adAstra

Market Internals Flashing Caution Signals

Prieur, what's your opinion on Lowry's being a contrarian indicator. When the Buying Power is low, it sounds like no one else is buying - sounds like a good time to buy to me!

Freddie Mac Sub Debt Buy-Back: Heinous and Grossly Unfair

Seconded. Thanks.

Another View of Industry Momentum

We may be in the launch phase, but given the speed of bureaucracy, I wouldn't expect to see that BAMM for another year. Believe it or not, construction won't happen until after field data is collected, design concepts are proposed, refined and approved by the government (be it local, state, or federal). The design process is going to take several months. Only once that ends will actual construction begin.

The Curious Case of the Stubborn Market Leaders

I think the point is that the chart of XLE exhibited bubble behavior to the upside and currently, bounced off the trendline. Projecting into the future, XLE should be over-correcting to the downside.

While it might prove profitable to invest in XLE near the low of the over-correction, the article also discusses sector leadership. My take is that a small position in XLE-related stocks would be profitable and allow for diversification, but the focus should be on investing in the next market leader.

A cheap dog is still a dog.

Breweries Provide Sign of Deepening Recession

I take it you haven't heard. The porn industry filled out a petition for a bailout too due to economic hardship. Guess sex isn't paying either.

GM Shorts Pay 50% Annual Rate

Actually some brokerages already let people earn money by lending their shares. It's a very small percentage of retail investors though because the only cases I know are retail investors with over 30k shares. They negotiated a deal with the brokerage - I guess you just have to ask.

Public Pensions: Rotting from Within

One of the few good things about this bear market is that retirement plans will be placed under a microscope. With the amount of losses pensions are experiencing, the golden eggs that unions and other powerful groups setup for themselves are cracking. If you visit that pension tsunami website, you'll notice that pensions have been falling apart for years, and 2008-2010 will probably be the straw that broke the camel's back.

The problem is that all those in power know the problem exists, but to take it on would be a policital death sentence and so they push it off to the next leader.

The only way the pension problem is going to be fixed is for the word to get out, which is starting to happen, albeit too slowly.

High Cash Levels and Your Portfolio

It might be time to buy, but I get the feeling that we're still a few months off.

One useful fact that wasn't mentioned was the average peak cash %. From the two examples given, we're not even at the mean yet so more cash will probably be pulled out.

Additionally, given the significant debt levels in the US, I would argue that we are more likely to overshoot the average peak cash than undershoot. People will need cash to pay off their debts, to pay their mortgages, etc.

50% Returns, No Risk?

Interesting perspective. In that situation, I'd probably be willing to put it in a stable value fund. Unfortunately, my current company only matches a fraction on the first 4k invested so it's a tiny consideration in my portfolio.

On a conceptual level, it's probably a much better idea to invest in an index fund for the next few years instead of a money market due to valuations. And once we're officially in a bull market, it would be a decent time to switch back to cash.

The Part-Time Nation

At first glance, the chart looks extremely disturbing. However, if you look closer, it only has raw data that can be quite misleading.

The chart would be far more useful if the numbers were adjusted; e.g. as a percentage of the total workforce, or of the total population, etc.

The sharp spike in 2009 is disturbing either way, but it may not be higher as a percentage of the workforce when compared to the peaks in the early 80s/90s.

Is there any chance we could see a chart with percentages?

What was Buffett Doing in 1974? How About in 2008?

The 1975 chart might prove to be similar to 2009 market performance. However, the same doomsayers that stated subprime was a huge mess a couple years ago are doing it again. The next "bubble" is the alt-A and opt-ARM mortgages that will be resetting in 2009/2010.

I haven't seen many seekingalpha articles about the effect of alt-A and opt-ARM resets on the housing markets and stock market. I haven't done in depth research on the financial status of companies holding MBS, but I'd be very surprised if they already took losses on those securities.

We might see a several month recovery followed by along leg down - or a long-term W-shaped market.

Tuesday Outlook: Commodities, Emerging Markets

Definitely seconded.

Thanks so much for the charts and commentary David, and Merry Xmas.

VIX:VXV Ratio: First Sell Signal Since August

> Note that even though the holiday season typically has lower than normal volatility, I do not recalibrate the ratio or the signals to account for seasonal tendencies.

Has it been your past experience that the ratio remains usable despite seasonal tendencies? Or does the utility of the ratio vary throughout the year.

The Deflation Risk Keeps Rising

The markets were planning to tank on Friday. After the Senate rejected the bill, index futures dropped about 200-300 points for the Dow. The markets even opened slightly down. However, I'm fairly certain that the markets recovered because the White House announced that they were going to give a bailout a shot, as did the Fed.

In any case, next week should be interesting with the FOMC meeting, triple witching,etc.


On Dec 13 01:13 PM Freedoms Truth wrote:

> I have an idea, let's capitalize the failed banks and make them zombie
> institutions. Oh wait, that's what Japan did. "
>
> Hear, hear. This is exactly what the 'bailout' of GM will do, turn
> it into a useless zombie institution that, thanks to the govt teat,
> wont be willing nor able to do the real restructuring it needs to
> do. Note that the bailout failed because the the GOP Senators and
> UAW locked horns over whether the UAW would make labor cost concessions
> in the next year, to bring wage costs to be competitive with folks
> like Toyota.
>
> Here's the reality: Unless and until GM labor costs align with Toyota
> etc., they will be INHERENTLY unprofitable. So the GOP Senators were
> right to demand this, to ensure this bailout wasnt a money pit.<br/>
>
> lastpoint: Harry Reid thursday night lamented the breakdown of the
> negotiations and said that he hated to see what would happen to the
> markets Friday... well the markets did fine. These guys who think
> govt bailout of GM will save anything are full of beans.

Tax-Loss Harvesting: Trickier in More Volatile Times

You can roll your losses forward so in all likelihood you should sell now and find a better investment.