Thursday, June 18, 2009

Contrary Indicator.... The Retail Investor Is Back.....

Looks like the "herd mentality" ( with the help from usual vicarious agents / see Abby Joseph Cohen 2009 vs Abby Joseph Cohen 2001.....Which Call Is Worse? & The Wall Street Clown Show via Michael Panzner UPDATE: CNBC´s Dennis Kneale: "The Great Recession Is Over") has once again sucked the small investor into this very dangerous market.... Just in time after a 40 percent ( S&P from 666 to over 900, DAX from 3600 to north of 5.000, Nikkei from 7.000 to over 10K, etc..... ) runup & insiders dumping shares ( see Insiders Exit Shares at the Fastest Pace in Two Years including a very interesting chart ) .... The clip is excellent !

Es sieht einmal mehr danach als wenn der "Herdentrieb" ( auch dank der wunderbaren "Expertenunterstützung" / siehe Abby Joseph Cohen 2009 vs Abby Joseph Cohen 2001.....Which Call Is Worse? & The Wall Street Clown Show via Michael Panzner UPDATE: CNBC´s Dennis Kneale: "The Great Recession Is Over" PURE COMEDY!) einmal mehr ganze Arbeit geleistet hat und den Privatanleger im großen Stil zurück in den "verminten" Markt gelockt hat...... Nach Anstiegen von ca. 40% ( S&P von 666 auf über 900, Dax von 3600 auf fast 5200, Nikkei von 7000 auf über 10K, usw. ) und massivsten Insiderverkäufen ( siehe Insiders Exit Shares at the Fastest Pace in Two Years beinhaltet u.a. einen sehr sehenswerten Chart ) gerade noch rechtzeitig..... Klasse Clip!

Hat tip to Zero Hedge





Neesdless to say that i think Biderman is spot on & that herding is a global "phenomenon" ( see A year in perspective, Shanghai edition via FT Alphaville )......

Überflüssig zu erwähnen das ich hundertprozentig mit Biderman übereinstimme und das der Börsenwahn weltweit erneut um sich gegriffen hat ( siehe A year in perspective, Shanghai edition via FT Alphaville ) ...... UPDATE: Hier ein weiterer erstklassiger Kontraindikator.... Der ZEW Index ( Das ZEW befragt jeden Monat Analysten und institutionelle Anleger zu ihren Erwartungen an die konjunkturelle Entwicklung ) sieht charttechnisch so aus ( sicher kein Zufall das der fast identisch mit dem DAXverlauf ist..... ). Textlich geht das dann ähnlich dem Artikel im MM ( siehe ZEW-Index signalisiert Ende der Talfahrt ) über den Ticker.....

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7 Comments:

Blogger jmf said...

Looks like the "small invetsor" isn´t the only one vulnerable to herding....


Brazil’s Pension Funds May Get Approval to Exit Fixed Income


Brazilian pension funds that manage more than 425 billion reais ($215 billion) may be allowed to move all of their money out of fixed-income assets and into investments with higher potential returns such as stocks and private equity, the industry regulator said.

6:37 AM  
Blogger jmf said...

via Ritholtz

Buyers Fatigue?


“There were hints, as well, that bullish sentiment, which for a spell remained fairly constrained, had escalated to something approaching euphoria. Investors Intelligence readings of advisory sentiment showed most of these supposed savants, who often function best as contrary indicators, have come a bit late to the party; in recent weeks, the percentage of bulls among them have registered in the mid-40s, compared with the low 20s for the bears.

Moreover, trading took on a distinctly more speculative tone, with small stocks chalking up big gains despite their conspicuous lack of very much in the way of sales and nothing in the way of profits or prospects. And perhaps the most persuasive evidence of the gamier spirit abroad in Wall Street is that, despite the mounting demolition of the commercial-property market, Morgan Stanley plans to sell re-securitized commercial mortgages.

Which, as one portfolio pro acidly observed to Dow Jones Capital Markets, amounts to peddling tarnished assets nicely repackaged with higher ratings. That kind of thing has been going on in residential asset-backed securities in recent months, presumably fueled by the notion that the housing decline has bottomed. But that it now has spread to commercial mortgages when things are getting notably worse is clear indication that the mind-set and, indeed, some of the very stuff that got us into such a jam is back. Alas.”

11:55 PM  
Blogger Francois-Guillaume said...

i dont have the numbers but i have the feeling looking at the headlines, that there has been a lot of equity offerings this year (not only in financials). Thats deleveraging the system. even if those firms go bust, thats as much less losses to be taken by the banks...

if so, it could well be long term bullish for the market. i see this topic being underestimated and not being discussed at all, where as i think its actually the most important one... secondary market is only noise and perception. primary market is when NEW MONEY comes to the market... and thats bullish.

i see the entire blogging community as bearish while the mkt price action is bullish... on that basis only, it would make me feel very bullish

12:17 AM  
Blogger jmf said...

Moin Francois-Guillaumme,

you are right. Quite a few companies have used the window of opportunity to raise capital.

As i have said in May related to the stress testing farce....

"Let´s hope that the banks that have passed the test are able to attract as much "smart money" as fast ( window of opportunity probably short lived ) as possible...The taxpayer needs a break....."

Even outside the banking sector some have been able to raise fresh money to pay down debt or to keep them from braking covenants....

But compared to the overall debt problem i think this will only have a very very very small impact.

The new issuance is tiny compared to the leverage that is out there....

Most companies will be happy if they will be able to roll over their maturities or loans.....

On top of this i think this "window of opportunity" is now closed.....

Congratulations to all the companies that have managed to issue new securities/stocks. Well done

But compare this to news like this

"Forty companies have been jettisoned from the ranks of investment-grade credits this year"

The overall leverage level of companies has never been higher and i think lots of companies will be cash flow negative for longer than most think.....

I think the main driver to lower leverage will be a debt to equity swap or highly dilutive secondary offerings. Both not very good news for stock prices....

And i have some serious doubts that every dilution will be cheered with a higher equity price like during the past few weeks....

As in the past a significant haircut will be the price for keeping the company alive....

But for a large part of junk companies the debt to equity swap will become reality.....

3:16 AM  
Blogger Francois-Guillaume said...

agree with debt to equity swap.
but IF that happens.
the system is reset, companies can focus on making money again, and not on balance sheet, and we start up a new cycle ?
then the pb becomes the high debt of the public sector, which probably ends in inflation. positive for stocks.

stocks are expensive. but market technicals seem there and mkt is forward looking. cashflow may be bad for a few more years but mkt technicals say it doesnt matter now and many things can happen in between.

6:41 PM  
Blogger jmf said...

Moin Francois-Guillaume,

i don´t care if the market will have a last leg up.

For me the chance/risk profile is probably the worst i have seen in a very long time.

8:51 PM  
Blogger jmf said...

Chart Of The Day

For some perspective on the current stock market rally that began on March 9th, today's chart illustrates duration (calendar days) and magnitude (percent gain) of all significant Dow rallies that occurred during the 1929-1932 bear market (solid blue dots). For example, the bear market rally that began in November 1929 lasted 155 calendar days and resulted in a gain of 48%. As today's chart illustrates, the current Dow rally (hollow blue dot labeled you are here) is above average in both duration and magnitude relative to the average 1929-1932 bear market rally (hollow red dot). Compared to the current rally, only one 1929-1932 bear market rally was greater in both magnitude and duration and that was the first 1929-1932 bear market rally that began in November 1929.

1:16 AM  

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