Buzz Bits: Dow, Nasdaq Fall Down
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Auntie Em! Auntie Em! - Todd Harrison - 12:32 PM
The meltage continues as the S&P takes out Wednesday's low and the banks break the aforementioned support zone. We know the story in tech (Intel, Yahoo, Google), the financials (sub-prime contagion concerns) and the industrials (Caterpillar), as well as the importance of S&P 1540, which is now well in the rear-view.
Energy, which has been a hiding spot, is also on the radar now. Our friends at Deutsche Bank note that the headlines that OPEC may increase production by 500kb/d in September are from the former head of Petroleos de Venezuela (the first time they've seen anyone in that arena make an estimate. That's triggered a downside reversal in crude and could conceivably put pressure on the energy complex.
Remember on Wednesday, we noted that the rotation into energy and metals was a relative positive because in a true malaise, there's no place to hide. I'm not sure how big this news is but if it hits that space, it would be another shift in the DNA of this move relative to the many false alarms we've seen. No chicken little here--just some chicken salad--just wanna make sure you see what I see.
I'm holding onto my S&P put position that I re-initiated, with stops above 1540 (sound familiar?). I don't know about all this "Black Monday" talk but it's academic from a mechanics standpoint. Discipline over conviction goes a long way in tapes like this, especially if this tape goes a long way.
I'm slammed into the afternoon so please forgive my anticipated absence. I hope this finds ye faithful well and that your weekend is chock full of mindful memories. The purpose of the journey is the journey itself.
Position in S&P
Dates, Drops, Disappointments - Jeffrey Cooper - 11:33 AM
The S&P is struggling to hold 1540 and the 154 Spyder strike which was the prior June high.
A break below it targets 1532ish again.
Be that as it may, the patterns do resemble the cycles 1990 top when the DJIA went briefly over 3000 and closed at 2999.70.
This is the anniversary of the Long Term Capital Management debacle in 1998.
My target on The King, Google (GOOG), was met and the ensuing price action shows the power of the Square of Nine chart, which obviously knows nothing from earnings.
Emperor Goldy, Goldman Sachs (GS), has slipped below 210 and is kissing its 200 day moving average(that tells the whole story): what will GS do at its 200 and what will the S&P do at prior 1540 resistance, which should be a floor?
Additionally, the straw that broke the camel's back may be that Caterpillar (CAT), the best performing stock in the DJIA, missed.
What to do with gold? - Lance Lewis- 11:07 AM
Note once again today that the gold complex has a bid despite the selloff in the stock market. As a result, the HUI/SPX ratio (shown in the chart below) is also breaking its downtrend since the May peak last year.
Those that are waiting to buy the gold shares because of fears about the stock market are being left at the station. What many seem to be forgetting is that the historical record shows us that the gold shares can rally (and rally big) despite a falling US stock market if we are in a stagflationary environment, just as occurred in the 1970s.
Click here to enlarge.
The excess "liquidity" (i.e. inflation) that has lifted everything since 2003 is still out there (that's why the dollar continues to decline and the equal-weighted CRB and GSCI commodity index are both making new all-time highs again today). It's just that "liquidity preference" is increasingly driving liquidity away from the US credit markets at present. Whether liquidity has chosen to avoid US stocks yet remains to be seen, but they're next in the avoidance process in my view.
With the credit rot stemming from the subprime mortgage meltdown spreading, I can already hear the Fed's printing presses being fired up somewhere in the distance. Apparently the currency markets do too, because the dollar continues to collapse against just about every piece of confetti on the planet. Even the euro-heavy US dollar index is poised to make a new multiyear closing low today.
Is it a coincidence that gold is up $6 amidst all of this? I don't think so...
Position in gold shares
Homie Alert - Bennet Sedacca - 10:36 AM
Here we go again, with the S&P Homie Index at multi-year support.
Click here to enlarge.
I continue to think it breaks and that the next move takes us from denial to fear to disgust.
There is a Bloomberg story that says the Miami condo market is putting the whole Florida economy at the brink.
Anecdotally, I was talking to a Sothebys real estate broker here in Bigfork, Montana yesterday that told me there is three years of high end supply here. Yuk.
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