BOO!

Well when the wife notices that the blog hasn't been updated and mentions it, I guess it's time to do an update. She already nags me enough about everything else.

:-)

So, last update I mentioned that we'd hit 10,000 and would we stay or just drop right back. We held for about a week and then we're in the midst of a pullback. Down about 6%. A real pullback or just another rest period before another move up???

Here's what's going to happen, bank on it. OK, well don't bank on it, but watch for it. S&P is at 1040 right now. We'll dip down to 1025 Monday, maybe into Tuesday morning, then a move to the 1070 range over the next few trading days. Then we're done. Finished. Kaput. The real move down hits.

GDP for Q3 came out and was a surprise to the upside. The markets rallied 200 points. ONLY 200 points. The reality is that while the GDP number appeared to be good, as soon as you dug into it and realized almost half of the "goodness" was due to cash for clunkers and that's dead and gone now.

The gov't has been trying to buy time until the real economy comes back to life. Problem is it's taking longer than they'd hoped.

Watch the headlines for the CIT bankruptcy. That will have major ripple effects out there.

How was this honey? Let me know when I need to do another post.

Took Long Enough

FINALLY! We saw the Dow touch 10,000 today. Now what? We'll see. I've had 10,000 as the goal. Now will we hold above it for a time in order to get everyone sucked back in that's been holding back? Or will we simply say "thanks... see ya" as we head back down.

Third quarter earnings are off to a good start and some more of the big boys report the rest of the week. Still a lot of smoke and mirrors going on. Q2 was all about cost cutting and Q3 is all about the weak dollar which helps multi-national companies.

The big question is, are consumers really spending again? What do you think? I don't see it, but what do I know. Seems to me that everyone is scared to death of losing their job so they're paying down debt and hoarding cash. With the real unemployment percentage hovering around 20% it's very ugly out there.

See what the rest of October has in store for us.

September 23 - Tidbit of the Day

Nothing much to say lately as I await the market to top out in the next couple of weeks. I expect one more week of flat or upward movement as the end of month and end of quarter window dressing keeps things held up. (Unless the Federal Reserve says something surprising today at 2:15)

But here's a good read.

http://www.realclearmarkets.com/articles/2009/09/21/an_interview_with_doug_kass_97416.html

September 13 - Tidbit of the Day

This one was sent to me by a buddy of mine. Very good stuff and a lot of the same things I've been worried about and bitching about.

And now we're starting a pissing match with China by adding a tariff to imported tires from China and they're now fighting back with tariffs of their own. If this continues it could become an issue.

http://www.huffingtonpost.com/les-leopold/one-year-after-lehman-and_b_285158.html

Creeping Up

As I mentioned in my last post I didn't think we'd hit the peak quite yet. We're getting closer... almost hit 1050 on the S&P. I still think Dow 10,000 is the ultimate goal. Get everyone excited again, then pull the rug out.

Here's a good article. Very well worth the time to read it.

http://seekingalpha.com/article/160619-the-coming-consequences-of-banking-fraud?source=article_sb_popular

Are We There Yet? Are We There Yet??

Calm down Timmy, we're almost there... Have we hit the peak of what I refer to as P2 (Primary wave 2)? The guru's are saying yes. I'm saying I don't think so. Who am I to argue with those that know better than me (in Elliott Wave Theory that is). Well nothing is cast in stone with Elliott Waves so I could very well be right. It'll all boil down to jobless claims tomorrow and unemployment numbers on Friday.

Have you noticed something the last week? Economic news has been "good" but the markets have been going down. For the past 6 months even when the economic news was bad they continued to move up. What we're seeing is exhaustion and a little bit of reality. What's been considered "good" has been a stretch at best.

Topping of a market is a process, it's not an event. We're going thru the process right now. Was 1039 on the S&P it? We'll know next week I believe. I'm looking for one more spike up towards 1044-1050.

There are so many warning signs and red flags out there it's scary. In the meantime the gov't is enticing people to spend money they don't have. Cash for Clunkers and the New Home Buyer tax credit are the two big ones.

Think about this... the gov't is trying to get people to buy a house with only 3.5% down and can use the $8,000 towards that down payment. So guess what... people don't have any "skin in the game". Why will people feel compelled to do everything they can to make payments if they get a little bit behind? Nothing. They have no money in the house, so they won't lose anything other than a big ding on their credit. I can ramble on this forever... It irks the hell out of me. The number of future foreclosures is going to be amazing for a long time to come. Home prices are continuing to decline and they'll really fall once this wonderful gov't program comes to an end and the fake inflated number of buyers dries up.

Speaking of which, if you're in the market for a car, wait about 2 months. After the Cash For Clunkers mad dash, dealers will be twiddling their thumbs for a while since everyone that was even thinking of buying a car within the next 6 months did in July and August. I have a feeling that in October and November dealers will be willing to do just about anything to sell a car.

Here's how I'm seeing things in the near term. S&P at 995 right now. Rally Thur and Fri and maybe into Tuesday (Monday is a holiday). And then the big P3 begins. Slowly or plunge... I don't know. I'm thinking a slow bleed for 2 years with the usual ups and downs. But we won't see S&P 1000 or Dow 10,000 again for a very long time.

We're Close

We're close... very close to a peak. I said back on March 4 and March 5 that we'd see a heck of a run and that as we got near Dow 10,000 that it would be time to get out. (Look back at those posts) That time is here. Dow 9600 right now with the S&P at 1030. If the S&P breaks above 1050 we have another 10% up move to go. If it doesn't break above 1050 we saw the peak this week. This coming up week and next week will be the tell all. Yes, really.

How will it play out? I don't know. I don't imagine a cliff dropping plummet at least not like Oct 1987. Instead I see a rather gradual decline. Everyone that has been "buying on the dips" the past 6 months will continue trying what has worked so well, but instead we'll continue a slow melting process that keeps them buying in hopes of the move back up. And in the meantime the folks shorting the market that have been getting burned the past 6 months will be too gun shy and afraid to make big bets because they've been screwed over so many times.

Here's the thing everyone, and I know I keep repeating it but NOTHING HAS BEEN FIXED! The gov't has thrown trillions of dollars into the banks and the economy but that's all. Accounting rule changes and smoke and mirrors is not a fix. The problems are still out there... over leveraged banks and consumers. If you look closely at the gov't reports that come out, the consumer is dead. The only spending is being done by the gov't and that can't last forever, nor is it enough to build a strong economy. The consumer is 1) tapped out and 2) scared. Scared of job losses, scared of losing their homes.

The Cash for Clunkers thing was the biggest fiasco. Get people who have cars that are likely paid off to turn them in for one that will require $300-$500 a month car payments for the next 4 or 5 years. And how many of those people thought about the fact that their auto insurance would double or triple also? Those 700,000 people that did this now have less spending money for the real economy. Not to mention the fact that if car dealerships had people lined up out the door of the showrooms, do you really think they came down on the prices of the cars? So guess what, you didn't save a dime.

Anyway, we're close to a peak. Either in the next 2 weeks or after 1 more 10% run. In either case, it's time to start positioning yourself. The bottom of the next wave could possibly just be a test of the lows back in March (S&P 670) or it could be far worse. Have to wait and see how bad things really are.

Commercial real estate will wipe out another 1,000 or maybe even 2,000 banks. Local, state and federal gov't revenue streams are WAY down which will mean higher taxes to make up for it. Don't be worried about inflation yet, that'll come in a few years. Be worried about deflation for the near term.

Now that the baseless rally and euphoria are peaking I'll start posting my thoughts along with tidbit articles that I find. I simply had to wait for this phase to play out.

A friend of mine kept asking me "Are you back in yet?" Nope... I didn't want to risk my retirement money knowing that at the best we'd still be around 30% below the high that was set in October 2007. Sure, I wish I'd caught more of this rally. Even though back on March 4 and March 5 I said this would happen, it even shocked me how impressive the straight up rally was.