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      03-05-2012, 11:26 AM   #771
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How much can Coal sell off everyday??
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      03-05-2012, 12:41 PM   #772
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Vanity,

Never mistake fundamentals(economic) with asset prices...its about liquidity and supply-demand...when liquidity runs a plenty, being short is a losing game no matter how crappy the fundamentals truly are.
Understood, but my post was referring to the end of liquidity injections similar to what we saw with the end of QE 1&2. The markets are only going up on these injections. Volume in the market already shows demand is thinning as equities march higher.
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      03-06-2012, 06:11 AM   #773
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March 8 is the final deadline by which Greece needs to carry out the debt swap with its private creditors. This crucial operation might encounter problems however as it is rumored that private bondholders are rather reluctant to take part in it.

Unless 90% of the creditors sign up for the deal, the Collective Action Clauses inserted into Greek bonds last week would be activated; if participation falls below 66%, the deal would collapse completely and Greece would be facing a default on its debt.
Source Here


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A disorderly Greek default would probably leave Italy and Spain needing outside help to stop contagion spreading and cause more than 1 trillion euros ($1.3 trillion) of damage to the euro zone, the group representing Athens' bondholders warned.

"It is difficult to add all these contingent liabilities up with any degree of precision, although it is hard to see how they would not exceed 1 trillion euros." [IIF document says]

If the Greek deal fell apart, the European Central Bank would likely suffer substantial losses, the document said, estimating the central bank's exposure to Greece of 177 billion euros was over 200 percent of its capital base.

The IIF, which helped negotiate the bond swap deal on behalf of creditors, said there would be more massive bank recapitalization costs, which could easily hit 160 billion euros.
CNBC Source here

Btw, not sure if you guys are aware of this fact, but the ECB's balance sheet is $3 Trillion dollars. The ECB itself only has about $10-11 Billion Euros of physical money. That's a leverage of 300:1. And here we thought the deviation of standard 8:1 frational banking to 26:1 world-debt leverage was bad. Here the ECB is leveraged 300:1. This is a large reason why previous ECB Trichet did not attempt LTRO. While I agree the effects of LTRO are very good for solving liquidity issues in banks, the collateral posted up was sub-par quality (junk, you could say. Like government bonds).

However, should anything terribly unexpected happen like, oh I don't know, governments defaulting on their debt, then the collateral used to borrow LTRO money from becomes worthless. This is a large part for why the ECB refused to take Greek Bonds as collateral during LTRO 2. 75% of the collateral would've dissapeared after the bond-swaps, but not only that, the bond-swaps themselves dont really stand a good chance of reaching 90% participation. (read up about Vulture Funds and Greek Bonds. Large hedge funds bought Greek debt betting on a collapse to cash in on CDS. They hold English-law versions of these bonds, exempt from CAC's. They hold over 10%, more than enough to derail this voluntary debt-swap).

With the ECB factoring in a voluntary debt-swap (and the markets too), LTRO would be a great plan. However, should this plan not go through, expect contagion as explained above and more cash-injections from the Bundesbank in Germany (If the germans really want to finance their debt, greece's debt, Spain's debt, and also Italy's debt, by themselves. Imo, I sort of take Germany on their word when they say "they've reached the limit of adding more money into saving the EU through the ESM. When have you ever seen a German joke about a serious matter?) Not to mention Greece losing it's second bailout this Friday. March 9 also happens to be a cycle cross-over from bull to bear. Coincidence....

But if there's any funny-business with the ISDA not recognizing a default on greece, or CDS's are rendered useless and Greece goes through with this all dandy, except the bonds on Spain and Italy to ascend upwards again. Why? Because when CDS's aren't recognized/triggered, government bond assets become much more riskier assets, entailing a much larger premium before investors are tempted back in. And you've all already seen Spain miss it's fiscal targets this year. -1% contraction already, and 8.5% GDP deficit ratios. It's going to get worse. And now they're defying EU treaties by factoring in their own 5.5% GDP deficit fiscal targets, as if they don't care anymore about what Germany wants. Anybody already forsee funding issues in the future? I see Germany not wanting to fund for much longer, of course, jmho.

Sometimes the eerie reflection of this rally, compared to the 2010 charts, is spooky. However, I don't think we're going to be waiting till summer for a sell-off this year. I think Q1 or early Q2. Just imho again of course. And I'll make everyone a promise here: after this next major leg-down, Vanity promises to put away his Matador costume and become a hopium-CNBC-DOW 13,000-cheerleader.

Oh btw, those Bank stress test results commissioned last year by the Fed are due out next week. Reports on Monday are saying not all of the banks will pass the test. Food for thought. When are they going to blow up Iran again? We need to get away from our problems here.
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      03-06-2012, 09:13 AM   #774
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plot Dow/SPX with $TRAN...plot same vs new 52 wk high on NYSE...plot same vs % stocks trading above 50DMA.

Pic is clear...next week will be fun.


Next week is here....anyone having fun yet?...the massive divergences had to play out to the downside.
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      03-06-2012, 09:14 AM   #775
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Originally Posted by Vanity View Post
Understood, but my post was referring to the end of liquidity injections similar to what we saw with the end of QE 1&2. The markets are only going up on these injections. Volume in the market already shows demand is thinning as equities march higher.
agreed!
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      03-06-2012, 10:37 AM   #776
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think the low is in for the day at 1344SPX...buying cheap short term SPY calls to protect short positions for VST bounce we should see soon.
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      03-06-2012, 10:41 AM   #777
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Coal has been all over the place today . Finally coming back to even off a 5+% loss early.
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      03-06-2012, 07:38 PM   #778
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Mact,

What are your thoughts on today being the initiation of 'the' major leg-down for 2012 as opposed to just a correction? Looking at a 010' vs. 011' comparison of SPX, it looks like equities have definitely marched much stronger in this 6 month rally than last year. My inclination is the sell-off will occur now, rather than later.

And if this is the major leg-down, my 1260 SPX expectation is overly-conservative and should be revised downwards. What's your view?
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      03-06-2012, 09:18 PM   #779
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$12 Million dollar put option purchased today for June, shorting IWM Russell 2000 index. IWM needs to drop to 69 from 78 currently (12%) before this put turns green.

Some very aggressive put buying here. Also, corporate insiders are selling shares at 6:1 sell:buy ratio now. Highest selling ratio in a couple months. Reminiscent of last April/ July.

I also thought it was interesting that Barclays only has 2.61% institutional ownership over its shares outstanding now. I believe this was around 50-80% ownership just a few weeks back. Pump and dump.
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      03-07-2012, 10:01 AM   #780
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Quote:
Originally Posted by Vanity View Post
Mact,

What are your thoughts on today being the initiation of 'the' major leg-down for 2012 as opposed to just a correction? Looking at a 010' vs. 011' comparison of SPX, it looks like equities have definitely marched much stronger in this 6 month rally than last year. My inclination is the sell-off will occur now, rather than later.

And if this is the major leg-down, my 1260 SPX expectation is overly-conservative and should be revised downwards. What's your view?

We will get a scary selloff right now...gotta reset the sentiment indicators and relieve the divergences.

But I dont think we have hit "THE" top yet...we get a scary selloff the get the bears on board than rally resumes to punish them yet again.

The top has been pushed out imho....but for this week and next, Im going to have some fun...will unload the SPY and QQQQ calls I have as protecting for my short positions today...more selling to come...perhaps after AAPL Ipad3 announcement.
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      03-07-2012, 12:13 PM   #781
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Quote:
Originally Posted by Vanity View Post
Mact,

What are your thoughts on today being the initiation of 'the' major leg-down for 2012 as opposed to just a correction? Looking at a 010' vs. 011' comparison of SPX, it looks like equities have definitely marched much stronger in this 6 month rally than last year. My inclination is the sell-off will occur now, rather than later.

And if this is the major leg-down, my 1260 SPX expectation is overly-conservative and should be revised downwards. What's your view?



I like your 1260 target...think 1250-1300 is reasonable...just start buying when retail starts unloading in droves....

One day soon, we will see a massive hammer candle on very high volume...that is the thing you watch out for.
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      03-09-2012, 03:43 PM   #782
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I have a feeling we will see fireworks Sunday night....gap down anyone????....we shall see....euro down hard and dollar up yet metals and equities up...hmmm...someone knows something.
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      03-09-2012, 05:23 PM   #783
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I have a feeling we will see fireworks Sunday night....gap down anyone????....we shall see....euro down hard and dollar up yet metals and equities up...hmmm...someone knows something.
Agreed! Those are some massive movements in the Forex market. Very rare days do we see currencies move as much as they have today. Still trying to figure out the magnitude of this next correction.
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      03-09-2012, 07:23 PM   #784
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When the hell are we gonna move down..
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      03-09-2012, 11:41 PM   #785
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When the hell are we gonna move down..
Can't really tell you that. All anyone can say right now is that: DOW has failed 6 separate days to reclaim and hold 13,000, and that the markets only went up +14 points on good jobs data and Greece deal finally finishing. So it's close. The bigger question is where it will fall and what might the catalyst be.
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      03-10-2012, 03:22 AM   #786
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Can't really tell you that. All anyone can say right now is that: DOW has failed 6 separate days to reclaim and hold 13,000, and that the markets only went up +14 points on good jobs data and Greece deal finally finishing. So it's close. The bigger question is where it will fall and what might the catalyst be.
This. If nothing major/severe happens in the global economy, such as war in Iran or chaos in Europe, I believe a 5-10% pull back would be healthy for the markets. If something catastrophic does however occur, it could be a large pull back. The drop on monday, was in my opinion quiet healthy for the markets. The DOW was very close to breaking its trend line, but managed to comeback throughout the week.

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As everyone knows, the markets react first than think later, which is why the markets rallyed on through the week, after fears of greece started to slowly fade (even though they did technically default just a "structured" default).

What I find interesting is how the Dow Transports and the Russell 2000 arent having the same rallys as the rest of the sectors (possibly due to rising energy prices for the Dow Transports). The Russell 2000 however is showing that the little guy is indeed staying out, which could mean that all the people that are going to buy into this rally could have already bought in, symbolizing that the markets maybe running out of steam.


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Just a quick post for the week.
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      03-10-2012, 04:20 AM   #787
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Cnbc article came out today with Pro traders telling people to buy in this rally at 1300. (still too expensive IMO) which is why I almost know this correction will ram past 1300. I'm still working on the vidence to support this model I'm working on, but I'm weighing the probabilities of this being a 20%+ new bear market. As the 2010 crash tried to bring a new bear, didn't hit 20% to declare one. In 2011 we had hit 20% on the intraday, but never closed a session past it so no bear. But each subsequent drop has been bigger in magnitude than the last since 2009. 09 baby bull is getting old and just "barely" shook off dropping 20% in 2011. Tells me there is weakness. Trend suggests this next correction might break through, as recent crashes have been working towards a 20% drop but failed.

Remember, information that everyone knows is information not worth knowing in this market. If everyone thinks this is going to be a 3-5% correction, it won't be. Just like how no one thought we would get to these multi year highs, and so we did. that's how the market makes money, you will never make money if everyone already knows the outcome. Which is why I'm leaning towards a larger correction rather than a small one. Anyone else been working out the ,agnitude of the correction? Anyone want to share their target ranges besides me and Mact?
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      03-10-2012, 06:44 AM   #788
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I'm playing MCP and SLV these days. I also like LVS along with MPEL.
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      03-16-2012, 03:14 PM   #789
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Anybody noticing the blow-off top formation?

SPX saw 120% volume relative to last 10-day avg volume. Dumb money is getting in on the top. Insiders have been selling since Feb, picking up selling pace from 6:1 in Feb, to now 7:1 in March, and most recently at 13:1.

Calling the top on this rally has been tedious and long-strained. I really do believe 2012 is going to mirror 2008. Doesn't it just feel like that all over again? Elections, high oil prices, declining earnings. Companies are issuing Q2 earnings to be negative at a 3:1 ratio. Hasn't been this high since the "crisis days" back in 09'.

Food for thought. Trade accordingly. I believe the months from April - September will be really rough. This is all my opinion so everyone hear should research and tinker it to their investment needs.

Mact, still there?
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      03-18-2012, 03:14 PM   #790
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Published March 15th, 2012, ECRI.

ECRI Recession call stands, re-affirmed.

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Many have questioned why, in the face of improving economic data, ECRI has maintained its recession call. The straight answer is that the objective economic indicators we monitor, including those we make public, give us no other choice.

How about forward-looking indicators? We find that year-over-year growth in ECRI’s Weekly Leading Index (WLI) remains in a cyclical downturn (top line in chart) and, as of early March, is near its worst reading since July 2009.


As for the job's data coming out, which I pointed at increasing to 9% last month from suggesting Gallup polls, here's the ECRI's take on it:

Quote:
Most data, both public and private, are seasonally adjusted. But the nature of the Great Recession seems to have had an unexpected impact on the statistical seasonal adjustment algorithms that are hard-wired to detect when the seasonal patterns evolve and change over the years. This is normally a good thing, but when the economy fell off a cliff in Q4/2008 and Q1/2009, it was partly interpreted by these procedures as a lasting change in seasonal patterns. So, according to these programs, data from Q4 and Q1 would be expected thereafter to be relatively weak, and therefore automatically adjusted upwards. Our due diligence on this subject indicates a widespread problem, resulting in many recent economic headlines being skewed to the upside.
And as for further QE's, whether domestic or global, here's their opinion as well:

Quote:
It is notable that the WLI, which is sensitive to the prices of risk assets that have been supported by massive worldwide liquidity injections, has hardly been swayed from its recessionary trajectory. In spite of the efforts of monetary policy makers, actual U.S. economic growth has slowed, while WLI growth has barely budged from a two-and-a-half-year low.

The bigger question is, can unprecedented, concerted global monetary policy action repeal the business cycle? The objective coincident and leading indexes that we have always monitored are still telling us that it cannot.
Recession call maintained for US.

Add in Europe already being in Recession, and then now China:



These are just 1 month periods of home sales, Dec. 11, 2011 - January 12th, 2012.

Don't see the FED doing any QE this year, as Twist ends in June and they would need a crash to happen in order to justify more stimulus (as the country, to the majority of the public, does not feel like 2008/09). By then, any move would be too politically objective as it drives near the elections. Can you already hear the public uproar against Wall Street and then the FED as well if that happened?

This is going to be a big year. I can feel it


Update: More on that China slowdown coming into play very soon:

BHP Billiton warns of Chinese slowdown.

Quote:
The world's biggest mining company, BHP Billiton, has sparked new fears about the economic outlook for China by warning the country's demand for iron ore is slowing.
I'll let you read the rest for yourselves. This should all come into play when Q1 earnings come in soon (by April 10th). Housing data coming out this week has been disappointing.
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      03-22-2012, 06:45 PM   #791
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Anyone have any ideas about the Tvix collapse today
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      03-22-2012, 11:08 PM   #792
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Anyone have any ideas about the Tvix collapse today
Ever since share creation halted the product has been trading at a premium. No supply, but demand exists. Hence, a premium. This is why on days when UVXY dropped 15%, TVIX either dropped a little bit (3%), or actually went up. The share have been halted since mid February. The underlying NAV (net asset value) of the instrument was actually trading at $8, and the underlying instrument for TVIX had been tracking VIX futures flawlessly. It was the premium that was distorting the surface. I suspect the correction today by Credit Suisse is so they can initiate shares creation again. Meaning, TVIX should be back to working 100% soon.
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