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Simon's The Sky is Falling Thread - Page 19

post #361 of 568
4/4/10 at 4:42pm
Thread Starter 
Quote:
Originally Posted by qu4rk View Post
Not much historical correlation between 30-year yield and the market. Am I missing something here?
This is not a black and white situation where every time yields do this, stocks do that. Rising yields can be a sign of economic expansion, but that's not the case this time. US debt issuance and supply and demand are dictating the rally in yields right now, and this is pretty much mother market's way of rebalancing things out.
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post #362 of 568
4/4/10 at 5:32pm
Thread Starter 
http://globaleconomicanalysis.blogsp...s-cooking.html

hxxp://www.ben zinga.com/193861/higher-yields-lower-equities

That last link is blocked by the site here, so change the hxxp to http and get rid of the space between ben and zinga if you want to check out the article.
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post #363 of 568
4/6/10 at 1:52am
From seeking alpha today. BTW the chart mentioned in the 1st paragraph is the 10 yr chart that has been posted several times:

http://seekingalpha.com/article/1971...ond-breaks-out

"Borrowing costs are going up, and this chart says they're going up a lot - like 200 basis points within the next year or so on mortgages and 10 year Treasuries.

Key to the thesis of Bernanke (and essentially everyone else) that this "V-shaped" recovery could take hold and be sustainable - instead of being a false dawn - is the premise that mortgage rates would behave.

Bernanke's thesis, in fact was that he could cap 30 year money at 4% or less to prevent home price devaluation.

Well, now the 10 year bond is back where it was before the collapse. That's good, right? Well, not really - because it means that 30 year money (mortgages) will start backing up shortly and prices on existing Fannie (FNM) and Freddie (FRE) (along with other long-duration) paper will start falling.

The target on this breakout of the inverted head-and-shoulders is 6% on the ten year treasury, and approximately 7% on 30 year mortgages. As of today's pricing (about 5% on that same money) we can back into the home price impact quite simply; the hypothetical $200,000 house will be devalued to $161,644.55.

That is, the same payment that today pays down a $200,000 mortgage will only pay down a $161,644.55 one.

The time on the full expression of this target is one to two years hence, although it can occur sooner. The reliability of this sort of pattern is extremely high, and remains valid conditionally even with a drop back to 3%, and is not invalidated unless the ten year were to get down to 2.03%. Neither is likely.
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post #364 of 568
4/6/10 at 2:18am
Somin, the treasury yields and the 10yr chart are the subject of a lot of articles and chatter right now. Here is an interesting one. This economist says that stocks are way underpriced vs earnings




I called Simon "Somin"

Dyslexics untie!
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post #365 of 568
4/6/10 at 2:32am
Thread Starter 
Oil is right now in the early stages of a pretty big breakout. In Vegg's article he posted, it discussed how rising yields will affect mortgages, and now on top of that we're looking at another tax in the form of oil breaking out. Let's just say that the recovery had better be pretty dang strong to overcome these 2 events.
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post #366 of 568
4/6/10 at 2:39am
Oil is advancing on the perceived recovery of the word-wide economy. Expect it to continue upward as the economy continues to recover from the Great Recession. As goes the US economy, so goes the world economy and vice versa.
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post #367 of 568
4/6/10 at 3:23am
Simon, I have only traded for a year so I don't have the perspective you have. You're looking at things that might happen years from now and I am just trying not to be a bag holder today.

I am enjoying this thread because it has made me read about bonds, which I have no interest in at all. The 10year treasuries are a popular subject so I think that after reading a lot of articles on them I might actually learn something about them. Someday that knowledge will probably be useful to me

I heard a brain doctor say once that the best way to avoid Alzheimer's is to always be learning.
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post #368 of 568
4/7/10 at 7:09pm
Thread Starter 
Quote:
Originally Posted by simonyadig View Post
I think something's gotta give soon, and we're at a point here where I think everyone should be on alert for a major topping pattern/ sell signal. Here are the two scenarios that I am really watching out for.

Double top: Where we top out somewhere near the January peak. It may go a bit higher to trap some bulls, but as long as it tops somewhere near it, it'll still go as a double top candidate. The trigger on any double top setup is when you get a convincing break below the lowest point point between the two tops. A close below that green line on the weekly chart would be official in my book.


Head and Shoulders top: I think I am leaning towards it playing out somewhat like this. I think the market is likely to still push higher, which would change the sentiment to being even more bullish, and it would be ideal for putting in a major top. There is also still a bit of a gap still unfilled, and should it get filled, that would put the price right at the weekly 200 MA resistance.



This is a weekly chart, so playing a trade off of it would mean a longer term timeframe and giving it some room to move against you, if not average in (depending on how you play it). One option is to average into a position as it tests resistance (which would vary depending on if you anticipate a double top or not), and the other option is to just let either scenario play out, then take the trigger. You will not be catching the tippy top with the latter method, but you also won't be tying up your money and your chances of success are better.

Even if you completely doubt we're heading for a second dip, there is no harm in just watching for an obvious topping pattern play out and then trigger. If it does, at least you won't be caught completely off guard. GL, and for anybody whose retirement is dependent on the stock market not crashing, be very cautious here.
Still have a chance for that head and shoulders (second chart) to play out here.
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post #369 of 568
4/7/10 at 7:14pm
Thread Starter 
Quote:
Originally Posted by veggrower1955 View Post

I heard a brain doctor say once that the best way to avoid Alzheimer's is to always be learning.
I've heard this too. You need to exercise your brain just like the rest of your body, it makes total sense to me. If you don't use it, you lose it. Why would your mental capacities be any different than everything else.
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post #370 of 568
4/7/10 at 7:19pm
Quote:
Originally Posted by simonyadig View Post
I've heard this too. You need to exercise your brain just like the rest of your body, it makes total sense to me. If you don't use it, you lose it. Why would your mental capacities be any different than everything else.
ive heard this from when i was a little boy. The phrase which also comes from this is.. TV rots your brain.. its better to read and exercise it than sit there on auto pilot in essence..
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post #371 of 568
4/7/10 at 7:39pm
Quote:
Originally Posted by mjoke View Post
ive heard this from when i was a little boy. The phrase which also comes from this is.. TV rots your brain.. its better to read and exercise it than sit there on auto pilot in essence..
it might not be true. some scholars got Alzheimer's disease too. They have been using their brain more often than us.
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post #372 of 568
4/7/10 at 7:44pm
Thread Starter 
Quote:
Originally Posted by tlee418 View Post
it might not be true. some scholars got Alzheimer's disease too. They have been using their brain more often than us.
Well it may not be the end all cure all, just like physical exercise won't prevent your body from breaking down at times or in certain cases, but that doesn't mean it's not incredibly beneficial and preventative in fighting brain diseases.
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post #373 of 568
4/7/10 at 7:47pm
I've been loading up on those long term spy puts the last few months...
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post #374 of 568
4/7/10 at 8:06pm
Quote:
Originally Posted by simonyadig View Post
Well it may not be the end all cure all, just like physical exercise won't prevent your body from breaking down at times or in certain cases, but that doesn't mean it's not incredibly beneficial and preventative in fighting brain diseases.

I should expand on my comment a little. The Doc said you need to learn in subjects NEW to you. So if I just kept reading books about growing vegetable, or soil science that is not the type of learning he indicated would ward off Alzheimer's. Now, my reading about treasuries, which I know nothing about, and learning how to trade stocks should help my brain stay healthy.
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post #375 of 568
4/7/10 at 8:22pm
Quote:
Originally Posted by tlee418 View Post
it might not be true. some scholars got Alzheimer's disease too. They have been using their brain more often than us.
Could be a link to alzheimers & the start of the use of aluminum cans.....I only drink bottled beer.

Anyhow, hopefully, this market starts to correct soon. Vix is hitting VERY low right now....sign of things to come.
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post #376 of 568
4/8/10 at 3:04am
Quote:
Originally Posted by veggrower1955 View Post
I should expand on my comment a little. The Doc said you need to learn in subjects NEW to you. So if I just kept reading books about growing vegetable, or soil science that is not the type of learning he indicated would ward off Alzheimer's. Now, my reading about treasuries, which I know nothing about, and learning how to trade stocks should help my brain stay healthy.
Next read...might I suggest Karma Sutra?
Works more than just the brain. HAHA
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post #377 of 568
4/8/10 at 3:44am
Quote:
Originally Posted by MC View Post
Next read...might I suggest Karma Sutra?
Works more than just the brain. HAHA
Way ahead of you on that one, MC It is best read with a close friend
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post #378 of 568
4/8/10 at 3:52am
so first day in awhile we had a sell off that hit -122 points. did get a little excited. kind of bored being in this overbought territory.
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post #379 of 568
4/8/10 at 4:07am
Thread Starter 
Quote:
Originally Posted by trendtrader89 View Post
so first day in awhile we had a sell off that hit -122 points. did get a little excited. kind of bored being in this overbought territory.
I hear ya, slow melt up = low volatility = not much fun.
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post #380 of 568
4/15/10 at 2:07am
Thread Starter 
Now this is what I'm talking about, none of that slow melt up garbage. Tops don't form from slow steady gains, they form after irrational exuberance has run it's course. I want to see more of today's action and then some, the current level of bullishness and especially the complete confidence people have in the assumption that we've recovered is pretty much an ideal scenario for capitulation and a top. The steeper this goes, the more dangerous it gets. Let's get nuts!

Disclaimer: I am very short the market on a long term basis (at very minimum the next couple years) but short term I do not recommend trying to step in front of a runaway market and peg the top. Most of you guys are short term traders and so am I, the main difference is once this move is done, I think we're going to be back to playing the short side for quite a while. Until then take advantage of the momentum while it's there, especially in the micro and small caps. They've been especially nuts.
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