Nov

6

 One has to believe that the realization that we will be living with the idea that has the world in its grip from the executive office for another 4 years will become accepted today with the exit polls and that a certain revulsion will take place. Yet stocks are still very low relative to the fed model for all time frames so that the revulsion should not be catastrophic.

Rocky Humbert writes: 

As I have previously demonstrated with regard to the monthly job reports, EVEN IF one can predict the data, it is impossible to consistently predict the terminal market reaction with any statistical significance at a given/terminal moment in time. And making predictions that X price will be hit (when X isn't statistically significantly far away) is an empty statement. Hence I submit that The Chair should acknowledge that his comment below is an illustration of a statement that cannot be wrong. At any given moment in time, there is a high probability of some revulsion. 365 days per year. And the definition of "catastrophic" is a function of leverage, not price. And that stocks are low relative to the fed model is an empty statement unless he believes that bond prices cannot go down. Lastly, the Average True Range of the S&P is currently about 15.5 points. So any statement that predicts a move of up to 15.5 spu points is most likely to true. I'd say that one needs a move of more than 31 spu points to be "revulsion."

But for proof and in the Franklinian spirit — I will send a unique prize of dubious monetary value to any Spec who can predict BOTH the winner of the presidential election AND the closing SPX price for tomorrow (Wednesday) within 3 SPX points. All submissions should be mailed to the speclist.

HOWEVER, I will make a final prediction. IF Romney wins. And IF Wednesdays close is more than 16 points below today's close, then there will be a very substantial decline between now and year end. How substantial? Enough for the Chair to call "catastrophic."


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5 Comments so far

  1. Andre Wallin on November 6, 2012 1:22 pm

    Barack Obama spx 1434

  2. Craig Bowles on November 6, 2012 2:31 pm

    Calls vs puts (10-day avg) got up to 1.74 on 9/19 and a normal correction is 0.40, so the bulls would be looking to come in around 1.34. 10/31 got down to 1.36, so employment release and the election seem to maybe delay the buying but doesn’t change the fact that people want to buy. (Also, we should have some sort of 4-month cycle low established well before Thanksgiving.)

    One thing that’s kind of interesting is the 40-year cycle. 2012 is similar to 1972, 1932, 1892 and 1852. These dates all seem to be global depressions. A lot of people have suggested that we could have a rough path into 2015 and the 40-year cycle says the same. (Hopefully the grains have already made their early 1970s-type move, because doubling from here would be pretty chaotic.)

  3. Ed on November 6, 2012 5:16 pm

    “And that stocks are low relative to the fed model is an empty statement unless he believes that bond prices cannot go down”

    That is what I have always wondered. Does the Fed model predict stocks or does it predict bonds?

  4. Ed on November 7, 2012 12:22 pm

    Great call!

  5. Anonymous on November 7, 2012 7:34 pm

    As I survey the digital landscape post-the executive powers auction, I wonder if it is not time for a declaration to end this dependence. Unfortunately, I am largely ignorant of recent political history. Perhaps the more erudite can suggest more prescient edits. Of course, not calling for Revolution. How few would die for these principles today? One * is an insertion; two ** is a deletion.
    When in the Course of human events, it becomes necessary for one people to *Reconstitute* ^dissolve^ the political bands which have connected them with *their government* ^another^, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and *the Nature of Man* ^of Nature’s God^ entitle them, a decent respect to the opinions of *Mankind* ^mankind^ requires that they should declare the causes which impel them to the *reconstitution* ^separation^.

    We hold these truths to be *inducible by any rational mind* ^self-evident^, that all men are *sovereign creatures* ^created equal^, that they are endowed by their *Nature* ^Creator^ with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the *nature of Reality and the nature* ^consent^ of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to protect their individual rights ^them shall seem most likely to effect their Safety and Happiness^. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.–Such has been the patient sufferance of these United States ^Colonies^; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present *US democratic government* ^King of Great Britain^ is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

    *It has, relying on erroneously granted Constitutional powers, interfered in the economy through regulation, taxation, and redistribution of citizens property rights.*
    ^He has refused his Assent to Laws, the most wholesome and necessary for the public good.^
    *It has refused to redress these violations of rights and had indebted its current and unborn citizens with its economic excesses.*
    ^He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.^
    *It has refused to grant proper judicial hearings to those effected and has, by effect, rendered economic rights a privilege held by the grace of bureaucratic tyrants.*
    ^He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.^
    *It* ^He^ has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing its *victims* ^them^ into compliance with *its* ^his^ measures.
    *It* ^He^ has dissolved due process ^Representative Houses^ repeatedly, to affirm ^for opposing with manly firmness his^ its invasions on the rights of the people.
    ^He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.^
    *It* ^He^ has endeavoured to prevent the population of these States; *for that purpose enacting obstructive* ^obstructing^ the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither,^ and raising the conditions of new Appropriations of Lands^.
    *It* ^He^ has obstructed the Administration of Justice, by refusing *its* ^his^ Assent to Laws for *enacting* ^establishing^ Judiciary powers.
    ^He^ *It* has made Judges dependent on ^his^ *its* Will alone, for the tenure of their offices, and the amount and payment of their salaries.
    ^He^ *It* has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.
    ^He^ *It* has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.
    ^He^ *It* has affected to render the Military independent of and superior to the Civil power.
    ^He^ *It* has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving ^his^ *its* Assent to their Acts of pretended Legislation:
    ^For Quartering large bodies of armed troops among us:^
    ^For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:^
    For ^cutting off^ *unnecessarily interfering with* our Trade with all parts of the world:
    For imposing Taxes on us without our Consent:
    For depriving us in many cases, of the benefits of Trial by Jury:
    ^For transporting us beyond Seas to be tried for pretended offences^
    ^For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:^
    ^For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:^
    ^For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.^
    ^He has abdicated Government here, by declaring us out of his Protection and waging War against us.^
    ^He^ *It* has plundered our ^seas^ *treasuries,* ravaged our ^Coasts^ industries, ^burnt our towns^ *devalued our currency*, and destroyed the *economic* lives of our people.
    ^He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.^
    ^He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.^
    ^He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.^

    In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

    ^Nor have We been wanting in attentions to our Brittish brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.^

    We, therefore, the ^Representatives^ *Citizens* of the united States of America, ^in General Congress^, Assembled, appealing to the Supreme Judge of ^the world^ *every man’s mind* for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these United ^Colonies^ *States* are, and of Right ought to be Free and Independent ^States^; that they are Absolved from all Allegiance to the ^British Crown^ *economic state and federal institutions so democratically imposed* and that all political connection between ^them^ *the economy* and the State ^of Great Britain^, is and ought to be totally dissolved; ^and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do^. And for the support of this Declaration, with a firm reliance on the protection of ^divine Providence^ individual sovereignty, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

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