The collision of global markets and social mood

Friday, December 13, 2013

Time For Cramer and Icahn

Each morning I check the Drudge Report for a specific reason: I've noticed it has a high correlation of bad market timing.

When the yellow smiley face appears alongside some Dow numbers, it's usually time to sell. When the yellow frown appears (or sometimes even something a bit more grim) it's usually time to buy.

Here is today's headline:

As much as I agree with it, it's probably the wrong time to go against Twitter, purely for momentum reasons. Also, the headline links to a video of Jim Cramer on Mad Money. Judge for yourself.

He also discusses Tesla, Netflix, and Amazon. He calls their adoration "unconditional love." He says it's like a Billy Joel song. He even utters the word "covetous."

Here I go the other way. This is the sort of twisted logic that appears at the end of trends as investors try to rationalize valuations.

"So how long will these amorous relations last?" he asks. He doesn't answer, but I will. They will last as long as there are the collective animal spirits to support them. In other words, as long as confidence holds out. I won't mention the Investors Intelligence figures again (most bullish since 1987) because it's old news now. But I will mention Carl Icahn, who was just on the cover of Time magazine.

Carl should be careful here. MASTER OF THE UNIVERSE, in the Montgomery Cover Indicator universe, is a warning sign.

Suppose that, as Bloomberg mentioned today, he's late to the party on Apple?

Icahn’s Apple Push Criticized by Calpers as ‘Johnny Come Lately’

What if Icahn, who is hitting on all cylinders, has a very public flameout on Apple?

What if his appearance on the cover of time shows that once again, as Paul Montgomery noticed years ago, that by the time magazine editors notice a trend it's usually over?

What if it's his high-water mark?

Just as Bitcoin may be signalling that animal spirits could be in retreat, we should keep a close eye on Carl, Apple, Tesla, Netflix, Amazon, Facebook, and Twitter.

We should keep a close eye on the market, too. The 1788-1790 level above, and as far down as the 1746 area are fair game for the time being.

No comments:

Post a Comment