Matt Blackman

http://TradeSystemGuru.com
Total Rating:
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172 Comments

    • Fri Apr 11th 12:10 PM | Rating: 0 0
      Commented on:
      America's On Sale - and the World's Buying
      Correction - your assumptions hinge on the US and the rest of the world NOT going into recession....
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    • Fri Apr 11th 12:09 PM | Rating: 0 0
      Commented on:
      America's On Sale - and the World's Buying
      Your assumptions all hinge on the US and the rest of the world going into recession... You say that the average sell-off in a recession is 25%. OK, except that the NBER still has to confirm we are in recession and typically, stock market corrections continue after a recession has been confirmed.

      Oh and one more thing.. priced in gold, the Dow Jones Industrial Average has fallen 73% since peaking in 1999...
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    • Thu Apr 10th 02:00 AM | Rating: 0 0
      Commented on:
      Roubini Now Says House Prices to Fall 30%
      Think your math is a little off there Larry. At the peak U.S. residential real estate had a total value of $21.5 trillion of which $10.5 trillion was mortgaged. A drop of 20%0 of $21.5 trillion in value is more than $4 trillion my son, not $1 trillion... whether people walk away or not that is still money (equity) lost to the financial system in terms of household wealth... and we still are waiting for the NBER to confirm that we are in recession. I think a 30% total drop in prices is a conservative estimate...
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    • Thu Apr 10th 01:41 AM | Rating: 0 0
      Commented on:
      Some ABX Indexes Rise, Fueling Optimism
      Uptick? What uptick? If anything, looks more than a moribund dead-cat bounce where there is any upward movement but then it immediately rolls over. Markit.com ABX Indexes
      www.markit.com/informa...
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    • Thu Apr 10th 01:15 AM | Rating: 0 0
      Commented on:
      Signs That Foreclosures May Be Peaking
      Interesting idea Kathy except that according to the last study I saw on the subject, more than 50% of foreclosures were due to change in income or loss of job and less than 5% were due to mortgage rate resets...

      You don't examine the ratio of mortgages defaults due to rate resets leaving us all in the dark.
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    • Wed Apr 9th 12:29 PM | Rating: 0 0
      Commented on:
      Wednesday Outlook: Bulls in Command
      Yes, a very interesting market indeed. Normally, stocks fall 'of their own weight' on light volume but that hasn't been happening. Someone has been buying but not in a committed way. On the other hand, the lack of volume means that stocks can't really go higher in a sustained manner because it takes increasing volume to support a rally.

      So here we languish in no-man's land... and earnings will determine whether we stay or whether we go (higher if they get better or lower if they continue to get worse)... If we are at a bottom though, and we rally from here, it will be relatively short-term based on my indicators...
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    • Tue Apr 8th 14:31 PM | Rating: 0 0
      Commented on:
      Bubbles Aren't Bubbles - Or Are They?
      The market efficiency hypothesis is a myth. Anyone who trades for a living understands it and makes money through the inefficiencies in markets.

      So how does Fama explain the latest credit bubble, the housing bubble and the internet bubble on the late 1990s after which the Nasdaq dropped more than 80%? Were those markets too big too? What a load of crap. A theory the requires goldilocks conditions (one that's neither too big nor too small, but is just right...) is useless. How can a market only reach efficiency when it reaches a certain size then loss efficiency when it surpasses that threshold? Seems to me that Fama is best at deluding himself like many in his field.
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    • Tue Apr 8th 14:19 PM | Rating: 0 0
      Commented on:
      Alan Greenspan Responds to His Critics
      Malkiel;
      I couldn't disagree with you more. In every bubble in history, rules were in place and were broken in the excitement and greed that each bubble engendered. When greed is powerful enough to create mass hysteria, no rules in the world will stop it.

      There were very clear anti-fraud rules already in place that both lenders and borrowers blatantly broke (Liar, Ninja loans for example) but when home prices are accelerating, both parties simply ignored those rules. So the solution is to add even more rules to increase the complexity? What is the good of that if they too will not be enforced? In Ohio, 49% of those taking out subprime mortgages never made their first payment. They obviously got caught up in the home-buying hysteria and greed in all the money they were going to make. Whatever happened to personal responsibility?

      The US currently has the most strict regime of rules governing markets of all sort and they do not stop abuse when bubbles are in the process of building because those in the know find ways around them or just plain ignore the rules. Create more rules and you create more opportunities for abuse and when markets heat up in the next bubble, people simply ignore them. But you also increase the costs of doing business for all and unfortunately its the smallest companies that pay the price as the regulatory thresholds to entry to markets in the way of excessive legal costs etc. are raised. Sarbanes Oxley is one reason why companies are flocking to European equities markets for this very reason.

      As you say in your post, regulator bases have been covered through post facto legislation designed to fight the last war but how do you design legislation for a problem that hasn't occurred yet?
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    • Tue Apr 8th 12:23 PM | Rating: 0 0
      Commented on:
      Decoupling: The Theory That Won't Die
      Interesting isn't it how when times are good, that the majority of pundits would have us believe that they will continue and we won't get similar slowdowns that occurred in the past. They said it about the housing market and even the rating agencies and banks bought it. They did the same thing in promoting the decoupling myth that said that a US slowdown would not impact global markets.

      Now they would have us believe that stocks are a a significant bottom and they now "represent a once in a generation buying opportunity,' according to Dick Bove. And Greenspan is now trying to tell us that the housing market will bottom this year? I'd love to know what data he is basing this assumption on because every indicator I am following continues to fall...

      I conducted some research two months ago to see how global indexes were linked with those in the US, and here is what I found
      tradesystemguru.com/co.../

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    • Thu Apr 3rd 15:12 PM | Rating: 0 0
      Commented on:
      Now is the Time to Buy Long-Term
      One last but important point. Were you aware that between 1902 and 2006, 93% of all Dow gains occurred in the 26 months leading up to each election compared to only 7% in the 22 months after? That is a ratio of more than 13:1. In other words, the efforts to pump money and blatantly inflate the system is a very predictable habit by government to put the economy in the best possible shape in an effort to please voters as they go to the polls. Studies show that the worst economic slowdowns (recessions and depressions) occur post-elections (see tradesystemguru.com/co... )

      So in the event we do get some sort of rally from here (which I consider somewhat of a long shot), there will be hell to pay once the election is over, the economic hangover sets in and the bill has to be paid in 2009-10 for the excesses of 2004-2008...
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    • Thu Apr 3rd 15:04 PM | Rating: 0 0
      Commented on:
      Now is the Time to Buy Long-Term
      Vahan, I am also puzzled by your logic. You say on one hand that the Case-Shiller home price index (also my favorite property metric) continues to show price declines accelerating (negative rate of change accelerating) and this is also true of housing permits and year-over-year home sales in both new and existing homes.

      Given that the subprime and credit problems are exacerbated by falling home prices and that this is severely impacting our economy, how can you say that the worst for stocks is now behind us given that the further home prices drop, the greater the pressure on CDS positions, lender and bank credit ratings etc? Each credit downgrade means banks, brokers and lenders must come up with billions$ more to shore up capital requirements increasing the likelihood of another Bear Stearns or bank failure.

      Major indexes tentatively hang in the balance with the majority of participants still sitting on the sidelines. More bad news will engender more selling and this will only be worsened as the economy slows and a recession is confirmed in the next 6 -12 months. This in turn will cause more job losses and push demand and real estate prices lower... Yes there is blood in the streets but as those who jumped back into homebuilders over the last year learned the hard way, this action means that you add yours to the mix. There is good reason why traders call this desperate and dangerous habit trying to catch a falling knife.

      So tell me again what mechanism you see driving stocks and earnings (that are also deteriorating at an increasing rate) higher from here other than a desperate hope that real estate prices will bottom next quarter?

      Matt Blackman TradeSystemGuru.com
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    • Thu Apr 3rd 14:38 PM | Rating: 0 0
      Commented on:
      Market Action: Have We Hit Bottom?
      Toro, well done! It's great to read an article by someone who knows how to read the technicals and volume is a big part of the picture. I have also been concerned by the lack of volume on upmoves, especially in the bullish Head & Shoulders Bottom (H&SB) pattern on the Dow Transports that was confirmed Tuesday on the big upmove. However, the pattern should have exhibited much more volume on a break of the neckline to the upside which should cause any trader to question it (see seekingalpha.com/artic... )

      By the way, in speaking to the folks at Bespoke, I learned that their research shows that all rallies in the last five years have been driven by short covering which is interesting. I would have thought that short covering was a much bigger factor in bear markets but that is not what they found...

      Matt Blackman TradeSystemGuru.com
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    • Thu Apr 3rd 14:21 PM | Rating: 0 0
      Commented on:
      Ways to Win a Recession-Predicting Contest
      In the final analysis, investors need to realize that a recession is more or less moot as far as their portfolios are concerned. By the time we realize we are in recession (hopefully long before one is confirmed by the NBER six or more months after the fact), much of the portfolio damage is already done. It's like waiting to know for sure that Bear Stearns is technically bankrupt before selling your shares.

      It's the bear market that precedes the recession that should be the first and foremost concern. The indicators I follow started flashing a warning more than a year ago and as more confirmed this probability, action needed to be taken. The real melt began in late October but we had two early warnings - May 2006 and Feb 2007. The next major sign was the negative divergence between the Dow Transports and Dow Industrials (see charts in link at tradesystemguru.com/co... )

      It is also important to point out that stocks can act like the economy is in recession even though one is never confirmed. For example, the recession that hit the US in 2001-2 never officially hit Canada whose GDP growth hit a low of +0.7% during that period. However, the Canadian S&P/TSX Index dropped 50.2% compared to a drop of the S&P500 of 50.5% over the same period. In other words, stocks acted as if the country was in recession even though one never officially occurred.

      Matt Blackman Host www.TradeSystemGuru.co...
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    • Thu Apr 3rd 00:26 AM | Rating: 0 0
      Commented on:
      Lies, Damn Lies and the Unemployment Rate
      Good analysis. Nominal numbers really don't mean much given the government penchant for fiction especially leading up to each election. As David Rosenberg chief economist for Merrill Lynch has said, its the rate of change in layoffs that is important and that began pointing toward a recession months ago.
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    • Wed Apr 2nd 18:38 PM | Rating: 0 0
      Commented on:
      The Myth of Gold as an Inflation Hedge
      Check out the link to MZM posted by Gigem77 for the real story on money supply. As of the latest Fed figures, total money supply has increased 17% in just 15 months and is now growing at a annualized rate of 39%.

      Ben Bernanke wasn't kidding when he asked a couple of years ago why we should worry about deflation as long as we had printing presses and helicopters. It is clear he now running both at combat speed! Certainly no reason to expect the dollar decline to end anytime soon.

      Kinda takes the starch out of Price's anti-gold argument doesn't it?
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