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Veteran Advisor

All-in-one market update

With stocks continuing to float up on a wave of liquidity, interesting to see the commodities diverge a bit although I don't think thee's anything there for calling a top- except for some long term cycle things and I don't really trust that with the money gushing.

 

But FWIW, the very unusual, by some measures unprecedented, uninterupted levitation of the stock market has some things in common with pre- flash crash action in April/May last year.

 

There is some considerable divergence among indexes but using the SP and the broader of the major ones, we've once again dipped to the 20 EMA and begun flattening it out with some sideways action. In the flash crash episode, the market formed a head and shoulders over about 10 days as da playas desperately looked for widows and orphans to unload that crap on.

 

Then it just let loose as the 10 ema crossed the 20.

 

Now I don't for a minute believe that the 1000 point drop (dow) was entirely due to a small mutual fund company selling some e-minis on a programmed hedging setup (the fat finger excuse was quietly abandoned). I do think that everybody's algorithms that were running the market up evidently were all purchased at the same K-Mart and went into "do not buy" mode all at the same time. They didn't need to sell- just normal selling and reaction to the drop was enough when the buyers who had run it up suddenly disappeared.

 

Now I am also 100% certain that this flaw is very well fixed- both internally with da playas and their magic machines and with the Plunge Protection Team.

 

So even though sentiment, complacency, oscillators etc. are looking phenomenally overbought I don't expect a flash crash even if the conditions are similar.  I'm really just a fascinated bystander but for my two cents worth I wouldn't be long anything in the AOM for a while. And that takes into consideration the possibility that this time the game will be to further punish anyone who has the temerity to be short anything. On a risk/reward basis I can live with being out.

 

fwiw, h

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6 Replies
Senior Contributor

Re: All-in-one market update

Marketing with periodic sales or other versions of the "sell it by pieces" strategy is about all we have.  The big concern is any big crash that would catch us unsold and not covering expenses.

 

I don't think the big boys have a clue.  They're like boys in a canoe paddling in a lock.  They think they're making progress but they ought to be looking up and down instead of sideways.   These are interesting times.

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Advisor

Re: All-in-one market update

  The local paper again ran a story in the business section of farmers making record profits, land up, rents also going higher, etc.  If I read it you can bet my landlords did too.  I called on them last month and voluntarily raised this years rent.  Is that being ahead of the curve?

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Contributor

Re: All-in-one market update

Was in Chicago for a couple of days earlier this week at TP conference and I could tell the number ONE item on everyone's mind was the landlord/tenant relationship......I think you are well served to address these issues early rather than later.

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Advisor

Re: All-in-one market update

nwobcw....did the same, but also cautioned them that this was what i was going with. no more increases for this year even if beans go to 16 and etc. I hope that the reverse happens when the inevitable drop in profit happens.  It's best to do this at a different time than when you show your winter vacation pics and drive up in your new lexus, too!

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Advisor

Re: All-in-one market update

Ha Ida in my case the landlord drives the Lexus.  Last fall I gave extra rent but paid it in a seperate check.  The ground I pay half spring half fall I plan on paying with 2 checks.  1 check for the spring half of the normal rent and another check for the extra for this year. 

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Veteran Advisor

Re: All-in-one market update

Actually following the pre-flash crash pattern fairly well.

 

Need a -200 or so day in the Dow, to be followed by a week or so of pump and dump.

 

Then we'll see how well the algos are fixed?

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