Anecdotal bottom indicator

Discussion in 'Trading' started by Cutten, Oct 6, 2008.

  1. Cutten


    This is a classic:

    One of my friends is in a small town in Italy. I was on the phone to him earlier today discussing the market crash. A policeman knocks on the door for some routine enquiry, and when he finds out my friend is discussing the market, he says "Sell everything, and buy gold!"

    Now if a rural Italian policeman randomly starts talking about the market, saying sell all stocks and buy gold, *after* the market has just crashed 9% in one day (intraday lows) surely that has to be the ultimate contrary signal.
  2. Chow Bella! :cool:
  3. Aok


    Maybe he's right?

    Certainly the next two quarters are going to be interesting to say the least. Not to mention the rest of this week.
  4. Look the economy is going to take a major hit in all areas and with little to no credit (debt) available this will only accelerate the slow down. We are only in the start of a multi-year slowdown.....recession....

    You guys seem to think that what took years of excess credit and monetary expansion will be fixed overnight.
  5. Not "all" areas as you state.

    The Defense budget out to 2009 is a done deal . . . companies like LMT and LLL generate HUGE cash flows. There is no credit crunch at these firms, nor at their customer, and customers.

    In fact, Israel just ordered $15 BILLION worth of F-35's ( 25 planes ) with an option to buy an additional 50 at a later date.

    The jet is still under development and is not yet in service, but the U.S. plans to eventually acquire 2,458 planes for the Army, Marines and Air Force at a cost of $300 billion.

    People need to upgrade from the old F-16's and F-15's, even the USA.
  6. Don't look at the market indices look at the fundamentals and news reports.

    I truly believe that CircuitCity will be BK before year end and F & GM by end of next year.

    Fitch downgrades Ford credit rating another notch
    By TOM KRISHER 10.06.08, 4:41 PM E


    Fitch Ratings downgraded Ford Motor Co.'s credit rating deeper into junk status Monday as economic worries dragged down auto shares along with stock markets around the globe.

    The credit rating agency said it reduced the issuer default rating one notch to "CCC" from "B-" for both Ford and its finance arm, Ford Motor Credit Co. (nyse: FCJ - news - people ) Both ratings are noninvestment, or junk, grade.

    Fitch analyst Mark Oline said the growing impact of the credit crisis on auto sales, supply chain financial risks, the financial health of dealerships and the capital advantage of its Asian competitors were all factors in the downgrade.

    "These issues are compounding the already severe stresses resulting from weakening economic conditions and the migration to fuel-efficient vehicles," Oline wrote in a note to investors. "Plummeting sales volumes will accelerate negative cash flows in the second half of 2008 and will result in deep cash drains through 2009."

    Even though Ford has made progress in cutting costs and commodity prices have eased, the automaker could reach its minimum operating cash requirements of $10 billion to $12 billion in the second half of 2009 unless it raises more capital or sells assets, Oline wrote.

    Ford shares fell 36 cents, or 8.9 percent, to close at $3.69 Monday as the Dow Jones industrial average fell 370 points. Earlier Monday, Ford shares dropped as low as $3.32, their lowest price since Nov. 14, 1985, according to the Center for Research in Security Prices at the University of Chicago.

    Ford spokesman Bill Collins declined to comment on the rating or the share price.

    Other automakers also saw their shares fall. General Motors Corp. (nyse: GM - news - people ) stock dropped 52 cents, or 5.8 percent, to $8.48, while U.S. shares of Toyota Motor Corp. (nyse: TM - news - people ) fell $4.72, or 6 percent, to $73.38. Honda Motor Co. (nyse: HMC - news - people ) shares tumbled $1.29, or 4.8 percent, to $25.34, and Daimler AG's U.S. shares plummeted $4.82, or 11.4 percent, to $37.65.

    Oline wrote that struggling Ford had $26.6 billion in cash at the end of the second quarter, and it has access to an $11.5 billion revolving line of credit. But that has been reduced by the bankruptcy of Lehman Brothers (nyse: LEH - news - people ), which had committed to lend $890 million.

    The automaker also has liquidity sources in the $25 billion federal loan program for the industry and possible delays in its payments to a union-administered trust fund that will take over retiree health care expenses starting in 2010, Oline wrote.

    Fitch downgraded General Motors Corp. to "CCC" on Sept. 22, citing similar factors.

    "Although Ford remains the best positioned among the Detroit Three in terms of liquidity, financial resources, manufacturing footprint and intermediate-term product plans, these relative attributes are being overwhelmed by industry conditions and the impact of the credit crisis," Oline wrote, adding that Fitch does not expect industry sales to bottom out until 2009.

    Part of the decline was attributed to the credit crunch in which banks, fearing defaults, have raised credit standards for those wishing to buy vehicles. Many dealers report losing sales after a deal is signed because loan applications are being rejected.

    Experian Automotive, a division of global information provider Experian, said Monday that auto loan delinquency rates are on the rise. Of $795 billion in open auto loans across the nation, more than $25 billion are currently delinquent, the company said.

    The number of loans that are 30 days past due rose 9 percent year-over-year in the second quarter, while loans more than 60 days past due rose 11 percent.

    Consumer credit scores also have worsened in the past two years, with the percentage of people taking out auto loans with prime credit - scores of 680 and above - falling 8 percent, the company said.

    Also, Chrysler LLC's finance arm ended leasing in July, and some other automakers have reduced it dramatically, further cutting into auto deals.

    This all comes at a time when the Detroit Three are trying to downsize and retool their factories to make small, fuel-efficient models instead of trucks and sport utility vehicles. All three have lost billions of dollars in recent years. Even Toyota and Honda, which had been seeing sales increases, have seen declines in recent months.

    Ford CEO Alan Mulally said Monday in a radio interview that the company is assessing whether to bring its ultra-small Ka model from Europe to the U.S. because of high demand for small cars. Ford previously had said it would not sell the Ka here because U.S. cities have wider streets and are less congested.

    U.S. auto sales dropped below 1 million last month for the first time in more than 15 years last month as some consumers struggled to get financing and others were frightened away from showrooms by bank failures and turmoil on Wall Street.

    Americans bought 964,873 vehicles in September, the lowest figure since February 1993, according to Autodata Corp. and the automotive Web site. Sales fell 27 percent compared with September 2007.
  7. Cutten


    Well, this is kinda 50% a short-term play for a strong bounce in the next few days/weeks, and 50% a long-term play.

    If I'm right about us being heavily oversold and in panic, then even if I'm wrong long-term, I should turn a nice profit initially. I can then raise stops to breakeven and book some profits.

    So I like a combo of short-dated calls, and longer-term outright positions. Flip the calls as soon as you get a big relief rally for a week or two, and run the rest. If a rally comes and we breach 1100, placing a stop at S&P 1000 would limit the potential downside in case we do get Great Depression II.

    The stuff about fundamentals is irrelevant to me. I went long September 21st 2001 and fundamentals sucked then, but it was still a great medium-term buy. Same in autumn 2002, Asia 1998 etc. Fundies always suck at long-term lows.
  8. Police: Jobless father kills family, self
    CNN - 1 hour ago

    LOS ANGELES (AP) — An unemployed man with an advanced finance degree who was despondent over his own financial problems shot and killed his wife, three children, mother-in-law and then himself in an upscale home in a gated community, police said Monday.


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  10. i think the bounce is going to go further than most people expect, unless the entire world collapses tomorrow
    #10     Oct 6, 2008