Tuesday, June 10, 2014

Noontime noos - looking for reasons for the market to go down

OK, like I said earlier, I think the S&P might go down for a bit, since its RSI is over 70.

Which is the lamest reason in the world.

So there's got to be some other reason for people to decide to start selling off the US market, and I'd like to be able to spot the bear narrative in its infancy.

So I went and poked through the RSSes on my mobile, and there was very little bearishness to find anywhere. So let's just look through a few newsbits:

WSJ Economics - NFIB index hits highest since 2007. It's not as amazing as you'd think, since Calculated Risk has a chart that shows SBO still has a long way to go before it's recovered to pre-crash levels (and maybe that's why we're not seeing Rosie's capex push yet). Here, let me show it to you:

in fact, it looks like pre-2007 the SBO was only this low about 2%-5% of the time. Pretty stunning.

Dragonfly Capital - what does sentiment tell you? Here, listen to a sensible person explain sentiment in a way that TAs can't:
One thing everyone can agree on is that bullish sentiment measures are high. It is the interpretation of that data that draws many opinions. But shouldn’t sentiment be high as markets are making all time highs? The best take away from this piece of data on high bullish sentiment is that it aligns with bullish price action.
Sentiment is supposed to be high when the market is going up. Sentiment is supposed to be low when the market is going down. Stuff that in your pipe and smoke it, mister highschool-educated contrarian blogger.

FT beyond brics - India capital raising becomes bullish. Modi eliminating the "let's fuck Vodafone" retroactive taxation law is one of those things that can have a positive multiplier effect: it was the most boneheaded move Congress made, because it told foreign capital that even thinking about investing in India would destroy your company, not just your foreign subsidiary. So him getting rid of this actually is a very good thing.

Reeking Alpha - gold manipulation: what should investors do now? This was a Ritholtz pick of the day, for some stupid reason. But it's interesting, this little bit in the middle of the article:
This is the dilemma faced by all manipulators. Manipulation is a double-edged sword. For example, if you sell large amounts of gold today in order to manipulate prices downward, you will now be a source of demand tomorrow that will tend to push prices up. Because prices - especially in large and liquid markets such as gold -- are ultimately determined by supply and demand, manipulators have little or no net effect on prices beyond the very short term. This is because manipulation provides no net supply or demand to the market. The positions taken to manipulate the market must be unwound, and so by the law of supply and demand the net impact on prices will tend to be a wash.
Uh, wait. You just described the options market. You're saying that trading of paper gold requires that positions be unwound, therefore there is no net impact on demand.

So you're saying that the longer-term gold price is determined entirely by supply from mines, and demand from Asia.

Bought gold yet, Barry?


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