Daily Archives: March 14, 2013

Crime and Punishment

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I just returned from the barber (I don't like my hair getting even somewhat longish, and I find getting a haircut surprisingly relaxing). While there, I thumbed through the Palo Alto Daily Post. In it was a tiny article whose headline was "Dine and Dashier Gets Jail Time" It reads as follows:

A man who dined and dashed at a San Carlos restaurant was sentenced yesterday to 120 days in jail, prosectors said. Patrick James Higgins, 43, pleaded guilty yesterday to commercial burglary for skipping out on a $70.24 check at Sneakers Pub and Grill on March 1, Chief Deputy District Attorney Karen Guidotti said. After ordering the hefty tab on his own, Guidotti said he ran out of the restaurant to the rear alley, leaving the check behind.

He was sentenced to 120 days in jail, ordered to pay back the tab as restitution, and will have three years of supervised probation, she said.

So let me get this straight. As a society, we have decided to let people like Lloyd Blankfein, Jamie Dimon, Jon Corzine, and everyone else involved in the financial crisis (including that complete douchebag from AIG) not only get away with murder, but also get breathtakingly rich while doing so, but if some guy has a meal and runs away, and he pleads guilty to the crime, we decide:

(a) he needs to pay the tab (fair enough!);

(b) he needs to be locked up for 4 months;

(c) he needs to spend three years – at significant taxpayer expense – being closely monitored by a probation officer.

Excuse me for asking, but what in the name of Jesus H. Christ is wrong with us? Oh, I forgot. If you're rich, you can do anything you want. If you're poor, you have the be the apotheosis of rectitude. And talk about swift justice! This incident took place not even two weeks ago! And yet Blankfein, a man who torture is too good for, smirks and leers his way to mega-riches.

0314-inaSpeaking of financial criminals, Congress is going to go through the motions of pretending to hold the leadership of JP Morgan accountable for their own misdeeds. The star is going to be Ina Drew, who is closely associated with the "whale trade" of last year. Ms. Drew, of course, is the massively successful former CIO at JP Morgan. Flying in by jumbo jet tomorrow, Ms. Drew will confront some weighty charges, having to carefully balance the voracious appetite of some legislators for explanation with massive amounts of hefty evidence.

Cognizant of the gravity of the situation, Ms. Drew will hopefully not sag with the colossal amount of pressure on her. The room will be thick with anticipation, but let us collectively hope no blubbering will take place on Ms. Drew's part. Tons of people will be watching, and the implications, perhaps, could be enormous.

A Contrarian Stroll Through Recent History

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Opening disclaimer:  I am not trotting out the past to show what a
great contrarian I am.  Truth is, I have not come close to fully taking
advantage of the bull calls last spring and summer.  Given what has gone
on in the precious metals, it has been all I could do to manage risk to
a break even.

That out of the way, this article was posted last May when it was very hard to be a bull:

Dumb Money Sold in May and Went Away

“Led by near suicidal
sentiment among the gold ‘community’, the broad markets recently
embarked on a southerly course as well, culminating with ‘dumb money’
sentiment at very bearish levels in technology, energy, financials,
industrials and on out to commodities.  The last time sentiment was in
such a compelling (contrarian) bullish structure was after the damage
inflicted upon markets by last summer’s acute phase of the euro crisis.”

Flipping the above on its head today…

Led by near pervasive and still-growing
bullish sentiment, the broad market is continuing upward on its course
and is culminating with ‘dumb money’ sentiment and momentum being set to
over bullish levels.  The last time there was such consensus on the
economy and the stock market may well have been in 2000.

“Think about the
election year pattern, think about how wildly bearish sentiment has
become, think about the market’s need to shake out the dumb money prior
to rising and most of all think about how policy makers need to be
perceived as doers of good; as part of a solution, as opposed to chronic
purveyors of an inflationary regime that has been in force most
intensely since 2000.”

Policy makers are not only thought of as part of the solution, they
are revered far and wide in a reverential and growing rabid manner. 
This is the ultimate bull rationalization and it is the underpinning of
confidence (great word) in today’s market.

In July this was written:

Dumb Money Sold in May?

“There are still articles showing up in the MSM
talking about what a good idea it was to ‘sell in May and go away’. 
But the truth of the S&P 500 chart begs to differ.  Yes, it has been
a nerve wracking couple of months, but as of Friday the SPX is above
where all but the most astute of the ‘sell in May’ contingent got out.”

There are now articles showing up in the MSM talking about the Great
Rotation, the Dow’s all-time highs and a new era for the US economy,
which has weathered the Euro crisis and myriad domestic issues as it
continues to strengthen.  All the talk of inflationary policy makers has
gone the way of Goldilocks.

“I do not love this market
by any means.  But I am still long (and profitable) several positions
that were bought down near the lows (Lithium, Rare Earths, a tactical
global fund, a global bond fund) and others in technology and energy
added since.”

Well do you remember how hard it was to be bullish last summer?  Now it is easy to be bullish.  Too damned easy.

“Last week as SPX tested
but did not fail support at the EMA 200, I held, white knuckles and
all.  This market may yet prove that the dumb money sold in May;
especially if the rally ends up going on long enough to drag them back
in again before any coming change to bearish again.”

The dumb money is holding without a care in the world.  

Another post from August:

“Dumb Money Sold in May and Went Away”

“But even if the market
tanks tomorrow and stays tanked, the dumb money sold in May.  Sentiment
structures said so then and ‘price’ says so now.  The big question is
whether or not the dumb money will buy back in setting up the opposite
scenario to May.”

One opposite scenario, comin’ up?  [edit] No comment on timing, see new post.

Biiwii.com

It’s Not Only ‘As Good As It Gets’… It’s Better Than it Gets

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See?  The Dow’s measured target (NFTRH chart) was 14,350.  Today we have jobs, jobs, JOBS!  And the market is up in pre…

dow

Dow, daily chart

Looking around… TRANNY?  On message.  RUT 2K?  On message.  Semi’s?  On message.

Speaking of which, I notice that the semi equipment stocks, which we
noted here as the canary in the coal mine 1.5 months ago indicating
coming economic strength, are diverging from the SOX’s momentum.  Could
be nothing… could be something.  Here’s the big daddy of semi equipment
stocks vs. the SOX.  AMAT led the way to today’s market cheer fest.

amat

AMAT vs. SOX

Biiwii.com

Reality or 1995? (by phantomcapital)

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The question that needs to be asked about this current
market is simply, "is this 1995 all over again or will some sort of
reality take hold?"  The answer to
that question will predict how this market behaves for the next several
years.  While I fully understand why the
market feels like it will not ever go down again in all of human
history (The January Effect), this rally is now pushing the borders of
absolutely absurd.  So I fired up the charts
and took a look under the hood of this current bout of insanity. 

Current Reality

I feel the best way to look at "current reality"
is through the distance from the 200 Day Moving Average on the
S&P weekly chart.  The size of the weekly
chart gives great historical perspective. 
Simply, the mania of the 1990's ended in March of 2000, and since then, the market has had a totally different feel. 

SPX Weekly Chart

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