I've Had it

[JPatrick]

I tallied up the market losses for the week and I am more than a little PO'd.
The good news is that this level of PO'd ed ness generally signals a market rally.  OK, I used some science as well.
Therefore, I have determined that tomorrow (Friday) will be an up day with motivation coming from an overall oversold market and a possible dramatic fall in oil.  I would say that this will be a substantial rally, but I don't know what the oils will do.  There is a chance they will break with the direction of oil, but that is a longshot.
If the world can get through tonight, tomorrow looks like a decent day.
i could be wrong

 

[wabmester]

Cool -- we're predicting next-day action now?

OK, CPI comes out tomorrow morning. It will be a 0.9% increase from August (annualizes to 10.8%). This will knock the market for a loop, nobody will want to hold anything over the weekend, and we'll see a 300 point drop.

I could be wrong too.

 

[HFWR]

Is that 300 point drop for the Dow, or the S&P??

Tomorrow, I will have tex-mex for lunch with my Dad, do some laundry, and maybe watch some bazeboll whilst drinking a refreshing "sports" beverage.

If the Dow drops 300, Monday I'll go shopping...

 

[wabmester]

Don't worry about it.   Nobody seems to care about inflation.   The CPI increase is expected to come in at 0.9% tomorrow, though.   Import prices were also expected to rise by 0.9%, but they came in at a 2.3% rise today.   More than twice the expected number.   Largest increase in 15 years.   And the market shrugged it off.   The Plunge Protection Team is watching out for us.

 

[retire@40]

My net worth is down about $24K from my high watermark just a few weeks ago. This is mostly due to a decrease in unrealized gains in equities. I'm not worried (yet).

 

[TargaDave]

Maybe this will cheer you up (hope the link works) though I'm not claiming to believe it. Written yesterday. Watching the market every day and predicting a few months out is futile but good sport for those who enjoy it. I'm goin fishin and drinkin beer with my Dad today.

http://www.thestreet.com/funds/supermodels/10247046.html


The first few paragraphs:

The professional Wall Street spin machine has kicked into overdrive in the past two weeks. A slew of strategists have stridden into the teeth of Hurricane October with forecasts saying stocks in the final three months of this year will clock in with a juicy 8% gain -- equal to the average fourth-quarter gain over the past decade.

As you might expect, there is plenty of bearish dissent, and the doomsayers certainly appear to have the upper hand of late. But more remarkable, perhaps, is a growing minority of forecasters who are looking for much, much better results.

Louis Navellier, the fund manager and newsletter publisher, is typical of the mega-bulls, advising private clients over the past weekend that their "best buying opportunity in six months" was last Friday. "If you have any cash, invest it right now," he wrote. "The next few weeks will be phenomenal."

 

[Michael]

Cool -- we're predicting next-day action now?

Since the relative strength indicator has plummeted, and the MACD (12,26) line is still well below the MACD (9) line, I fearlessly predict that the market will keep going down until it stops. What is the prize for this contest anyway?

 

[Dawg52]

Maybe this will cheer you up (hope the link works) though I'm not claiming to believe it.  Written yesterday.  Watching the market every day and predicting a few months out is futile but good sport for those who enjoy it.  I'm goin fishin and drinkin beer with my Dad today.

http://www.thestreet.com/funds/supermodels/10247046.html

Yeah I saw this yesterday. I think I will leave my balanced allocation as is and go play golf. 

 

[justin]

I forgot, was the title of that article Dow 40,000 or Dow 4,000? I guess each of those predictions are just as valid.

 

[JPatrick]

Cool -- we're predicting next-day action now?

OK, CPI comes out tomorrow morning.   It will be a 0.9% increase from August (annualizes to 10.8%).   This will knock the market for a loop, nobody will want to hold anything over the weekend, and we'll see a 300 point drop.

I could be wrong too.

Wow!  One thing is sure--we can't both be right

 

[nearly50]

CPI came in at 1.2% for September.

 

[brewer12345]

CPI came in at 1.2% for September.

Fugly. Doesn't make fixed income look too good right now.

 

[SteveR]

These are ripples in the pond.

October is a volitile month and it is best to stand on the sidelines and wait for the market to drop a bit and then buy in before the prices go up for the year end rally. I have gotten most of my best deals in October.

Don't sweat the small stuff. It will all work out in the long run.

If you daytrade you have my sympathies. If you are in it for the long term (and you should unless you are 95), you just need to go play golf today.

 

[HFWR]

Obviously, you've never seen ME play golf. Btw, I shoot in the low 70s, but then I have to play the back nine...

I'm not sure we're at the bottom yet, or that we'll get an end-of-year rally. Sticking mostly to my usual allocation, though I have more cash than usual (20%). After the Katrina rally, my spider sense was tingling. Moved 10% to cash from three blend funds in my 401k. When I go shopping, will increase value tilt slightly, and add a tad more microcap and emerging markets. Been waiting for this pullback to do just that!! 8)

But 90% of my port is right where it was. As unclemick says, "Don't just do something, stand there..."

 

[TromboneAl]

I can't help taking a look at the market every day, but I've had my crew tie me to mast so that I won't make any changes in my allocation.

 

[JPatrick]

I can't help taking a look at the market every day, but I've had my crew tie me to mast so that I won't make any changes in my allocation.

You'll know you've done the wrong thing if the crew starts erecting a plank 

 

[wabmester]

CPI came in at 1.2% for September.

Yup, bonds are taking a hit. But core inflation was only 0.1%, so the stock market is having a party.

 

[brewer12345]

Yup, bonds are taking a hit.   But core inflation was only 0.1%, so the stock market is having a party.

Oh yeah. I don't buy any energy or food, so all I care about is core inflation.

What a crock.

I think this is really a relief rally. I don't think it will last unless earnings look awfully good.

 

[justin]

My understanding of why core inflation is important is that when the core starts picking up, that means you're seeing the energy increases spreading through other parts of the economy.

 

[wabmester]

Oh yeah.  I don't buy any energy or food, so all I care about is core inflation.

What a crock.

Well, the reasoning is that inflation might be temporary until it permeates the core, and then it becomes persistent.   The other part of the equation is that *everybody* has a lot of faith in the federal reserve.   As long as the fed remains pretty transparent in their actions, the market is pretty happy.   I really believe the fed is responsible for the reduction in market volatility and the reduction in risk premium.    All they need to do is talk the talk.

 

[JPatrick]

A couple of positives:: As of early afternoon the oils and oil service stocks are breaking (somewhat) with the direction of the fluids.  If stocks show they can advance while oil continues to fall into the fifties this could be a great reenter spot for oil stocks.
The other thing to watch for is a strong last hour close.
It is hard to be a believer in today's action cause everything was oversold to an extreme. You want sauce with that dead cat bounce?

 

[brewer12345]

My understanding of why core inflation is important is that when the core starts picking up, that means you're seeing the energy increases spreading through other parts of the economy. 

Its only a matter of time before inflation spreads beyond food and energy. Fuel prices have been rising for over a year. Agricultural commodities have been on a run too. Soon enough, it will be in the core. In the meantime, overall inflation is causing plenty of pain out there in the "real" economy.

 

[justin]

Instead of increasing core CPI, the increased energy costs could be absorbed by businesses, resulting in lower profit margins. I don't think this will happen forever, as eventually businesses' prices will increase to reflect their true operating costs.

 

[wabmester]

Instead of increasing core CPI, the increased energy costs could be absorbed by businesses, resulting in lower profit margins.  I don't think this will happen forever, as eventually businesses' prices will increase to reflect their true operating costs. 

Yup, that's exactly what's been happening for the last year or two, both domestically and internationally.   The economy is weak enough that manufacturers don't think they have a lot of pricing power, but they are finally starting to cave in under margin pressure.    Remember that press release that Toyota issued a while back?   Something like "To give GM a break, we're going to raise our prices."   It's hard to spin a price increase.     That's also partly why we just saw such large import inflation -- those guys are under forex pressure and energy price pressure.   The core is slowly heating up.

 

[tryan]

Stock ... Schmock (and bond ... schmond).

Can't touch my 401k for 20+ years ... I'm bettings things will be a little higher than they are now.