…at least for Noah it was over in forty days and the world got better…instantly! Not so for we unlucky fools. Over the past 40 trading sessions we have seen the following:
*the last 7 straight sessions have been more than 1% moves on the Dow Industrials
*36 of the last 40 have been more than 1%
*16 have been between 2% and 5%
*8 have been greater than 5% (plus several that were just under 5%)
*2 have been greater than 10%…10.88% and 11.1%
*16 have been up, 24 down…that about sums up the sentiment
On Monday TB reported that Vince Farrell had noted that since 1950, 15,000 trading days, the S&P 500 has gained or lost 4% or more in a day just 68 times (33 up, 35 down). Of those 68 sessions, 28 have occurred in the past three months!
Not only have we had unprecedented volatility as measured by the above percentage changes, but the VIX volatility index which measures options volatility for the S&P 500 has averaged 63.70…contrast to 25.36 for the earlier part of the year, had a record high of and never fell below 44.25, the year low was 15.82 on 5/19; had a record high of 89.53 on 10/24, eclipsing the old high of 49.35 on 9/21/01; the average of the past five years ended September 30 wa just 16.19! ranging from 9.39 to 16.19 and note that that period includes the first year since the peak. It is within this context that allowing naked shorting and no uptick rule is preposterous and took any fairness out of the markets…or logic!
Volume has averaged 1.55B shares over this period (since 10/14), or about 100M shares daily more than for the rest of the quarter.
The brains that be continue to debate the merits of an uptick rule yet none that TB has seen are talking about reinstating it as it was: 1/8…or about 13 ticks on the decimal system. Their lowly argument is that it would be impossible to control due to all the electronic trading platforms…horse manure…at one tick yes…at 13, no! Besides isn’t it worth a try? Meanwhile, after inflating balance sheets through fair (sic) market accounting, we are now willing to put that aside to stabilize markets…so what is so sacred about reinstating the uptick rule? The same goes for naked shorts which Chris Cox seems to love…or is it he merely loves the supporters of it who ‘supported’ him?
If you watch Jim Cramer, you know that he is lobbying for himself as SEC Chairman. At first, TB was ill, but he has supported both of TB’s thoughts listed above, and also wants to prohibit ‘ultra’ long or short ETF’s that double or triple the intended direction of the ‘bet’…it is a bet as it certainly isn’t an investment strategy that one should use. (TB notes that legendary short hedge fund operator Bill Fleckenstein is shutting down his fund…he correctly called the financial crisis especially FNM and FRE…if you wonder why, TB suggests that the market has declined so far and now that the volatility has tripled, why take the risk?…quit a winner and come back to fight another day, smart guy).
So you see…Noah had it easy…if only our forty days and forty nights were over and not just a long, endless nightmare. TB warned yesterday that although the long-awaited Santa Claus rally might be here to not bet on it and if it is, do like the smart money will and take some off the table before options expiration (12/19) and definitely by 12/26 (last day for T+3 settlement in 2008)…could TB be wrong? Sure, but four straight quarterends accompanied by huge declines in stocks should not be treated as casual correlation.
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Dumb and dumber: here is a pair to draw to…perhaps a team for the next presidential election? Former New York Governor and Attorney General Elliott Spitzer and Illinois Governor Blagojevich…perhaps the order should be reversed as the B-S ticket, no?
What is particularly appalling is his contempt for the candidate he supported; “if he gives me nothing ‘F’ him.” He also said if he didn’t get enough money he would simply name himself Senator…oh, oh…that could pre-empt Sarah Palin from doing the same thing!
At least it is nice to see two Senators leaving under honorable conditions, Obama and Biden. Meanwhile, Idaho Senator ‘Wide-stance’ Larry Craig is still seated pending appeal of a plea bargain he made…fat chance; Alaska Senator Stevens is still seated awaiting sentencing…is this getting what we pay for? This is a disgrace.
Oh and Congress is trying to micromanage the auto business…the one that bought and paid for their complicity for decades to fight fuel efficiency…so we have an Auto Czar who is powerless as his commission has to reach a unanimous decision! Our crisis began in the Congress…and don’t you dare blame the Democrats…it was Texas Senator Phil Gramm (R) who led the charge on repealing Glass- Steagall…joined by Robert Rubin, pawn of Sandy Weill who convinced Clinton to back it. Both parties are complicit in this crisis and both should pay…but they won’t…we will!
First, we doled out hundreds of billions to financial industry with no restrictions…especially the shameful $300 billion plus in loan guarantees to Citi and another $105 billion in cash…and Congress is down on Paulson for the lack of supervision as well as not following the intent of the TARP legislation. Now Congress wants to run the auto business…remember why we have all those SUV’s? Because lobbyists convinced Congress when they were trying to allow 100% first year deductions for specialized trucks used on construction, etc., to include SUV’s but only those of weight restrictions that only Detroit was making! So all types of business owners took advantage and bought gas guzzlers. Why? The alternative was to buy another car and if it is over $35,000 it is classified as luxury and the excess cannot be deducted. Unless we take back control of Congress, we are destined to more of the same…but worse! Both parties have to be held accountable, not continue with business as usual.
