simply put, I'm long term bearish



I don't really "expect" (as usual, I almost expect to be wrong) the market to hold up here, and we might even just move sideways for quite awhile; regardless of everything, however, I will not fight the fundamentals, the boom-bust cycle, and the Fed. It is possible that the market really is a random walk and that fundamentals/maket cycles are smoke and mirrors. But even if one makes that (in my opinion, giant) leap, there is the Fed to deal with.

The Fed played chicken with the market on Sept 13, 2008, and the market won. I believe the world changed that day and that it will never be the same. Free markets -- as they were intended -- never anticipated Too Big to Fail, and I think we saw the world's realization of a major flaw in the ideology of the free marketeers. When the Central Banks and governments around the world began their "all-in" actions to save the spiral from growing out of control, it did not get interpreted positively to say the least. The spiral continued for 6 more months before the market realized that this was not the end of capitalism and free markets as we knew it (that is what they thought when we went to truly liquidation levels)... it was a fundamental shift in the ideology of an entire world worth of investors. Or well, some don't want to admit it yet and are stuck in "reality" of Pre-Lehman(tm) which will never exist again.

Eventually, though, they will come around. Central Banks and governments everywhere have already spent ungodly amounts (by % of GDP) to support the system as not only a lender of last resort, but also an investor of last resort. Many of those investments from when things were bleakest have been repaid in full with high amounts of interest. Why would I or anyone assume that they wouldn't do it all over again at any degree necessary if a double dip situation started becoming more of a probability than a possibility? It's not like they're going to close up the wallets now and say, "nope we got no more...!" And that means governments too - stimulus, tax cuts, whatever. They will do anything and everything to keep this all from crumbling.

At the core of everything, we are still in the early stages of an economic boom that followed a bust that will eventually culminate in The Bust. Rates have gotten to zero - each boom after a bust sees rates get progressively lower and lower, and this time they hit the floor. Not only that, they remain at zero.

Liquidity is being pumped into the economy daily at a rapid rate. The banks are simply sitting on that money because they are getting paid to do so. It's like they are all playing chicken with eachother trying to make all the money in Treasuries before that starts to crumble. Eventually when assets go piling out of Treasuries, the demand for ***mortgage assets*** and ***equity assets*** and ***corporate bond assets*** will go through the roof as all that money tries to find a new home. And that means the banks will sure start lending... hello inflation. Hello raising rates. Hello recovery. Hello boom. Hello new bubble, whatever that will be. Agriculture sure is on its way.


In summary,


I'm a buyer right here at 1047 spx and do not think 1221 is the high for this cycle - I'd say we see 1221+ spx within 1 year.



9/30/10 UPDATE: I think it is safe to say I can label this with a thumbs up icon. The market moved up over 10% in a month for the best Sept since 1939, and we are only 6% off a 1221 high already.

[clearwaters]

Bros, you really work hard getting your message out and I appreciate that every day. I really don't know anything about the stock market - I'm the first to say that. But as far as saying that they won't let it crumble, I think the one thing I've learned this year is that "they" are like bookies, and "they" are making money whether the markets go up or down. Letting it go down again is just another chance to get stocks cheap again. They've gotten amazing wealthy this and last year, and will make more in the future, regardless of what happens.

[Clinton SPX]

A slow loader, hit pause and let it load up.

[cosmic]

I think without a time frame, this is difficult for me to interpret. I'm not saying the concepts are incorrect - they're deeper than I tend to look into things.

I see major events, *things*, that are powerful enough to move world markets. Not 'V' things, just normal things. I see 2 elections, 2010 and 2012. I see 2012. I see a panic into 2012 even though every single person knows in their heart that a galactic alignment has less effect on the earth than Pluto's gravity on a nickel in your pocket. But there will still be jitters, just like Y2K.

But in the meantime I think the political aspects are the most important.

[brosin]

Aug 26, 2010 20:15:41 GMT -5 clearwaters said:

Bros, you really work hard getting your message out and I appreciate that every day. I really don't know anything about the stock market - I'm the first to say that. But as far as saying that they won't let it crumble, I think the one thing I've learned this year is that "they" are like bookies, and "they" are making money whether the markets go up or down. Letting it go down again is just another chance to get stocks cheap again. They've gotten amazing wealthy this and last year, and will make more in the future, regardless of what happens.

Good points Clear - as long as there's a spread, "they" will always be making money, but it's a matter of speed and racing eachother to get it, so they have the bots. So you're right, it's possible the bots don't discriminate so that the other factors don't matter.

But I still believe the bots are more reactionary and programmed than self-thinking and devious. And if it's only a matter of hitting the buy or sell programs...

I think the main point is that there are billions of dollars sitting in reserves that the banks are not lending. It could be anything from bad loan portfolios they are keeping money around for just in case to not wanting to burn their hands again since they are still blistered from the past crisis and want to take it slow. Whatever it is, it is a matter of time. When a bank is getting free money at 0% and not lending it out at X% or XX%, that is irrational behavior which will eventually correct itself. The correction will be a race to lend and a race to find places to get that money. It's like we're at a massive bottleneck in the highway.

[brosin]

Aug 26, 2010 20:34:29 GMT -5 cosmic said:

I think without a time frame, this is difficult for me to interpret.

What do you mean?

I gave the summary, which is pretty clear. I didn't say

"In summary, next ____ "

... ;D


Seriously though, everything about this market looks like it wants to go lower. But I do not have a deflationary mindset. If I think something is going to be worth more next month or in 3 months than it is now, I buy it because there is the chance it won't be this cheap again. I don't worry that it might go down a little bit more before going up. I don't have confidence in being able to grab it on the bottom to the penny.

[cosmic]

Supermarket Survey today said Sell! (just sayin')

[brosin]

That's fine - y'all go on, have a blast. Drink one for me.

If you're right, you're right. It is what it is - I tend to not post novels like this very often because I try not to. It just kept growing and growing and I tried to cut it down to the basics lol. They usually turn out like this after I've been wrestling with things for a few weeks... this is what the resolution looks like. If you look at the dates in the blog, few of the novels were actually at the bottom, but they weren't too far off.

[timber]

I think some people just see things bullish and some people will always see the bearish side of things......its the rare one that can see both at the same time

[Rich]

I, like Bros, tend to think we will go higher over time. I don't believe in the double dip thing. But I do think there's room to move lower on this leg.

I started thinking today that I hope 1000 holds. Don't want to sink to triple digits.

[brosin]

Aug 26, 2010 20:48:14 GMT -5 timber said:

I think some people just see things bullish and some people will always see the bearish side of things......its the rare one that can see both at the same time

yeah true, maybe we just lie to ourselves alot though... i think we all have the bear and bull inside of us. except for torr and purr! haha

without the ying there is no yang

[jack]

Aug 26, 2010 20:55:15 GMT -5 brosin said:

Aug 26, 2010 20:48:14 GMT -5 timber said:

I think some people just see things bullish and some people will always see the bearish side of things......its the rare one that can see both at the same time

yeah true, maybe we just lie to ourselves alot though... i think we all have the bear and bull inside of us. except for torr and purr! haha

without the ying there is no yang

Not in a convent

[bellevuetrader]

Did you post that novel and express your thoughts and feelings because of your current FAS position? Hang on Brosin...it'll come back around!

[brosin]

Nope Belle - not really all that worried about the FAS as that account only has about 15% of the value that my IRA does. And I planned that trade for a long time so wasn't going to give up on it even if I did decide that bearish was my new direction.

I would've definitely thought about lightening up the IRA if that had been my decision, but last night I had several "a ha" moments when doing all the monetary policy stuff

[benvestor]

well written and interesting stuff bros.. did you go to one of them ivy leagues or what

[brosin]

Aug 26, 2010 19:57:41 GMT -5 brosin said:

I'm a buyer right here at 1047 spx and do not think 1221 is the high for this cycle - I'd say we see 1221+ spx within 1 year.

How about a new spx high within 2 months and 2 weeks?



Truly

Remarkable

[Rich]

Weeeeeeeeeeee!!!!

[Clinton SPX]

The bulls are giddy. Rah Roh

[Clinton SPX]

Government should have started loaning itself money decades ago.

[brosin]

Aug 26, 2010 21:22:42 GMT -5 bellevuetrader said:

Did you post that novel and express your thoughts and feelings because of your current FAS position? Hang on Brosin...it'll come back around!

Truer words were not spoken, although they were sarcastic

[puurfectten]

lol..common bros..u know u wanna...we'll talk about it as soon as i get done cleaning the toilets...

[brosin]

YES!

Finally - they are a mess in there!

[kbk3ck]

Well, Iv increased my total account by 22.8% this past 30 days and aint complain'en!! Thats perty good stuff right there. Im bullish till i see some reason not to be. We just now got back to the middle of the chanel!!! Yall dig your spurs in and hang on now.