RBS warns of crash by sept

[Skydaemon]

RBS issues global stock and credit crash alert - Telegraph

Interesting timing.

[Grizzums]

Heh....nice, RBS sounds a bit like they are trying to shirk any responsibility of this mess onto the central banks and regulators of the world. I am certainly a critic of central banking (with my limited knowledge), but come on....institutes like RBS and many others (the list is too long) and their greed have been in the drivers seat of the vehicle that was destined for the cliff re:this credit mess...

I must say too....this sort of noise makes me think that some actual buying opportunities are a comin in the....okay, months ahead.

[Skydaemon]

I'll say 3 things that are interesting to me about timing.

1) There are people walking around claiming a hindenburg omen got it's second confirmation just a couple days before this.

Near as I can tell, this indicator shows that some industries are crashing dragging the market, and some (like tech and oil) are rocking the glass at their highs and not following the trend lower. This omen portends that these stocks despite their strength cannot disobey a downtrending market and will break down (possibly due to money flows) thus sending _all_ industry sectors down resulting in a major crash mostly because nothing will be holding it up against the trend. The omen boils down to showing a large divergence in the market between some stocks doing well, and others crashing into the floor for extended periods in an overall down market.

Unfortunately it's a long indicator with a range of up to 120 days, it's near term suggestion is 5% down within 41 days and 25% down within 120. I really wonder if these rbs guys are simply pointing out this omen and presenting it as their own analysis. Highly suspect.

2) It's end of quarter. End of sept is next end of quarter. 3-6 months is how long it takes motivated money managers to vacate positions. The timing at end of quarter is amazing. I've been suspecting the next downtrend will come starting in july because of this. Also, I suspect that oil will plummet individually either in july or 3 months later starting october for exactly the same reason. If funds leave oil, it'll be after closing books on a quarter I bet. No way it falls just before they have to report results, they have the cash to prop it up to make themselves look good for a couple weeks if they have to.

3) A lot of foolish fund/treasury money entered the market after bear stearns. At some point they're going to clue in that wasn't the real bottom and they're about to lose their a$$. I'm mindful that might be within 3 months from now, possibly as soon as a couple of weeks.

Anyway I am watching for signs funds and large money flows are clueing in and preparing to exit.

IMO all bull or bear markets are defined by net money inflows or outflows, so this is important to watch even though it's hard to identify.

[Grizzums]

Originally Posted by Skydaemon

I'll say 3 things that are interesting to me about timing.

1) There are people walking around claiming a hindenburg omen got it's second confirmation just a couple days before this.

Near as I can tell, this indicator shows that some industries are crashing dragging the market, and some (like tech and oil) are rocking the glass at their highs and not following the trend lower. This omen portends that these stocks despite their strength cannot disobey a downtrending market and will break down (possibly due to money flows) thus sending _all_ industry sectors down resulting in a major crash mostly because nothing will be holding it up against the trend. The omen boils down to showing a large divergence in the market between some stocks doing well, and others crashing into the floor for extended periods in an overall down market.

Unfortunately it's a long indicator with a range of up to 120 days, it's near term suggestion is 5% down within 41 days and 25% down within 120. I really wonder if these rbs guys are simply pointing out this omen and presenting it as their own analysis. Highly suspect.

2) It's end of quarter. End of sept is next end of quarter. 3-6 months is how long it takes motivated money managers to vacate positions. The timing at end of quarter is amazing. I've been suspecting the next downtrend will come starting in july because of this. Also, I suspect that oil will plummet individually either in july or 3 months later starting october for exactly the same reason. If funds leave oil, it'll be after closing books on a quarter I bet. No way it falls just before they have to report results, they have the cash to prop it up to make themselves look good for a couple weeks if they have to.

3) A lot of foolish fund/treasury money entered the market after bear stearns. At some point they're going to clue in that wasn't the real bottom and they're about to lose their a$$. I'm mindful that might be within 3 months from now, possibly as soon as a couple of weeks.

Anyway I am watching for signs funds and large money flows are clueing in and preparing to exit.

IMO all bull or bear markets are defined by net money inflows or outflows, so this is important to watch even though it's hard to identify.

That's interesting. You are certainly putting more thought into this than I. I have seen plenty of talk about the pattern as well.
Some blogs have been lit up about it.

Morgan tried to place contrarian bets on energy rather then following Goldmans strategy of sticking with what was working. That sure came back to bite them. I said awhile back that I thought the Dow would see 12 before 13 when it was in its last little bear rally, because bear markets don't just retrace 10% and I thought it was fairly apparent that we were at the end of a bull run. Regardless, the divergence we are currently seeing has to make one wonder...

I'm not up on the details of the omen beyond what you have already mentioned but it is definitely something to watch for. I don't think oil is going to come down hard until end of Q3....

I am with you on net inflows/outflows of capital.

What do you suggest is the best way to watch for large money flows?

[Skydaemon]

Originally Posted by Grizzums

What do you suggest is the best way to watch for large money flows?

This is extraordinarily difficult. I look at numerous things but most are difficult to directly correlate to particular trades or give much certainty of trends. Some are not much better than pure guesswork and speculation.

I've noticed two distinct trends in the market over this last crash. The first wave started from april-june 07, and the second larger wave started august 07. I divide this into money flows from the smart in-the-know fund managers who got out in q2-q3, and the herd managers who got out starting in q4.

Not every stock in the market shows both trends, probably because both groups of funds weren't in every stock to begin with.

It seems to me that if you can figure out which funds vacated the stocks exhibiting these two trends first, you might be able to derive which specific large funds are the ones in the know. Then look up their other holdings and look for them to sell off of some particular sector. Should give anywhere from 1-2 quarters of notice of the herd in theory.

Another way to do it would be to look for stocks exhibiting inverse trends during these two time periods. Rising slowly from april 07, then more sharply from august indicating the money was pouring into there. Then it's a matter of figuring out when the "smart money" leaves those stocks/sectors.

Food for thought anyway, and a lot of work but something that would be worth it to try to do soon.

That's probably the best thing to look for that I can think of and it's not exactly easy.

[TNTrader]

Originally Posted by Grizzums

That's interesting. You are certainly putting more thought into this than I. I have seen plenty of talk about the pattern as well.
Some blogs have been lit up about it.

Morgan tried to place contrarian bets on energy rather then following Goldmans strategy of sticking with what was working. That sure came back to bite them. I said awhile back that I thought the Dow would see 12 before 13 when it was in its last little bear rally, because bear markets don't just retrace 10% and I thought it was fairly apparent that we were at the end of a bull run. Regardless, the divergence we are currently seeing has to make one wonder...

I'm not up on the details of the omen beyond what you have already mentioned but it is definitely something to watch for. I don't think oil is going to come down hard until end of Q3....

I am with you on net inflows/outflows of capital.

What do you suggest is the best way to watch for large money flows?

Cash is also an asset class.


Good Luck

[BadThad]

RBS turns Chicken Little?

Bah, they are predicting calamity about the time the markets should theoretically being showing some bullish signs of financial market recovery. Also, as Sky said, oil will also be due for a drop simply because of it's cyclical nature of up coming winter demand. The drop in oil will put a whack on inflation...... as that's a huge part of the root cause.

I don't believe anyone can accurately predict what the markets are going to do months out. I'd say it's more of an educated guess, but a guess nonetheless. Most educated guesses are easily biased by opinions and assumptions....and we all know the cliché for assumptions. I'd say RBS is going to be the first part of that cliché.

No matter, it's called STOPS. Everyone should have stops on their longs, plain and simple. And if you're in the green, you should have a stop that moves up with PPS so you can lock in profit. With these in place, I don't much care if there's a major market clamity....so RBS can puff all the hot air they wish because I know my money will be safe. And, if they are wrong, I'll be hugely green whilst they sit on their pile of cash cowering and earning some paltry rate.