11 replies to this topic

[arbman]

This is the worst this chart ever looked since the bear market... fyi.

- kisa

[selecto]

Liquidity Crisis Hits Markets

[arbman]

I am pretty certain that if a global slow down is in progress, there will be no further yen carry trade unwinding. If anything, the rates will go lower and there will be more appreciation in the commodities after a recession. This is a very crappy situation for the next decade since the rates might have to eventually go much higher, yet I think this recession should put a temporary bottom for the real estate! Greenie, are you reading this?

[Trend-Shifter]

There will be a flood of money coming from China. The China government has changed the rules with banks & insurance companies just recently. They know the must wrk towards currency conversion & flexibility. These are the tools they are putting in place to reduce the appreciation of the Chinese RMB as they relax controls. Myself, in my 401K I can only trade IT. My trailing stop took me out in June and I did not buy back in to date. I will be looking at price action this week. A big pop Monday seems like a given. Tuesday should be an indication of where the market is going. It's harder to figure out when to buy-in than sell. Especially when if I do a round trip I get nasty letters from Fidelity! My trading account is ready!

[peregrine]

The Yen carry trade steals some market liquidity as the Yen rallies.

http://stockcharts.com/c-sc/sc?s=$XJY&p=DAILY&b=5&g=0&i=0&r=6755.png


....and less liquidity is available as the bond market steals some also.

http://stockcharts.com/c-sc/sc?s=TLT:$NYA&p=DAILY&b=5&g=0&i=0&r=7369.png

In the few weeks prior to the beginning of the stock market spill these two sources of buying power alternated making feints above shorter term (20d) ema's. When they jumped accross the 20 dema in concert, the stock market declined in earnest. The same phenomenon occured during the February 2007 spill. Note: these charts show the 50 and 200 ma's only.

P

Edited by peregrine, 29 July 2007 - 08:46 PM.

[VolPivots]

thx Kisa, I was wondering about the status of that chart....so far the credit crunch is being labeled a 'repricing of risk'. But as you've noted earlier, this has been in development since last year. Last night, I was watching the Smartest Guys in the Room, the documentary about Enron. Their problems started appearing in the fall of 2000, but didn't really start spiraling out of control until the following summer, resulting in a late year bankruptcy filing. These things don't happen overnight ya know, and I seriously doubt a 4-day selloff is all it takes to adequately reprice the cost of capital, especially since I imagine there's still plenty o' bad news yet to be released to the mainstream media. Markets are so efficient these dayz with global information networks, it wouldn't surprise me one bit if the US is staring a recession right in the face in the coming weeks. So 'twill be interesting if this so-called repricing of risk expands into full-fledged systemic risk/global credit crunch.

[Echo]

Here's a collection of junk bond charts I posted back on July 2nd: http://stockcharts.c...X,PRHYX,JAHYX|D



they weren't lying to us.

Echo

[arbman]

Thanks for the charts Echo. I am thinking the credit bubble era is over and the above relationship will not hold anymore from whatever low is made during this decline, perhaps it will really crash in the weeks ahead consistent with an extremely right translated 4.5 yr cycle. The above relationship was based on an era of the credit bubbles from 1998 though now as the primary driver of the bull markets. I really do not know whether a miracle will emerge and rescue the markets from the ashes, maybe more foreign investment? But at this point, none is in the horizon for the next several months... Anyhow, let's see a bounce first of this deeply oversold market and focus again on the IT picture later... - kisa

Edited by kisacik, 29 July 2007 - 11:28 PM.

[arbman]

Echo, look at this, the bond guys are now jumping off the windows. If this does not trigger a crash in 2007, I don't know what will...

[qqqqtrdr]

I believe the average american consumer does not have much to spend, but the global growth is still strong, and the American consumer is still spending just as much as always. There are a couple of exceptions. 1) Housing.. Slowness in housing, which I believe is due to the realization that a home is not a great investment is starting to bring housing buying and selling down to normal standards. 2) Automobile Sales.. Many consumers have bought cars from 2001 - 2006. I think higher gas prices and already have an auto payment, so they can't afford another. Computer Sales are still brisk world-wide, but there is relatively large market out their for computer replacement in the next three years as Microsoft gets there act together with Vista, and computer makers actually create machines that run Vista effectively. Barry