Thursday Flip-Flop – Now GS Says S&P 1,250 is Target
by phil - April 5th, 2012 8:01 am
Oh sure, NOW they agree with me!
That's right folks – Goldman Sach's Chief Forecaster, David Kostin latest monthly chartbook has a 3-month target for the S&P 500 at 1,275 (down 9%) and a 12-month target of 1,250.
I don't agree with the longer-term forecast as I think inflation will kick in by then and we'll be off to the races (in price, not value) but that 90-day target is right on the money. I know you may be saying to yourself: "Say, didn't Goldman just tell us last month to BUYBUYBUY?"
Of course they did. If you don't BUYBUYBUY, who were they going to SELLSELLSELL to. See those S&P calls at the bottom – Nove 30th: "SELL Internationa Sales Basket," January 9th: "SELL S&P 500" – that's what GS tells their insiders – if you somehow got a slightly different impression of what they were saying from the MSM or ex-GS alumni Jim Cramer or any of the 300 stooges on CNBC – you must have simply misunderstood.
Doesn't Cramer sound like one of those hosts on the Home Shopping Network when they get stuck trying to sell an item that isn't moving? Clearly the Banksters did not expect that their Pavlovian attempt to train retail investors to buy every dip would wear off so quickly and this is why we "Sold into the Excitement" last week, rather than waiting for the charts to tell us what the Fundamentals were whispering in February, when we made our plan to "Sell in March and Go Away". In fact, the title of my Friday post was the last in my series of warnings: "March Goes Out Like a Lamb (to the Slaugher)."
After adding additional bearish bets in yesterday's morning post and early Member Chat (and TLT is flying this morning), we did flip bullish at 2:15, going long on the Russell Futures (/TF) at 815 and the QQQ weekly $66 calls at $1.16 (for the Futures-challenged). The RUT gave us a lovely run back to 818.50 for a $350 per contract gain and the Qs ran up to $1.40 for a nice 20% gain in less than two hours and, of course, we flipped back to bearish at the close. My prediction for tomorrow (today) was:
I think we're good for at least another half-point down tomorrow.
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Which Way Wednesday – $3.5Tn Not Enough to Prop up Markets?
by phil - March 28th, 2012 8:19 am
Uh-oh!
Wasn't it just 2 days ago that the EU was all set to pop the ESM to $1.25Tn and the IMF was going to add another Trillion and the Fed was talking about more QE in the $1.25Tn range, which plunged the Dollar to multi-week lows? Shouldn't adding 6% of the entire planet's GDP in additional stimulus give us more than a one-day pop in the markets?
As I pointed out in Monday's Morning Alert to Members – these are all just RUMORS and my conclusion in the Alert was:
Despite the bullish turn of events (which we anticipated last week) we're more inclined to cash out our bullish trades into the excitement and press our bear bets and TOMORROW, if we're still over our levels – THEN we will scramble to add some aggressive bullish trades to our virtual portfolios. Again, I cannot stress enough that CASH is my preferred position because this market is tough to call and you need to be very flexible and very nimble to trade it.
We proceeded as planned and, so far, we haven't had any reason to capitulate and get more bullish and that is both surprising and disappointing as this is the end of the first quarter of 2012 – if not now – when? As David Fry notes:
Monday’s rally was typical as we head toward the end of the quarter. Hedge fund performance fees are on the line and any way to boost these profits is job one. Top holdings for hedge funds include the usual suspects: AAPL, IBM, INTC, BAC, DIS, HD etc.
With little volume it’s easy for algos and hedge funds to prop stocks on little hard news. Tuesday we briefly saw more of this. Just as markets were weakening a story appeared using the Fed’s favorite oracle, the WSJ, as Fed governor Rosengren stated, “more stimulus is on the table”. Immediately HFT algos jumped and markets rose if only briefly.
It's very exciting for us as PLCN (see Thursday's notes) went all the way up to $736 on Monday and sold off on some pretty heavy trading yesterday. Slowly but surely, our negative premise is beginning to take shape as Piper Jaffray is finally catching up with us and noting "a sharp decline in unique visitors to Priceline's booking.com" from growth of 61 percent during the…
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TGIF – Holding that 100% Line Would Be Nice
by phil - February 18th, 2011 8:16 am
Fastest Double EVER!
That's the verdict as the S&P 500 adds 666.79 points in 23 months, the fastest gain since the index was founded in 1957. "The scale of this rally is just enormous," said New York money manager Barry Ritholtz. He calls it the most intense rally since the Depression. Even during the go-go 1990s, the S&P typically took around three years to double. For instance, it first cleared 1,000 on Feb. 28, 1998 — 35 months after its first move above 500 on March 24, 1995.
Ritholtz says the average stock market bounce following a crash is 70% or so, and is stretched over a longer period. But of course, in previous cases the Fed wasn't buying up half a year's worth of Treasury issuance and holding short-term interest rates near zero.
"This one is unique," said Ritholtz. "Obviously the Fed is the key difference. We have never seen them throw this much liquidity into the mix." Accordingly, most market observers are now tapping their feet waiting for the inevitable pullback. The average correction following a postcrash bounce is 25%, Ritholtz said. According to Fortune: "There are all sorts of reasons to expect the momentum to turn against stocks after their unprecedented gains. They range from rising bond yields and stretched stock valuations to political unrest in the Middle East and another iteration of the ongoing debt crisis in Europe."
Of course, as Fortune should know, IT JUST DOESN'T MATTER what's going on in the World as long as B-B-B-Bennie and the Fed continue to prime the pumps at the IBanks and last week, the Fed set a new record as well by expanding their balance sheet to $2,492,000,000,000 after adding $23Bn of US Government Securities.
Now I wouldn't want to force you to draw any conclusions that may link those two items. After all, Doctor Bernanke himself says that the Fed's actions have nothing to do with either inflation in the commodity pits or in the equity markets. They are merely providing ample liquidity to their Member banks who, in turn, lever that liquidity 10:1 and spend it in the same wise fashion they always have – like the 10s of Billions of Dollars of "toxic" securities they have been splurging on again, once again hoping…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site