Date 8/17/2009
I hope I am not too late posting this if you are into junk bonds. Hat tip to Shaza
If you have not sold ---SELL NOW
Junk bonds broke down today. Cash for this clunker was a good idea for those who got out earlier this month on my call. This signals the possible entry of the next phase of the credit crisis...which MSM has been hailing as over. As Queenbee sarcastically pointed out, all the chatter by MSM is a good contrary indicator.
Cash is still King in a deflationary depression if you cannot be a nimble a trader. If you missed the rally, stay in cash and let the tape tell you if this is a correction or a resumption in the bear market. Government bonds are returning some of the yield, the gold silver ratio is rising, gold price is falling , the dollar is rising and the Fed has no room to lower rates. The Fed can debate over 25 basis points that are left in the till, but give us a break! If the markets do test the lows of the last 12 months, the Fed has nowhere to go with rates. Things should start to get pretty interesting if the FED panics again.
This is adding up to a massive RED Flag.
If you have not sold ---SELL NOW
Junk bonds broke down today. Cash for this clunker was a good idea for those who got out earlier this month on my call. This signals the possible entry of the next phase of the credit crisis...which MSM has been hailing as over. As Queenbee sarcastically pointed out, all the chatter by MSM is a good contrary indicator.
Cash is still King in a deflationary depression if you cannot be a nimble a trader. If you missed the rally, stay in cash and let the tape tell you if this is a correction or a resumption in the bear market. Government bonds are returning some of the yield, the gold silver ratio is rising, gold price is falling , the dollar is rising and the Fed has no room to lower rates. The Fed can debate over 25 basis points that are left in the till, but give us a break! If the markets do test the lows of the last 12 months, the Fed has nowhere to go with rates. Things should start to get pretty interesting if the FED panics again.
This is adding up to a massive RED Flag.
29 comments:
Hello everybody,
Been away for a bit, hence no comments. re imminnent market crash or not, i think trader mike absolutely nails it ie the trend is still intact. This is worth a read:
http://tradermike.net/2009/08/august_17_2009_stock_market_recap
Hi Mugabe, the trend is in tact but JNK is signaling a shakey tolerance to risk. IT is bouncing around...in/out etc
Crash is not imminent, but red flags abound...JNK is one
My JNK call made 40%,,,let's not get greedy! LOL...There is too much risk to buy JNK after 40%
hmm ... the trend is your friend. and the advance decline line is still very healthy
http://stockcharts.com/charts/gallery.html?$NYAD
I am still long but would have no quarrel with someone who is out and waiting. what i diagree with is the assertion that the only valid position is short (an opinion i hve seen expressed in the comments section). I just don't see how you can think that by looking at charts. A
I am looking at V Vest..they have a market neutral. Buy Sell Ratios are declining, this is over 2 weeks. I am in the prudent camp for now. Trend may be up, but nothing is straight up like JNK for example. Correction yes, crash no imo
SHORTS still getting eaten..SHOrT? No
Mugabe welcome back you have been missed. I posted this article two days late. I am barely able to keep up as I work full time and have a full time relationship that often suffers as a result. I am in STEC which is a solid company, but I bought in late. I need to break the resistance at 6.50. I am not in bonds at all so what they do doesn't matter to me. I am just the blogmistress.
re JNK, so far looks like a normal correction to me within an upward trend. this was the first time it was overbought on the weekly RSI for over a year and a half, so a bit of retrenchment was to be expected:
http://stockcharts.com/h-sc/ui
the trend is still intact imo.
so far i don't see any massive warning bells on the big picture chart.
queenbee, your contribution /management is more than appreciated! we all owe you a debt of thanks. and post when you like! don't feel it HAS to be daily (imho).
Everything is mislabeled. Even a lot of investment grade is junk. Anything without a fedres or fedgub guarantee is suspect. I can't imagine how bad HY junk which is actually called hy junk could be.
[JNK top 25 components]
Actually not as bad as I suspected. Still, an ETF? You could be stuck in that fund for a long time if the fund share price plummets.
Big correction on my earlier post on STEC Simple Tech. The resistance is at 36.50 not 6.50. The stop is at 27, but being conservative and buying at 36.25 I put in a stop of 31.00.
Edgar, funny you say that! I was just talking to someone and we agreed it is all junk! Some is just junkier than others.
Maybe it should be labeled : Bank Junk Bonds and General Junk!
Mugabe, this was an interesting take re Shangahi Market ( also JUNK):
Beginning of a fall
''We have been watching developments on Shanghai exchange closely,'' said HiFX senior consultant Derek Mumford, who pointed out that Chinese equities had been a leading indicator for the collapse in global growth at the end of last year, as well as the modest recovery in growth in the second quarter of this year. Continued…on smh.com.au
Queenbee - One post a day is all that's needed (with weekends off if you like) and if there are days when you don't post it doesn't matter. Too many posts means broken threads of discussion on the comments board. Quality beats quantity!
mugabe - You are right to read the JNK tape the way you say but the sell call is predicated on another major liquidity crisis - back here on one of Shaza's earlier podcast posts:
http://commoditywatch.podbean.com/2009/07/30/using-history-to-predict-the-future-bob-hoye/ -
from 06:00 for a couple of minutes.
Ok I am only going to post one a day and always take Sunday's off. After all we have the blog list and links to read and I think I have put together the best of the best. Anyone who wants to can let me know to add another at any time.
Queen, don't knock yourself out. Take some time to relax. It's August, most "investors" are on their boats right now, not staring at monitors. A healthy mind and body will improve your trading as well. A clear mind makes better decisions.
We can easily get information overload these days. Even if you only stuck to your list of fave Blogs, by the time you get to the end of the list they all have new posts and you would have to start over at the top.
I read extremely fast, skim thru much, and I still can't keep up. I used to read 16 hours+ a day on financial, economic and trading websites, and I still could not read everything I wanted to.
You have to filter the quality from the quantity, somehow. There are simply not enough hours in the day or week to do it all. Never mind if you want to have a life on the side too.
One of the best traders on Bill Cara's Blog, a guy who posts his trades and seems very profitable, says he has limited himself to 30 minutes a day on the PC reviewing his portfolio and making trades. Stops take care of the rest, he is not watching. He sticks to his little area of specialty, with just a few stocks, and with only a few of the same repeated strategies, that's it. Something for all of us to aim for.
Shiny metals: this year it seems the seasonal pattern is holding true, but about 3 weeks later than usual. If this holds, we are due for a dip in precious metals that will last to mid or end Sept. See this 40 Year composite seasonal silver chart, it looks like we are with the red line, but a bit delayed. So a 'buy' on long silver will be coming in mid-Sept, give or take. You can follow the gold/silver ratio for a cue as well, it will top out somewhere in the mid 70's at a guess. The Sept 'buy' will be for a short-term (2-4 week trade), as I would expect precious metals will decline with most other asset classes (with US $ strength), when the almost inevitable Oct/Nov equity decline season comes along.
RE: JNK with div yeild or 12.9% and a gain of over 40% in such a short time is a sell for me, hold if you wish, but the red flag is still up on the credit market with risk being a little in your face right now, esp as the after hours trading is holding up the numbers at this point.
gold Silver ratio is creeping back up too that is also a red flag...maybe yellow at the ratio of 68! LOL
[SHLD on the "down" elevator?]
INO has a good video on NAZ, if you are in the NAZ, not to be long at this point..
By the way, I rec this site.
Aug. 20 (Bloomberg) — Corporate defaults worldwide rose in 2009, surpassing the number for the whole of 2008, Standard & Poor’s said in a report today.
A total of 201 issuers defaulted through Aug. 12, affecting $453.1 billion of debt, S&P said. That’s up from 126 defaults totaling $433 billion for all of last year, the report said.
I wonder how many were rated investment grade?
Here is the INO site with NAZ video, I use this site a lot!
http://broadcast.ino.com/education/nasdaq817/
Edgar, re IG BONDS, I guess they were rated according to if they threatened the ratings agency to withdrawal their fee for being rated AAA! LOL
Rating remains a big fat joke until the companies being rated do not have financial contracts attached to the agencies!
The whole thing fits right in whit the rest of the scams!
Mugabe, my son brought me back the most beautiful painting and pottery from Morocco. But alas, nothing from Spain! Shaz
Props to your son. You get more bang for the buck in Morocco. Good example of frugality. Mish would be proud of him.
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