Benjamin Roth: The Great Depression: A Diary
It's all here, times change people don't
-the endless govt programs that fail to stimulate the private sector
-the ups and downs of the economy, the veterans pension stimulates just as the housing credit did, until of course the money runs out
-Roth is a attorney in Youngstown Ohio who kept a diary regarding the economy from 1930 until WW II breaks out, he is objective, candid, and forthright which is more than we get from Washington DC now or then
highly recommended
Robert Scheer: The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street
The former Editor of Ramparts takes on both parties and how they sold out to Wall Street that is even now partying and bonusing on their former mistakes.
Charles Gasparino: Bought and Paid For: The Unholy Alliance Between Barack Obama and Wall Street
How Wall Street Backed the Administration and Got What It Paid For
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Tuesday March 16 2020
The market has recorded four waves down, one and three down two and four up.
A fifth wave low will follow, the Dems will delight in that claiming it will show Trump wrong
Trump will volley back after the fifth wave low when we should have quite a rally.
Monday March 16 2020
SPX
Dow industrials
These targets will result in a 40 % loss in the major averages over a couple of months..
Monday March 16, 2020
Percent of S & P Stocks over 200 day Moving Average
Compare what is happening now with the devastating 2007 - 2009 meltdown.
This indicator topped in late 2007, which is when the Transports topped, Fall 2007.
but it took more than a year for the indicator SPXA200R to bottom. This time thee indicator toped in late 2019 but has almost reached the same extreme by March 16. That iis what I mean by a complete change in the market.
So far all the talking heads on CNBC, Fox Business have assumed this is just a pullback, and repeat the mantra of buy the dips.
How long will it take before it dawns this is different? Sure the virus is a problem but this is not just the result of the virus. Rather it is a Grand SuperCycle Top dating back to 1982, if not 1930 and 1907.
Transports
11 250 - 7 000 = 4250/11250 = 37% Decline in just two months.
Small Cap 600 index is down 40%, about the same.
Industrials
29 586 - 20 188 = 9398/29586 = 32%
MY conclusion is that the Industrials are not done nor has the index completed five larger waves down.
Industrials 15 Minute
Here is the last two days on a 15 minute chart. The circuit breakers are, no surprise, causing the very havoc they were designed to prevent. The market gapped down after the 1041 limit was lifted. Then the idex rose to fill the gap. I suspect the feverish selling the last half hour results from the fear that another circuit breaker will keep orders from being filled on the open tomorrow.
Here are the rules courtesy of wikipedia. Note the clsoe was 12.93%, right at the limit.
At the start of each day, the NYSE sets three circuit breaker levels at levels of 7% (Level 1), 13% (Level 2) and 20% (Level 3). These thresholds are the percentage drops in value that the S&P 500 Index would have to suffer in order for a trading halt to occur. Base price levels for which these thresholds will be applied are calculated daily based on the preceding trading day's closing value of the S&P 500. Depending on the point drop that happens and the time of day when it happens, different actions occur automatically: Level 1 and Level 2 declines result in a 15-minute trading halt unless they occur after 3:25pm, when no trading halts apply. A Level 3 decline results in trading being suspended for the remainder of the day.[2]
Bonds
The spread between the interest rates on Treasuries, supposedly safe bonds,, and junk bonds rate less than BAA will widen as the bear market progresses. A junk bond is really just a stock w
The spread between the yield of junk bonds and Treasuries will widen at the bear market progresses.
The markets tanked today after the supposedly omniscent FED lowered rates to zero Sunday. The FED cancelled its meeting this Wednesday, having no idea what to do next. The FED only foollows the market and will not rescue this bear.
A junk bond is really a stock with a high dividend. Those dividends will likely be cut at a minimum, and of course many C rated bonds will default.
Apache gave up o their Davis Mountain discovery as most was natural gas, too cheap at these prices to make any money drilling. The rout in the APA shares is a gliimpse of things to come in the oil patch.
Exxon Mobil dropped another 9.5% today closing at 34.49. We stated in a recent column that XOM's announcements about what they would do in the future would be dictated by the market, not the Board of Directors of CEO.
Monday March 16 2020
CFR appears to be making an effort at forming a bottom just under its book value of $60.
Bank Index Makes Lower Low
A blue chip shows it colors in a panic. CFR hit its low last monday, the overall Bank Index is lower today. This speaks to the market's viiew that CFR is better managed and pre pared than most banks
MACD rising for Frost, still falling for BKX
Monday March 16 2020
The peak of emotion occurs during third waves. The VIX hit its high during the Fall of 2008 well before the end of the fith wave March 9 2009. the same thing is occurring again, expect a lower VIX during the forthcoming fifth wave.
Weekend March 15 202
Advisors who would have you believe in their sophistication, rely on 'complex' models, consider this one.
The conclusion is
Should there be a significant opportunity to capitalize on the price dislocations we will do so.
What all this really means is
they never saw the drop coming