Thursday, June 25, 2009

The followup and some tidbits

First the tidbits
- Fitch downgrades the State of California
- Pipelines attacked in Nigeria
- Helicopter Ben gets defensive over his role in BofA/Merrill (too defensive?)
- from a chat room, posted by Isam Laroui, CMT

There's a blog ( that posts a selection of articles from the WSJ from each week 79 years ago. One bullish article from June 1930 made the following point:

"Historically there has been no case in this country since 1900 when business failed to turn upward the year following a depression."

The implication was that, since the depression was over as almost everybody thought at the time, business was bound to do better sooner or later. A 3-year depression was not even considered possible.

Back to the present: Pretty good stuff, right?

And on to the followup:

Today's big rally does not change my view that the market has probably topped. But as I wrote yesterday in the column, I was not about to "call that top" due to ongoing unstable conditions in the markets since last year. The TED spread is back to normal but both the T and the ED are still at near zero levels. That is not what I'd call normal.

Volume was rather light on the day, too, so I'll just take it as another black eye on the way to winning the fight.


bmbull said...

Lots of attractive short setups showing up my scans -- that supports the 'topping' view, in my opinion.

Of course, it's always a matter of the exact timing...

paulocuana said...

"A 3-year depression was not even considered possible."

I haven't heard much about it lately but the one thing in the back of my mind that makes me feel that this time is different from the usual recession is a major 70 year cycle for the economy and the markets.
Does this play into your thoughts?

Btw, I've very much enjoyed your recent work.

Paul O'Cuana

Quick Takes Pro said...

1929 - 2009? 80 years? Probably a bit too long for the Kondratieff Wave. Not that I am an economist but it does not seem the same today as it was in the 30s.

rb531 said...


I have been a staunch follower of your barrons articles. I too think market has topped in the short term. But I see, the more we think it will pull back, the higher its going. I have lost quite some money following this technical analysis. Maybe its time to follow momentum. Hell with technicals and fundamentals. If a bunch of money managers want to match the indexes performance, they will move the market higher. ITS ALL ABOUT WHERE THE BIG MONEY IS GOING. but i still like how you analyze. Its just that markets aren't following any thesis thats out there.

Quick Takes Pro said...


You are right, we cannot will the market to do anything. Our job is to weight the evidence, realize it will never all align on one side
and make our bets.

However, this is not really a momentum market. It is chop, chop with some leftover momentum giving it a bias (up).

Keep in mind, too, that while I was bearish for the past two months, I never dove in all the way on the short side. Nibbles yes, big trades, no. Money management is so key.

The newsletter has made money shorting stocks this month. It lost some, too, but if this were truly a mo-ma (momentum market - I must have read that somewhere) we would have lost more than we made.

rb531 said...

As bmbull mentioned, exact timing of a pullback is anybody's guess. But given the fact even the technical indicators are gradually turning bullish (already a golden cross in QQQQ and in Nasdaq composite in the next couple of days), do u think one major breakout might prove all of us wrong?