Tag Archives: stock market

Moody’s does it again. Affirms India, Downgrades World

Truly an India Shining update, Moody Affirms India outlook as stable, downgrades world, bank stocks rallied last week, and market participants said rating agencies were irrelevant in the face of global chaos that is underway, does this signal a short on a positive or stable rating, and a long on a downgrade?

NEW DELHI–Moody’s Investors Service said Monday it is maintaining its “stable” outlook on India’s sovereign rating as the growth slowdown and deteriorating business sentiment in the economy are likely to be temporary. The decision would give the Indian government the much-needed respite as it faces heat due to a cut in outlook to “negative” from “stable” by Standard & Poor’s in April and by Fitch last week, reflecting fading investor confidence triggered by worsening conditions in the economy.

http://www.marketwatch.com/story/moodys-affirms-indias-outlook-at-stable-2012-06-25

Moody’s downgrade gives edge to safe-haven banks
Major ratings downgrades by Moody’s will further divide the world’s biggest banks based on their strength and access to cheap customer deposits. The ratings, released Thursday by Moody’s Investors Service, gave a competitive advantage to “safe-haven” banks that fund themselves with stable, low-cost customer deposits, while worsening the outlook for weaker banks that rely more on capital markets for their funding.
http://business.asiaone.com/Business/News/Story/A1Story20120625-355113.html

The Loonie has broken to the downside and Yen is capped around 83.45.

The Loonie has broken to the downside and The dollar  is capped against the Yen at around 83.45, And whereas it looks like the bounce levels for CHF at 0.91 figure and EUR at 1.3245 appears near conclusion. Am not sure, if these breaks and  if it does, there is more upside for the currencies and more downside for the dollar, against the CHF and the EURO. {Targets CHF 89.60 / EURO 1.3455 levels}

This break above 1.3245/0.9100 {below} is required to provide confirmation that the US stock market rally is extending, and targets Dow 14000/1450 SP. In such a scenario, the currencies also extend and the recent weakness in the JPY can see it take out 83.50.

About 83.50 on the  JPY puts 85.50 into target, a key resistant level, whose break is required to provide evidence that the move for the USD towards 92-94 YEN is indeed underway. The JPY is the only trend at the moment that looks extremely healthy and with the most potential,  The bottom right, as expected, now for the larger big move, we have been waiting for will present itself in the coming weeks.

Only, If the bounce concludes, for the EURO and CHF and there is a reversal, JPY trend trade could be in danger as we shall see a lower stock market and cash moving back into safe havens, which the YEN has lately demonstrated a few times, as it inverse relationships to US stocks takes hold.

In the longer term, been parked in the dollar will look better than stocks, which are now over extended and there has been some substantial damage done for the bears, none are to be seen, the VIX has been crying out aloud.

Stocks may be poised to go crazy to the upside and it could be relatively fast and furious, with 14000 within weeks, and the SP 1450 in sight. Good levels to position to jump in on the turn around.

Never forget the short squeeze of the late nineties, The Nasdag went from 1000 to 5000 in a relative short period of time. Yes!, the Nasdaq gained close to 500% in a relative short period of time. 15 months {Oct 1998 to March 2000 bust). We could see a repeat here.

The stock bulls are pushing it once more again, very soon some juicy steaks will be on the table.

The New Trends

The New Trends – 1st Quarter 2012.

Lets analyze what are we witnessing thus far.

1. In the previous quarter, consumer spending was still bid based on availability of cheap deals and deal based sites were the master of the day, it seems the deals sites in the current interim have now started to bleed, with lack of availability of any new loss making deals, which didn’t go well with merchants and with reluctance of merchants and retailers to go down this path, the deals have not only dried up, as they realize the very little value additions by deals based websites to their business.  Case in point, low numbers of groupon and various other deal sites.

The consumer is more cautious and will not pay for anything that he doesn’t need and involves in extensive research in an event he needs anything, be it a product or service. A tight market in general, with uncertain conditions, inability to determine tomorrow. Therefore save for a rainy day, mentality presets.

2. Volume has never been so bad in the markets, bearish bets have declined to almost a five year low, with the Vix breaking down below 15 yesterday, the same remains with retail sales figures across most markets, yet somehow government reports differ, on the dry bulk market, shipping is in a very bad shape.

The above two factors are sufficient to suggest that growth is missing in this stock market rally and till that is fixed, it hard to see how else will the situation turn around.

As we head towards the opening month most…

As we head towards the opening month, most likely which will set the tone for the rest of the year, I would look at two scenarios before the significant bearish move to the downside.

Scenario no 1. This opening week will create a top in most of these markets and a resumption to the downside. The dow is up 2% today, and oil, gold, a few percentages as well. The euro seems confident. In Scenario no 1, we expect the markets to have or already have made a top today and allow the market to grind this entire week, before a break down on Friday. Which means the highs are already behind us today, or there is another one more attempt left to the upside, in either case, we expect a reversal back to pre holiday levels by Monday.

Which means continuation of the dollar to the upside and a RISK OFF attitude back in the markets.

In Scenario No 2. This market continues to the meltup and top off sometime in March and then we break new lows and even lower lows than last October 3, which if anyone has noticed was almost 22% away. The market has rallied much more.

My own bet is on the RISK OFF trade.

HERD MENTALITY

HERD MENTALITY

DynamicTrader.org/Nov 15 2008/       In today’s day and age, the most important socialnomics lesson is Herd Mentality. We simply can’t have enough of what the next individual is doing. The place to start to understand our affliction is in the stock markets.We simply can’t stop creating enough Bubbles.

The Subprime Crisis first made notoriety in August 2007, at a time when bullish indicators were already at the extreme. However, despite the subprime announcements and fears from industry veterans and hedge fund professionals (George Soros, Buffet, etc), the market defied all odds and continued to move to new highs. In October 2007, so bullish was the herd that they convinced the “best traders of all times to go long”. Temasek and various sovereign funds went long in the face of adversity, calling it a trade of a lifetime.

Here was a pattern emerging: “How the best traders of the world were making the worst trades of their times”. Similarly, this has happened before and always will – in end 1999, just by the DotCom Collapse, when Tiger’s Fund Julian Robertson, George Soros and even Value Warren Buffet went long tech stocks before their demise, after being short Nasdaq in general for three years in a row, this pattern of Herd Mentality is so strong that in 1998, the Monetary Authority of Singapore and Taiwan’s Central Bank publicly announced that they were moving most of their reserves from other currencies into US Dollars. This is when they initiated long carry Yen traders at 130/145 ranges just two weeks before the Great 20% Collapse in US/JY to 90 Yen per Dollar. So it isn’t surprising to note that this time around, they are caught on the wrong foot again.

It is this Herd Mentality that makes conservatives into extreme gun-slinging, risky, adventurous traders, and this change in perception is created by a very strong emotion known as greed. Society tends to create hidden benchmarks of expected performance from a fund/trader/investor/individual. This benchmark is usually driven by GREED or FEAR; fear of losing out to the next and greed of making more than the next. HOPE only kicks in when either of the perceptions go wrong. So in emotional studies, it would be that hope is the consolidating phase before the turn back into fear or greed.

Just as the markets are flirting around with the lows, a look at the charts of the DOW/SP/Nikkei or any of the world indices clearly demonstrates that consolidation is underway. We have not had significant lower low, lower highs for the past three weeks, but rather a swing up to the highs and a swing back down, on both sides. There is fear – fear of losing out a bottom, fear of not having enough cash during the down turn. Interestingly the market closed midway of the week, suggesting hope that the G20 and the weekend will bring about some relief.

Somehow it seems that the herd is dumb, stupid and has no mind of its own. Emotions run so strong that the animals don’t looks up and see the reason of running – they do not know the reasoning of the run. Is it to a slaughter house or towards greener pastures? One thing however is sure – the only way to profit from the markets is through contrarian approaches. In all probabilities, 80% of the time, results should end up favorably albeit at times after a prolonged wait. But the nearing turn always comes when the “best traders of all times initiate the worst trades of all times” and you don’t have to worry, they usually announce their trades with a Big Bang!

Recent Announcements:

  1. Fed Bailout 700B (BEARISH)
  2. Buffet says buy American (NEUTRAL)
  3. Jim Rogers, Long Commodities, China. Short US (Analyst view not fund)

Notes:

  • Of the above, it seems Jim has three options open and as usual, he will emerge in time to call his trades Right.
  • Fed changes plan of not investing in Toxic assets anymore. They seem to have seen the light!

Good luck investing!!!!

DTRADER

Socionomics – Introduction.

Mr Robert Precther over the years has contributed enormously to the studies of waves, Eliottwave as they are known and the importance to Fibonacci numbers and how they relate and how they are ever present within science, cycles and even biology.

In this new documentary he explains the importance of Socionomics, which mainly states that its how the sociology mood of the general population that contributes to great booms in the economy and not the other way around. In essence if people are feeling down, the stock market will collapse, its not that people mood swings create stock market crashes.

This documentary tries to explain this ground breaking theory and research. It is in fact in line with the vedic studies of the past, for people who believe in spirituality, this should come as of no surprise.Watch the documentary and make your own conclusion. Very interesting stuff.

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