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goldminingXpert (29.46)

It May Be Coming To An End

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August 31, 2009 – Comments (39)

Let me preface this by saying that I've been very wrong about the market since the beginning of May. Other than my buy and hold options positions, I've traded nothing but euros, pounds, yen and dollars in my FOREX account since July. The stock market is just too irrational at the moment to be worth my attention. All that said...

The rally of the last few weeks has been driven utterly and solely by crappy stocks. ABK, FRE, FNM, ETFC, C an so on. Even stocks like the old Lehman shares of that long-dead corporation tripled yesterday. Once you strip the garbage out, volume on the rest of the market (i.e. real companies) has been light, even for summer.

What happens next? Most things I watch, such as the Nasdaq (QQQQ) and the oil names just plain aren't making new highs, while the dollar has not continued to go lower despite the continuing strength in the market. Things are diverging--we have global selloffs beginning--China is in full-on crash mode. How long will we hold up? I don't know, but it seems that we are very close to running out of gas in this bear market rally's tank.

 

Long story short, the S&P will be under 800 at a very minimum by the end of the year, and the 666 low will be taken out in 2010, one just has to be patient and wait for perception to catch up to reality.

39 Comments – Post Your Own

#1) On August 31, 2009 at 1:37 PM, goldminingXpert (29.46) wrote:

I forgot to mention AIG, the leader of the zombie market! AIG finally appears to have cracked today. I look forward to the day when I score 100 points off that pick--I may be down 400 on it now, but I'm merely pulling a Dryships!

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#2) On August 31, 2009 at 1:54 PM, jason2713 (< 20) wrote:

I think we are in for a good correction, but to go as far as say it's going to crash, who knows.  If the market gets to 9100, I think that's going to add a lot of tension and spark a big sell off to capture profits and lock them in.  The crap stocks you mention are being boosted by large firms/banks/gov't $$ from stimulus...no question about it.   I honestly hope for the doom and gloom senario.  I'm shorting the market and would love to make 20-30% :)

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#3) On August 31, 2009 at 2:01 PM, RookieQB (28.92) wrote:

Why do you see us going lower than 666?

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#4) On August 31, 2009 at 2:02 PM, goldminingXpert (29.46) wrote:

I'm not calling for gloom and doom... I just have never seen a bear market end on a "V", so at minimum, there will be a test of 666 to make a double bottom before we get a genuine bull market. If calling for a test of 666, which I expect will fail by at least a small degree (I'd be surprised if we don't see 640), then by all means, call me what you will. I think it's more fair to call anyone calling for 1200 here insane optimists, since the market is already up 55% on hot air. What more do you want?

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#5) On August 31, 2009 at 2:04 PM, goldminingXpert (29.46) wrote:

Rookie: The economy has significantly deteoriated since March, assuming we get a similar amount of panic when the next utterly insolvent bank blows up (I'm looking at you Wells Fargo), we should go lower as we will panic again in the face of weaker economic/profits outlook. S&P earnings and revenues are steadily falling and unemployment keeps rising, lowering the range at which the S&P will find knife-catchers willing to enter in the face of weeks of continuous down action.

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#6) On August 31, 2009 at 2:11 PM, goldminingXpert (29.46) wrote:

The folks over at TrimTabs released their latest findings late last week. To say the report was “eye opening” is to risk understatement. Here’s a bit from the release: SAUSALITO, Calif., Aug. 28 /PRNewswire/ -- TrimTabs Investment Research reported that selling by corporate insiders in August has surged to $6.1 billion, the highest amount since May 2008. The ratio of insider selling to insider buying hit 30.6, the highest level since TrimTabs began tracking the data in 2004. "The best-informed market participants are sending a clear signal that the party on Wall Street is going to end soon," said Charles Biderman, CEO of TrimTabs.

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#7) On August 31, 2009 at 2:25 PM, davejh23 (< 20) wrote:

"TrimTabs Investment Research reported that selling by corporate insiders in August has surged to $6.1 billion, the highest amount since May 2008. The ratio of insider selling to insider buying hit 30.6, the highest level since TrimTabs began tracking the data in 2004."

This is very interesting.  It seems that there is quite a bit of pessimism out there for now...which probably means the market has further to run...who knows?  With all the optimism I had been seeing, I took it as a clear sign that the rally wouldn't run too far.  I'm out of the market for now.  Not short...just waiting to see what happens...if the market takes off again, who cares?

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#8) On August 31, 2009 at 2:56 PM, dudemonkey (38.50) wrote:

Glad to see you back, GMX.  I'm with you on your assessment of direction (although I can't begin to estimate the magnitude of the downturn the way you do).  I hope you're right.  The buyout of MVL by DIS is going to leave me with a pile of cash I'm going to be wanting to deploy when the time is right.

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#9) On August 31, 2009 at 3:29 PM, SolarisKing (27.97) wrote:

Hey GMX, i keep missing you. I seem to be one step behind on you on your blogs, so i doubt you have even seen my last two replies.

I loved your pitch last week, where you did the valuations for EDU. Any chance you could take a few minutes to do the same for WNR for ASP?

You know how i like all the AllStarPortfolio pitches to have that uniform heading that i clip from the blog (on August 31, GMX wrote;).

Hope you get this note, and thanks in advance.

-solaris

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#10) On August 31, 2009 at 3:33 PM, jesusfreakinco (28.92) wrote:

GMX,

With the Fed printing oooooodles of money, I am not sure I am ready to throw in the towel and agree with traditional TA.  I think what remains to be seen is what will happen with the USD and the long bond.  When those look weak run for the hills as it will indicate the Fed is losing the war.  If that happens, we'll be experiencing a currency crisis and inflation will spike overnight.  Let's hope that doesn't happen..., but I fear that we may not be far off from this possibility.  There is just too much 'noise' supporting this and the fundies on the economy are deteriorating rapidly as you indicated.

JFC

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#11) On August 31, 2009 at 4:41 PM, StrongTrader (< 20) wrote:

HEy GMX, totally agree with what you said. The rally is running out of fuel and the air is getting tighter up here. A correction is imminent. As the bond bubble burst, we will begin our next leg down a year or two from now.

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#12) On August 31, 2009 at 7:21 PM, dragonLZ (99.38) wrote:

Hi GMX. Great post. Agree with everything you said...

You know I'm kidding, don't you?

OK, I'm also willing to stick my neck out (I do realize that my "neck" is not so relevant as yours right now, but one day it will...believe me...):

DOW will see 10,500 before the end of the year (which will probably be the short term top).

Also, S&P will never see 666 again. Never.

Now, go ahead call me whatever you want, but remember: We will know who's right and who's wrong very soon. The end of the year is not that far away...

p.s. Never will take a little time... :)

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#13) On August 31, 2009 at 8:34 PM, goldminingXpert (29.46) wrote:

Also, S&P will never see 666 again. Never.

I do agree there is a possibility that we will gap down and never see 666 print. Perhaps we'll close at 675 and open at say 655 when, say, COF surprisingly announces they are insolvent.

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#14) On August 31, 2009 at 9:08 PM, rofgile (99.32) wrote:

Here is a graph of the insider buying:

Insider buying has been very low since April, as investors have been sceptical, burned, pessimistic, and expecting a correction since the bottom S&P 666.  The new low in insider buying doesn't look that different than previous months.

The truth is a LOT of people, more than just GMX, is expecting a correction.  That means that there is still lots more money that could go into the market that has been waiting - fuel to go higher. 

----

As long as a trickling of positive economic news continues (as a symptom of the real underlying, slow but sure economic recovery of the US), the market will have the ability to move higher. Sometime between S&P 1100-1200, we will need more than occasional positive news to go higher.  At that point, we'll need employment to recover, which may take years (employment recovery is necessary for consumer spending recovery). 

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#15) On August 31, 2009 at 9:23 PM, goldminingXpert (29.46) wrote:

Insider buying is still low, as it has been for awhile-- insider selling, however is skyrocketing. While insiders were smart enough to realize even at the lows that their companies' shares weren't worth buying, they now ALSO realize their shares are now WILDLY overvalued!

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#16) On August 31, 2009 at 9:54 PM, Imperial1964 (98.28) wrote:

I'm not as pessimistic as GMX here, but the following quote from rofgile caught my eye:

"the real underlying, slow but sure economic recovery of the US"

Call me a skeptic, but just a month ago the economy was still contracting, not recovering.  Why are so many people taking for granted that things are getting better when all the data I see just says they aren't getting much worse?

Things are stabilizing, I'll give it that, partly because the government has increased its spending to fill the void.  But if consumers don't step back up and start spending again (or can't because they are unemployed), how long can the government keep spending like a drunken sailor without creating more problems?

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#17) On August 31, 2009 at 9:58 PM, dragonLZ (99.38) wrote:

So if you guys look at what the insiders are doing, and if you saw insider buying jump up in March, why did you then start shorting the market in April and May? Did you think insiders are buying just because they were expecting one good month???  I can't believe you guys... Just like little kids. No matter what the market does, you turn it into the "Papa Bear Story"... Of course they are selling when most of them quadrupled their money since March (unlike some goofballs who shorted the market...)

 p.s. Funny, GMX, funny...the story about the gap... there will be a lot of laughing at the end of the year...

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#18) On September 01, 2009 at 2:15 AM, StrongTrader (< 20) wrote:

The next few trading sessions will be the decisive bout whether we will rally more or correct. We are beginning to see signals flashing sell everywhere. The bearish signals dominate that of bull so far. The market can always throw a curve ball so that's something to watchout for. Best place to be right now if one is conservative is to stay cash until market picks a direction. The aggresive ones, however, will of course begin shorting/buying.

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#19) On September 01, 2009 at 2:18 AM, StrongTrader (< 20) wrote:

"So if you guys look at what the insiders are doing, and if you saw insider buying jump up in March, why did you then start shorting the market in April and May? Did you think insiders are buying just because they were expecting one good month???"

dragon are you going to listen to your own advice and short after hearing this?

"Insider buying is still low, as it has been for awhile-- insider selling, however is skyrocketing."

Are you going to ask yourself, "Did you think insiders are selling just because they were expecting one bad month???"

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#20) On September 01, 2009 at 3:24 AM, kaskoosek (53.16) wrote:

I agree with JFC

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#21) On September 01, 2009 at 7:01 AM, ozzfan1317 (79.18) wrote:

I sincerely doubt Wells Fargo is insolvent also I htink a Correction or 10% or so is likely before we see another push higher. I already sold my positions in X and F in anticipation.

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#22) On September 01, 2009 at 7:48 AM, dragonLZ (99.38) wrote:

Strong, I was asking them (GMX & co.) because they weren't making any sense. Only amateurs base their decisions on insider buying or selling...

p.s. But I do think that selling make sense when you had enormous gains... I'm slowly selling too...but I'm not completely going out. There is still steam in this market....10,500...remember...?

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#23) On September 01, 2009 at 9:44 AM, MikeGi (95.76) wrote:

Good to see you back and posting gmX.

I agree with you for the most part, just not in the magnitude.  I definitely think the market is overvalued, but I'm looking for a pullback closer to the 900 level, maybe 850 at worst.

What makes you think Wells is "utterly insolvent"?

If you are right about that, then it would indeed have a huge negative impact and your call of 600s would seem much more reasonable, but I just don't understand why you think Wells in particular is insolvent.

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#24) On September 01, 2009 at 11:07 AM, goldminingXpert (29.46) wrote:

Only amateurs base their decisions on insider buying or selling...

Oh really? Are you sure?

 

 

 

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#25) On September 01, 2009 at 12:16 PM, StrongTrader (< 20) wrote:

Of course GDX! Don't you know? Experts based their decisions on CNBC while sippin' kool aid ;)

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#26) On September 01, 2009 at 12:21 PM, jason2713 (< 20) wrote:

Only amateurs base their decisions on insider buying or selling...

 

You're joking, right?

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#27) On September 01, 2009 at 12:24 PM, jason2713 (< 20) wrote:

What makes you think Wells is "utterly insolvent"?

I don't think they are yet, but they are on the brink.  Comercial real estate collapse, combined with failing businesses and foreclosures are weighing heavily on banks.

I don't think wells is the only one to be honest.  I just don't see how the banks are any better off than they were a year ago.  The only thing I see is the gov't made them solvent again.  But to add to this, banks are using a credit card to remain above water, and the gov't is using their credit card to allow the banks to use theirs.  The holes are still there, and growing larger.

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#28) On September 01, 2009 at 12:30 PM, XMFSinchiruna (27.47) wrote:

GMX,

Refreshing to have your voice on the blogs once more.

I agree 100% with your assessment, though I stop short of making specific projections for the indeces. I think we will have a massive correction characterized by some measure of panic, but I think the situation has grown too complex to permit me to make a target call on the broader indeces.

Here are my musings on the topic from this morning. 

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=252200&t=01006124249416869148

 

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#29) On September 01, 2009 at 2:41 PM, genron (< 20) wrote:

all else fails then

www.bigjobsboard.com

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#30) On September 01, 2009 at 3:16 PM, dragonLZ (99.38) wrote:

Now all of you who got rich by following insiders buying or selling, please stand up.

I'm sure about a million of you just stood up as it's sooooo easy: Just look at what the insiders are doing and you'll make a lot of money in stocks. Why nobody told me this before??? Am I the only one left who's not rich yet????? What the...????

p.s. So based on the insiders buying, you guys were buying in March. However, I still don't understand why you were shorting the market in April and May??? Like to be early? Leave some money on the table for the next guy, is that what you do? I guess you can afford it being so rich, and stuff..

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#31) On September 01, 2009 at 3:45 PM, booyahh (< 20) wrote:

I sold most of my stocks last week, and now I've jumped into bear ETFs.

 But i still do think that this is just a correction, and that by year-end we'll be atDow 10.5k.

 Anyway, before I jump back in and go long again, I'll see what happens in Sept-Oct

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#32) On September 01, 2009 at 4:24 PM, goldminingXpert (29.46) wrote:

dragon, using 16 question marks in the space of three paragraphs is generally a mark of a poorly-thought out idea. I was in fact buying in late Feb/March and I started shorting in May. In six months, I'll be able to ask why bulls were buying in August and September... at least I was long at the bottom whereas I haven't seen many of CAPS' bulls say they are shorting stuff here at the top.

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#33) On September 01, 2009 at 5:17 PM, dragonLZ (99.38) wrote:

Good thinking, GMX, and a valid question to ask. If this is a top, of course...

Once again, I doubt it...but, I'm not an expert, you know... :)

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#34) On September 01, 2009 at 8:28 PM, dragonLZ (99.38) wrote:

So DOW's down 186 points today...

Have a question: If this worked last time DOW was down 186 points, is there any chance it will work again?

I'll give it a try. I say it will...

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#35) On September 09, 2009 at 5:11 PM, dragonLZ (99.38) wrote:

GMX, just wondering if the end is coming soon or do we have to wait a little longer...?

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#36) On September 10, 2009 at 3:49 PM, dragonLZ (99.38) wrote:

I guess the end wasn't yesterday because the market is up 1% today. Still waiting...

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#37) On September 15, 2009 at 5:32 PM, dragonLZ (99.38) wrote:

It's September 15, and no end yet...

I know, I just need to wait a little longer...

p.s. GMX, have you forgotten LVS? I guess I was wrong as it took 4 weeks for LVS to reach $20 (not 3 weeks as I thought it might).

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#38) On September 15, 2009 at 5:46 PM, jason2713 (< 20) wrote:

Haha.

Shoot I missed this last little portion of the rally as well, all the stocks I was in as of 2nd week of Aug have gone up another 15%.

Since shorting I've lost 10-12%.

Not good, but what can you do but stick to your guns.

Good luck all, make that money while you can!  Can't ever hate on that.  And as for Alstry and GMX, I agree there is a definite disconnect between reality of the situation and the market.  It makes absolutely no sense, but I am learning that the market doesn't always do what its supposed to.

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#39) On December 22, 2009 at 11:52 PM, dragonLZ (99.38) wrote:

The end of the year is here...

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