Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Can the Markets Survive Without QE3?

Stock-Markets / Financial Markets 2011 Dec 14, 2011 - 06:55 AM GMT

By: PhilStockWorld

Stock-Markets

Best Financial Markets Analysis ArticleWTF?

Do Ben Bernanke and I live on different planets?  "For a lot of people," he said during a speech at Fort Bliss, "I know it doesn’t feel like the recession ever ended."  For what people exactly, Dr. Bernanke, does it seem like it did end?  Study after study after study show that, if you are not lucky enough to be in the top 10% of our society (and certainly not a shade of Johnson’s "Great Society" anymore) then you are pretty much f*cked – and, no, there’s not a nicer way to put it.  


Bernanke seems to love the Great Depression so much he is Hell-bent on replicating it here so he can study it in greater detail.  I suppose he has some sort of academic detachment regarding the untold suffering he is causing the American people but, who can blame him?  He just got a great rate when he refinanced his $850,000 home. 

Fortunately, we had complete confidence in Bernanke’s incompetence (see yesterday’s "To QE3 or not to QE3 – That Sets Direction") and, of course, we took advantage of yet another chance to short oil futures (/CL) off the $101 and then the $100 lines on the way down.  We were HOPING (not a valid investing strategy) that we’d get some QE3 but, as I warned Members in the morning:  "If not – well, Hell hath no fury like a market disappointed." 

Clearly, as you can see from David Fry’s SPY chart – I was not overselling the point.  Bernanke and the Fed are of the opinion that 10% unemployment is within their mandate of "promoting full employment" and don’t see the need to take action?  Let’s have a little review of how good the Fed Chairman has been as a prognosticator for our economy as he enters his 7th year at the Fed:

Drivin’ that train, high on cocaine

Casey Jones you better watch your speed

Trouble ahead, trouble behind

and you know that notion just crossed my mind

Trouble with you is the trouble with me

Got two good eyes but we still don’t see

Come round the bend, you know it’s the end

The fireman screams and the engine just gleams – Grateful Dead

Scary, isn’t it?  I think those lyrics sum it up better than me ranting about what an idiot this man is.  Can our economic engine survive a Fed Chairman who is asleep at the switch?  

This economy, the whole Global Economy, in fact, has the potential to go off a cliff between now and the next Fed meeting (Jan 25th) but, rather than put the brakes on our downward spiral or at least nudge us in a different direction – Ben would rather wait until we’re falling off that cliff at 32 feet per second squared to take action – risking the possibility that it may no longer be possible to "fix" things if our downhill slide begins to gain momentum.

We didn’t wait for Ben to screw us over, fortunately – we were already deeply concerned about the Global Economy (see Monday’s "Robbing Peter to Pay Portugal") and had gone back to "Cashy and Cautious" last week.  Now that our hopes of QE3 and a Santa Rally are dashed on the rocks – we’re glad for the DXD Jan $15 at $1.25 (now $1.50) calls from Friday’s post (offset with short FCX Feb $33 puts at $1.25, now $1.45) as well as our SQQQ Jan $16/19 bull call spread at $1.50 (now in the money at $20.19 with the spread at $2 – up 33% in 2 days) and all of our offsetting put sales there (GOOG, AAPL, MSFT) were up for the day yesterday so big winners from Monday morning’s post as well as my calls to short the S&P (/ES) Futures at 1,250 (now 1,219) and the Russell (/TF) futures at 740 (now 713) with the RUT, for example, gaining $2,700 per contract on that drop!  

In Member Chat on Monday, we did pick up a long on NLY (very hedged) and an aggressive FAS $60/61 bull call spread for the White Christmas Portfolio at .55 on the assumption XLF would hold $13 through Friday.  We tested $12.50 yesterday and, if we’re not over $13 by lunch, we’ll pull those $60s (now $1.70) off the table and leave the $61s as a naked call – if those expire worthless, then it’s a $1.15 profit off the .55 net entry (209%), which is not bad for a trade we called wrong!  

SLF was another bottom fishing find (thanks Savi) and we took a chance on DMND – in case they don’t go BK.  Yesterday, we added a bearish play on NFLX at 11:52,  TLT at 1:08, a bullish trade on RIMM at 1:51 (also betting they don’t go BK, like they are priced),  

DIA $117 puts for .90 at 2:12 that we took off the table at $1.20 at 2:45 (up 33% in 35 minutes), then the DIA 12/31 $116 puts at $1 at 2:50, which we dumped for $1.20 (up 20%) followed by the 12/31 $115 puts at $1 at 3:36 which we got out even on.  That put us back to fairly balanced into the close but, if we fail to take back the 1,235 Must Hold line on the S&P this morning (doubtful) – it will be bearish bets we’re looking to add this morning.  

What’s the good news that can take us higher now?  What catalyst can we expect as Europe has done whatever it is that it did and China and Japan did their things and Ben did his thing (which is nothing) so – now what?  Now the attention turns back to the data, back to the Fundamentals and the Fundamentals are NOT sound.  Not at all.  My prior bullishness on the Fundamentals included the expectations of an injection of QE3, without new money coming in from somewhere – we can expect those Must Hold lines to begin to look more like the top off a 10% lower range.  

It’s all about the Dollar, of course but, if Europe is easing and China is easing and Japan is doing whatever they are doing – then doesn’t that make the Dollar relatively stronger and, if the Dollar is stronger, then commodities are lower and, if commodities are lower – then won’t that drag down the commodity sectors and won’t they, in turn drag down the S&P and, in turn, the Nasdaq, Dow, NYSE and Russell?  

That’s all Fundamentals are – follow the money.  Or, in this case, thanks to the Fed – the lack of it

- Phil

Click here for a free trial to Stock World Weekly.

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

© 2011 Copyright  PhilStockWorld - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Rob
14 Dec 11, 14:34
QE 3 ... the last bullet

QE3 might be the last silver bullet of the Feb. I suspect Feb won't use it till the cassh call in Europe peak during Feb or March in 2012.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules