You Need A Sense of Humor...
You have to have a well-developed sense of humor to be a trader in this market. You can't take serious stuff too seriously.
You know the place where nothing is real
Well here's another place you can go
Where everything flows
- Glass Onion (The Beatles)
I wish I could say something that would make sense about Wednesday's action. I wish I could say something intelligent about the DJIA down nearly 200 points that rebounds to unchanged. Based on a bogus rumor about a Fed discount rate cut prior to next week's FOMC meeting.
I wish I could say something intelligent about the Fed refusing to speculate about the rumor. But I guess its hands are tied. Tied by the same string it is pushing on? Just askin'.
You have to have a well-developed sense of humor to be a trader in this market. You can't take serious stuff too seriously. You know, serious stuff like your financial well-being, recessions, the degradation of the dollar (there goes that summer vacation to the Riviera), and the degeneration of the capital markets from an investment/trading market place to more of a cesspool of a casino.
Hey, capital, cesspool, casino, it's as easy as A-B-C to make money. Let's keep this thing simple, folks: Everyone knows all you have to do to make money in America is buy bottle rockets in front of earnings and buy every plunge and you will be rewarded and be able to retire by the age of forty. It's our birthright.
Everybody knows that all you have to do if it's raining daggers in Tapetown is put up an umbrella of bids. Better hope that umbrella is titanium if we get a close below Monday's lows.
The Peril at Merrill (MER) is a $3 bln write-off. No, it's a $7 bln write off. No, it's back to $3 bln. But, wait there's more. It's not $8 bln. It's precisely $7.9 bln. So I'm wondering, how do you know how much to write off if you can't price the suckers? As Senator Everett Dirkson said, "A billion here, a billion there, and pretty soon you're talking about real money."
Cesspool Casino Capital flow... it rolls off the tongue like the cacophony of cash careening from one corner of the globe to another at the click of a computer while the crowd clamors for another rate cut.
That clamoring amongst the longs caused covering on Wednesday, as in short covering that catapulted stocks out of the chasm.
Are you a believer yet? Has the buy the dip mantra gotcha yet? Have you been proselytized to yet? Because that's Hoofy's thing--- he just stares you down until you blink.
You absolutely, positively have to have a good sense of humor to appreciate how far a rumor can run stocks. You've gotta wonder where on Earth it may have emanated from and where the basket programs that "legitimatized" it hailed from. Trust me, we'll never hear another peep about it. They deal from the bottom of the deck... that's how they roll - with loaded dice.
It's Wail Street Resorts: there are no clocks on the walls, money doesn't sleep, as Gecko offered, it's Churnem, Burnem and Howe, Incorporated. And they make the Dukes look like pikers.
You float a rumor about a pre-Halloween discount rate cut and then unleash buy side basket programs. Yeah, as the Dire Straits song goes, "that ain't workin, that's the way you do it... get your money for nothing and your chicks for free." Rock and Rock Investment Bank.
But the powers that be are trying to fight a trend that is inevitable and unavoidable. In a nutshell there was an unprecedented credit expansion in a no risk environment. However, credit is now contracting globally. Even the Bank of England acknowledged on Wednesday that risks to the financial system have risen since the summer.
To think that a simple adjustment, a tweak, or even a Shock and Awe dueling banjos by Hank and Ben can resolve the issues at hand when the housing market is the weakest in a generation, while a credit crunch persists, while as Morgan Stanley economist Stephen Roach contends "the U.S. consumer is toast", seems to be the short straw. Don't you think?
And although much of the bullish sentiment hangs its hat on the Global Growth story, in reality the buyer of last resort of goods is the U.S. consumer. If the U.S. consumer is toast then the Glo-bubble paradigm should lose some of its bouquet. Don't you think?
If you gaze through the looking glass, when the layers upon layers of derivatives and debt and excess at the heart of this love story are peeled back it could make one tear.
When the onion is peeled back it could stink up the joint and send shards of more irrational behavior rippling through the markets. You know, the place where nothing is real.
Click here to enlarge.
This is what occurred at the July 12th "Breakout", A, and the October 11th Breakout 90 degrees in time later.
Click here to enlarge.
Many times I refer to the Wheels of Time and how time determines trend. Note how each time the Daily Swing Chart or Trendline Chart had turned up since the High Day Reversal, X, that it has defined a high at points. A) October 15th; B) October 17th; C) October 23rd
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