Is A Downturn Imminent !
Thursday Sep 14th 2006
Although the major market ETF's certainly do NOT yet exhibit much if any weakness and likely will attempt another rally or two today in the absence of any selling pressure, my pattern and momentum work continue to argue that risks are mounting quickly for holders of long positions...regardless of what happens in reaction to tomorrow's expiration Friday.
Another piece of technical evidence that should concern the bulls is the picture provided by the VIX, or Volatility Index, which has plunged to near 6 month lows, a condition that in the past has warned the bulls of impending price weakness.
The fact that the VIX has plunged to near historical lows during September likely is very unusual-- when stock price weakness (not strength) and VIX strength (not weakness) is much more the seasonal norm. The apparent complacency and confidence exhibited by the bulls (evidenced by the plunge in the VIX), coupled with an investment environment that would appear to be priced for goldilocks perfection, could be a prescription for any measure of not-so-good news or (heaven forbid) bad news.
Mike Paulenoff, ETF Trading Diary.
Thursday Sep 14th 2006
Although the major market ETF's certainly do NOT yet exhibit much if any weakness and likely will attempt another rally or two today in the absence of any selling pressure, my pattern and momentum work continue to argue that risks are mounting quickly for holders of long positions...regardless of what happens in reaction to tomorrow's expiration Friday.
Another piece of technical evidence that should concern the bulls is the picture provided by the VIX, or Volatility Index, which has plunged to near 6 month lows, a condition that in the past has warned the bulls of impending price weakness.
The fact that the VIX has plunged to near historical lows during September likely is very unusual-- when stock price weakness (not strength) and VIX strength (not weakness) is much more the seasonal norm. The apparent complacency and confidence exhibited by the bulls (evidenced by the plunge in the VIX), coupled with an investment environment that would appear to be priced for goldilocks perfection, could be a prescription for any measure of not-so-good news or (heaven forbid) bad news.
Mike Paulenoff, ETF Trading Diary.
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Sell The Dow
SHORT THE DOW JONES INDUSTRIAL AVERAGE, IT IS IN FACT TOPPING OUT AS WE SPEAK,NOW AT AN IMPORTANT RESISTANCE POINT AT 11533 AND IT WON'T BE LONG BEFORE ONE OF THE BIG PLAYERS START TO LIQUIDATE THEIR HOLDINGS AND STARTING THE SNOWBALL EFFECT.
THE MARKET WILL MOVE LOWER BY DECEMBER TO TRADE CLOSE TO THE YEARLY PIVOT POINT AT 10568
SHORT THE DOW JONES INDUSTRIAL AVERAGE, IT IS IN FACT TOPPING OUT AS WE SPEAK,NOW AT AN IMPORTANT RESISTANCE POINT AT 11533 AND IT WON'T BE LONG BEFORE ONE OF THE BIG PLAYERS START TO LIQUIDATE THEIR HOLDINGS AND STARTING THE SNOWBALL EFFECT.
THE MARKET WILL MOVE LOWER BY DECEMBER TO TRADE CLOSE TO THE YEARLY PIVOT POINT AT 10568
watercooled
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rols said:
Hi Batty,
What makes you think the Dow can't go the R3 @ 12100ish?
Regards WC
More grist to the mill !
Regional banks' pinch foreshadow national woes
By Nick Godt, MarketWatch
Sep 14, 2006
NEW YORK (MarketWatch) -- Some big and medium-size regional banks are starting to report more problems stemming from a fast-falling housing market and slowing economy, likely foreshadowing what will become a nationwide phenomenon, analysts said. Over the past week alone, both Cincinnati, Ohio-based Fifth Third Bancorp, reiterated the view that profits and revenue will rise only modestly in the third quarter, after a guide lower in the second quarter. The banks have cited a range of issues, from declining volumes of loans and deposits to rising loan losses and higher costs that are likely to worsen with a slowing economy and affect a growing number of banks in various regions of the country. "If one or two banks tell you that things are going to be a problem, you'd better believe that everyone is going to have a problem," said Punk Ziegel & Co analyst Richard Bove. Late on Monday, Fifth-Third said that bad debt and nonperforming assets would lead third-quarter earnings to be "modestly lower" than in the second quarter. Elaborating on the outlook during a Lehman Brothers banking conference on Tuesday, Fifth-Third Chief Financial Officer Christopher Marshall said the losses were coming from its retail consumer business, but declined to elaborate on whether it was directly linked to the housing market. "There's not anyone thing in particular," Marshall said. "It's a general increase in stress on our consumer borrowers," adding that he didn't know if the phenomenon was impacting just the Midwest region or the whole country. David Daberko, chief executive of National City another Midwest bank, said that consumers were "getting stretched big time."
The Midwest region, which has already been hit by the declining U.S. auto industry, is particularly vulnerable to the decline in wealth experienced by some homeowners as the housing market continues to fall. "The Midwest regional banks are more challenged by fact that the Midwest is growing less than the national economy," said Jim Callahan, banking analyst at MorningStar. This historically industrial region has fallen behind as manufacturing moved overseas while baby boomers have moved to richer parts of the country, such as the West and the Southeast, and taken their assets with them. This has heightened competition for dwindling loans and deposits volumes. But those pressures are not just felt in the Midwest. TD Banknorth, which has been trying to aggressively expand in the Mid-Atlantic region, warned Tuesday that third-quarter earnings would be lower than analysts expected amid a "leveling off" of both commercial and consumer loans. "Competition for loans and deposits remains extremely competitive," TD Banknorth said. Higher marketing costs and the shift of consumers to higher-rate deposits are also hurting margins, it said. Similarly, Commerce Bancorp on Tuesday reiterated its previous outlook for flattish earnings in the third quarter. The bank has continued to grow its volume of deposits, but it has been paying more to offer higher-rate deposits.
Interestingly, the banks have played down their exposure to a fast-falling housing market, either pointing to their limited holdings of risky mortgages or noting that their geographic location was not among the previously hottest markets. But as the housing market stops fueling wealth and consumption and slows the economy as a whole, demand for loans is naturally shrinking across the board, while new deposits have to be "stolen" from the competition by paying higher rates. "The business of American banks is lending money against real estate values, whether via mortgages, home equity, commercial lending, and even other types of loans," said Bove. "Therefore as housing goes down, earnings are going to go down." But even if growth hasn't started waning as fast as in the Midwest, a big chunk of the growth seen in Florida, California and throughout the whole country over the past five years has been directly and indirectly linked to real estate, Bove noted. And the bread and butter of regional banks has remained lending money to businesses and consumers, and taking in fees from deposits, mostly from their core region. "A fundamental risk with many banks is that they are exposed to their regional economies," said Morningstar's Callahan.
Nick Godt is a MarketWatch reporter based in New York.
Regional banks' pinch foreshadow national woes
By Nick Godt, MarketWatch
Sep 14, 2006
NEW YORK (MarketWatch) -- Some big and medium-size regional banks are starting to report more problems stemming from a fast-falling housing market and slowing economy, likely foreshadowing what will become a nationwide phenomenon, analysts said. Over the past week alone, both Cincinnati, Ohio-based Fifth Third Bancorp, reiterated the view that profits and revenue will rise only modestly in the third quarter, after a guide lower in the second quarter. The banks have cited a range of issues, from declining volumes of loans and deposits to rising loan losses and higher costs that are likely to worsen with a slowing economy and affect a growing number of banks in various regions of the country. "If one or two banks tell you that things are going to be a problem, you'd better believe that everyone is going to have a problem," said Punk Ziegel & Co analyst Richard Bove. Late on Monday, Fifth-Third said that bad debt and nonperforming assets would lead third-quarter earnings to be "modestly lower" than in the second quarter. Elaborating on the outlook during a Lehman Brothers banking conference on Tuesday, Fifth-Third Chief Financial Officer Christopher Marshall said the losses were coming from its retail consumer business, but declined to elaborate on whether it was directly linked to the housing market. "There's not anyone thing in particular," Marshall said. "It's a general increase in stress on our consumer borrowers," adding that he didn't know if the phenomenon was impacting just the Midwest region or the whole country. David Daberko, chief executive of National City another Midwest bank, said that consumers were "getting stretched big time."
The Midwest region, which has already been hit by the declining U.S. auto industry, is particularly vulnerable to the decline in wealth experienced by some homeowners as the housing market continues to fall. "The Midwest regional banks are more challenged by fact that the Midwest is growing less than the national economy," said Jim Callahan, banking analyst at MorningStar. This historically industrial region has fallen behind as manufacturing moved overseas while baby boomers have moved to richer parts of the country, such as the West and the Southeast, and taken their assets with them. This has heightened competition for dwindling loans and deposits volumes. But those pressures are not just felt in the Midwest. TD Banknorth, which has been trying to aggressively expand in the Mid-Atlantic region, warned Tuesday that third-quarter earnings would be lower than analysts expected amid a "leveling off" of both commercial and consumer loans. "Competition for loans and deposits remains extremely competitive," TD Banknorth said. Higher marketing costs and the shift of consumers to higher-rate deposits are also hurting margins, it said. Similarly, Commerce Bancorp on Tuesday reiterated its previous outlook for flattish earnings in the third quarter. The bank has continued to grow its volume of deposits, but it has been paying more to offer higher-rate deposits.
Interestingly, the banks have played down their exposure to a fast-falling housing market, either pointing to their limited holdings of risky mortgages or noting that their geographic location was not among the previously hottest markets. But as the housing market stops fueling wealth and consumption and slows the economy as a whole, demand for loans is naturally shrinking across the board, while new deposits have to be "stolen" from the competition by paying higher rates. "The business of American banks is lending money against real estate values, whether via mortgages, home equity, commercial lending, and even other types of loans," said Bove. "Therefore as housing goes down, earnings are going to go down." But even if growth hasn't started waning as fast as in the Midwest, a big chunk of the growth seen in Florida, California and throughout the whole country over the past five years has been directly and indirectly linked to real estate, Bove noted. And the bread and butter of regional banks has remained lending money to businesses and consumers, and taking in fees from deposits, mostly from their core region. "A fundamental risk with many banks is that they are exposed to their regional economies," said Morningstar's Callahan.
Nick Godt is a MarketWatch reporter based in New York.
watercooled
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rav700 said:
'That's good then' (Nottinghamism), as I'm short the Dow...
Regards WC
A very negative outlook from Steve Lehman, who manages the Federated Market Opportunities Fund.
What a Bear !
14th Sept 06
http://media2.bloomberg.com/cache/vwdMgnbQCnLI.asf
What a Bear !
14th Sept 06
http://media2.bloomberg.com/cache/vwdMgnbQCnLI.asf