just in in-tray
Player #1: Good set up here as well with WFC similar to Oct 2002 bottom on the comp when YHOO had good numbers. That is when things changed.
Player #2: If oil cooperates in the coming days we could see one heck of a rally.
Player #1: Certainly feels like it and given we are in the zone.....would not want to be short here.
just spoke to my traders, shortcovering for now, but people getting ready to buy finanacials if the earnings season goes the way WFC reported. There has been substantial cash parked on the sidelines ready to pounce on any series of positive events in financial land.
Player #2: But if Oil were to correct to 85-90. I would think about buying contracts
Player #4: Hold your horses there, _______, we're still only working on crossing the 3-day moving average here ROFL
bigcharts.marketwatch.com
You have to stand back and let those logs catch fire a bit first or you'll blow out the fire with that all that fanning from your bellows LOL
Yes the financials have been taking a beating for 9 weeks, but are you not concerned that we did not see a washout selling climax here? I am....
Player #1: The signs are there. You interpret them any way you wish. This feels like a similar set up to mid March...financial stocks rallied out of that. In a banking crisis selling climaxes happen for individual stocks, not the index necessarily, because different banks are affected differently.
As in Mar/April, if bank losses are less distraught than estimated (esp from Whitney, who's been the most bearish) this week and next this sector will rally harder than in March/April, imo. Bear market rally, but that doesn't mean you can't participate.
Player #4: Just funnin' wit you, mon -- no probs
I'm just mindful of the fact that the big bank earnings are suspect across the board IMO since they can be managed at the financial statement preparation level thanks to things like Level 3 classifications that can be used to negate the effects of MTM -- it's only my opinion, but I don't believe any bank of significance that was/is involved in the RMBS or CRE market could possibly be making any money here net of their true underlying asset impairments -- so my personal preference is to not play in that minefield
In the end it all depends on how much of the horror-to-come is already baked into prices, and how far into the future -- I guess we'll all have to wait and see
Player #2: All bottoms start with short covering. Remember I told you the Tiger cub guy was covering his financial shorts last week. And he is running big money.
Player #2: I am putting some of that out tomorrow or at the close. DOY that is. I am long the DZZ as well. All that glitters is not GOLD trade.
Player #2: Oil really needs to break 133 for me to get short big, but when it does it is going to go down to 100 fast breaking the 200 day to really scare the shit out of the bulls.
Player #1: agree. 50day MA at that level. 200 day at 106 and change. Signs are good it will break today or tomorrow. Gold probably sells down in sympathy imo down to at least 900 level on a similar fast move. Good weak long shake out is needed here before next leg up.
Player #1: Agree w you.
The other sector to fly on this thesis are the airlines. If oil goes to 85-90, these (US) puppies are doubles from here.
Go long DOY for anyone who wants to short crude contract outright through a listed ETF (different from DUG which is tied to oil stocks). UOY for those feeling bullish.
BTW, if you check out a lt chart on BKX going back to the early 90s, the uptrend has not been violated yet and in fact crosses around 45 this month. We got down to 46.52 intraday. Close enough for me. I think the bottom may be broadly in for the financials. Probably gets retested, but I suspect no new meaningful lows get made. If you look at (systemic) banking crises around the world, banks correct 50-70% before they find a bottom, and it costs ~10% of GDP to bail them out. Then life goes on.
The BKX is down 60% from their highs so we are in the zone. It has been down for 9 consecutive weeks during which it lost 43%......now that is a black swan event.
Player #4: Lack of bank note paper threatens Zimbabwe economy
July 14, 2008
HARARE, ZIMBABWE -- It has come to this: Zimbabwe is about to run out of the paper to print money on.
Fidelity Printers & Refiners, the state-owned company that tirelessly churns out bank notes for the Robert Mugabe regime, was thrown into a crisis early this month after a German company stopped supplying bank note paper because of concerns over Zimbabwe's recent violent presidential election, widely seen as fraudulent by international observers. The result on the streets was an immediate cash crunch.
Before the crunch, a beer at a bar in Harare, the capital, cost 15 billion Zimbabwean dollars. At 5 p.m. July 4, it cost 100 billion ($4 at the time) in the same bar. An hour later, the price had gone up to 150 billion ($6).
latimes.com
Player #3: 50% inflation per hour? i believe that's worse than Weimar now.
Player #3: yesterday, there was a record high in new lows at the NYSE - over 1300 issues made a new low. to me this indicates two things: 1. a short term bounce is likely (i.e., today's bounce probably has more legs), and 2. this is not your daddy's bear market - it is your grand-daddy's bear market, and it likely has much further to go. it will probably take several years to reach the ultimate bottom, and it's a reasonable expectation that at some point during the proceedings the market will make a 20 year low or worse (this is how much value secular bear markets usually destroy). i would also expect the long term secular decline in p/e ratios to continue until we see a classical low in them - i.e. , single digit p/e's.
short term we could easily see the S&P rally to the point where the recent oversold conditions are sufficiently relieved. presumably oil will have a bigger correction along the way, with the main caveat being the possibility that Iran will be attacked, which i however regard as a very low probability event.
airline stocks are proving their value as a hedge for energy related positions, and will likely continue to be in great demand if oil's correction continues (the latter seems likely, but i note that there is still a lot of lateral chart support in crude that hasn't been violated yet).
also, one needs to keep an eye on the BKX, which is close to the first point of resistance at 55, with the next one at 60.
there is one thing that makes yesterday's stock market low a bit suspect, and that is the lack of panic/fear, but as i noted yesterday, this is not a sine qua non for a short term low. we may see the panic in the next downwave after the upward correction, unless today's rally remains a one day wonder.
it has still not penetrated into the mass consciousness what a whale of a crisis this is. yesterday i read comments made at a conference call / analyst meeting dealing with the GSEs troubles, and my impression was that the assembled crowd was extraordinarily complacent. i felt reminded of comments made by politicians and the popular press in early 1930, just as the downturn got underway. the opinions expressed at that time were similar insofar as no grave danger was perceived to exist - sort of like, yes, we do have a downturn here after all (contrary to the previous 'it's all well contained' sentiment), but it's closer to the end than the beginning, and after all, our resources, capital, ingenuity, and so forth, are all more than adequate to deal with the event. as long as sentiment is in this state of denial, the downturn is likely to continue - until the point of wider recognition is reached. the fact that technically, or rather officially, the US is not even in a recession yet is very noteworthy in this respect. it illustrates this general willingness to remain blind to the problems, in the hope that by not acknowledging them they will somehow fade away.
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