Confirmation Friday..... Denied.
Signals are what they are.
Indeed, sellers showed up at 11:00. But they were met with buyers, who fought with them literally all afternoon until, in the final 30 minutes, the buyers won.
Smart or not smart? We will know in the fullness of time, of course. I suspect the answer is "not smart", but heh, I could be wrong.
The SELL signal on the Nasdaq remains in place, believe it or not. While Stochastics have turned to BUY MACD has not, and without both, you have no confirmation. So if you left your QQQQs this morning, that's ok - we're just not there in terms of whether we are going to confirm a "false alarm" or not. We will find out Monday.
Here's my friend again:
Pinged off the bottom of the channel and couldn't stay above it. Now that's interesting.
Note that this may auger for a blowout to the top, at least in the short term.
However, we've still got the economic indicators, and they're weak. What drove the rally? People's belief that rates will be cut. No chance guys, unless the economy goes completely in the tank, at which point the last thing you're going to care about are rate cuts. As for rate hikes? Well, I think we're going to get them eventually, simply because it will become necessary to defend the dollar.
What's going on with this market anyway? Why is it that you can put forward economic numbers that show that GDP growth is now solidly under 1% (inventory adjustment plus the trade balance adjustment), the widely-accepted barrier to a "Hard Landing", and yet while the market sells off as expected yesterday it then picks up essentially all of its loss the next morning - when that data confirms and reinforces the previous day's release!?
What's driving the market right now to a large degree is that companies are buying back their stock. But how is that bullish for the economy? Its not. If corporations are buying back stock instead of investing in their businesses through capital expenditures, then what you're see is corporations propping up their stock prices because they can't find a good place to spend the money that will lead to a return for their shareholders!
The "talking heads" all like to talk about the sea of liquidity and they are correct, as far as it goes. The stock market is like any other market - prices are determined by supply and demand. Remove supply with a given level of demand and prices rise.
The unfortunate side of this though is that if you artificially constrain supply while lying about what would normally drive demand, then you wind up with a very large problem down the road. See, when the REAL FACTS come out, suddenly that liquidity bubble contracts like a firehose suddenly being turned off.
Let's be serious here. Stock buybacks which are paid for with debt issues need to be stopped. These are the worst sort of deception because while they may boost prices of securities in the short term they distort the value of the firm as they damage the balance sheet. We know who the offenders are, but the simple fact of the matter is that if you can't buy the stock back with free cash flow then you shouldn't be doing it.
And speaking of which, if you don't have that, how the hell are you "expanding" your business?
Does anyone remember the mid and late 90s? Those companies in the internet space didn't grow with free cash flow. They issued debt - lots of it - and "created" equity through IPOs and secondary offerings. It was all phantom; in the end thousands of these companies either disappeared entirely (along with all that "wealth" that their shareholders had) or were severely whacked in the marketplace, with many still trading at their split-adjusted price of under $1/share. Some, like JDSU, were even labelled on the street as "Just Don't Sue Us"!
I want to see real corporate value here. Not share buybacks with debt nor pumping the markets with credit-based liquidity based upon the wild disregard for risk.
Nor am I alone in this regard. In fact, there are some other sane people out there. Maybe.
Until then, I remain cautious - and I was most certainly not buying that "rally" today.
Indeed, sellers showed up at 11:00. But they were met with buyers, who fought with them literally all afternoon until, in the final 30 minutes, the buyers won.
Smart or not smart? We will know in the fullness of time, of course. I suspect the answer is "not smart", but heh, I could be wrong.
The SELL signal on the Nasdaq remains in place, believe it or not. While Stochastics have turned to BUY MACD has not, and without both, you have no confirmation. So if you left your QQQQs this morning, that's ok - we're just not there in terms of whether we are going to confirm a "false alarm" or not. We will find out Monday.
Here's my friend again:
Pinged off the bottom of the channel and couldn't stay above it. Now that's interesting.
Note that this may auger for a blowout to the top, at least in the short term.
However, we've still got the economic indicators, and they're weak. What drove the rally? People's belief that rates will be cut. No chance guys, unless the economy goes completely in the tank, at which point the last thing you're going to care about are rate cuts. As for rate hikes? Well, I think we're going to get them eventually, simply because it will become necessary to defend the dollar.
What's going on with this market anyway? Why is it that you can put forward economic numbers that show that GDP growth is now solidly under 1% (inventory adjustment plus the trade balance adjustment), the widely-accepted barrier to a "Hard Landing", and yet while the market sells off as expected yesterday it then picks up essentially all of its loss the next morning - when that data confirms and reinforces the previous day's release!?
What's driving the market right now to a large degree is that companies are buying back their stock. But how is that bullish for the economy? Its not. If corporations are buying back stock instead of investing in their businesses through capital expenditures, then what you're see is corporations propping up their stock prices because they can't find a good place to spend the money that will lead to a return for their shareholders!
The "talking heads" all like to talk about the sea of liquidity and they are correct, as far as it goes. The stock market is like any other market - prices are determined by supply and demand. Remove supply with a given level of demand and prices rise.
The unfortunate side of this though is that if you artificially constrain supply while lying about what would normally drive demand, then you wind up with a very large problem down the road. See, when the REAL FACTS come out, suddenly that liquidity bubble contracts like a firehose suddenly being turned off.
Let's be serious here. Stock buybacks which are paid for with debt issues need to be stopped. These are the worst sort of deception because while they may boost prices of securities in the short term they distort the value of the firm as they damage the balance sheet. We know who the offenders are, but the simple fact of the matter is that if you can't buy the stock back with free cash flow then you shouldn't be doing it.
And speaking of which, if you don't have that, how the hell are you "expanding" your business?
Does anyone remember the mid and late 90s? Those companies in the internet space didn't grow with free cash flow. They issued debt - lots of it - and "created" equity through IPOs and secondary offerings. It was all phantom; in the end thousands of these companies either disappeared entirely (along with all that "wealth" that their shareholders had) or were severely whacked in the marketplace, with many still trading at their split-adjusted price of under $1/share. Some, like JDSU, were even labelled on the street as "Just Don't Sue Us"!
I want to see real corporate value here. Not share buybacks with debt nor pumping the markets with credit-based liquidity based upon the wild disregard for risk.
Nor am I alone in this regard. In fact, there are some other sane people out there. Maybe.
Until then, I remain cautious - and I was most certainly not buying that "rally" today.
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