No way are stocks selling off in Sept

I agree that the economy is far better than the media likes to pretend. There are plenty of factors that could cause a blow up. A real estate implosion is one. The air has been coming out of the real estate bubble for a year now, but at some point it could turn ugly. Commentators point to tons of ARM's coming upfor reset or interest only products having to be rolled over as potential traps. Who knows, probably we'll muddle through that OK.

The history of Fed rate hikes is not reassuring. Typically the market is heavy after the last Fed hike. Of course, the reason for that is that typically the Fed has put the economyinto a recession, which so far, has not happneed.

The midterm elections could be a wild card. Without being overly partisan, I doubt the markets would be thrilled by Democrats taking over one or both house of congress.

Iran, Iraq, Lebanon and North Korea could blow up at any time.

September and October historically are the two worst months for the market.
 
Tell me that even a plurality of the cash on the sidelines is tiring of 5% CDs, treasuries and money markets, and I'll buy twice the volume I did last month...


...maybe three times.

When human nature (greed) takes over, that cash will come into the markets and propel them higher.

But the market has to validate itself first.
 
NEVER SAY...."No Way" in trading!!!

ALWAYS expect the unexpected, and then you will not be surprised when "no way" happens right before your eyes.
 
Quote from DeepFried:

I'll bite and take the bear side.

-Growth is lower but strong at 2.9% GDP,
If growth is strong, the fed will continue raising rates. If a slowdown occurs, then growth isn't strong.

-Fed appears to have stopped hiking rates and some are saying they'll cut rates next,
I don't know when "next" is. Fed Funds have a pegged an all-but-zero chance of a change in interest rates through December. But, the same argument as above. Is growth is strong, the fed will raise rates. If growth is weak, then they'll cut rates, but that means the market should be weak as well.

-Unemployment and inflation numbers are good,
"The trimmed-mean PCE index has risen at a 3% annual rate in the past six months, the fastest growth since June 2001. The index has risen 2.7% in the past year, the same as in June. On an unrounded basis, however, year-over-year core inflation is at the highest level in 14 years. On Wednesday, Dallas Fed President and FOMC voter Jeffrey Lacker said the trimmed-mean PCE indez is the best gauge of underlying inflation."

Highest in 14 years? Highest/6 months since '01? You really want to call these numbers "good"? :-)

-We're coming out of a period of extreme, intense pessimism through the summer,
I don't know how to measure that, so it's hard to respond. Historically, September is pretty extremely pessimistic.

-Oil and gasoline prices are dropping,
From "insanely high" to just "amazingly high". A retracement from $80 isn't a resounding recovery. $80 isn't all that far from 1979 inflation-adjusted highs, and we know what happened after '79.

-N. Korea and Iran are relatively quiet,
Really? What news have you been reading? :-) Iran is going to continue to develop their nuclear program. Bush is going to push the UN to do something. They won't. Bush will act unilaterally. I swear this happened before... If only I could remember when, and with which president...

-A lot of people have already positioned shorts for Sept....
Actually, peeking at the Commitment of Traders report, non reportables are seriously long the S&P. Non-commercials and commercials are both net short. We all know which side is *always* wrong.

Unless I'm wrong.
Ditto!

I just think there's a good argument against. :-)
 
Quote from AAAintheBeltway:


The midterm elections could be a wild card. Without being overly partisan, I doubt the markets would be thrilled by Democrats taking over one or both house of congress.
More...

I strongly disagree.
Republicans controlling everything (as they currently do), results in <b>far more</b> government meddling/statism damage to this country. <b>Gridlock</b> would be a welcome relief compared to this.

When the politicians are stuck fighting each other, they have less power to oppress the people. Maybe Joe sixpack doesn't get this concept, but I bet the smart money understands it perfectly...
 
Quote from FullyArticulate:

Quote from DeepFried:

I'll bite and take the bear side.

-Growth is lower but strong at 2.9% GDP,
If growth is strong, the fed will continue raising rates. If a slowdown occurs, then growth isn't strong.

-Fed appears to have stopped hiking rates and some are saying they'll cut rates next,
I don't know when "next" is. Fed Funds have a pegged an all-but-zero chance of a change in interest rates through December. But, the same argument as above. Is growth is strong, the fed will raise rates. If growth is weak, then they'll cut rates, but that means the market should be weak as well.

-Unemployment and inflation numbers are good,
"The trimmed-mean PCE index has risen at a 3% annual rate in the past six months, the fastest growth since June 2001. The index has risen 2.7% in the past year, the same as in June. On an unrounded basis, however, year-over-year core inflation is at the highest level in 14 years. On Wednesday, Dallas Fed President and FOMC voter Jeffrey Lacker said the trimmed-mean PCE indez is the best gauge of underlying inflation."

Highest in 14 years? Highest/6 months since '01? You really want to call these numbers "good"? :-)

-We're coming out of a period of extreme, intense pessimism through the summer,
I don't know how to measure that, so it's hard to respond. Historically, September is pretty extremely pessimistic.

-Oil and gasoline prices are dropping,
From "insanely high" to just "amazingly high". A retracement from $80 isn't a resounding recovery. $80 isn't all that far from 1979 inflation-adjusted highs, and we know what happened after '79.

-N. Korea and Iran are relatively quiet,
Really? What news have you been reading? :-) Iran is going to continue to develop their nuclear program. Bush is going to push the UN to do something. They won't. Bush will act unilaterally. I swear this happened before... If only I could remember when, and with which president...

-A lot of people have already positioned shorts for Sept....
Actually, peeking at the Commitment of Traders report, non reportables are seriously long the S&P. Non-commercials and commercials are both net short. We all know which side is *always* wrong.

Unless I'm wrong.
Ditto!

I just think there's a good argument against. :-)
More...


Quoted just because it is so well written, and the rationality is brilliant.
 
fully articulate excellent rebuttal. your answers are the truth. the other answers are what the media has spun. who wins out? time will tell
 
FullyArticulate is right on the money.

Deepfried I have to disagree. These markets will top out soon, when everyone gets extremely bullish saying dow 12000 dow 12500 etc there seems there could be a top in place.

I'm bearish and will back it up with this:


Inflation is still on the rise, one month of CPI and PPI showing tamed inflation does'nt mean a thing. Maybe after 3 or 4 months of inline data from CPI and PPI would change things.


The federal reserve has paused, this doesnt mean they are done raising rates. 6% is certainly possible by end of 2006 early 2007 if inflation shows in key reports. And if the Federal Reserve decides to start cutting rates it only means one thing, a slowing economy is on the way.

The cease publication of M3 data!!!! hmmm I wonder why??????


In October of 2005 bankruptcy laws changed making it more difficult for struggling debtors to hold on to houses and other assets.

January 1st 2006, Credit Card Companies doubled thier minimums.

America in unbelievable debt!!!

Savings rate in AMERICA IS NEGATIVE!!!!!!!!

Latest data shows that we have a -0.7%. savings rate!!!!!!!
One reason for the low savings rate is the lure of credit cards.
The biggest reason for our poor savings rate is that people have been borrowing against their HOUSESSSSSSSS!!!!!!

Cash-out refinancings and home-equity lines will probably slow this year as the housing markets cool. Without big gains in home prices, consumers will have to start funding their spending out of income — or regular savings. They might also cut back on their spending, which would hurt the economy.

Oil still at RECORD LEVELS

The housing market is on the verge of a collapse. HERE ARE THE FACTS:

1. ARMS are actually in reset mode. This only means higher monthly payments. This will lead many into FORECLOSURES.

2. Inventory is at a 10-year high, and the number of homes sold in July was 22% lower than last year.

3. The housing bubble is a $10 trillion equity balloon that will explode sometime in 2007 when more than $1 trillion in no-interest, no down payment, adjustable-rate mortgages (ARMs) reset, setting the stage for massive home devaluation, foreclosures and unemployment. What happens when most consumers were borrowing agains their houses and now have to pay that back. Where will money come from now. 2/3 of the economy is based on the consumer, and if the consumer is in major debt where will they continue to borrow money from. Without the consumer spending the economy is certain to slow down.

4. Consumers spent about $200 billion of the money they pulled out of their home equity. What happens when this slows, there will be a domino effect throughout the economy. As the housing market drops, jobs, income and wage losses in housing will roll over into the economy possibly causing a recession for 2007. 30% of the workforce was created during the housing boom these past 5 years. With the housing market slowing what will happen to the millions of people hired during these great times.

Taken from an article:

According to Economy.com, more than $2 trillion in US outstanding mortgage debt, nearly a quarter of all mortgage debts, are of the interest-only variety passing the two-year introductory period in 2006 and 2007. The Wall Street Journal reported March 11 that these borrowers will face drastically higher interest rates that may cause their monthly payments to rise by up to 50 percent.


How can I be soo bullish when the housing industry is in the process of a collapse and economy ready for a recession!
 
Quote from FullyArticulate:

Quote from DeepFried:


-A lot of people have already positioned shorts for Sept....
Actually, peeking at the Commitment of Traders report, non reportables are seriously long the S&P. Non-commercials and commercials are both net short. We all know which side is *always* wrong.

More...

Large Speculator Net-Short QQQQ Position Suggests Rally May Be In Store
Posted on Jul 6th, 2006 with stocks: QQQQ

Michael Panzner submits: Each week, the Commodity Futures Trading Commission publishes its Commitment of Traders report, which breaks futures activity down into three categories: Commercials, Non-Commercials (also referred to as Large Speculators), and Non-Reportables (also referred to as Small Speculators).

The last two times Large Speculators (e.g., hedge funds and commodity trading advisors, or CTAs) were as net short Nasdaq-100 futures as they are now (i.e., more than 23% of the open interest outstanding) the technology-laden market staged a sharp near-term rally.

Given that the first two weeks of July tend to be seasonally positive for technology shares and the fact that other indicators paint a picture of a market that remains somewhat oversold, that suggests the path of least resistance for the Nasdaq-100 (QQQQ) is up.


:confused:
 
Quote from BoyBrutus:

Large Speculator Net-Short QQQQ Position Suggests Rally May Be In Store
Posted on Jul 6th, 2006 with stocks: QQQQ

Michael Panzner submits: Each week, the Commodity Futures Trading Commission publishes its Commitment of Traders report, which breaks futures activity down into three categories: Commercials, Non-Commercials (also referred to as Large Speculators), and Non-Reportables (also referred to as Small Speculators).

The last two times Large Speculators (e.g., hedge funds and commodity trading advisors, or CTAs) were as net short Nasdaq-100 futures as they are now (i.e., more than 23% of the open interest outstanding) the technology-laden market staged a sharp near-term rally.

Given that the first two weeks of July tend to be seasonally positive for technology shares and the fact that other indicators paint a picture of a market that remains somewhat oversold, that suggests the path of least resistance for the Nasdaq-100 (QQQQ) is up.


:confused:
More...

That article is dated July 6th. It's now Sept 1st (actually it's the 2nd on the East Coast). Those numbers are completely meaningless almost 2 months later.
:confused:
 
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