:-)

that was in part my feeling after the run up until "grey tuesday" ..... :-)

das war in etwa meine gefühlslage bis zum "grauen dienstag" ..... :-)

dank an oke!

"grey tuesday" panic selling in perspective from 1949 on

what a chart! i differ with the writer who is in part bullish (because no hedge funds has blown up so far, no market top in sight, etc) especially his argument

Given that the amount of equities held by households (as a percentage of their total and financial assets) is only at its 54-year average - there is still a lot of potential for further accumulation of U.S. and international stocks by U.S. households. The U.S. cyclical bull market lives on...

with cash at lows? is very weak (see chart from contrary investor)

to read his thesis click on the headline

netter chart. überflüssig zu sagen das ich nicht mit dem autor übereinstimme der weiter bullish bleibt. seine argumente klingen ziemlich dünn. dazu bitte auf die überschrift klicken.

The Arms Index is named after its designer, Richard Arms. It is also known as "Trin," which stands for the "Trading Index." The Arms Index compares two of the markets key "internals." The first is the relation of advancing issues to declining issues (stocks up at least a penny on the day versus stocks that have declined at least a penny.) Meanwhile, the second is the relation of advancing volume to the declining volume (the total volume of all stocks that closed higher on the day versus the total volume of all stocks that closed lower). http://tinyurl.com/27ytop



As one can see from the above chart, the selling that we endured on the U.S. stock market during February 27th and the following four days was one of the most intense in history. Not only was this apparent in the U.S. stock market, but all around the world as well as the major global market indices plunged. At the height of the selling, money managers in Asia were remarking that they have not experienced this kind of selling intensity since the height of the Asia Crisis in October 1997.

.......More encouragingly, there were no hedge fund "blowups" during the latest crisis - despite the intensity in selling on February 27th (the NYSE ARMS Index closed at 15.77 that day - the highest reading since the 30.76 reading on September 26, 1955 - the Monday after President Eisenhower's weekend heart attack). Moreover, there were only six prior instances of an ARMS reading above 15 since January 1940 - with one of them coming during the Fall of France, two of them during 1943 (when it seemed like the Allies were losing World War II), and two more during 1946 when the 1942 to 1946 cyclical bull market was in the midst of topping out. For comparison purposes, the NYSE ARMS Index hit a level of 14.07 during Black Monday, on October 19, 1987

It's behind you / economist

good story. and a good song....




Should twitchy markets scare us?
“WHAT'S that coming over the hill? Is it a monster?” The Automatic, an indie-rock band, might almost have written its recent hit with the stockmarket in mind. Most people struggle to muster much sympathy for overpaid Wall Street traders when share prices are falling. What they worry about is a market decline that seems to anticipate—or even cause—an economic downturn. ....

.. There has been a sharp fall in HSBC's activity-surprise index, which reflects whether economic numbers have surpassed or fallen short of expectations. A weaker-than-expected services-sector survey was followed by a surge in American unit labour costs, a fall in pending home sales and a 5.6% drop in factory orders, all seemingly negative indicators.

A look back at the past week or so suggests investors are indeed worried about economic growth. The assets that have sold fastest have been growth-sensitive ones—shares, commodities and emerging markets—whereas Treasury bonds have risen. Within stockmarkets, defensive shares, such as food producers, have done better than cyclical ones, such as miners.

Market turmoil also matters because financial services play such an important part in many developed economies. In America the industry makes up more than 30% of profits. Wall Street's big securities firms were on top of the world only weeks ago, basking in record profits and handing out bonuses to make Croesus blush. Last year was the best ever for the five biggest firms, which made combined profits of more than $30 billion. ......

The credit markets, to which the banks are naturally exposed, have long looked like an accident waiting to happen. In late February the interest-rate margins above Treasury bonds on high-yield corporate and emerging-market debt were very low by historical standards. Some narrowing of these spreads was justified by the fundamentals. Emerging economies are a lot stronger than they were ten years ago, with many enjoying current-account and budget surpluses. Surging profits have kept the default rate on corporate debt down to very low levels.

But investors probably became too complacent. According to Martin Fridson, a credit strategist, spreads in late February no longer reflected the return needed to compensate investors for the historic default rate on bonds. That is especially odd given that the credit quality of bond issuers has steadily deteriorated in recent years, as fewer and fewer companies have achieved the prestigious AAA rating. (thats quity an understatement.../ne leichte untertreibung. thanks to http://calculatedrisk.blogspot.com/ )

Credit spreads have widened again during the sell-off. The cost of insuring against default in the European high-yield debt market rose by almost 50% in a week (see chart). Higher costs for borrowers could prove to be a drag on economic activity.

Another element of the financial system that has caused concern is the “carry trade”, where investors borrow low-yielding assets to invest in higher-yielding instruments. Japan's low interest rates have made the yen the chief target for the trade in recent years.

When the storm broke, investors reversed their bets. .... (run to the exit forrest......)

It is tempting to believe the yen's movements have been fuelling recent events. But that may be simplistic. Stephen Jen, a currency strategist at Morgan Stanley, believes the equity and credit markets were the main arenas for a rethink on risk. Once these markets stirred, hedge funds were compelled to exit their riskier trades wherever they could. The liquid currency markets were an obvious place to start.

In any case, hedge funds were not the only ones who had been nudging the yen lower. A big part had been played by Japanese savers searching for higher returns overseas. They might limit the yen's rise. David Woo at Barclays Capital reckons that, each time the yen strengthens towards 115 to the dollar, Japanese funds will find it hard to resist the temptation to buy “cheaper” overseas assets—and start bidding down the yen again. (chart was befor the latest small rebound in the yen / der chart zeigt noch nicht den letzten kleinen rebound)

Sinking subprime mortgages, risky credit markets, reversing carry trades—any one might be the harbinger of bad economic news. Many monsters turn out to be a figment of the imagination, but this one seems more solid than most.

some charts from yesterday.......and some cartoons

i think it is safe to say that this cartoons is now officially outdated.... we have now moved to the sell side.....but i have to wait for cohen, cramer, battapaglia etc to confirm this.............. :-)

denke das dieser cartoon seit gestern ausgedient hat.---- wir sind wohl jetzt zu der verkäuferseite gewechselt... wir hier müssen aber wohl auf all die daueroptimisten speziell auch in der presse warten um das zu bestätigen (kann nicht alle aufzählen).....


i think this one is also outdated.......the bear has entered the stage........


here now the facts: europe and asia have extended their slump today.

i especially like the opinion from bill cara on the sudden drop. http://www.billcara.com/

At 3:00pm ET yesterday the Dow 30 index dropped about 200 points in literally seconds. There was commentary in the media that the trade data had fallen behind and that had caught up at that moment.

I believe otherwise.

Having been in the business at a high level, I believe a rational explanation is that margin calls were sent to under-margined accounts during the day. With one hour to go, the broker-dealers would take action by selling out accounts of under-margined clients that had not responded to demands.

here comes the response from dow jones:

System problem caused calculation lag Tuesday

maybe caused from too much liquidation going on....... :-) / evtl. zuviel verkaufsdruck.... :-)

update from http://tickersense.typepad.com/

We all know by now that the sudden 200 point drop in the Dow yesterday was due to a calculation delay caused by information overload by Dow Jones' data systems. Below we calculate how the intraday price chart should have looked based on the actual price changes of the Dow's 30 components. As the chart shows, the calculations began to go awry a little after 1:30 pm and continued until the computers finally caught up at 3:00 pm (i leave it to the readers to judge this action.../macht euch selber einen reim darauf......)

größer/bigger http://tickersense.typepad.com/photos/uncategorized/dowactual.jpg

this is what to be expected. but i think this time they need to clone van gogh and michelangelo...........

hier kommt wohl was wir jetzt zu erwarten haben. denke aber das dieses mal ne verbindung von van gogh und micheangelo nötig sein wird......

and on top of this the "spin doctors" / dazu wohl auch noch die "spin doctors" :-)

more graphs etc here from barry ritholtz http://bigpicture.typepad.com/comments/2007/02/helluva_day_dow.html

and mish! http://globaleconomicanalysis.blogspot.com/2007/02/advance-decline-volatility-charts-2007.html

both very good!