Select Archives: 2008

TrendView BRIEF UPDATE      Friday, December 19, 2008
In our final missive prior to end of year holidays (respecting the extremely fractured 2008 holiday trading schedule) we note that in spite of being driven down a bit further by the extremely accommodative FOMC statement on Tuesday, the US Dollar Index managed to bottom near secondary .7750 support and leave an UP CPR from the .7890-48 area with help from a most unexpected quarter: Monsieur Trichet. In hindsight it was also not much of a shock that a thin, late-year T-note upside explosion ended the very week the Fed restated its de facto quantitative easing intentions. as the equities took obvious comfort from that to extend the DJIA rally to the 9,000-9,100 resistance. Even though our sustained (at times aggressive) bearishness toward equities throughout the year had served our clients well, we were also kind of glad to see the back of 2008.
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TrendView BRIEF UPDATE      Wednesday, November 26, 2008
The very next day we noted there seemed to be a lot to be thankful for into Thanksgiving, at least for US equities bulls who would see the Fed hints of de facto quantitative easing lift the DJIA back above 7,900 and 8,200. Yet, the real joy was reserved for govvies bulls who saw the December T-note push above 122-00, which liberated both it and the already strong European long ends for massive late year rallies that also supported equities' newfound stability; even if that had the effect of temporarily anhiliating the US dollar.
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TrendView GENERAL UPDATE      Tuesday, November 25, 2008
US equities recovered from the bear extension into mid-November new lows (not seen elsewhere), yet long-dated govvies presumed there was good reason to remain strong as the Bund & Gilt pushed through major resistances even as the T-note stalled a bit into 121-00 resistance from back into its March (Bear-Stearns capitulation) highs. US Dollar Index also fell back below .8750 resistance as the first crack prior to the flood of selling that would take it down to .7766. Crude Oil also viewed the equities' recovery with skepticism, only bouncing to its failed 55.00 support prior to heading down below 50.00 once again.
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Capital Markets Observer IV-17      Wednesday, November 21, 2008
After repeated warnings that multiple failures up near 9,708 in mid-October and again into the early-month US election left DJIA and other equity markets vulnerable, the multiple tests of the DJIA 8,200 and 8,000 lower support areas motivated the completion of our major report on the broader implications of the Super-Cycle Correction(sm). Considering how far down the equities had come while still looking weak, we could not help but lead with a quote from the late great Warren Zevon, "Well, it ain't that pretty at all."      Of course, analysis of the broad implications from the major technical trend DOWN Breakout that spoke of a failure of the major growth cycle out of the 1970's consolidation can be accessed on our Super-Cycle Correction(sm) page. We refer you over to that for the full text-based analysis with interesting supplemental resources, as well as the accompanying slide show. Ironically, it was published just as the DJIA finally neared (and held) the 7,400-7,200 support originally projected in Capital Markets Observer IV-15 immediately after the early October debacle.

TrendView GENERAL UPDATE      Tuesday, November 4, 2008
Our cautionary pre-election word on the DJIA 10,000-9,700 area still being critical resistance. The pre-election high later that afternoon is 9,654. T-note critical back near 116-00 resistance, while any previous thought of the other developed a countries de-linking from US weakness is totally shattered by extended 'haven' rally in US Dollar Index up to test of .8750-.8850 resistance. Interestingly enough equities recovery also drives Gold down to major cyclical correction low into $700 support, yet only provides a very temporary bounce to techincally damaged Crude Oil grinding down toward key $60.00 support.
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Weekly Overview                  Monday, October 13, 2008
After DJIA sharp failure below 10,00-9,708 major long term support, we focus on that area as resistance in addition to some interim levels. Tuesday's major recovery failure high is 9,794 prior to heading back down to the 8,200 area.
US Dollar Index pulls back from .8300 on equities recovery; T-note settles into a bottoming range prior to major rally on continued equities weakness.
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TrendView BRIEF UPDATE      Friday, October 10, 2008
Rapid follow-up with interim DJIA supports in the 8,200, 8,000, and 7,500 areas, which all became incrementally important throughout late 2008 into early 2009.
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Capital Markets Observer IV-15      Wednesday, October 8, 2008
The first major edition after the massive equities break throughout the week (ironically after Congress passed the TARP rescue package) revisited the significance of the technical failure noted in a hasty Tuesday 'preview.' All major US equity indices had DOWN Acceleration on the way below long-term support, most critically DJIA failing the 10,000-9.708 area; another irony insofar as that was the October 2004 pre-election low prior to Mr. Bush dominating the polls. 'Equities Quo Vadis?' explicitly articulates major supports much lower, and offers the first mention of the Super-Cycle Correction(sm). That extends to pointing out a likely swing back down to the 7,400-7,200 support from the previous 2002-2003 cycle low, even though it took awhile to get there.
Of note, the T-note also sold off toward mid-111 support on general risk aversion, but US Dollar Index surged to .8300 resistance on 'haven' buying.
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Capital Markets Observer IV-14      Thursday, October 2, 2008
While DJIA has rebounded temporarily from a Close below 10,500, background situation remains completely unsettled. On what we now clearly realize was the Eve of Destruction, 'govvies' rallied modestly in the face of equities' weakness and US Dollar Index took on first hint of 'haven' bid to follow with a late-week push above .8000. 'Let 'em Eat MBS' explores how an extensive American anti-bailout revolt may bring the house down on themselves, 'Carload of Beef' reviews why toxic MBS cannot be properly priced,
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Read FT editorial "In praise of free markets"

Capital Markets Observer IV-13      Wednesday, September 24, 2008
It becomes apparent that the Congressional process for approving a financial rescue plan will not be rapid. Yet that is due in part to relative sophistication of members, with one pointed assertion that a lack of foreclosure mitigation was a "gaping hole" at the center of the plan; reinforced by what at that time was a record 9.5% drop in Existing Home Sales prices. 'Rescue Round One Recap' is a tragi-comic general review, and Fiddler's Notion discusses there is 'Plenty of Blame' to go around (and even an observation on the 'race card.')
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TrendView MARKET ALERT      Friday, September 19, 2008
Unusual second Market Alert in same week, as the previous afternoon Treasury Secretary Paulson announced forerunner of the TARP program, rescuing DJIA from weakness into a 10,500 new low. Yet, same narrow focus on addressing securities losses instead of direct at-risk home borrower relief still did not appear very constructive. That said, DJIA did rebound for a very temporary test of 11,500 while T-note dropped sharply on reflation concerns.
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Capital Markets Observer IV-12      Thursday, September 18, 2008
Things remain fraught as DJIA fails below mid-July weekly UP CPR bottom from GSE rescue. In spite of repeated confidence building efforts, any rally is now back into resistance. 'Still No Solution' highlights RTC-style rescue focus continues to be on banks, not the likely far more critical at-risk borrowers. Decreasing impact of rescue announcements covered in Authers' FT column. Extensive previous OECD Interim Assessment points out still wide interbank interest rate spreads along with sharp tightening of bank lending standards.
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Read FT John Authers' "Weekend could be a long time in finance"
Read OECD Interim Economic Assessment from September 2nd

TrendView MARKET ALERT      Monday, September 15, 2008
Financial services crisis drives psychology in the face of Lehman bankruptcy, Merrill buyout and AIG problems. Revisit idea this is due to powers-that-be being stuck on "liquidity" solutions to "asset value destruction." That sees DJIA below 11,000 on the way to 10,500 support as the T-note pushes to 120, but US Dollar Index drops back to .7750 on excessive pump priming fears.
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Weekly Overview                  Monday, September 8, 2008
DJIA gets a bounce from the initial test of 11,000 support in the wake of FNMA and FHLMC 'conservatorship'; vindicating Greenspan mid-August prediction. However, DJIA stalls into initial resistance at 11,500 over the next week while the US Dollar Index is boosted to .8000 by further economic fears in Europe.
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Read US Treasury Secretary Paulson's GSE Conservatorship statement

TrendView BRIEF UPDATE      Friday, September 5, 2008
DJIA back in trouble below 11,300 after a month of stalling around 11,750, which motivates T-note above 116 (with 120 possible), and US Dollar Index pushes through .7800 on its way to .8000. OECD Composite Leading Indicators (six-month forward view) show accelerating weakness in major economies.
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Capital Markets Observer IV-10      Friday, August 8, 2008
Back from a week's holiday we note quiet stability in equities and bonds, while US Dollar Index explosion above .7432 signals a solid bottom. 'Toxic Trichet' and 'Still Dark' discuss backward hawkish stances of ECB and Fed even as they note economic weakness. That adds to employment and GSE woes, along with first NAR focus on foreclosures as a major component of home sales.
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Read the NAR Existing Homes Sales for June 2008

Capital Markets Observer IV-8      Thursday, July 17, 2008
Churchill quoted on "...the end of the beginning...", as the only way to support US GSE's was de facto nationalization; also pressured Bush into accepting the Congress' housing relief bill previous week. As this sinks in, equities quietly begin two months of stabilization prior to bigger late September credit market threat to the banking system. Also highlighted possible US dollar bottom as allegedly 'de-linked' currencies are still overvalued in weak global economy. 'Malleable Mind Frame Minuet' discusses extreme reticence of Paulson and Bernanke forced to abandon purist 'free market' approach to problems.
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Read the Congressional GSE reform & Hope for Homeowners bill
Read US Treasury Secretary Paulson's less than enthusiastic remarks
Read John Authers' FT Short View on "...a better liquidity trap."

TrendView BRIEF UPDATE      Tuesday, July 15, 2008
DJIA continued to grind lower under 11,635 January low on the back of further general economic weakness and weak housing fomenting the crisis at FNMA and FHLMC. Previous Friday's approval of Congress' stalled housing relief plan could not prevent DJIA slide below 11,000 that morning prior to combined Bernanke-Paulson congressional testimony; which would turn out to be telling. Click to Read

Capital Markets Observer IV-7      Tuesday, July 8, 2008
Established trends continue to grind in same directions, yet fundamental background deteriorates further. We allow that even mighty Crude Oil is overextended at major weekly oscillator thresholds into $145 per barrel, especially in light of further economic weakness. 'Real World Implications' reviews how HELOCs (home equity loans) are being withdrawn by banks, a telling major sign for future forced front-line consumer spending restraint.
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Capital Markets Observer IV-6      Tuesday, July 1, 2008
Established trends grind on: equities lower on DJIA slippage to 11,200, US dollar down, fixed income up. Analysis of Sen. Dodd's Countrywide conundrum that opponents use to block housing assistance. Fiddler's Notion: also on the 'US Housing Bailout' from savvy observer believing foreclosure prevention is the only way to address not just liquidity problems but insolvency for major financial institutions: so sayeth Lawrence Summers. Interesting.
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Capital Markets Observer IV-5      Wednesday, June 25, 2008
Prediction of 'no action' by FOMC was accurate. Yet misguided statement maintained hawkish sentiment that had weighed on equities since mid-May. Stunned DJIA held 11,750 that day, yet fell below critical old January 2000 high the next day. That move to a new low for the downtrend confirmed bearish tendencies, and was also enough to finally get the T-note rallying again from a test of 112-00 area. Fiddler's Notion: 'Let 'em Drive Hybrids' on Mr. Obama's desire to reform energy policy regardless of the cost. Sound familiar?
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Capital Markets Observer IV-4      Wednesday, June 11, 2008
DJIA likely to suffer more damage below failed 12,700-12,500 area support if afternoon Beige Book weak; which it was. Yet 'govvies' still weak while many refuse to believe broader bottom in equities is failing. Resurrection of Capital Markets Observer includes new feature 'The Fiddler's Notion' for offbeat observations: 'Bernanke mea culpa?' on trust in crude oil forwards' predictive power, and ironic review of Bear-Stearns' failure to follow its own research.
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Special Market Highlight: EQUITIES Tech      Thursday, June 5, 2008
After the weakness noted below, DJIA put on a rally back up to 12,600 area in front of the US Employment report for May. While fundamental cross currents remained unsettled, the technical 'trend logic' was clearly eroding. That called for a special presentation of a chart view that was increasingly pointing toward a retest of the January-March lows, or even a swing significantly below them.
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Weekly Overview                  Monday, June 2, 2008
As DJIA had indeed experienced a sharp failure below 12,700 shortly after our previous report, whether it still had a chance to push above 13,100 now rested with its ability to hold the 12,500-450 support tested early the previous week. "A violation of the latter would seriously impugn the overall bottoming tendencies,..." and that is indeed just what happened the following day.
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Weekly Overview                  Monday, May 19, 2008
DAX finally joins others above February highs in the wake of previous week's strong ECB Monthly Bulletin and EU GDP forecasts. Yet, that flies in the face of extremely weak OECD Composite Leading Indicators, with DJIA failing at a Double Top with early-month 13,100 high into resistance. We reiterate idea it is premature for equities to return to full-blown bull trends. More likely Last Hurrah, and DJIA failure below 12,500-450 would seriously damage them.
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TrendView BRIEF UPDATE      Thursday, April 17, 2008
We were misguided in believing the previous week's DJIA 12,450 short-term DOWN Break would derail its ability to Break UP above 12,768. After holding above 12,200 support, it pushed back above it in spite of a weak Beige Book. That sustained resilience of an upside bear market reaction also weighed heavily on fixed income, as the T-note finally cracked 118-00 area support. These were our last specific trend views again for awhile, as markets extended equities strength, US dollar firmness, and 'govvies' weakness.
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TrendView BRIEF UPDATE      Wednesday, March 19, 2008
Even a .75 percent Bernanke rate cut didn’t help until the equities are finally reinvigorated by economic wisdom of… Mr. Bush!?? Fixed income finally tops in the wake of that. Our first mention that above 12,768 DJIA 13,900 Objective is not realistic; ergo, equities bearish even if an extended recovery occurs. That said, recovery finally puts bottom in US Dollar Index near .7000 Objective. Once again our last major views for awhile, as markets settled into ranging reactions while the DJIA ground higher toward the 12,768 reaction high.
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TrendView BRIEF UPDATE      Thursday, March 6, 2008
The previous afternoon's downbeat Fed Beige Book, a morning 'no action' from both BoE and the hawkish ECB left equities under pressure into Friday's OECD Composite Leading Indicators. And the indication there of "slowdown phase in most major OECD economies" along with a weak US Employment report for February was enough to put DJIA below 12,000 after the previous Friday's failure below 12,450. This began the process of back to back weeks of the Spitzer and Bear-Stearns capitulation basing action into 11,750.
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TrendView BRIEF UPDATE      Thursday, February 28, 2008
'The agony and the ecstasy' and back to the agony for the equities, with a commensurate response from fixed income. The failure of DJIA to push above 12,750 felt stale, yet with burden of proof on the bears to Negate a 12,450 UP Break to send it back down to supports in the 12,000 or even 11,500 areas. Weak economic fundamentals also push the US Dollar Index below .7500.
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Capital Markets Observer IV-3      Wednesday, January 30, 2008
Technical bottom in DJIA from 12,000 area underpins near-term recovery, puts a lid on fixed income and a near term floor under US dollar. Summers and Soros at Davos agree direct address of US housing weakness is necessary or other measures are not going to help; eerily prescient. All of which reinforces 'Flailing III', 'RTC-2008 III' and 'Solution at Hand' pointing out availability of existing programs that Messrs. Paulson and Bernanke never use. This was our last major report for awhile, as markets settled into ranging reactions.
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TrendView BRIEF UPDATE      Tuesday, January 22, 2008
"A funny thing happened on the way to ..." Europe being delinked from US economic weakness; it isn't; in spite of ECB contrary view. Fed puts through emergency intermeeting cut in order to stem slide before DJIA fails 12,500 area. Fixed income surges to higher resistance before reacting.
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TrendView BRIEF UPDATE      Thursday, January 17, 2008
DJIA Wednesday Close below 12,500 Negates short term basing attempt in front of downbeat speech by Mr. Bernanke and negative ECB. Next support not until 12,000 area. Forex and fixed income more convoluted than that.
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Capital Markets Observer IV-2      Thursday, January 10, 2008
The near-term DJIA bounce from 12,500 left only a minor bottom overrun the following week. No surprises as Messrs. Paulson and Bernanke were 'Flailing', other suggestions were 'All Over the Map', with 'RTC-2008 II' reinforcing our suggestion that a direct at-risk borrower bailout would be necessary.
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Read Lawrence Summers FT Comment on America must have stimulus
Read US Treasury Secr. Paulson's remarks on US housing problems