echotoall.com Blog

The Vix is indicating an interesting break down from the 50 SMA. Hopefully there is some follow through.

With the credit markets stabilizing, as indicated by commercial mortgage rate declines, hopefully this also suggests volatility in the markets decline. IMO, the chart above suggests this. As volatility goes down, this may allow the markets to rise.

The SP500 has already risen from its lows, and may continue to do so over the next few weeks. However, it is approaching some significant resistance points via SMAs.

We are due for a move to the 62 SMA, as the markets are still oversold within the long-term charts. This maybe that move, with the sense of positive sentiment relief. But there is uneasy resistance around 900 and 950. It may be best to use these markers as points to unload any positions with huge gains from the market lows.)

Happy Gobble Gobble Day. Despite the gloom, there is still plenty to be thankful for… the roof over our heads, the friendships we have, and all the beauty that life has to offer… a bit cheezy, yes, but true.

Been busy the past couple of days… my company went through the other round of layoffs we were all anticipating, and a bunch of my friends are no longer there. On top of that a complete reorganization took place. I still question the strategy. Innovation and ‘out side of the box thinking’ are used too loosely. Companies must understand their limitations, and consequences of the demoralizing effect of actions before acting.

Whatever the scenario, I have been doing a lot of thinking, which destracted me from the markets. I am lucky enough to still have a job, but unfortunately got bitch slapped. There is a hugely demoralizing effect when required to train your supervisor on how to be the supervisor, then get looked upon to lead despite the presence of the new boss. I understand why I am in this situation… I have a habbit of stating reality when I see a wrong or misconception. At the moment, the people in charge do not like reality. (Over the past 6 years I was able to rise so rapidly because I was fortunate to have bosses that respected this fact about me.)

Politics in corporate America is a bitch, but I still think its the best system in the world. (The level of coldness is a needed part of the equation.)

On the bright side, I am seeing bias within the VIX, FXY, and short ETFs (SH and QID) supporting a continued market push upward. As for how far upward, the SPY indicates around 950.

I still think the market at 950 is too inexpensive, but too many investors will start selling at that level.

On a side note… GOOG is trading at 250 with a trailing PE of 15. It is simply too cheap to ignore. Just think about this for a second. GOOG usually trades with a PE over 20. If we are to assume the market is correct, and it is pricing in an earnings contraction to produce a PE of 20, that represents an EPS of 12.5. This is approximately 20% BELOW trailing EPS of 16. So I ask… Will EPS contract by 20% this year? (The worst of the worst online estimates do NOT suggest this, they do not even hint it.)

Simply proves the market is thirsty (really really thirsty) for certainty.

Obama made public his unvailing on Monday, and the market rallied.

It was, and still is, so hungry for certainty.

Here is a long-term chart of the SP500:

So, here we are, a clear double top.  So… whats it going to be? A complete collaspe of the world as we know it, or are our leaders going to get some balls and step up to the plate and save our society?

If the market is to forecast, it is forecasting a decline in society if it continues to decline. Dramatic… yes… Is it true… i hope not.

During the great depression, the GDP decline some 25%, from around 800B to 600B. (Good write up on the Great Depression) Ultimately this caused an approximate 80% decline in the stock market.  From intra day highs (1575)  to today’s low (776) the SP500 has declined 50%.

questions that remain, and what I will try to look into…

1. Are we still flushing out leverage excesses within the market?

2. By how much will GDP contract this go around? (If it is below 25% does this mean the market will stop its decline? In relation to GDP, is the market inexpensive or expensive assuming a reasonable decline in GDP?) 

3. Or will the market continue to decline, signalling the World is going to collapse? (If America collapses so goes the world. I am serious about this. American corporation are indicative of the rest of the world activity. Whether it be sudden or a slow deterioration.  After all, 2012 is an important calendar date w/respect to the ancient calendars concerning the end-of-days or representing a major shift.)

I maybe taking a bit dramatic look at things since today was not a good day in general.  Layoffs and reorganizations were announced at my company, and the market was not kind to me today. (I was safe, but witness the coldness of corporations and the relative stupidity of mid-tier management yet again.)

Anyway, the only thing I want to convey here is that our leaders have to step up and grow some balls. To do whatever needs to get done to save the most productive and functioning society history has ever witnessed, and to continue the path our previous leaders set forth.