Since there is no more WSLZ, here is my points

colderdown

1.        SPX had 4 weeks down move, rebound is very well expected. But I sure did not see the scale of this bounce.
2.        There is not much fundamental change regarding US economy, except you think high gas price is good for recovery.
3.        Major Banks will have decent earnings, not many of them left right? As whole sector, financial is far below its golden days. The best we can say is they are surviving.
4.        Chinese market was inflated by liquidity. Until over capacity problem is solved, where it comes, where it will go. It’s hard to imagine China will pull everyone out; its GDP is only 7% of global economy. US is 23%.
5.         US consumer is still in deep trouble. Since consumption is the driving force for US economy, we still have tough time ahead. Department stores sales were down 29% in June.
6.        Political wise, democrats are using this crisis to push their agenda, a lot of bills would not pass in any normal situation. The crisis did not over, and will not over soon. Govt. can’t and won’t B.S. its teeth out all the way.
7.        WS wants 3rd stimulus package. (yes, 3rd, it is not a typo). Democrats are facing election next yr. The survey already showed a strong resistance for any more budget deficit. Well, first package did save the banks for NOW, second one is just a waste. Without further govt. spending, the market will go down. To pass the third one, can you imagine it will have any chance when SPX is above 1000?
8.        As far as I know, most IBs are neutral after SPX passed 880

At last, always control your risk, long or short. Never all way in. Bulls or bears, it does' matter, just don’t change your mind every second.

dara

The problem is US market is also inflated by liquidity.

Overall I agree with your points, but market really does not reflect current economics.
If you look at A gu, it is way more scaring than us market, fed prints so much money and loan them free to GS and other big guys, they can use the money to pump market too.

I see market is still a range bounded (at least until October(next ER)), but the low bound and up bound will probably move up saying 91x-98x. (last bound is 87x-95x)

cw8888

svntn

if liquidity is flooded in the market again, would CIT bankrupt, or face the risk? Think about it.  Read how many mortage applications were turned down during the past few months.

Fed is a more responsible authority, compared to what China is doing, or, China is also facing a systematic risk that nobody is aware of?

dara

if liquidity is flooded in the market again, would CIT bankrupt, or face the risk? Think about it.  Read how many mortage applications were turned down during the past few months.

Fed is a more res ...
svntn 发表于 2009-7-15 20:56

liquidity is not in CIT's hands, it is in other big guys's hands.

Plus the 4T in money market need go somewhere, they can not stay there forever.

If Fed is like china, maybe we see SPX 1200 already.(china 16xx --> 3200).

I said we still in a range market with an increased low/high bound. I just do not see SPX could drop to 800 if A gu is 3000+, NO WAY.

ROOKIE2

The market is not relevant with the economy. Everyone can see the situation become more worse, such as sales, jobs, but the market still bull. Bull market is needed for politics, bank, MM, and everyone. If you lost your job, don't worry, put your EI in the market and buy bull.

Lionking

Agree. But if you don't have enough fund or courage to survive spikes, like in this week, it is still better just let market go first.

mary666

ding

svntn

5# dara


don't be fooled by the so called "4T money market fund awaiting opportunity to deploy". You need to compare it to history to understand the potential for these funds to come to stock market, because most of these money are mandated to stay in money market (cash or US treasury),no matter what  including China's foreign reserve.

July 8, 2009, total Money Market Fund 3.67T.
May14, 2008, 3.56T (right before last May's high).
January 2, 2008, 3.19T (well before the market crash)

colderdown

2# dara

I know it is hard to make bearish case after today, and I don't exclude the possibility for SPY going to 95.6 or even above 1000. It's just different trading view, I'd rather short market when SPX>900. The key is still risk control and look a bit further. I did not add short today since I reached my limit on Tue. Total short position is 30% of fund. I won't add a penny more while SPX<1000. If it indeed goes above 1000 in next 7 weeks, that's the time to go all way in.

Here is the summary of GS Daily
"In summary, not only do we have quite a lot of excess capacity, but it is likely to be around for an uncomfortably long time unless the economy rebounds more sharply than even the most optimistic forecasters expect."

Here is the summary of GS weekly
"It is likely that consumer spending will remain anemic for at least next several yrs. Moreover, while leverage among financial institutions has fallen and overall household credit as share of GDP has started to contract, the progress of reducting the economy's dependence on credit growth is still ongoing".

小亥

What do you mean neutral?

8.        As far as I know, most IBs are neutral after SPX passed 880
colderdown 发表于 2009-7-15 20:35

colderdown

11# 小亥

They did not advice their bussiness clients to add more long positions of US risk equities. GS keeps its' pro China and short USD positions.

hithere

finally, I see a cool head ...

maserati

Well said

layschips

thanks. we do need a clear mind when struggling in this market of mess

z_crochio

Looking at the health care reform.
08 sure likes overhauling. Ho-over

ROOKIE2

WELL DONE

xiaoshitou

Well said. Thank you very much.