Registered User
Joined: 2/7/2006
Posts: 218
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I started this thread to get ideas on what other people are seeing...im bullish on the US market out to around 2010 or so...techs..financials..and short term refiners and industrial companies benifiting from the lower dollar at the moment.. the HKHS-X (hang seng) is looking very toppy...its double topped and is kissing the channel as we speak on a daily...a popular Cliché at the moment is feb 26 at which time the china market made a great impact on ours...on a quarterly view its touching the top of the LR channel 100-33-16 on a daily its kissing the channel goodby...the 3 day its above the channel looking extended, although it looks like moneystream is leading...japan indexes are looking the same but moneystream is not leading...london is looking toppy and the price is outpacing moneystream...the strange thing to me is that the US market is moving up on companies beating extremely low expectations..and leveraged buy outs are worrying me also, if these companies were such great buys, would not warren buffet be in on some of the action? i think our debt market is exploding...the fallacy in the tight job market is that we have had a demographics shift...the baby boomers are at the top end of the population with the most money and as they retire or are retired they will not be looking for jobs...so the rest of us have to provide goods and services to them in the coming years while they are just pure consumers...which is going to provide low unemployment for years to come...that is the way it is calculated...plain and simple...im looking at large cap stocks due to the fact i think interest rates are going higher do to the wage and food and other forms of inflation do the cheap money running around...i hear an echo in my head that says sell in may and go away still....
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Registered User
Joined: 2/9/2005
Posts: 42
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Bull trap imo, tied to the low dollar. The reversal will be deep, triggred by selloff in the SHANGHAI INDEX (^DJSH) which is up 50% in 7 weeks. Get out now or go short.
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Registered User
Joined: 10/7/2004
Posts: 2,126
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Dear Aksportsman, the market fundamentals do not justify the rise.
Has the US industrial production increase? no.
Are manufacturing jobs increasing? no.
Is inflation running up?Yes. Regardless of whether they talk about including or not the hardcore CPI or any bullsshh.. they want to tell you - you still have to pay for gasoline, don't you? you still have to pay for energy (electric, gas, etc) don't you? So what does the pocket care what it is that you have to pay, if you have to pay it anyways.
Jobs, are we creating new jobs? I can debate that. What I like to say, is that for example the folks that use to make $25/hour or higher at the car factory in now working at the nearest hotel making $10 with some luck. Does he have a job - sure. But he doesn't have the same kind of income - that is what you are not told.
Home sales, building, and auto industries are all in the gutter.
Strong consumers??? who is buying that. The only strong consumer here is the FED who is really consuming your debt.
Today it was said and I quote "New estimates of the ocean of red ink facing the federal government in the coming years put it much, much higher than politicians will admit. One estimate says we could sell everything we own -- the country and every building on it -- and still be $20 trillion dollars short."
So what is this market feeding on - a few earnings which are meeting or exceeding previously lowered estimates?
I have to say again - the fundamentals are missing -
It seems then that you were asked to believe that:
-a slowing economy won't matter,
-rising commodity prices don't matter,
-the falling dollar doesn't matter,
-SINGLE-DIGIT earnings growth doesn't matter,
-manufacturing weakness doesn't matter,
-cap-ex spending declines don't matter,
-higher oil prices don't matter,
-a 5-year low in housing starts doesn't matter,
and even the world-wide selloff of other markets doesn't matter
THEN I ASK WHAT MATTERS? ON WHAT IS THIS MARKET BASING ITS VALUE?
lots of food for thought. You mention you are bullish on out to 2010 ah! Are we specting a double bull cycle (8yrs) without a darn correction eh!
Something must be out of whack.
I assume a long road for you on the long term framer. As for me I careless, althought I am aware I don't even bother. Give me the 20 min frame, and I will deal with that. If you want to deal with the rest of the lies for such a long timer frame I advice you to get protection or you are going to get a real sunburn when the sky clears out. Watch out below!!
Oh! and I forgot to mention the lost war in Iraq. What are those folkd returning home going to do when they are here? How are they going to impact society, and jobs? What are the chances of another terroris attack here soon after the troops finally pull out of there?
good luck.
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Registered User
Joined: 10/7/2004
Posts: 2,181
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I gotta go with the majority on this one. BigBlock has built a pretty powerful case. I keep getting low numbers of stocks in my bullish scans on "Up" days.
Something just smells rotten in Denmark (apologies to all our Danish friends).
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Registered User
Joined: 4/18/2005
Posts: 4,090
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I dunno.
those are some good points.. but It seems like chopy markets and cycle churing for now. Possibly some consoliding and moving on. I have read.. and I'm not a financial guy I just like all the pretty lines on the chars, that we have been in this situation before and pulled through in unexpected time. We do have allot of new technologies coming to market. Where were we before the Tech boom? Yea allot of jobs are being sent over seas. But as you said allot of baby boomers are retireing, and ageing. I think medical and healthcare, pharmaceuticals etc will do well. I have also read that usually after a Housing boom a market boom tends to follow. Allot of asset management stocks have been cruising since the housing sectors started looking topy. Take GROW for example, Also brokerages. I'm told that there is allot of real estate money coming into the market now.. as people pull out their realestate investments and move them to the market.
We are due for a correction. but I think we are headed into a long bull market. There will be retracements along the way .. but nothing severe I don't think.
I've also read that unemploy ment is TOO LOW, and this is percieved as a drag on a companies bottom line as they must pay up for the same or lower quality of help. However allot fo jobs are gonig over seas.
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Registered User
Joined: 2/7/2006
Posts: 218
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i was hoping this thread would get a good discussion going...im assuming a tech boom out to about 2009-2010 given demographics in developing countries, wealth of baby boomers and the cash just sloshing around...but im also thinking about technology and how we are heading from the 50 to 90 percent adoption and saturation point in the US towards the end of this decade...the last time tech took off was when the dollar was at lows. the stage is that we have an economy likened to a crack in a huge debt dam...we dont know how long it will be until the dam breaks but we are patching it up because we cant afford to completely fix it.. sooner or later its going to burst but we will climb a wall of worry before that happens....i totally agree with everything you said Bigblock thats why i sold my house in 2005 and have leased a vehicle(unfortunately for gas prices its a dodge quad cab)...im looking at other markets topping and i think there is going to be a nice selloff in may...but the demographic spending trends suggest china and maybe india will be on the rebound as our decline starts to precipitate later in this decade...the difference in this eventual huge decline is that it will not be just on paper like 2000...it will slap you in the face at your home when its value drops 20-30 percent or more...a knock down drag out recession in 3+ years similar to 1929 but not as severe...i think as investors as the world economy grows we have to be careful not to center ourselves only on the economic dynamics of the US because other nations are on their way to leading positions...they will want our technology and with the dollar down why not buy it at a discount...the money has to go somewhere...i am a net seller in this market at this point though...puts puts puts that is...it is possible that the huge decline could come sooner and i will admit that i was wrong at that point...but im betting on the subprime leak and the debt markets being patched until nothing more can be done and they will peak at the end of this decade spreading to many asset classes...the leveraged buy out phenomenon is just nuts to me...im an options trader myself...it will be interesting to watch what happens this summer...
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Registered User
Joined: 9/21/2005
Posts: 566
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I do have some conerns about living beyond one's means. I see evidence of it at every level of our society from the individual to the federal government. So then you have to ask how did we get to this state where credit card debt is so much the norm you raise eyebrows if you dont use it, or use a home like a piggy bank to pay for things you really can't afford.
In my view its a combination of a real decline in wealth of this country and a real decline in the average person's sense of responsibility. I read an interesting article once comparing America to the Roman Empire and how like the Roman Empire the decline has commenced even if the Empire still seems strong on the outside. No empire can last long if its economy is fundamentally weakening, such as losing big chunkcs of its manufacturing base and outsourcing everything possible to other nations. Its not even worth going into how poor the federal budget has been mismanaged and how empty the promises are for long-term entitelement programs. I guess the sad truth is that the country collectively and indivudually is getting poorer. No clearer evidence of that from being the largest creditor nation to the largest debtor in a generation. That works ok as long as other countries are willing to buy your debt but you lose some freedom if you need them to in order to stay afloat.
Having said all that on the maco level, I still think one can trade the markets if you are open to what the market gives you and dont think you can outsmart the trends. Think of it like being a surfer, your goal is to ride waves and see how long they might take you. If you see a really big wave coming that you don't want to ride, take precautions. On another thread we talked about how we all new that the tech craze and Internet bubble were going to crash, but if you didnt take part in that market you missed one of the best bull markets in recent times. If the market looks frothy, tighten your stops, reduce the size of your trades, buy lots of index puts - many ways a person can hedge their risks but still go along for the ride while it last. There always will be some Feb 27s that cause losses but in the long run you have to be in if you want to make money trading.
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Registered User
Joined: 3/25/2005
Posts: 864
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I think all of you naisayers out there should be more concerned about whether Dow 14000 will be reached before the end of the year.
There are several factors fueling the market right now.
First, because of most of the reasons BigBlock stated, there will be a tendency for interest rates to either stay put or drop further. The prospect of continued low interest
rates is a positve for the stock market.
Second, earnings,overall,are positive to very positive for Key Companies regardless of how low the estimate bar may
have been set. The bottom line is that the majority of
companies reporting are firmly beating their estimates
and this is also fuel for the stock market.
But, IMO, the single most important factor driving this
stock market right now is the fact that there are a whole
lot of dollars chasing fewer and fewer publicly traded
companies as private-equity firms either threaten to
or are actually taking more and
more public companies private. So it's a case of supply
and demand -- more monetary demand chasing fewer supplies
of publicly-traded companies.
Of course this is just my opinion but I think this bull
is going to be strong for a while. Rising oil prices
may keep it in check temporarily but if each passing
quarter continues to yield positive earnings for the
most part and if interest rates remain in check then
Katy bar the door!
I think we may be rallying until June before things begin
to slow up a little.
Just My Opinion.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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The problem with this type of analysis is it allows
a traders biases into the picture. If you want to be
a bear you can. One of the beauties of the mind is
you can explained away good news. You can choose
to see what you want. You can choose what counts
and what doesn't.(in spite of what the market does)
The bottom line is I haven't seen anyone trade inflation
numbers job numbers, housing numbers, CPI, budget
deficits. They are simply the arrow that is put into the
bow when someone wants to make a point.
(the correlation between these and the market is
horrible)
Every argument has 2 sides. (some only have one they just
don't know it)
Usually when looking to the future technology is underestimated.
Innovation is under estimated, growth is underestimated.
(remember when the "earth" crowd predicted the next Ice age?
(now it is global worming) remember when we wouldn't be
able to produce enough food to feed the population? (now
we are suffering from obesity)),
There is always something for the gloom and doomers to hang
their hat on. All I know is throughout history those who have
predicted the end. have had their eyes blackened and their
noses bloodied.
We can "take sides" in this issue and argue the end of the world
but as I see it. this has to be converted into trading.
If someone wants to say jobs, housing, growth, autos are bad.
My question is : When is to top? Unless you can tell me we still
have to trade.
Your trading should have its own protection measures in it.
Unless you are a daytrader going to cash at the end of every
day. You should be using money management and stop losses.
Your own trading "not working" should tell you something is
wrong. This should tell you to stop and see if something
ominous is on the horizon. Something as simple as a
40 to 45 week moving average. Would have kept you
out of most market problems for decades.
To be honest I am not even certain it matters. I can remember
trading stocks like: FBC, COCO, FLIR, CHS, KWK during
the 2000/2003 bear. (notice that some of these have
not done well in this bull. This is the ":natural cycle".)
If history is any guide. There will also be many strong
stocks in the next bear.
(I wont even get into the topic of how "easy" shorting is)
As far as I was concerned the bear market was "invisible " to
me. All that matters when you are trading is what is in your account.
(as far as I know there was no law passed that you had to be in
Cisco at the top)
I think traders would do better to focus on how to find and trade
good stocks. Then worry what the latest CPI number means.
Thanks
diceman
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Registered User
Joined: 3/25/2005
Posts: 864
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I agree totally diceman.
The direction of the market never matters
to me personally.
I've been shorting successfully for the
last few days all the while the market
was making new highs.
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Registered User
Joined: 2/9/2005
Posts: 42
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DOJI on the NDX yesterday with RSI of 76. Enough said.
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Registered User
Joined: 10/7/2004
Posts: 2,181
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You know, this is pretty interesting. I just looked at daily and weekly charts of the NDX, DJ30, COMPQX, etc. They all look strong, especially the weekly.
Interestingly, the VXN and VIX are reaching support levels. Maybe what I'm seeing is just the typical retracements needed in an otherwise healthy market.
I am fortunate in that I don't day trade, so my trades are usually just going to include retracements as part of their normal lifecycle.
Of course, the one statement I know will prove correct is...we'll see.
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Registered User
Joined: 2/7/2006
Posts: 218
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gentelemen gdp came in lower than expected
Q1 08:30 GDP-Adv. 1.3% vs 1.8%, breifing had it at 1.5%...im wondering at what point foreign investment pulls out of the US to chase obviously better growth in other countries...the debt that we have that is being financed by other countries has been loosing value...at what point do they say enough, im cutting my losses? then the interest rate will shoot up when our debt is not supported...not a good scenerio for the soo called goldilocks navigating fed...
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Registered User
Joined: 4/18/2005
Posts: 4,090
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Aksportsman you are scareing me , but I have allot of blue on screen for a market down dayright now.
You make some interesting and good points above but I was trained to see all the doom and gloom as a good sign. but then I guess it matters who is talking. Farmer Joe around the corner talking about his retirement or trained market profesionals.
though right wehn my wife and I got maried I was delivering furniture in NJ and was amazed at all the people whoe were buying houses that were clearly to big for them becasue interest rates were so low. Some people made good money flipping the houses in a year but allot were planning to keep the houses. That was before i knew what a limit order was and it seems like a bad recipie for disaster then, Sounded historically familiar.
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Registered User
Joined: 9/21/2005
Posts: 566
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I was in a bookstore a couple years ago and was browsing the investor section. Lots of books on real estate and especially on flipping. About how easy it was to flip houses and only the chumps were not doing it. I wonder if you can correlate any market craze or fad by how many books are on sale touting and how prominently they are displayed. There is some expression out there about how when the average joes start making stock calls its time to head for exits.
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Registered User
Joined: 2/7/2006
Posts: 218
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im sure a statistical analysis would agree with you...it looks like a lot of exhaustion going on...lots of traders stand to get sold into...thats the way it happens though...it should be a crime to set estimates this low so that everyone beats earnings and artificially send the market up only to sell into people...other markets are not going to like our GDP numbers...
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Registered User
Joined: 2/9/2005
Posts: 42
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The Market is being held up partially by big Wall Street Brokers and hedgies whose monthly bonuses are on the line. They got none in March and so April was catch-up time. With RSIs over 70, and volume tailing off, the big drop likely will begin Tuesday, the start of a new month. With the economy slowing, perhaps the annual top is in.
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Registered User
Joined: 10/7/2004
Posts: 319
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Your points are well made Nimbus. I'm getting cautious as well. Besides, I heard some dude on CNBC today calling for an 18,000 DOW. Seems to me I heard that before sometime around 1999 or 2000.
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Registered User
Joined: 2/9/2005
Posts: 42
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With the dollar so weak, the Asians are buying USA stocks at major discounts to what USA citizens have to pay for these same stocks. This is a huge driver for the recent feeding frenzy for our stocks. I call it "false demand." You don't hear about many USA brokers "loading the boat" in recent weeks - many are selling into this false Asian-based demand.
The scary graph, ala 1999/2000, is the Dow Jones Shanghai index ($DJSH on StockCharts).
http://stockcharts.com/charts/gallery.html?$DJSH
When we took a hit in late February 2007 in our markets, it was in reaction to a mere 9% drop in the $DJSH, from 284 to 259. The $DJSH is now 379 (up 46% since late February). The Febraury drop barely shows on the current chart. The P&F chart says it also just topped on Friday.
Clearly the $DJSH is going to collapse like the NASDAQ did in 2000. Odds are it will retest the breakout level of 165 of late November 2007, effectively a drop of 57% !!!!!! We could feel at least half of that here in the coming months.
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Registered User
Joined: 4/17/2006
Posts: 271
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Nimbus, that daily $DJSH on StockCharts is, indeed, scary! Even scarier if you switch it to weekly...parabolic! Very interesting point about Asian money scooping up US stocks on the cheap. Are you saying when Shanghai collapses that they will also pull all their money out of US stocks thus precipitating and/or exacerbating fall(s) in US markets?
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Registered User
Joined: 12/30/2004
Posts: 10
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From what I understand the Markets rise can be attributed the decrease in the amount of tradable shares of stock on the exchanges. This is do to buybacks and private equity taking companies private.
I recall reading an article buy Warren Buffet in Fortune Magazine after the market drop in 2000. I don't recall the exact year. He said in the article that the US stock market would not advance much until about 2007. His reasoning was a comparison of the total market cap of the US stock market versus the total GDP of the entire country. He had this graphed on a chart. Prior to the drop in 2k the market cap was higher than even prior to the crash in 1929.
I know that you can get total GDP from government web sites. I don't know how you can get a total of the number of available shares to trade.
On the bear side the market historically starts going down in May.
Steve
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Registered User
Joined: 9/21/2005
Posts: 566
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interesting blurb from Grantham:
The bursting of this bubble will be across all countries and all assets, with the probable exception of high-grade bonds. Since no similar global event has occurred before, the stresses to the system are likely to be unexpected. All of this is likely to depress confidence and lower economic activity.
Grantham sees two big potential catalysts that might turn this bull market into a bear: a surge in inflation, leading to higher interest rates, and a squeeze on profit margins, which are currently running way above long-term averages.
As for timing, he concedes that's impossible to predict. But here's the kicker: Even Grantham thinks you probably need to be bullish right now. The reason? Most bubbles, he notes, go through a short but dramatic "exponential phase" just before they burst. Like Japan in 1989 or the Internet in early 2000.
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Registered User
Joined: 2/7/2006
Posts: 218
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i agree with that...i said before im looking to 2010 for mass precipitation but a nice correction here in may is probable
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Registered User
Joined: 3/1/2005
Posts: 34
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My crystal ball is pretty hazy right now.
Here are a couple macro factors that will have a great impact.
1. Right now the markets are being driven by the massive liquidity bubble fed by the FED instituted negative real interest rates from late in 2001 to kick start a rcovery after the September 11, 2001.
2. The bull market we have enjoyed since the early 1980's has been funded by the Reaganomic invention of the IRA, 401K vehicles to entice the baby booom to reliquify the markets after the stagflation of the 1970's that followed the Viet Nam fiasco.
Forecast #2. In mid 2009 say somewhere around June we will have the modal period of the withdrawl of the baby boom cash flow into the Reagonomic IRA, 401k vehicles the investment bull markets in the USA have been riding. Unless there is some replacement for that cash flow input the market will turn bearish from this factor. Yeah, I know pretty basic and everyone knows it already.
Forcast #1. The liquidity bubble will impose a declining FRN (most people incorrectly call it the dollar). If it is managed to decline in an orderly manner as the FED has planned it will just quietly deflate all the entitlement, savings, retirement and finacial assets denominated in FRN's. Therefore, increase your exposure to international financial assets like Swiss Franc, Canadian oil sands, CNI, etc, etc.
The dollar devalued by about 8.5% over the past year and we expect the rate to increase as the "war on terror" goes increasingly badly with no "Patten", or "Eisenhower" anywhere to be found anywhere in the US armend forces.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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I havent read all the above, just skimed most some of it. I found this interesting ... a custom date sort frmo Feb 26th to current brings up internet information providers, Catalogues reatil and Shiping in the top five who hade the greates % increase.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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that was for the Hemscots.
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Registered User
Joined: 12/8/2004
Posts: 1,301
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I have to go with diceman on this one. Trade what you see, not what you think you will see in the future. Right now my bullish scans show 77% of the highest volume stocks are in bullish trends. That's pretty normal for a strong bull market.
Let the market tell you where it is heading. Forget forecasting except for the fun of it, but try not let that forecasting cloud your judgement. This was a very tough lesson for me to learn.
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Registered User
Joined: 10/16/2004
Posts: 8
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The bear case sounds pretty much like What I’ve heard my whole life so far.
I don't ever remember a time when they've said go out invest and don't worry.
Some facts are though if you look at what has happened to the global economy since about 1990 to present the USA has been really the one stabilizing force for the globe. I don't think this will change soon, as in the next 50 years or so.
It seems now days any event that would’ve, even a decade ago, had a lasting effect for a year or longer.
Now gets worked through the markets in hours, days, a month or so, and poof it is over with.
I doubt China or any other debt holder of the USA will do anything to damage or hurt us as this would most likely cause severe damage to their economy and loss of their principle.
Interesting China is much more concerned about inflation presently than the US is or has been in a long time.
China is running a surplus, we are running a deficit, but yet both are supposed to cause inflation.
Hmm, maybe money exchange theories are misjudged, or lagging.
Now look at the GDP of the USA 2000 approx. $10 trillion nominal today about $13.2 not bad in spite of what has happened.
Let’s see in 1999 we had about 3.5% unemployment and a, supposed, fiscal surplus plus a stronger dollar.
Today we have about 4.5% a declining deficit and a weaker dollar but yet at both junctures potential fear of the end were heard.
Demographics might be the key here as boomers leave the workforce will they do start ups, play, or need special medical care or other demands for labor and services consumer goods..
If you look at the demographics of immigration you see that many are younger predominate home buying years are 25-29 and 45-50 or so if given the chance.
Last I read south of the USA border about 75% are under 35.
One thing about immigrates, is they buy houses, and if anyone went through the R.E. markets in the 1980’s we’ve heard the sky is falling before and with the Saving and Loans mess that congress created it almost did. I know the S& L was predominately commercial and partially created by aggressive deprecation rules and lack of passive active income rules.
The garbage Barney Frank is rattling about could be also viewed as capital restrictions which aren’t a good thing.
Also most likely though the workforce will need to produce less jobs to keep unemployment low as it is.
Now productivity will most likely be crucial going forward and that along with inflation is one of these events that no one can really pinpoint as to what or how it can be created.
I suspect we will go negative on productivity here soon for a few quarters which will trigger a new rash of capital spending.
Now with out getting into why did productivity spike so much in the mid 1990’s was that because the boomers finally became good workers if you look at productivity is was flat post WW2 and declined mid 1970’s as boomers entered the workforce.
Or did productivity increase as they changed counting the employed women became counted in the labor and employed fields than.
It is the ld if you pain your house just the paint is counted towards the GDP, but if pay to have your house painted both the labor and paint is counted towards GDP.
Now are you able to make more working and hiring your house painted.
Would higher income or tax code influence you, net income.
Fact is factors of production aren't or haven't changed and as one gets out of whack compared to the others adjustments will be made.
Nicest thing about productivity is no diminishing returns.
Another little fact is as long as we have inflation the federal reserve has tools to deal with it it is deflation that is the real fear.
Disinflation like we have now with imports is ideal really as we are importing deflation and the best part is the twin of a trade deficit is a capital surplus.
We have a trade deficit not a service deficit.
I could go on.
For myself I do believe the event that will cause the markets to sell off in a major way for a sustained period of time at this point is not even on the radar, or will be another 9.11 type event.
As we saw with 9.11 it was a relativity short time frame for the markets but will be a long term lasting effect for the USA mindset.
I also believe that what congress does as far as fiscal policy will be the greatest threat to the USA economy going forward.
I happen to believe in supply side fiscal as per investment tax credits and increasing capital formation.
To create the incentive for people to want to take risk; along with the risk of potential profit or loss entitlement.
I do not believe China will amount to much as we saw with the USSR and as we saw once before in modern times with Mao in China.
Command central economies are too slow to respond to changes in the production function recipe.
Now granted right now in the USA we are moving towards protectionism and some pretty economically damaging foreign policies based on populist notions.
Anyone who has studied the time period of post civil war to pre-WW2 US economy can see some similarities in stupidity of our elected idiots in DC.
But regardless national and international potential trouble, trading/investing, for me, is voluntary.
I can always sit out or do mutual funds if I get overwhelmed.
I do think the derivative can also cause a great quick short trade one of these days as in a “fat fingers” type events or a collapse of something.
I do beleive that for those of us who want to learn more about the markets and trade along with them.
We will have better and more tools than ever before going forward.
Which, hopefully, should lessen the risk, nice dream huh, or be able to at least be stopped out faster.
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