Economics
Recent Data
Believe it or not, yesterday we got two positive data points in housing:
(1) weekly mortgage applications [secondary indicator] rose 3.2%,
(2) August pending home sales increased 7.4% versus July and 8.8% on a year over year basis. Even Barry Ridholtz had something positive to say:
http://bigpicture.typepad.com/comments/2008/10/pending-home-sa.html
Other
There is plenty of blame to go around for the current financial crisis. This brief note on Greenspan’s contribution simply adds another piece to the puzzle.
http://bigpicture.typepad.com/comments/2008/10/deconstructing.html
Politics
Domestic
John Fund on the Saturday Night Live skit that I linked to in Monday’s Morning Call:
http://online.wsj.com/article/john_fund_on_the_trail.html
Biden and the facts:
http://article.nationalreview.com/?q=YjU0ZWU3YTcxODcyMDA1NzBjZmE1ZDg0NjJhOTFkMTE=
International War Against Radical Islam
Options on
http://www.american.com/archive/2008/september-october-magazine/closing-iran2019s-oil-spigot
The Market
Technical/ Fundamental
A great contrary indicator:
http://bigpicture.typepad.com/comments/2008/10/time-cover-soup.html
Some sage advice:
http://traderfeed.blogspot.com/2008/10/need-to-be-right-versus-need-to-make.html
Some thoughts on the proximity of a bottom:
http://traderfeed.blogspot.com/2008/10/how-weak-is-this-market.html
Chart porn on the S&P and its 200 day moving average:
http://bespokeinvest.typepad.com/bespoke/2008/10/sp-500-26-below.html
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Both indices closed down again, leaving them below their 2004 support levels and unfortunately with a lot of distance between their current prices (DJIA 9758; S&P 984) and the next visible support level (DJIA 7146, S&P 766). The volatility index was up again leaving it at the ‘hysterical’ level--not good but history suggests that it can not stay at its current extended level for a long period of time. In addition, volume at last started to pick up--not to the extent that one would expect in a panic sell off, but headed in the right direction.
In addition, the pin action inside the market had promise; by that I mean that in a DJIA 189 point down day, some of the better quality stocks in the sectors that have heretofore led the Market down (financials, oils) were up on the day, while stocks in the sectors that have held up the best (consumer staples, healthcare) got popped. When the best quality companies in industries with the most stable earnings get whacked, it is usually a sign that the end is nigh.
Another positive is that there were signs that the credit markets are starting to unfreeze, i.e. short term Treasury rates were rising in the face of the global central bank rate cuts suggesting that investors were selling those securities (rising rates = more sellers than buyers) and buying something else. Since anything else is more risky than Treasury bills, this is the first sign that the supply of equity buyers could be building. Of course, one day does not a trend make; but it is a start and if it continues that is a major positive.
I think that this is potentially a significant sign regarding the supply of buyers and their willingness to commit capital. If we can just get hedge fund liquidations out of the way; things are falling in place for a bottom.
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