Dow back over 8000

[Sam Spade]

I'm feeling that we're somewhere around a short-term top today.  There is massive resistance above where we are right now and there are tons of internal divergences at present.

OTOH, some other news/articles have come across the wires today that makes me think that a total economic collapse is even more likely to occur down the line (among the mess of options available).  Guess it's time to start preparing as such.

[Sam Spade]

In volatile years, the market has frequently rallied in the spring (1997, 1998, 2002, 2007, 2008), topping in May or August/September only to fizzle out later in the year. I truly expected no such rally this year, because I expected the economic news to he a steady drumbeat of gloominess. With near free fall in world trade, the jobs market, and manufacturing, and the bulk of the financial difficulties not over, we have a lot further to go before we are out of the woods.

Well, the market has regained about 60%-65% of the value in the past month that we lost in the first two months, so yes a rally *did* happen, of sorts.

And yes, I've noticed this pattern too. 

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Which items?
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The way the Fed bought Treasuries today (on-the-run securities, as opposed to off-the-run securities) and the speed with which they're using the allocated 300 billion.  The fact that Dresdner Kleinwort dropped from the Fed's primary dealers - which leaves 15 left.

A few other stories that are much more worrisome and deserve to be posted separately.

[Sam Spade]

Cramer already said the depression was over today.

Henceforth, my top call. (for the time being)

[Sam Spade]

I'm feeling that we're somewhere around a short-term top today.  There is massive resistance above where we are right now and there are tons of internal divergences at present.

OTOH, some other news/articles have come across the wires today that makes me think that a total economic collapse is even more likely to occur down the line (among the mess of options available).  Guess it's time to start preparing as such.

Hey, Sam old chap, with the world now printing currency like the way BRTD puts up polls, is there any reason why I shouldn't be loading up on 4.5%-4.75% 30 year fixed interest mortgages?  Ya, I know about the AMT beast for refi interest (it ain't deductible for AMT purposes), but didn't our president say he didn't like the AMT or something?  

Well, if you have an ARM, obviously you want to refinance.

If you already have a fixed, a lot depends in my mind whether the new fees/interest + principal are greater than what you would pay presently over the term of the loan and whether the residence is principal/secondary or whether it's a rental.

Also, you need to ask whether you need to raise cash now AND how secure your job actually is (I'm assuming fairly secure), because things will get worse.

So that's a lot of questions.  But, in the end, I really doubt mortgage rates will get lower than this for a long, long time, so this is the time to refinance if you really want to.  

[Sam Spade]

And with that, we're back above 8000. Let's see if we close above that level.

Looks like we will due to a typical end-of-day pump on light volume.

Ben's slowly but surely losing control of the bond market though.  The gap from the QE announcement on the ten-year is getting very close to filling.

EDIT:  It's another good opportunity to take your profits for now, my gut tells me.

[Sam Spade]

It appears to be a no brainer to me actually. The costs are about 1% for residences and vacation homes, and 3% for income property. The rate drop would be about 1%, so you break even pre tax in about 3.5 years for income property, and a bit over a year for the residences.

If you've done the math and it works better, then do it.

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We're getting there.

[Sam Spade]

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That "sounds" fascinating. Pity I have no idea what it means.

Well, before BB made his QE announcement, the yield on the 10-year bond was at just over 3.00%.  Immediately afterwards, the 10-year gapped or dislocated (within a few minutes) down to just under 2.50%.

As of the close of business today, the 10-year is now back to being slightly above 2.90%, which means that we've regained nearly all of the "gap" caused by the QE announcement.

BB desperately wants to keep the 10-year below 3.00%.

[Sam Spade]

The end of today would have been a good time to take a lot off the table.  I expect somewhat of a reversal Monday even though it is options expiration week.

Keep in mind - I do think the market can still go higher (maybe as much as 900-1000 points on the DOW, even though I suspect 300 or so is a more likely target).  But we are reaching the point of diminishing returns as with regards to upside and danger below.  Better to sell now and reload if we get any significant retrace before the summer.

There is also the possibility we will play within a trading range for a while.  Just mentioning it.

[Sam Spade]

I care a lot more about the job market than the Dow.

The problem is that the two are interconnected more than people think - especially nowadays and especially with regards to crashes.

For example, a 500+ point crash as we were having back in September/October directly correlates with the loss of say 100K or 200K jobs in the US.

[Sam Spade]

Who knows. Most of the banks report earnings next week, so its possible we see another pop. I'm still waiting for a downward turn. I have a 56% profit in BAC, so its probably good to sell before earnings are released. The same with AAPL.

Don't wait.  Act.  I'm not going to repeat the "bulls, bears, pigs" line again.  If you think you're going to get another few hundred points, but the odds are more likely that you're going to lose a few hundred points and you could lose much more than that, pull a good bit off the table - it's been a nice run.  That's where we're at right now in my book.  Remember, after the Wells Fargo joke on Friday, earnings may already be priced in if they're good.  Also, financials and tech are the two places easiest to manipulate earnings (think about what that means for other companies) and I've already said that I expect the banks to overperform earnings expectations for this quarter.

I lost a bit by pulling out in June 2007, but I'm not crying now since I don't play daytrader.

[Sam Spade]

I care a lot more about the job market than the Dow.

The problem is that the two are interconnected more than people think - especially nowadays and especially with regards to crashes.

For example, a 500+ point crash as we were having back in September/October directly correlates with the loss of say 100K or 200K jobs in the US.

The stock market is up during the Obama administration, but I don't see that helping with jobs. 1.3 million have been lost in the last 2 months, while a quarter million should have been created just to keep up with growth in the labor pool. 1.5 million jobs short in 2 months is terrible.

There is no correlation where a 500+ gain = gain of 100K or 200K jobs in the US.

I understand your concern, but you can't just create jobs for the sake of creating jobs. 

There is presently a major oversupply in labor in the US fwiw, and generally that labor is overpaid compared to the global wage rate.  All of this will correct itself over time - it would have happened long-term anyway, but the process is going to be sped up due to massive deleveraging.