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Keep an eye on the CRB index. It had a major spike on Wednesday, albeit on a low volume day, to close above 20 DMA. Is this a fake out or a break out? I don’t have a clue – except this chart.
BTW, I am of the opinion that inflation won’t be a problem until deflationary cycle is first completed. Based on the evidence we have seen so far, I still strongly believe that this could be a fake-out. However, I could be proven totally wrong.
In any event, to make-up your mind, combine the above chart which is indicating inflation with the following charts (courtesy: Contrary Investor) which are indicating deflation (at least in the short-run).
[Full article: Homes For The Holidays at ContraryInvestor.com]
MarketTicker.com Predictions for 2009
This website claims to have nailed their predictions for 2008, made in Dec 2007.
- US will enter a recession: Confirmed by NBER. Check.
- Unemployment will rise north of 5%. Check (bigtime)
- Housing will not turn in 2008. Major check.
- The story in 2008 will be defaults on prime mortgages. Check.
- Consumer lending practice stupidity exposed. Check.
- Recreational sector (boats, etc) smashed. Check.
- Government will meddle. Biggest check of all!
- Buffett will win on munis. Miss – a clean miss.
- Equity prices will at least touch 1220, target of 1070, no surprise on a three-digit handle for the SPX. Major check.
- Return of capital is the dominant theme. Check; 0% IRX anyone?
- No “hyperinflation”. Check.
- Debt to be paid down and/or defaulted. Half a check. The hiding continues, and so far, there’s no indication that the end of that rope has been reached.
- CRE will collapse. GGP anyone? Check.
- Business CapEx will go to hell. Check.
- Dollar will strengthen. Check.
- Market callers coming to the public “hat in hand”. Nope; clean miss. Where’s Cramer committing Seppuku on national TV? Oh well; hubris knows no boundaries.
Their top 4 predictions for 2009 are as follows:
- The economy will not recover in 2009. Job loss will continue through the year and unemployment will reach 8% in the “headline” statistic by the end of the year. U-6 (broad unemployment, or the closest to “real” unemployment without government “cooking”) will top 15%. All the “talking heads” are predicting a turnaround in the second half of 2009. They will be wrong. Look at their records for 2008 – all of them were predicting closes at or above 1500 for the S&P 500. Why does CNBC continue to put people on the air who, if you listened to them, cost you 40% or more of your money?
- Deflation, not inflation, will become evident well beyond housing. Other capital goods beyond housing will see real price declines for the first time since the 1930s. Debt is inherently deflationary; the “hyperinflationists” will once again be shown to be wrong (how many years running will it be now?)
- Housing prices will continue to decline. I believe we’re about halfway done with the price correction. Those who think we will turn this in 2009 are wrong – unless we get an all-on collapse in prices in early 2009, which I do not believe will occur. I’ve heard several claims we will have positive year-over-year home price changes in 2009. I’ll take the other side of that bet.
- The Fed’s attempt to “pump liquidity” will be shown to be an abject failure. We will see either a Treasury Market selloff or worse, severe instability in the dollar at some point in 2009.
Get the rest of the article here: Where are we Headed in 2009? [Edit: That article reads as though I have written it. I swear, it is not me who wrote it.]
now the Fed starts exiting thier position in Treauries to make it appear that investors are exiting a position of safety into a position of risk?
one question . what is the lowest trading volume ever on the SPX in a full trading day? this has to be close.
January 2nd, 2009 at 3:33 pm
You are right. The volume is quite light.
January 2nd, 2009 at 3:38 pm
its not insanely light comared to previous years at this time when you look at the month of December. it is just light compared to the wacky months we just experienced. has the massive selling and consolidation period peaked and now we will enjoy days of 3 or so volume. historically this seems about right.
crazy trading… now 930; can it push up to 950 before close???
R3 on the ES is 931.33… hummmmm
im glad i was buying SRS this morning instead of shorting the SP500.
January 2nd, 2009 at 3:41 pm
IYR moved down nicely. Prelude to ?
Is anyone shorting oil now that we are near the top of the big channel?
January 2nd, 2009 at 3:46 pm
i did at $46 even. maybe it opens at $42 on monday. it traded down there overnight.
I love CNBC. We’ve got guys coming on now talking about how we are setting up for a rally. Hey, maybe we are, maybe we’re not. But aren’t we up 25% from the lows? Isn’t that a pretty good rally? And isn’t that about normal for bear market rallies?
January 2nd, 2009 at 4:22 pm
It is laughable.
Today was major rebalancing day. All the poor areas were bought into like consumer and industrials, and the strong areas like healthcare were sold off. Classic fund rebalancing and we shouldn’t read much into it. Next week will be more telling.
Although I trust the charts, with a fair market value based on 2009 estimated S&P earnings of just $42, and a Bear market PE of 8, means we need to seek a price of $332, not $932!
Well I got beaten by the market bully today. But I held my ground. Kept my shorts and added to them at the end of the day. Painful though.
January 2nd, 2009 at 4:47 pm
Oh BTW, congrats to anyone who was long. I can be gracious in defeat.
Although I expect the bull cycle to continue in next month or so till ~1080, I think it is way overextended in short term either by some fools or manipulators. In either case, I expect to see a significant pullback either on Monday or Tuesday.
I think 960 can be the max for current up cycle, although it is more likely that a pullback will start from current level itself.
NY ROUNDUP – Friday, January 2, 2009
HIGHLIGHTS
US ISM Survey falls to 32.4 – much worse than expected
US Treasury Continuing Actions to Strengthen Economy
Turkey Consumer Prices for December down -0.4% m/m, +10.1% y/y – worse than expected
Euroland PMI Manufacturing for December falls to 33.9 – worse than expected
COMMENTS
While the fat lady slept it off, equity bulls came out in force, picking up where they left off on Wednesday. Europe rallied anywhere from 3-4% with the US following suit, closing up 3% across the board. The DOW closed above the psychologically important 9000 level as stocks had their best opening day of the year since 2003. In most other markets, the all-too-familiar volatility continued — crude traded in a 14% range (down early this morning but bounced back due to the continued activity in the Middle East), front end US rate futures got hammered (eurodollar futures down 15-25 after trading up first thing this morning), and the USD rallied smartly against most of the majors. To what do we attribute today’s moves? While certainly difficult to pinpoint given that correlations continue to break-down, the one thing we can say with great certainty is that equity markets are in a world of their own at the moment, ignoring another ugly ISM print which included the worst new orders sub-index since 1948. Perhaps they are rallying on light volumes due to technicals, perhaps due to rally in oil, perhaps due to the more liberal TARP distributions, or perhaps due to relative valuation (stocks and bonds traded as mirror images of one another today). It is also worth keeping in mind the extent to which equities lagged credit on the way down. Perhaps it is just payback time as credit continues to trade well. For those out of the office today, it is worth having a look at USDJPY which appears to be rallying in-part due to the risk asset rally and in-part due to the pull-back in US treasuries. There were a few other interesting developments overnight. First, KRW rallied 5%, as the spot market played catch-up with the NDF move Tuesday (spot was already closed when the KIKO news broke on Tuesday). Second, there was a shocking Singapore GDP print — the annualized quarterly number was down 12.5% versus expectations of -3.4%. Finally, India cut 100 bps overnight to 5.5%. Get your rest this weekend as the new “normal” kicks off next week. Highlights will include the Fed minutes Tuesday and the employment report Friday.
CURRENCIES
Cross Low High
EUR/USD 1.3840 1.3988 Close: 1.3856
USD/JPY 90.79 92.41 Close: 92.22
EUR/JPY 126.55 127.95 Close: 127.78
GBP/USD 1.4376 1.4555 Close: 1.4473
EUR/GBP 0.9554 0.9646 Close: 0.9574
USD/CHF 1.0627 1.0845 Close: 1.0789
EUR/CHF 1.4824 1.5026 Close: 1.4949
AUD/USD 0.6946 0.7105 Close: 0.7108
USD/CAD 1.2067 1.2239 Close: 1.2136
NZD/USD 0.5780 0.5870 Close: 0.5859
For us APPL watchers, early next week will be of interest. APPL has failed three times at $91 R level. S is at 85 and 80. Below that………get a lifeboat