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thank you, you never know what company will be the next msft.
goog
yahoo
a mover like hlsh did for us.
Thanks, Mick
I'll peek in on them.
Fred
o.k., here goes for the right stuff. plus a new one PWE
Dow 30 With Point and Figure Charts , Dow Discussion #board-7254
PowerShares Dynamic Technology Sector Portfolio Sponsorship of ETFs (PTF) #board-7276
i have the wrong stuff for this question. i do it and i hope i didn't offend anyone with prayer. i got mixed up on forums.
these are on a daily turn booklet. they are everyday for the year.
attached at the btm always doesn't seem to go with the prayer but this is below today's prayer.
if two people who love each other let a
single instant wedge itself between
them, if it grows--it becomes a month,
a year, a century, it becomes too late.
from
published by hugs for heart ..tm
by lighten up enterprises,inc
Thanks, Mick. Where do you have them. Can you give me a link?
Fred
check my dow 30 stuff. a lot are in the overbought area.
i have them in p&f readings.
know when to hold and when to fold.
Mostly, I now daytrade ... with mixed success. This recent run has been nice, but it's not always like this.
Fred
i see you like quality companies.
i did two recent ones for this type of investments.
dow 30 and somethings for etf's.
New Educational Article out ... very interesting Historical Analysis on the January Effect.
On our Seasonal & Rolling Stocks Website:
http://blashing.com/_misc_/theJanuaryEffectDoc.php
SONS,
Slovak Telecom Relies on Sonus Networks and Pactolus Communications Software to Bring VoIP Services to the Bratislava Summit
Thursday March 10, 2:30 am ET
BRATISLAVA, Slovakia & SWINDON, U.K. & WESTBOROUGH, Mass.--(BUSINESS WIRE)--March 10, 2005--
Slovak Telecom, Sonus Networks and Pactolus Communications Software Deliver Calling Card Services at Bush-Putin Slovakia 2005 Summit
ADVERTISEMENT
Sonus Networks (Nasdaq: SONS - News), a leading supplier of service provider Voice over IP (VoIP) infrastructure solutions, and Pactolus Communications Software, a leading supplier of carrier-class, enhanced voice applications for next-generation networks, today announced that Slovak Telecom extended its next-generation network using Sonus Networks and Pactolus solutions to support the summit of the United States and Russian presidents, George Bush and Vladimir Putin, recently held in Bratislava, Slovakia on February 24, 2005. Slovak Telecom, a leading telecommunications company in Slovakia, was selected to provide the communications and technology infrastructure during the summit. Additionally, Slovak Telecom provided prepaid/postpaid calling cards, supported by the Sonus-based network, to all journalists attending the event.
As part of an ongoing relationship with Slovak Telecom, Sonus Networks has deployed an integrated next-generation VoIP solution that includes calling card services based on Pactolus' application. Supported by the Sonus' Open Services Architecture(TM) (OSA), Slovak Telecom is delivering multiple IP-based voice services, including Global Card and Directory enquiry and operator-assisted services. Slovak Telecom first deployed Sonus' GSX9000(TM) Open Services Switch, Insignus(TM) Softswitch and Sonus Insight(TM) Management System as the foundation for their VoIP network and has since expanded its next-generation network to include the Pactolus SIPware Calling Card and Operator Services. The combined Sonus / Pactolus solution provides a broad range of SIP-based calling services throughout Slovak Telecom's network, enabling feature flexibility delivered through a cost-effective IP-environment.
"A robust communications infrastructure was essential for government leaders and other attendees during that summit," said Herbert Mueller, COO, Slovak Telecom. "We required trusted partners that could deliver a cost-effective platform that was scalable, reliable and deployment-ready. The solutions from Sonus Networks and Pactolus have been deployed in large-scale networks around the world and enabled us to seamlessly support the increased demand for the duration of the summit."
"Pactolus responded very quickly to this important event and doubled Slovak Telecom's calling card services capacity in a matter of hours." said Gordon Arthur, VP Business Development, Pactolus Communications Software Corporation. "In conjunction with Sonus Networks media gateways, the entire solution continued to meet the scalability and reliability requirements expected during the peak call loads of the summit."
"As the world's telecommunications networks evolve to a packet-based infrastructure, carriers such as Slovak Telecom are finding new ways to leverage the flexibility next-generation networks can provide," said Steve Edwards, chief marketing officer, Sonus Networks. "Integrating prepaid/postpaid applications on a Sonus packet-based architecture has allowed Slovak Telecom to rapidly scale their network to meet the expected increased demand. We are very pleased to be working with Slovak Telecom to deliver enhanced voice services to the summit, and look forward to continuing to work with them to further expand their service offerings."
Koikaze - When you were in the Dolomites did you make it to Kastleruth (Kastlerotto)? Blue
Thanks Fred for your work.
I've enjoyed reading it
On to the next mission.....
Kirk out
Thanks, Fred. I'm glad you found it useful.
Fred
Thanks, Gottfried.
I'll be here. Not only that, but I'll be active. I just hope others find my area of interest worth considering.
Fred
You surely made it easier to find Zeev's thoughts.
This thread will be missed...
Fred
Fred, thanks for all your extractions! They will be missed, but I hope YOU will stay. :) Gottfried
NOT THE END OF ZEEV'S IDEAS - up to ZEEV:363125, 02/27/05
Just the end of my extraction of them ...
... because it's time for me to go
I've had a lot of fun, you know
Reading AJ, Basserdan and all
Trying to be sure I had it all
So you could see just what he meant
Knowing that the time's well spent
Now, at the end, I should be glad
Instead, it makes me kind of sad
Fred
ZEEV, NEAR TERM - up to ZEEV:363125, 02/27/05
02/22: (361015) (*COMMENT*)
Z: You have a better chance of inversion than you do of getting to 2250-75 by 2/23. I find it strange that you are still pushing that roadmap when reality has been knocking ... no, pounding at the door...for weeks. But I find it even more strange that few seem to embrace the notion of failure and keep trying to suckle on the nipple or prognostication even though the milk is and has been so obviously tainted recently.
(*END*)
Until the fat lady sings... by the way, with many indicators simply meandering rather to going to any extremes, the possibility of a meandering market is increasing, we'll see if 2040 holds today, I think it is an important test.
02/22: (361348) (*COMMENT*)
(Part 1)
Is today incurring enough damage to change this week from an UP week to a DOWN week or do you think we're close enough to 2040 at the close with other indicators indicating bottom and therefore bounce back?
NASSACRE beginning yet or still have a big bounce left?
(Part 2)
We never got the extremes I expected for the nassacre to start, of course, it does not means that it won't.
(Part 3)
Zeev,Lol, you are the master of the Hedge!
(*END*)
It is not I, it is the market refusing to cooperate and yield clear signals.... (g).
02/24: (362029) (*COMMENT*)
I believe we are now in the turnips timeframe (the ROADMAP) window for the beginning of the nassacre.
Possible to get a sense of your market thoughts here? I know the turnips reserve the right to change and change often <g>. - still of great value though.
(*END*)
I have no clear signal one way or another, confused turnips at this point.
02/24: (362339) (*COMMENT*)
Zeev, I still have a "Change of Direction Point" due next Monday, I think the market will be up (on balance) into sometime Monday (I'll let you pick the hour) then it is look out below!
(*END*)
It does not leave much room here for a substantial advance.
02/24: (362367) (*COMMENT*)
Zeev do you think this was a mini nassacre and now we can start a bigger move up? Thats my thinking.
(*END*)
A nassacre? We just came from 2100 to 2025 or so, that is a relatively normal retrench, IMTO.
02/24: (362462) (*COMMENT*)
Zeev,which comes first,Naz 1750 or 2350?Hate to put you on the spot,so PM me if you'd like.Just curious on your take.
(*END*)
I don't know, I doubt we have 2375 in the next six months, but the 750 called for by the nassacre scenario may b doubtful as well, wit the Sox starting to lead nicely here, we may not have that nassacre after all. Just trading range for few months in the 2000 to 2200, then depending on economic conditions, it may change either way.
ZEEV, ROAD MAP - up to ZEEV:363125, 02/27/05
Wecus has a chart of Zeev's ROADMAP on the ZEEV'S ROADMAP CHARTED Board (#board-2299).
The ROADMAP chart is updated through February 18th, 2005
02/27: (363079) (*COMMENT*)
(Part 1)
Zeev,which comes first,Naz 1750 or 2350? Hate to put you on the spot, so PM me if you'd like.Just curious on your take.
(Part 2)
I don't know, I doubt we have 2375 in the next six months, but the 750 called for by the nassacre scenario may b doubtful as well, wit the Sox starting to lead nicely here, we may not have that nassacre after all. Just trading range for few months in the 2000 to 2200, then depending on economic conditions, it may change either way.
(Part 3)
I think just delayed. March is normally a volatile month and known for turns. SPX/DOW look likely to set blowoff tops while NDX looks to break up to maybe 1590 being accelerated on short covering. I think a fast move up and a faster reversal is in store. Perhaps then the indicators will register the extremes your looking for. I don't think such a trading range can be supported by the fundamentals looking forward a few months. BWDIK?
(Part 4)
Could very well be that the nassacre is just delayed, but I am almost ready to defenestrate the nassacre scenario out of the window.
Few things to note. The economy i still in "goldilock" mode, with employment behaving relatively nicely, thus delaying any possible consumer retrenchment.
The semi equip BTB at .80 is mildly bullish, sure it can go lower, but the behavior of the sox in face of the recent low BTB indicates to me we are closer to a through in that sector than a top, note how KLAC reused to revisit the $40 area and instead launched to a new recent recovery. Since we never got a really deep decline in the BTB, we may not get a sharp advance there either. That reinforce a model that includes rather than a very sharp retrenchment modest advances and declines.
Last the failure to get any extreme readings (either excessive bullishness, or excessive bearishness) in sentiment indicators, point to a period of less volatility (see the anemic VIX/VXN charts, even during periods of big declines as we had the one day wonder last week).
So, if we do not get excess optimism on the next ramp (and that ramp takes the dow to recovery highs), I will defenestrate the Nassacre model out of the 10th floor window.
I am still at a "neutral" like exposure at 44% cash here.
(Part 5)
So in pure and simple Hungarian, this means that the 1750 scenario is most unlikely to happen anytime soon or never (g)??
(*END*)
1750 is not yet "off the table", as I said, I need to see how extreme the various sentiment indicators get to in the next ramp, if they do not get outlandish, then 1940, might be the low till the middle of the year, and even that, just on a spike. No better visibility at this time... Got to "live" with what the market offers and right now, the turnips do not have a clear map of where it is we are going. Clarity may or may not return, soon.
ZEEV, TECHNICALS - up to ZEEV:363125, 02/27/05
02/24: (362287) (*COMMENT*)
(Part 1)
Wow, what's with the equity only put/call at .85. Why the sudden apparent fear? Is there something "else" going on besides just a little fear build up? Might we indeed be getting some sort of bottom or am I getting too excited about this one indicator??
(Part 2)
It is actually a pretty good indication here, we have not had this one that high either in the relapse to 2040 earlier this month, nor on the test of 2008 in January.
(Part 3)
Well, that's what I'm wondering out loud about. Now everyone is waiting for a test or break of the Jan lows and hence, getting very bearish. With monthly strength period starting and lots of automatic inflows into 401ks and the like over the next few days, maybe we have or are about to see a low...
(*END*)
Could very well be, if that number stays that way or even gets higher, that is a bullish sign.
02/24: (362484) (*COMMENT*)
(Part 1)
Do you follow CBOE only? I am puzzled by the big difference between high EPC on CBOE (bullish) and very low (about 0.45 and very bearish) all-exchange P/C.
I trust all-exchange P/C more.
Looks like a typical DCB, nothing more. All oversold readings are gone in one day.
(Part 2)
Where do you get the total EPC ratio, the CBOE now reports the "virgin" EPC, without options on the QQQQ.
(Part 3)
<Where do you get the total EPC ratio, the CBOE now reports the "virgin" EPC, without options on the QQQQ>
Quote.com is one source. Usually "all-exchange" P/C is not so different from CBOE P/C. But yesterday the difference was dramatic.
If you follow CBOE only, never mind.
(*END*)
Thanks.
ZEEV, GOLD - up to ZEEV:363125, 02/27/05
02/27: (363071) (*COMMENT*)
My better half has greater aversion for the "yellow" than I have.
-----------------------------------------------------------------
I've never understood the "gold" thing. In my mind's eye it is a commodity of fear. As I metioned to Westy,if it ever goes to $3000/oz we'll be back to a barter economy.
(*END*)
We are in the same camp, no rational that I can see for gold to do anything but mirror the dollar's movement.
ZEEV, NEAR TERM - up to ZEEV:360842, 02/20/05
02/14: (358190) (*COMMENT*)
(Part 1)
Zeev, I am a little confused again (as usual). When are you expecting the last hurrah and at what target?
(Part 2)
The nominal date was supposed to be 2/23 and the target was in the 200 to 2250 area, but if we do not take out 2112 with some gusto early in the week, who knows, either that is delayed, or maybe it does not happen. Not much excess exuberance so far, so it may take time to mature, or it may get aborted. Got to see the numbers day by day now.
(Part 3)
i have reviewed all of your recent posts, and i am somewhat confused by your post below, as it seems as tho you feel that the nassacre may get aborted? thanks in advance, pg
"The nominal date was supposed to be 2/23 and the target was in the 200 to 2250 area, but if we do not take out 2112 with some gusto early in the week, who knows, either that is delayed, or maybe it does not happen. Not much excess exuberance so far, so it may take time to mature, or it may get aborted. Got to see the numbers day by day now."
(*END*)
Hey, there is always such a possibility, after all, we had nassacres (early year swoon down) now in one way or another five years in a row....
02/15: (359098) (*COMMENT*)
(Part 1)
Zeev cash position now. Thanks
(Part 2)
Cash position high here at 50% or so, they won't get me my bids... (g).
(Part 3)
Why is your cash position so high if you still think we're going to 2200 or so...or do you?
(*END*)
Because I could not find bargains to replace what I sold...
02/16: (359322) (*COMMENT*)
Zeev, seems like Iran situation may become the trigger for the downleg in the market you were looking for. I remember how the uncertainty of Iraq invasion was depressing the markets. Iran is even more complex situation, larger, tougher enemy. Iraq still a mess. Could put a damper on any optimism.
(*END*)
It sure is scaring the market everytime it seems to flare up.
02/16: (359721) (*COMMENT*)
(Part 1)
Does its inability to take out 2112 this week spell doom for the Naz going forward?
(Part 2)
I am not sure about doom, but it is a major concern and the lack of put buying on the swoon today ia an additional concern.
(Part 3)
On the other hand, isn't there usually a blow off period of high optomism in the market just before a major turn occurs?
(*END*)
Yes there is, that is why still have the possibility of a blow up run of some 100 Naz points before the nassacre sets in, then I would expect the EPC to drop well under .5, even under .44.
02/18: (360544) (*COMMENT*)
Zeev, are you seeing much more down the next few days for the COMP before another lift? Some post expirty week down?? Put/call high today, but, of course, maybe skewed due to expiry?? Thanks in advance.
(*END*)
No I actually have a strong week next week.
ZEEV, ROAD MAP - up to ZEEV:360842, 02/20/05
Wecus has a chart of Zeev's ROADMAP on the ZEEV'S ROADMAP CHARTED Board (#board-2299).
The ROADMAP chart is updated through February 18th, 2005
02/15: (358805) (*COMMENT*)
Zeev, your roadmap seems to be playing out. NOT 'foutu' after all. What would you like to see more to confirm the map in its present (wecus) form?
(*END*)
As I said earlier in the week, we need to take out the 2106/12 area, and we seem to have some difficulties for now, maybe later.
ZEEV, TECHNICALS - up to ZEEV:360842, 02/20/05
02/19: (360728) (*COMMENT*)
Also, with the turnips call lagging behind a bit, what % probability do you give that we still reach for that elusive 2200/2250 area on the NAS within the next couple of weeks. (Or is there a possibility of pushing the date out further?)
(*END*)
We are rapidly approaching a window of Bradley turns here, my turn date is still 2/23, leaving very little room, Jim's turn date is 2/28, I believe, so you may want to tighten stops and watch very carefully, a failure of 2040 to hold is a clear sell signal, taking out 2112 will very probably lead to a fast move up, possibly still reaching that elusive 2200 plus level. Mind you, a lot of the overbought conditions were relieved last week, so I have a strong week coming up.
ZEEV, NEAR TERM - up to ZEEV:357998, 02/13/05
02/09: (356108) (*COMMENT*)
Zeev, seems maybe the time is ripe for a little pullback here. Are you looking for one and on the COMP, you still thinking 2040 max down? Thanks.
(*END*)
I still have clear sailing here, 2106/15 will be the next "test", it could run fast if CSCO's impact on tech is minimal. got to take a short snooze here.
02/09: (356369) (*COMMENT*)
ok- time for my contrarian post.. letsee if it works this time but :
Zeev- this market looks like SHIT... and getting worse as I type this message. I think people are going to throw in the towel here real soon and judging by the buying on all the dips there are a ton of folks who will try and squeeze out the exit if this house of card collapses..
(*END*)
a 25/30 naz points retrenchment is quite normal, as long as 2040 holds, I think we are still OK.
02/09: (356454) (*COMMENT*)
Heavy selling into the close, not a good sign, we may see 2040 by tomorrow.
02/09: (356469) (*COMMENT*)
Pause on the march upward hopefully? I see we are nearing OEX again, will this put a premature top in before the nassacre?
(*END*)
It could be though put buying has intensified a tad, the EPC has not seen .70 for a little while here.
02/09: (356508) (*COMMENT*)
Zeev - end of Nassacre ...
Noted your roadmap to Nassacre beginning is approaching. when you refer to buying TBL when "we are close to the end of the Nassacre" ... is that a TBD date that will be derived later as your models evaluate the size, scale and progress of the Nassacre, or have you already tentatively published an approximate target timeframe?
(*END*)
I have a target for a first bottom in the map, with a strong possibility that a second worse bttom will occur in the October time frame.
02/09: (356515) (*COMMENT*)
ZEEV: Agree about anticipating a double bottom -- UNLESS the news tomorrow or Friday scares the hell out of folks and they dump large. Know any news that is coming out in the next couple of days which could to instill such fear and give Ms. market reason to sell hard? Trade deficit? Employment? Bond sale? RANCH
(*END*)
We have initial claims (these have been creeping up recently, so another creep could be used as an excuse), and trade balance, which we all know will be crappy, but if it comes under $60 B (last month huge trade deficit) could be construed as "positive" (sure even if it comes at $58 B, it is still much too much.)
02/09: (356546) (*COMMENT*)
Zeev, you mentioned 2/16 as a retrench. Do you mean that from this last top into the 16th is the retrench and then up from there to the 23rd as your "last hurrah"? Just looking back at my Zeev notes!
(*END*)
These windows are far from perfect, I doubt it will take that long since we are already pretty close.
02/10: (356856) (*COMMENT*)
Zeev, I don't think I can recall a time since I've been following you that you have taken so many losses over a 2-3 week period.
Could this be a sign that something is askew with the current map?
Curious to current cash position?
(*END*)
Yup it could be a sign that the nmap is wrong. Let see how we fight the battle here in the 2040 area, it looks as if we may even try the 2012 after all. And while I was on the phone, OSTK got hit just under $50. And my cash is up to 42% with all these losses.
02/10: (357191) (*COMMENT*)
Maybe participants are looking for some place to hide. Wouldn't the Dow be the last to breakdown?
(*END*)
We bounced quite nicely from 2040, so I am not too concerned, yet, about an imminent breakdown, though in few stocks like DRIV, SYNA, PLMO and others, it surely feels like the Nassacre is in full swing.... (g). I was much too slow getting out of these, a big mistake.
02/11: (357795) (*COMMENT*)
Zeev, map looks like it's foutu.. Nu? 2040 looks about to be taken. Now what? Without the extreme highs is 1st leg og Nassacre tobe put off until April/May?
(*END*)
Not yet foutu, is it, quite a nice reversal today, the question is can we take out 2112 next week, a big question. Put buying, not as heavy as yesterday, was respectable...
02/12: (357852) (*COMMENT*)
Zeev, seems to be lots of talk about near the end of this run the NAZ will actually underperform the S&P, etc...do you buy this theory? Do you look for the Techs to underperform during this possible "final" cyclical bull run this next month or so (or however long this runs lasts)??
(*END*)
I am not sure about it, the SMH is starting to look half decent, so the Naz could easily take out 2106/12, and if that happens we could have a fast run into the end of the month.
02/12: (357866) (*COMMENT*)
The performance of the SMH was a revelation yesterday, given the mediocre-at-best results posted recently by tech companies. It really had the feel of a damn-the-torpedoes push by Da Boyz, the kind that signals a significant move up...
(*END*)
Agreed, and still within the major framework of the current model. Mind you, SNDK was not following with oomph the behavior of MRVL, though.
02/12: (357904) (*COMMENT*)
The post this replies to gave timing considerations. Current thoughts on last hurrah?
Another thought is not certain at all tax cuts will be made permanent, in fact I doubt it. That possible hit to liquidity along with a shrinking of the public sector if budget cuts pass will hurt the consumer going forward.
(*END*)
Looks as if 2/09 was a little premature, 2/10 and retest 2/11 seems (with the strong reversal) to have been "it", there is still a possibility of another minor weakness early Monday, but I doubt we get that "fine structure local low 2/16. Jim, has 2/16 as such a low, however. The strong rally yesterday did not cause major reduction in put buying either, so this run may have a little more to go.
ZEEV, ROAD MAP - up to ZEEV:357998, 02/13/05
02/07: (355525) (*COMMENT*)
Just looked at your road map. Have you checked it lately? Sure looks like the move down just started a bit early. Any chance of that at this point? I am kind of on hold here waiting and seeing. Your roadmap sure makes the case that the Nassacre, phasse 1 has begun.
(*END*)
I had to change to nominal starting date (top) to 2/23 (see #msg- 5129211 and #msg-5129606 from about three weeks ago. So far we had three EPC reading under .5 in the last month, and none really under .45, got to wait for real extremes before I have a "run for the hills" call.
02/10: (356951) (*COMMENT*)
I still say that the map really is not that wrong. The trend is following the map perfectly. It is possible that it is just out of phase. It started to be out of phase when there was no retrnch in December. You never adjusted to that and keep waiting for the next move up which may not come. What is funny about your map is that I am also waiting for that next wave up, maybe the v of 5. But, your map which is so clearly being followed, just a month too early, is really convincing me to put away the party hat and is keeping me mostly hedged. Look at how perfectly your map is tracking the move if you just push it back a little starting in December.
(*END*)
I thought I corrected that by moving the top to late February...
ZEEV, TECHNICALS - up to ZEEV:357998, 02/13/05
02/07: (355533) (*COMMENT*)
One "odd" thing about today's EPC, Zeev, is that there were over 136K of the XOM 50 Calls traded today, thus pushing the ratio out of whack. XOM goes ex-dividend tomorrow, and apparently there's a play of capturing that dividend (and profits) with ITM options. This happened in December with a few dow stocks, too.
I don't know if this has gone on all the time, but it sure makes the EPC seem less exhuberent, as no one is buying 10% ITM calls out of speculation....
(*END*)
Do you know what was the open interest in those calls yesterday? The current open interest is very low, so that must have been a "closing" of a position, maybe to capture the dividend.
ZEEV, GOLD - up to ZEEV:357998, 02/13/05
02/12: (357851) (*COMMENT*)
OT<<If America had stayed on the Gold Standard and just grew at a normal pace and worked hard - THINK were she would be today. THINK of the future we could have left our children. No instead we will all be slaves in a cage - a zoo.>>>
WestPacific, I have been reading your posts-dozens, if not hundreds of negative diatribes against America for a long time -- It seems like you need a history lesson, and I don't think Ayn Rand is the best source for your philosophy or history education:
You ask what America could have been, and I respond that America has been just about as busy as was humanly possible saving people like you from heaven knows what for the past 70 or 80 years. Let me ask you a few questions, in no particular order, that might help you understand what American has been doing for the world during this time, while many other nations have spent a good deal of their time complaining about us.
1. What do you think would have happened to the world if America had not intervened in WW1? -- would Europe be as strong as it is today?
2. What do you think would have happened to the world if America had not intervened in WW2? ? Do you think that the Nazis would have been the proper people to rule the world? -- nothing would have stopped them but America.
3. Do you think the Berlin wall would have been torn down if not for America? -- for that matter are you aware that America saved Berlin right after the war with the airlift?
4. What would have happened to South Korea if not for America?
5. Do you really think that America had any choice in regards to allowing Iraq to control 78% of the world's oil supplies?... Do you think that Saddam would have stopped at Kuwait and not gone on to Saudi Arabia?
6. Where would the World's scientists be if not for America -- do you believe that science would be as advanced without America?
7. Where would the poor and hungry of the planet be if not for America -- do you understand that America has probably been more generous with its wealth -- by what, a factor or 10, a factor of 50? -- than all the rest of the nations of the world put together?
8. Would man have sent foot on another heavenly body if not for America?
9. Would we have an internet if not for America?
10. Did I mention Democracy and the Constitution that has given hundreds of millions of people life, hope, and a decent life? -- were these the gifts of some nation from the West Pacific?
11. Where would Japan be today but not for the generosity and kindness of America after WW2?
12. Where would Germany be today but not for the generosity and kindness of America after WW2?
WestPacific, I have to get back to the market now. I could sit here and list another 500 American gifts to the world, but I will close by saying that you seem to think that your thoughts are very profound regarding America's problems. You capitalize your dictate that we all must THINK about what you say. You tell us we will all be slaves in a cage in a ZOO.
You need to do some thinking young man, for you fail to understand that it is America that has already saved you from exactly what you are afraid of--it was America that kept you from being a slave in a cage.
We know we have problems, but you need to look more on the positive side of what America has done.Those of us who have studied history are well aware that no nation has ever sustained its position of superpower forever. But I will suggest this to you, if America continues in its generosity, continues to allow the Constitution to be its prime directive in all important affairs, continues to strive to advance the cause of the common man, then there is a mighty good chance that we will be around and leading the way for a very long time.
(*END*)
If we stayed on the gold standard, the economic cycle would drastically amplified and we would go from massive inflation followed by depressions every decade. I have presented a detailed analysis of the "sodom bed" of the gold standard few times (#msg- 507644, msg#-555089, #msg-1150995, #msg-1150808, #msg-1471212).
A lot of people think that Greenspan is still a gold bug, well you may want to read "Maestro" by Bob Woodward to get an inkling on his conversion. I think that today, Greenspan would consider being called a "GOLD bug" or a supporter of backing currencies with GOLD as an asteisticon. Of course, this assertion may be nothing more than indulgence in obnubilation on my part. Many still maintain that Greenspan never left the "Austrian discipline" camp, I think these people are witnessing nothing but kinephantoms, though.
02/13: (357998) (*COMMENT*)
Hi Zeev: I'll have to give your last post about "free market raining," [stet]some thought. It's been my experience that you can't reign in a printing press with a reigning machine. The Boys in Treasury are pretty slick.
(*END*)
But the free market is working, the dollar Euro ratio has gone from $.80 to $1.36, a 70% decrease, that is how the market works...and look how well, when the dollar was at $.80/Euro, gold was at $250/ounce, multiply that by 1.70 and you get exactly the recent high in gold at $425/ounce. Actually, European gold bugs have not had any appreciation in their gold holdings in the last three years in term of their own currencies. Holding Euro would have been much better since you also collect a meager non zero libor rate.
ZEEV, NEAR TERM - up to ZEEV:354953, 02/06/05
01/29: (351196) (*COMMENT*)
I have been looking at a couple of charts. Do you consider it a possibility that this retrench could end with some serious panic selling?
(*END*)
yes, but not any time soon, probably in late May to late June.
ZEEV, TRADING - up to ZEEV:354953, 02/06/05
02/01: (352561) (*COMMENT*)
Cause for concern on OSTK would be his charasmatic nature which was all the red flag I needed to avoid OSTK even for a 5 minute time frame scalp..
The last time I listened to his conference call (2-3 quarters back?) the guy was talking about the float of his stock and how fast it could move up if the shorts got squeezed, and also 3 times he mentioned how he was aggressively shorting AMZN in his personal account..
Not the kinda place I would put my money.. even for 2 seconds.. I respect Zeev more then any other trader I met in cyberspace but sometimes I have to scratch my head when I see him playing 'gambling' stocks like OSTK.. but of course the flip side to that is he can manage the volatility/low float alot better then I can so perhaps its just my lack of abilities that keeps me from these?
GOOG, RIMM, TASR, OSTK makeup a list of several dozen comapnies I refuse to trade.. Overpriced junk.. momentum vehicles with automated market makers and average trade sizes of 100 shares are less.. Just try getting the hell out of dodge when those games come to an end.. Heck- if I need that kinda volatility Ill play a REAL company like AAPL for example..
(*END*)
Did you look at OSTK chart and when I started to get interested again, as it approached the gap between about $47.5 and $48.25, sometimes the stock bounces from the top of such a gap, and does it few times (see BIIB for instance), sometimes the gap get filled. Friday I entered after a long absence, and it bounce a little distance from the ap, so yesterday I took first a double bucker profit, then I dropped a little when $52 was breached, a very rational approach ($52.12 was the point that gap was last approached). Today, I waited patiently until $50 was breached entered, and then entered again when the top of the gap was breached just before the close (that position yielded another $1.65), in AH we finished back above the top of the gap, and market willing, that is all that need to be done for now, for closing that gap. Why you find that a gambling play, I know not, it was a perfectly rational approach. Look at the chart and you will see the rationale. DRCT was another gap play aborted early (I probably should have stayed a little longer, but decided that other "legal shoes" might e falling soon, so I'll be able to reenter again under $18.65).
ZEEV, ROAD MAP - up to ZEEV:354953, 02/06/05
Wecus has a chart of Zeev's ROADMAP on the ZEEV'S ROADMAP CHARTED Board (#board-2299).
The ROADMAP chart is updated through January 21st, 2005
01/29: (351164) (*COMMENT*)
Zeev: does your grand vision of the market down the road suggest when we could get out of low 2,000 NAZ to high 2,000 or even low 3,000 before the end of year 2010? It appears there is always something to suffercate the sprouts of positive market sentment since its collapse in 2001, e.g., corporate accounting scandals in 2002, Iraq war in 2003, oil crisis in 2004, Iraq election in 2005, .....there is no ending in sight.
The reason that I am asking 2010 yr is because baby boomers start to retire and need to withdraw money from their investment in market and could impose a huge inbalance of supply and demand. Based on this scenario, I don't think we ever be reach NAZ 5,000 until yr 2050 or later. What do you think?
(*END*)
I don't know how to answer that question, the Nikkei is still down 70% or so from its peak in the early 90', 15 years later, no reason the Naz, which is over inflated will not take 15 years to get back to those lofty highs. I would wait to see a real secular bear market bottom. I would suggest that would be associated with a serious recession and possibly much higher inflation than we are seeing now. The Dow and SPX are more rationally priced, but even these will have to see "uncommon values" before the secular bear ends.
ZEEV, TECHNICALS - up to ZEEV:354953, 02/06/05
02/03: (353651) (*COMMENT*)
<I have only three weeks left in the ramp>
Z, a rally starting with vix 11+ and EPC around 0.5 will lead us to 2300 in three weeks?
(*END*)
Note that the EPC quoted by the CBOE is now the virgin EPC, they now report the QQQQ options as part of indices options. Too bad we do not have these data easily accessible historically.
02/04: (354032) (*COMMENT*)
Zeev, did you find anything of interest in the EPC data I mailed you? tia
(*END*)
Yes, and thanks for the spread sheet. It confirms that the virgin EPC , like the EPC has some predictive values at extremes, it has to go well under .44 to signal a top and well above .90 for a significant bottom. It probably is best used in conjunction with other parameters such as trin, NH/NL behavior Bull bear ratio in advisors etc.
ZEEV, MARKET/ECONOMY - up to ZEEV:354953, 02/06/05
01/29: (351256) (*COMMENT*)
(Part 1)
Zeev with that much higher inflatio 2010 or whenever do you think that would preceed a drop in real estate. I guess the question is do you see a drop or crash in real estate or futher highs over the next few years?
(Part 2)
Real estate is probably one of your best defense against inflation, as long as you do not pay outrageous rates, getting fixed 30 years rates now is a gift.
(Part 3)
Zeev I hear you and my question more to the point is do you expect a 10 20 or even 30 percent drop as you forcast your panic selling this spring? Certainly it wouldnt happen as fast as the overall stock market but if invetors are hurt wouldnt it be expected that real estate would feel it too?
(*END*)
Real estate ias a local thing, I doubt you get a crash nationally in that sector. If rates climbs slowly, I doubt there will be any impact, maybe a slow down in price appreciation overall, and only for a short period. The crash of 87 had no RE repercussions, though the tax change (the "at risk" introduction into deductibility) caused a major problem (that was 82, however) including the S&L collapse, of course, the very high rates then just exacerbated the problem.
02/05: (354814) (*COMMENT*)
Zeev,
With the Nassacre scenario in play, what stocks and entry points do you like for like a 2-3 year hold?
I noticed you have $25-30 for QCOM, which I like and just sold my holdings.
Do you have entry points for these:
1. EBAY 2. RMBS 3. ARMHY 4. MRK 5. PFE
What do you think about big Pharma? I think the valuations are attractive and are overstating the risks.
(*END*)
Two three years? That is a long time horizon and may include another cyclical bull move before the killer last bear move in the secular bear market.
If you look at investing in the July-November time period for a run into early 2006, and I have no visibility post that time period (my map actually has, for now, a double bottom in October, and repeat in December like in 1987).
Some ideas might be waiting for QCOM to drop to the $25 range might be a good target, but mind you, if $23 fails on a closing basis, the coming bear may be worse than expect and QCOM could drop back to the $12.5 to $13 area.
The same applies to IGT, I expect a low in the $24/$25 area, but if $23 "gives", then IGT could easily become a middle teenager.
As for big pharma, though to say, typically they are heaven during bear markets and their current valuations are attractive, but on the other hand, in the health care sector, you really want to look at companies that are reducing the cost of health care delivery. We already are spending 15% of GDP on healthcare and we cannot spend much more, so something has to give, and excessive drugging of America is one thing that could give. I would not be surprised to see congress to move to ban again drug ads from TV, a major source of over subscription. That will be an additional shoe dropping on the sector, on top of the Vioxx/Celebrex controversy.
02/06: (354915) (*COMMENT*)
>> it was the investing public and Wall Street that created it through greed.<<
Precisely what and who the Chairman of the Federal Reserve and the Secretary of the Treasury should be protecting us from. Greenspan and Rubin just added 'fuel to the fire' by adding additional liquidity whenever Wallsteet called for it. Both cared more about pleasing Wallstreet the controlling the bubble mentality.
Greenspan recognized "irrational Exuberance" in 1996. I think it was because of Rubin and his ties to WallStreet and the political machine that he did nothing about it. The bastard was afriad that he would not get reappointed.
Strong policy of strong dollar and low inflation? Was there ever a Secreatary of the Treasury who favored a weak dollar and high inflation?
(*END*)
Greenspan may have added liquidity, Rubin acted against the wind and soaked liquidity, look at the rate of federal debt rise during his stewardship and compare to the rate of growth in either the 8 years of "trickle down" economics, or the four years of either Bushes.
When Reagan took over, the debt stood at (12/31/80) at $ 931 B, when he left 8 years later (9/30/88) the debt stood at $2.6 T a factor of 2.79 in 8 years. When Bush I left, the debt stood at 4T, another factor of 1.54 in just four years. When Clinton left (09/30/2000, Rubin) the debt stood at $5.7 , or a factor of 1.42 in eight years. The last year of their reign, debt barely rose, and the fiscal surpluses actually caused the recession, due to soaking money from the economy (I commented on that early in 2000 as one of many reasons a bear market is coming). The last Bush, in four years managed to get the debt to $7.4 T (09/30/04) or a factor of 1.3 in just 3 years, despite the residual impact of Rubin policy on 201 which had a minimal rise in debt of $130 B. In the next three years, 1.6 Trillions was added to the debt.
Rubin actually did a great job, together with Greenspan in avoiding a number of possible collapse in the market (Mexico, the Asian flu, the Russian melt down, Long term Cap's Merriwether folly were just four potential causes of a 1987 like crash, all adroitly avoided by smart management of both monetary and fiscal policies, creating in the process untold fortunes, 22 MM new jobs, and a long stretch of prosperity. The market bubble is simply a reflection of the cyclical nature of capitalism, money seeks the highest possible returns, until too many are crowding these "high returns" and a good chunk of money is sent to "money heavens".
And yes, Snow favors a weak dollar (though he speaks with a forked tongue), and a somewhat higher level of inflation (to deflate our debt, of course).
02/06: (254917) (*COMMENT*)
gt, Rubin bailed out banks that made bad loans.. yum
(*END*)
Are you people completely ignorant of what would have happened if Citi and Morgan were allowed to fail? You think that we would be better off? We would have sunk into a depression of the like of 1929 where one out of every three people is unemployed. You think that to avoid such a scenario, it is worth twisting the arms of congress to advance a loan to Mexico, which was, by the way, quite profitable to the US treasury.
02/06: (354938) (*COMMENT*)
>>Are you people completely ignorant of what would have happened if Citi and Morgan were allowed to fail?<<<
I would question more about how they were encouraged by Federal regulators to get so big that we can now not afford to let them fail. How stable is our economy if we can't let one of these PUBLIC companies fail?
(*END*)
There is really not much of a choice, with the like of HSBC, Deutche and Credit Swisse, gobbling every thing in sight, they got to grow and be "big" as well. Eventually, one of them will run into big troubles, but it will be so engineered (if the Fed and treasury are smart) that only the stockholders suffer rather than the whole economy.
02/06: (354949) (*COMMENT*)
>> look at the rate of federal debt rise during his stewardship<<
The limited rise in Federal debt during Rubin's years was more related to the increase in capital gains taxes from the run up in stock prices. I don't know if you can call that "soaking up liquidity".
Greenspan's avoidance of several possible "collaspe" scenario's became called the 'Greenspan put'. Maybe if he would have let "cyclical nature of capitalism" take it's natural course instead of kissing ass on Wallstreet we could have avoided the equity bubble, the credit bubble, and the real estate bubble that we now find ourselves in. Greenspan has done an excellent job of keeping these bubbles nflated until another Chairman's watch begins.
(*END*)
Joe, I don't think we are going to agree on that issue. The deep "natural" cyclical ups and down of capitalism have created massive devastations and misery, the harnessing of the cycle (or the elusive "soft landings"), create problems of their own, they lengthen the period of reequilibration. However, because such soft landing involve relatively mild slow downs (since the 1970, we have not had a massive recession in which GDP drop more than 3% for three consecutive quarters), the damage to the economy is much smaller than what would be inflicted under "Austrian Discipline". I'll take soft landing anytime over deep lengthy "reequilibrating" recessions.
As for reduction in debt growth during the Rubin era, the increase in capital gain tax receipt had nothing to do with it, it was the reigning in of expenditures. I don't have numbers, and hopefully someone may come to the fore with such numbers, but I doubt the cap gain tax receipts in 98, 99 and 2000 exceeded $100 B per year, a very small portion of what the 'target" 13 Trillion debt the nay sayers were forecasting for 2005 in 1995...
ZEEV, NEAR TERM - up to ZEEV:351256, 01/29/05
01/24: (348664) (*COMMENT*)
(Part 1)
hehe I think you just need to take the initiative and clean off that bear suit.. Every bounce gets sold real hard- and at 2028, we may lose this 2000 today..
That should get a run to the hills from you :)
(Part 2)
Looks like it...maybe the nassacre started already without the exytremes in the EPC.
(Part 3)
Are you changing your current BUY to a SELL with that last post ?
(*END*)
No. I was shaking like an autumn leaf in mid summer aa well...
01/25: (349336) (*COMMENT*)
I would not be surprised we go below 2000 before we move higher...
(*END*)
I am not sure, it seems as if we are finally changing the market's mood , just a tad here.
01/27: (350452) (*COMMENT*)
Z: Re: " ... and the nassacre is approaching."
Geez, I have seen something like it in my rearview since the end of December.... And now you say another is approaching? Oh, my, I can only take one at a time...<g>.
(*END*)
Justa, you just saw the shadow, beware of the real thing....
01/27: (350596) (*COMMENT*)
Zeev, Are you seeing something here to negate the possible run up prior to the Nassacre beginning are you?
(*END*)
So far, no, actually today's action allows for a breather without getting too exuberant, the streets loves walls of worry, and the orderly retreat was pretty good.
01/27: (350604) (*COMMENT*)
btw, has zeev announced the date and time for nassacre to begin. I 'll need an hour to clean up and prepare ....
tia
(*END*)
Nominal date is 2/23....FWIW... Mind you Jim has a turn 2/29, I believe.
01/27: (350640) (*COMMENT*)
Zeev-- Any chance that the rally at the end of the year was mostly MSFT induced and created a false technical picture?
(*END*)
If you mean, the failure of the market to retrench in December and then take a beating early in January, at the time, I mused that the $30 B MSFT liquidity injection into the markets might impact the original model that had a retrench to just before Christmas (we never had any). We got it later, but to roughly the same target (I had 2040/50, we overshot by a good 30 Naz points and are still struggling in the 2040/50 area here).
01/28: (350891) (*COMMENT*)
yes, sometimes the market's action requires me to flip-flop...but i haven't flip-flopped on my fundamental outlook for the next several years.
"My lesson from Soros is to accept that my understanding of the market is imperfect and that i am mistake prone, but happen to be
(*END*)
No problem, you did not see the VBG?
01/29: (351196) (*COMMENT*)
I have been looking at a couple of charts. Do you consider it a possibility that this retrench could end with some serious panic selling?
(*END*)
yes, but not any time soon, probably in late May to late June.
ZEEV, MARKET/ECONOMY - up to ZEEV:351256, 01/29/05
01/23: (348427) (*COMMENT*)
Re: <...by late October, I believe we will have had a print under 8000 on the dow, now, that is a bear....>
Zeev we already have over $6 trillion in money market and other short term instruments, where is money going as the market deteriorates? Are foreign markets going to suffer as well?
Long term rates don't seem to have moved like short rates have. Are you expecting longer bonds to tread water or begin a slide concomitantly?
(*END*)
If markets deteriorate, MZM keeps growing and some money is sent to "money heaven". As for long term rates, they will probably creep up from here (I don't expect an inverted curve), but the spread may not increase. Later in the year or early next year, rates may actually start down, but I still think that 5% on the 10 years is probably going to happen.
01/29: (351164) (*COMMENT*)
Zeev: does your grand vision of the market down the road suggest when we could get out of low 2,000 NAZ to high 2,000 or even low 3,000 before the end of year 2010? It appears there is always something to suffercate the sprouts of positive market sentment since its collapse in 2001, e.g., corporate accounting scandals in 2002, Iraq war in 2003, oil crisis in 2004, Iraq election in 2005, .....there is no ending in sight.
The reason that I am asking 2010 yr is because baby boomers start to retire and need to withdraw money from their investment in market and could impose a huge inbalance of supply and demand. Based on this scenario, I don't think we ever be reach NAZ 5,000 until yr 2050 or later. What do you think?
(*END*)
I don't know how to answer that question, the Nikkei is still down 70% or so from its peak in the early 90', 15 years later, no reason the Naz, which is over inflated will not take 15 years to get back to those lofty highs. I would wait to see a real secular bear market bottom. I would suggest that would be associated with a serious recession and possibly much higher inflation than we are seeing now. The Dow and SPX are more rationally priced, but even these will have to see "uncommon values" before the secular bear ends.
01/29: (351256) (*COMMENT*)
(Part 1)
Zeev with that much higher inflatio 2010 or whenever do you think that would preceed a drop in real estate. I guess the question is do you see a drop or crash in real estate or futher highs over the next few years?
(*END*)
(Part 2)
Real estate is probably one of your best defense against inflation, as long as you do not pay outrageous rates, getting fixed 30 years rates now is a gift.
(Part 3)
Zeev I hear you and my question more to the point is do you expect a 10 20 or even 30 percent drop as you forcast your panic selling this spring? Certainly it wouldnt happen as fast as the overall stock market but if invetors are hurt wouldnt it be expected that real estate would feel it too?
(*END*)
Real estate ias a local thing, I doubt you get a crash nationally in that sector. If rates climbs slowly, I doubt there will be any impact, maybe a slow down in price appreciation overall, and only for a short period. The crash of 87 had no RE repercussions, though the tax change (the "at risk" introduction into deductibility) caused a major problem (that was 82, however) including the S&L collapse, of course, the very high rates then just exacerbated the problem.
ZEEV, NEAR TERM - up to ZEEV:348415, 01/23/05
01/19: (347068) (*COMMENT*)
Scarey thing about this drop is the NDX is still overbought on my Stochastic. At best, neutral on others. Could be quite a ride if it cannot reverse itself soon.
(*END*)
Scary indeed, but new lows refuse to expand, and new highs have actually expanded a tad last week when we hit that 2066 level.
01/19: (347351) (*COMMENT*)
Zeev, I feel a bit silly asking this, but are we in the midst of the nassacre? Feels like it's upon us (tomorrow...).
(*END*)
I don't think so, though it is quite possible. We just did not get the short term extremes that often preced the onset of a major decline, but the market can teach us a new lesson every day.
01/20: (347642) (*COMMENT*)
Z: And when does a "minor" retrench become a "major" bottom? A 150 point plus drop in a few weeks in the Nasdaq is not a "minor" retrench imo for this market. Maybe it is not a "major" ... maybe "intermediate" is a term more appropriate ... but to call this pasting a "minor retrench" is the understatement of the year.
(*END*)
All I tried to say was that I can't rely on the EPC for such.
01/20: (347832) (*COMMENT*)
(Part 1)
Roadmap punt?
(Part 2)
??????
(Part 3)
"punt" is a football term . . . meaning, when you cannot advance the ball any further, you kick it to the other side, or make a risky play (depending on the situation)... if you hold it for one more play, trying to get the 1st down (a new set of plays) you risk giving the ball to the other side and giving up valuable yardage... punting is a defensive play (capital preservation), and is usually a wise choice, like a "stop loss"... take your offense of the field, rest and regroup, while your defense fights the battle and could even score on their own
of course you could always FAKE the punt <g>... another risk/reward option
(*END*)
I still do not understand, we are still well within an orderly retreat to 2040 (and getting quite oversold), no need to "punt". I take profits when offered and keep a relatively high exposure to the market, not much damage, just a little more than 100 Naz points from the recent highs. It is so typical near such turning points to have all that "hand wringing", it is getting "predictable".
01/21: (347871) (*COMMENT*)
Zeev, how did you arrive at your 2040-50 target? Is it a previous support area, fib number or something else. TIA.
(*END*)
That area was resistance on the way up from early november, and on the late november retrench it served as support. It is also a number that has "latent" congestion for quite some time now. If we bounce here today, that may not be a bad area from which to launch a leg up. Major overhead resistance we will need to "deal with is of course the 2100/06 area.
01/21: (348085) (*COMMENT*)
Jeez,not again.I'm about to throw in the towel on this market.
(*END*)
Expiry day, they are playing games, it goes nowhere by the time this is over at 4:00. (g).
01/21: (348221)
(*COMMENT*)
Posted by: cannabis
In reply to: None
Date:1/18/2005 6:11:06 PM
Post 346838 of 348215
"Is 4Qs max pain really 37? They wouldn't dare."
THEY DID.<g>Oy.
(*END*)
So, where do they open us Monday, another G&C? I am getting tired of this chinese torture with indicators still quite neutral....opnion might be right.
01/21: (348254) (*COMMENT*)
(Part 1)
Some are saying the market is afraid of a possible downgrade in GM bonds to junk status, and that is a key factor behind this selloff
(Part 2)
Hm, an interesting possibility, would that not put upward pressure on corporate bonds in general? GM stock was not particularly weak today... if that happens, it must be "baked in".
(Part 3)
Some bulls are saying the market will rally sharply if the GM bonds are not downgraded.
Junk bonds in general have been weak lately with widening spreads from Treasuries. But spreads still are very tight and well below hisitoric averages.
(*END*)
Would not junking GM bonds further narrow the spreads? By the way, my analysis of the markets internal show a divergence between the indices (new reaction lows) and various strength indicators such as AD, Up/Down volume, stocks above the 10 DMA and 200 DMA, all indicating that the January 4/5 period was the low in the latter indicators, and these are holding at much better levels today with the indices breaching.
Of course, I remain bullish with cash at 8%.
01/22: (348295) (*COMMENT*)
Zeev- lost your bear suit? SPX estimates are still too high and we are at the cusp of a major financial derivatives incident.. maybe housing or high yield debt IMTO
(*END*)
Yup, the cleaner is slow with delivery of the bear suit, I want it well cleaned since expect to wear it for a stretch this time around.
01/23: (348415)
(*COMMENT*)
Long-term Projection
If the $Compq stops at the Aug 04 lows then the whole thing will be nothing more than a (nearly) two-year wave 4 of... That's my count.
Unlike '87, any fast decline now would lead to even more scrutiny of firms like LaBranche and I think Bill and his brother are smart enough not to kill the golden goose.
It's all about eggs!
(*END*)
My target low for the year is still around 1400, and quite probably lower. Of course, the fact that early January did not yield the expected exuberance, will delay the onset, and unless the next move up really shows some major excesses, all we may have is a range bound market between the August lows (1750) and the February highs (still expect 2200 plus), still a wild range mind you. Which part of the wave, and of which cycle, I know not.
ZEEV, ROAD MAP - up to ZEEV:348415, 01/23/05
Wecus has a chart of Zeev's ROADMAP on the ZEEV'S ROADMAP CHARTED Board (#board-2299).
The ROADMAP chart is updated through January 21st, 2005
01/20: (347695) (*COMMENT*)
Zeev, Looking at the 2005 Roadmap, you still feel confident (as much as one can), with the TA and FA that you use, that the NAS still reaches the 2,200 level, let alone the 2,275 area? (by mid Feb.)
And is it fair to assume that the 2040 is the line in the sand, or is it just an area of concern?
Feel free to give probability %'s.
Thanks in advance,
(*END*)
No change from last post on subject (#msg-5129211).
(Cited message, copied here for your convenience flg)
Do you still see short term a retest of 2000 or has the behavior in the last few days alleviated your fear? Note that on 1/4-1/5 (my own folio had its local low 1/7 and is already nicely up since, though the Naz is still essentially at the same level) many market sectors had less or close to 10% of their components under their respective 10d moving averages (see Les' report here #reply-20952333). Note that the SOX dwelled in that area much longer and deeper than the BTK, which my experience indicates that the BTK will hold better and the sox will suck badly during the nassacre. Short term, though, the sox was so oversold a stronger bounce could be expected. I would ride the like of CCMP, MRVL, SNDK for the next few weeks (at least till their respective earnings).
Note that we are already in the middle of January and did not see an EPC under .4, that shifts the Christmass map timing probably by two weeks or so, I still think the most likely scenario is a double top before the end of February, just not sure if December was the first or the coming run is. I lean to January as the first stop and late February as the pre nassacre top. (mostly due to lack of excessive bullishness in December.
ZEEV, TECHNICALS - up to ZEEV:348415, 01/23/05
01/16: (346289) (*COMMENT*)
*****MUST READ Key part of article is just below:
................................................................
The percentage of NYSE and Nasdaq stocks below their 10-day moving average is one indicator that he says has given almost perfect signals for the past 20 years, and it is giving a very clear buy signal now: When that number goes below 10% (i.e., 90% of all stocks are trading below their 10-day moving average), the market is typically much higher three to six months down the road. It was at the same level in August last year, and since 1990, the signal has tripped 15 times. On average, the market is up 4% two weeks later, up 11% three months later and up 24% one year later.
Through the end of Thursday's trading session, the number of stocks below their 10-day moving average had begun to hook up despite the decline in the broad indexes -- the type of divergence that sets up reversals.
.............................................................
Jon D. Markman Amid Naysayers, an Upbeat View By Jon D. Markman RealMoney.com Contributor 1/14/2005 4:41 PM EST
Editor's Note: This is a bonus story from Jon Markman, whose commentary usually appears only on RealMoney. We're offering it today to TheStreet.com readers. To read Jon Markman's commentary regularly, please click here for information about a free trial to RealMoney.
------------------------------------------------------------
Virtually every major technical analysis shop and market timer in the country has declared the 2004 rally dead in the water over the past two weeks. But Florida-based Lowrys Reports is one exception. The firm has a great long-term record, so it's worth hearing its point of view.
I have mentioned the institutional advisory firm, of which I am a client, before. It is objectively focused on proprietary equity supply-and-demand measures. It was appropriately bearish during the 2000-2002 bear run and has caught turns back to bullishness beautifully -- first in mid-October 2003 and then with a timely and long-lasting bullish call in late March 2003. The firm was bullish, particularly on mid-caps and small-caps, all the way through the last three quarters of 2003 and into 2004. It remains so today.
I had a long talk on Wednesday with John Brooks, who has been at Lowry's since the early 1970s. He said that his team studies 145 market indicators, and he sees nothing more on the weekly charts today than a normal correction to the bull trend. He says that most of their short-term indicators are four-fifths of the way to oversold or better, and are thus very nearly ready for a full reversal.
Brooks notes that most of his clients, at funds large and small throughout the country, were skeptical of the bull market throughout 2004 and are thus somewhat happy to be vindicated with the recent selloff. In October and even November, amid the big speculative end-of-year run, he said, it was "like pulling teeth" to get people to buy stocks. So it's not a surprise to him to learn that so many managers are exhibiting a morose skepticism today. Confident Against the Herd Brooks is confident that sellers will be as wrong today as they were in October last year. The percentage of NYSE and Nasdaq stocks below their 10-day moving average is one indicator that he says has given almost perfect signals for the past 20 years, and it is giving a very clear buy signal now: When that number goes below 10% (i.e., 90% of all stocks are trading below their 10-day moving average), the market is typically much higher three to six months down the road. It was at the same level in August last year, and since 1990, the signal has tripped 15 times. On average, the market is up 4% two weeks later, up 11% three months later and up 24% one year later.
Through the end of Thursday's trading session, the number of stocks below their 10-day moving average had begun to hook up despite the decline in the broad indexes -- the type of divergence that sets up reversals.
Brooks says he believes the psychology of pros has been negative for a year, and most have wanted to be defensive. This explains why Lowrys' "selling pressure" index has hit record lows while "buying power" never gained a lot of traction.
Major fund managers were holding on to their stocks, expecting higher prices, but they weren't buying a lot of new stocks. That is pretty much the definition of a "wall of worry," and it can be very bullish as fearful investors are slowly but surely tempted to commit more funds to stocks.
Brooks thinks the Dow Jones Industrials will hit 11,700 midyear, then decline and rebound to finish the year at the same level. But that doesn't mean he is a long-term bull. In fact, he believes the market is tracing out secular bear-market behavior, and he believes the current period is more like 1971-1972 -- about a year from the brink of a precipice -- than 1982, the start of a long-term rally.
For now, he says Lowrys' work has shown over the years that you can't get a major decline without a buildup in selling pressure. In the second stage of a bull market, which is probably where we are headed, he says buying power and selling pressure move up in tandem as people are increasingly willing to liquidate positions. But even when selling pressure crosses above buying power, he says that's only a four- to six-month warning of a top ahead.
In sum, Brooks advises investors to stay focused on the healthy weekly advance-decline line, which suggests continued interest in buying a broad range of stocks. "When IBM gets to $101," he says, "every trader who's been sitting on his hands is going to say, 'What do I do now?' And then you're going to get a melt-up. The glass is not half empty, it's half full. .... This is not the start of a bear market. All that has happened is they've taken the cream off the top of the bottle."
If you like Brooks' view better than the nabobs of negativity, here are the big-cap stocks he likes.
Big-Caps Poised to Perform
Company Ticker IBM (IBM:NYSE) Wyeth (WYE:NYSE) Altria (MO:NYSE) Caterpillar (CAT:NYSE) Disney (DIS:NYSE) United Technologies (UTX:NYSE) DuPont (DD:NYSE) Johnson & Johnson (JNJ:NYSE) General Electric (GE:NYSE) Procter & Gamble (PG:NYSE) American Express (AXP:NYSE) American International Group (AIG:NYSE) McDonald's (MCD:NYSE)
(Part 2)
I was asked in a private message to comment on Markman's excessive optimism (#msg-5126546, read Markman (which is listed above under COMMENT, flg) before you read my comment below) and how it relates to my short term optimism (2275) but a coming nassacre following that. Since this is really of much broader interest, and I spent quite some time to back up my thesis, I thought I should make my reply public, here is a copy:
In one of my recent posts (#msg-5129211, and in that post, I erred and meant 10% or less above their 10 DMA, not under), I mentioned the paucity of stocks above their 10 dma as an indicator of an impending rally. However such strings surely are lousy LT indicators, look at #reply-16433472, a string post 9/11/2001 preceding a nice run into January prior to Nassacre 2002. Or the minor local April 2001 bottom (#reply-15677769) signalled with few extreme 10 dma readings, just to peak next 5/22/01. Note in the sox, such a string in early June and July 2002, also followed by a failing ramp (#reply-17699443) on 8/22/02. Many other examples where the 10 DMA was an excellent forecaster of an impending failing run. It is also important to look at when this becomes excessive in the 85%+ range, typical of an impending top. But I still have not found one single indicator that is "good all the time", and Markman's reliance on that one in face of very bullish advisors and generally low epc, is an error, IMTO.
(Part 3)
Using Moving Averages to Determine Long Term Market Bottoms:
Back on October 9, 2002 when the market formed a long term major bottom Les Horowitz's data showed his entire database was 90% below the 10 day, 21 day, 50 day and 200 day moving averages. Page down as there is lots of insight in the data:
http://www.siliconinvestor.com/readmsg.aspx?msgid=20936513
On January 5, 2005 the market closed with 89% of Les's data below the 10 day moving averages. However none of the other moving averages look anything like the major bottom in October 2002. The next lowest number was 79% below the 21 day moving averages with all other numbers being higher:
http://www.siliconinvestor.com/readmsg.aspx?msgid=20952333
Long term market bottoms are formed when the entire market is so oversold that 90% of stocks are below all meaningful moving averages.
However as nice as it would be to believe we can watch this data and know that typically the market will rise after such a notable event as having all the moving averages so low on a percentage basis it just is not a 100% certainty.
In fact on July 23, 2002 the number of stocks above the moving averages was even lower than it was on the ultimate bottom on October 9, 2002. Proving that even a reliable indicator needs confirmation in the form of positive divergences.
Anyway, getting 90% of the market below its 10 day sma is rare but not rare enough to portend a major market bottom. Even having 90% of the market below all its major moving averages will not do that. But positive divergences such as lower prices with more stocks above the 10 day, 21 day, 50 day and 200 day moving averages surely will in my humble opinion.
NYSE and NASDAQ Percent of Stocks above the 50 and 200 Day SMA's:
When only 10% of stocks are above the 50 day and 200 day sma as measured by the record percentage then we can be reasonably assured of a long term bottom. Using the 10 day sma alone would probably work well for a short term bottom but in my humble opinion nothing more.
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(see original post for the links. flg)
This post was inspired by this article which contains data which should be questioned:
http://www.thestreet.com/pf/funds/jondmarkman/10203518.html
(The article mentioned was copied into the top of this segment for your convenience. flg)
(*END*)
but from that July 23rd you got a powerful move to August 22 when once again the short term dma went through the roof, indicating a local top (together with the EPC going to sub .4), where I got back into my bear suit (#msg-472363) after going bullish around July first (partially due to a string of sub 10 in the 10 DMA series and the EPC hitting above 1 late in June, but then chickened few days later, but came back as a bull (#msg-417016) on 7/15. Sure after the 8/22 high, we got another new low in October, but that seven weeks run from early July to October was worth playing. I agree with you that the longer term DMA's indicate we are not at a major bottom, thus, my impending Nassacre.
01/20: (347601) (*COMMENT*)
Are the current put/call ratios at levels that you consider good enough for a bottom that will carry us on the final leg up before the Nassacre?
(*END*)
No outrageous buying of puts, but that you get at major bottoms, not retrenches.
01/23: (348345) (*COMMENT*)
Late to the party...
Donald Luskin - Happy Days Are (Almost) Here Again Monday, January 24, 2005
Valuation and other market measures tell me that stocks are on the verge of a very nice rally....
....One of the things that Fred is looking at now, three weeks later, is a unique approach to put/call ratios. Technicians believe that when put option trading exceeds call option trading, it means investors are getting excessively bearish. Fred goes
http://www.trendmacro.com/a/luskin/20050124luskinSMC.asp
(*END*)
Very interesting, though my on studies indicate no corelation between future market behavior and the IPC (indices Put/Call ratio), maybe his approach of finding divergences between EPC and IPC has a better long term record, I have not looked into that.
In general, however, he agrees more or less with my very short term scenario. Neither he or Fred, however are suggesting a very nasty decline after the coming ramp they expect (Fred even suggests new highs above the December highs, as I do).
ZEEV, MARKET/ECONOMY - up to ZEEV:348415, 01/23/05
01/22: (348300) (*COMMENT*)
Marketmaven. LOL. Gutsy no doubt. Keep in mind this isn't going to be a crash boom event. But I clearly amof the opinion that we are indeed are at the threshold of a substantial bear market. I look as far back as ten years. This will take time to hit. But clearly below 10000 is a coming. ;) RE: DOW
(*END*)
Below 10,000? that is barely a scratch and only 393 Dow points from where we are, by late October, I believe we will have had a print under 8000 on the dow, now, that is a bear....
01/23: (348341) (*COMMENT*)
When the peak is reached, care to give top choices for a "short" ride to below 8,000 on the dow? I know youy don't short, but humor us.
The 64 million dollar question. When is the time window ripe? FEB/Mar. Hope those turnips are well fertilized (g)
I think my list will start with T (ATT)
(*END*)
The best I can suggest is #msg-5129606, with a potential top 2/23 or there about (Jim has 2/28-29 I believe).
01/23: (348342) (*COMMENT*)
zeev,,,what sectors get hit hardest the next 10 months of bear?
(*END*)
Semi should get hit hard (remember I have a target of $12/$13 for a low on INTC...)
01/23: (348350) (*COMMENT*)
(Part 1)
ZH - and what for the economy? Is there a depression to accompany the drop of 2,500 Dow points?
(Part 2)
There was no depression in 2002 when we hit 7500 on the Dow, why would you expect a depression?
(Part 3)
ZH -
1. It was incipient.
2. The Fed was lowering interest rates to the lowest point in nearly a century.
3. Oil was below $30brl.
4. We had just had the effect of 9-11 together with a severe correction that started in March 2000.
5. European economies were not badly hit.
6. Russia and China economies were happily expanding without talk of the need to hold them back.
7. Even if it wasn't fall inot a depression we all remember earnings seasons two years ago the earnings were dire.
8. Fiscal and monetary stimulii were available and were deployed. I am not sure they are so readily available today.
9. Confidence. The most important factor in the market and in the economy is confidence. A collpase below 10k never mind one to the depths of 8k would in my view deal a massive blow to business confidence here and probably world wide. With no apparent end to the market malaise it is not clear to me what measures would turn it around at that stage.
10. It is also clear that in such circumstances OPEC would take measures to reduce production inorder to maintain prices. China and India would find that their economies were suffering and that would not be helpful. China is working very well so long as it offers increasing relative prosperity to its population. Were that process to be interfered with I do not think it would be helpful to stability. Same sort of thing with India.
Just a few of my thoughts. And I haven't mentioned a material increase in unemployment and its effect on the budget deficit.
(*END*)
But a depression? I said I expected a consumer led recession, not nice, but not the end of the world, just normal part and parcel of rebalancing the economy.
01/23: (348415) (*COMMENT*)
INTC - $12/$13 is mighty low. Are you anticipating that their fundamentals will deteriorate (perhaps something like Dell deciding to use both AMD and INTC), or are you just expecting INTC to be taken down with the rest of the market?
(*END*)
Triple whamo, IMTO, first a general decline in chips sales, stiffer competition from AMD, and reduction in margins (these are historically low, amongst other things, because depreciation rates have declined with INTC restraining capex (note the decline from B$6.47, for 01 to B $5.07 in 2003 and to $4.81 in 2004). With INTC picking back its capex to the $5 B plus range, depreciation is going to mount back and the 56% margins may not be sustainable. That with a market that is going to contract PE and a possible downturn in earnings late next year (getting for all of 2005, maybe 1.10 rather than $1.25 the market think INTC will get), would, at the extreme of under pricing the stock get us possibly to the 12/$13 range, mind you that is the max downside I see.
ZEEV, OIL SANDS - up to ZEEV:348415, 01/23/05
01/20: (347604) (*COMMENT*)
* Oil Sands Post *
Zeev -- Last month you asked my opinion of the best way to play the oil sands. While I am not able to give you a simple answer, I have several ideas below that may be a good start.
A couple of key background facts first:
Current world oil consumtion is 83 million barrels per day, and increasing. Current Canadian tar sands production is 1.1 million barrels per day, 1.3% of total.
Unlike conventional oil production, tar sands must either be mined or produced in wells by steam and solvent injection. Lead times for this extra equipment is 2-5 years.
Once the "tar" is produced it requires substantial upgrading to have sufficient quality for processing in a conventional refinery into gasoline, diesel, etc.
Investment into oil sands infrastructure averaged less than $2 billion/year prior to 2001. In the last few years spending jumped to $6 billion/year and is projected to peak over $9 billion/year. This has more than over loaded the technical design and construction capacity resulting in overruns and other problems.
Even with this high activity level, oil sands production will not even double by 2010, current forecasts total around 2 million barrels per day. During this same period, using a 1%/year increase in demand (and many forecast 3%/year increase), world wide demand will be 87 million bpd, an increase of 4 million bpd. So, the era of Canadian Tar Sands lies further out than 2010. It cannot act as a cap on oil prices in this 5 year period.
The best we can hope for is that OPEC accelerates production of their reserves to help bridge this gap. I'm not too hopeful that we can find new conventional oil reserves to replace this production. Tar sands, natural gas, coal, nukes, and a little wind will be required in the long term for supply. Higher prices and resulting efficiency improvements should help moderate demand growth. I think room temperature superconductors (carbon nanotubes?) could really help with line losses in electrical transmission and improved vehicle efficiencies are two places where demand could readily be curtailed.
So you still want to play Canadian Oil sands? The deposits are huge and there are many companies with positions. Market cap in billions is shown in parenthesis.
Big chunks are held by the super-giants Shell (112), Conoco- Phillips (61), Total (130), Imperial (Exxon) -- oil sands are significant but still small parts of their business.
Big chunks are also held by the mega-independents Encana (26), Devon (19). Still a relatively small part of their business. Canadian producer CNQ (11) has a relatively large part of their business focused on tar sands, but it is still less than half the value of the company.
Canadian producer/refiners SU (15), PCZ (13), HSE.TO (14) have substantial leverage to tar sands on both the production and refining/upgrading side.
OPTI (symbol - OPC.TO) (1.4) is a pure tar sands play. They will both produce and upgrade in 2006. They have no current revenue and are in construction mode presently.
Deer Creek (symbol - DCE.TO) (0.4) is another pure tar sands play, they are focused on production side only. They currently have some minor production/revenue, but their value is clearly in the ramp up.
I would welcome anyone's comments on any of these companies or others that should be considered. I am still evaluating how I want to make the tar sands play.
Regards - Cy
Links to the top cantidates -
http://eneken.ieej.or.jp/en/seminar/alberta/041209p0062j04.pdf
http://www.cnrl.com/
http://www.opticanada.com/ http://www.huskyenergy.ca/
http://www.petro-canada.ca/ http://www.suncor.com/default.aspx?ID=1
http://www.deercreekenergy.com/about/index.html
(*END*)
Thanks for the informative post.
ZEEV, NEAR TERM - up to ZEEV:346249, 01/01/06
01/10: (343490) (*COMMENT*)
Hi Zeev: An ok day for me. Things worked out as I suspected. Happens occasionaly.
(*END*)
Same here, the big run on SYNA help alleviate some other problems. Outgoing cah still at around 15%.... I would not object to a bottom by Wednesday at 10:30 AM (g). I think that is where Jim has his turn.
01/11: (344062) (*COMMENT*)
Zeev, Are you still looking for 2040 - 2050 in the COMPX, as you mentioned on Sunday?
(*END*)
That is my worst case, we got down to 2072 or so earlier, that might have been enough, depending how the market views INTC's details.
01/12: (344669) (*COMMENT*)
Zeev it sure seems like the selling is about over and the market wants higher. Do you think we are ready for your 3 to 6 week advance?
(*END*)
Yes, I do, though we did not reach my target of 2040/50, today we hit 2066, close enough...
01/12: (344953) (*COMMENT*)
(Part 1)
You think the large leg up you are looking for has started?
(Part 2)
Yes, see #msg-5049160 and #msg-5092624.
Message 5049160, 01/07/05: Not changed. Early in December I expected a swoon to the 2040-50 to occur before Christmas it seems to be materializing now (and since we got higher than I expected prior to that, the depth of the swoon may not be that deep). The MSFT bolus of liquidity must have delayed that denouement. From that level I still expect another run to 2275 or so.
Message 5092624, 01/12/05: Yes, I do, though we did not reach my target of 2040/50, today we hit 2066, close enough...
(Part 3)
I am ready and hopefully closer to a month or two and not just a two week pop.
(*END*)
Hey if we cover 150/200 Naz points in two weeks, that should get us almost back to "schedule". (g.
01/14: (345908) (*COMMENT*)
Zeev, Do the turnips finally have us off to the races now to 2275-2325ish now? (Meaning this mornings low is the intermediate low?)
(*END*)
I thought the low was Wednesday at 2066 or so.
01/15: (346163) (*COMMENT*)
zeev
i'm not excluding the probability we might retest the 2000 level...one can observe some real weakness in Msft, IBM
(*END*)
Do you still see short term a retest of 2000 or has the behavior in the last few days alleviated your fear? Note that on 1/4-1/5 (my own folio had its local low 1/7 and is already nicely up since, though the Naz is still essentially at the same level
Note that we are already in the middle of January and did not see an EPC under .4, that shifts the Christmass map timing probably by two weeks or so, I still think the most likely scenario is a double top before the end of February, just not sure if
01/15: (346174) (*COMMENT*)
Zeev: "...shifts the Christmass map timing probably by two weeks or so.." Since yur last X'mas map had a NAZ top near 2275 bet 1/19-1/25/05, with your latest 2 wks shift, would that NAZ top be 2/2 - 2/9?
By the way, neither your X'mas map points to double top in Jan/Feb frame and we have not had any top so far in Jan. 05. WHere are that new double top before the end of Feb in your latest revision? Just trying to understand your English.
(*END*)
Yes, probably a first top around that window of 2/2-2/09 (I had 2/09 as the first retrenchment), once we get this in place (best target now is 2/02 for that first top), I'll be in a better position to determine what is next (and if we see some intern
01/15: (346201) (*COMMENT*)
Zeev - What do you think of these two alternative scenarios:
1) We never get a rally, or much of one, and the Nassacre (I notice you don't deem this one worthy of capitalization) will start anyway
or
2) There is no Nassacre, and the Market climbs over the course of the year
(*END*)
I do not think that the Nassacre can start without grave excesses in optimism as would be illustrated with very low EPC, excessive number of stocks above their short term averages and few others. Nor would a continuing rally without any major retrenc
01/16: (346228) (*COMMENT*)
Zeev, I have a signal for a "Change of Direction Point" for February 28th. I wanted to give you plenty of notice <g>.
(*END*)
Is that a peak or a valley?
01/16: (346230) (*COMMENT*)
Zeev
Like you, I believe we soon will start a rally, either from around today's level (70% probability) or from a bit lower (2000 level?)(30% probability)
Last week I mentioned you that I personally found the price/volume action of MSFT, IBM, SAP, Dell not very encouraging. As a result, I thought that a retest of 2000 should not be excluded anymore, hence my 30% probability.
As said before I remain unconvinced of a Nassacre. My worst case scenario is a retest of 2000 later this year.
I do see weakness in the consumer side of the economy, but strength on the business side. IMO, businesses have underinvested in IT the last 3 years, by only focusing on cost cutting. Now they are focused on generating growth in revenues, which means
Just my humble thoughts
(*END*)
But the consumer is 67% of the end demand, government and business the balance, if consumer retrenches, business will rapidly adjust...as for Government, they are really stretched and not much growth can be expected from that corner.
ZEEV, ROAD MAP - up to ZEEV:346249, 01/01/06
Wecus has a chart of Zeev's ROADMAP on the ZEEV'S ROADMAP CHARTED Board (#board-2299).
The ROADMAP chart is updated through January 14th, 2005
ZEEV, TECHNICALS - up to ZEEV:346249, 01/01/06
01/08: (342966) (*COMMENT*)
Zeev, When you look at Price/Vol. do you have a method to look at the data better than what one normally sees on a chart? If so would you elucidate for me?
(*END*)
In stockchart, you can get "Price by Volume" (shows areas of "congestion", but not very detailed), but when I speak about a price/volume reversal, it is really comparison of the volume on a sharp turn day to average volume (like GILD last Wednesday, a big spike down finishing close to the high on three times recent volume, 5 to 10 times is even better).
ZEEV, MARKET/ECONOMY - up to ZEEV:346249, 01/01/06
01/09: (343020) (*COMMENT*)
Look at mutual fund flows for this time of year last year to current numbers. Does not bode well for equities. makes you wonder what supported prices at the end of the year. One would think that with the run we had for November and December that January flows would be much higher.
I would also question the high volume that we saw the last few months. It does appear that it came from mutual fund inflows. Program trading maybe??
http://www.geocities.com/dollarbear2k3/FUND_FLOWS_CHARTS/fund.flows2_24836_image004.gif
(*END*)
Joe, I am not sure about your conclusion, fund flow out of these funds at local lows, look last August for instance, or March 2003, on the other hand, last january as we were going down into the spring lows, they had huge inflows. Should not that be a contrarian indicator?
01/10: (343234) (*COMMENT*)
How can you have these massive fund inflows and yet report a miniscule US savings rate? I wonder if there is some problem with measuring the savings rate.
(*END*)
I think that saving rates does not include 401k, various IRA, SEP etc. Note that last month debt declined markedly, paying debt down is not calculated as saving rate either. I am not sure how the saving rate data is calculated. Maybe the difference between income (real rather than gross including retirement contributions) and consumer expenditures?
01/15: (346208) (*COMMENT*)
The Nassacres of 2001, 2002, 2003 and this year, all had sub .4 EPC preceding them by few days. Maybe this is too strong of a string?
maybe rising interest rates and widening credit spreads will do it?
http://www.siliconinvestor.com/readmsg.aspx?msgid=20953297
(*END*)
I doubts the rates are at a pain point, though the flat yield curve may indicate a future recession, especially if it get inverted (I doubt that will happen, very rare, leading into the 82 bottom, we had, if memory serves, an inversion where short term rates where higher than longterm rates).
ZEEV, NEAR TERM - up to ZEEV:343026, 01/09/05
01/03: (340415) (*COMMENT*)
zeev, does today's action give you pause in your thoughts about a rally?
this from streetinsight:
Now this isn't the way the bulls want to start a new year. After a hard reversal of this morning's promising open, the market appears to be on a rather slippery slope despite big losses in energy futures. The market's swoon feels worse than the large-cap indices suggest, and that's because breadth is pretty bad.
I'm sure that seasonal factors such as the "January Effect" are at work today, but some very sobering data crossed my desk earlier this morning, and I'm sure it's taking a toll on investors' psyche.
Over the past six years, there has been incredible downward pressure on the Nasdaq in the January to February period. From the highs of January to the lows of February, the Nasdaq has doled out double-digit losses in all but one of the last six years -- and in that year the decline approached 10%.
Thanks to the good people at CS First Boston, here is
the data:
# 1999: -12.6%;
# 2000: -9.5%;
# 2001: -32.6%;
# 2002: -22.5%;
# 2003: -15.3%; and
# 2004: -12.0%.
Ouch.
Of course, these were not normal years, with the unwinding of the bubble taking a considerable toll. In addition, the data is also representative of a strong January start in most of these years. Nevertheless, the data is pretty scary.
(*END*)
No, I still expect a high later this month, I think we had a lot of delayed profit taking to move taxable profits into 2005... The low trin in boith the NYSE and Naz most of the day indicates, IMTO, some stealth buying into this swoon.
01/04: (340664) (*COMMENT*)
Naz closes green. It hasn't closed red first 2 days in Jan since 1991... THAT'S 14 YEARS!!!!!! History is on my side.<g>
(*END*)
Statistics would say, it is about time to have another event of two first red days in January (g). By the way, since my cash has dropped under 25%, I have to done minor horns here and remove the neutral stance. No choice. No big bull mind you, only some 100 to 150 Naz points left.
01/04: (340752) (*COMMENT*)
Zeev,the NDX hasn't been this oversold since November of 2003. 2003!!! The only worst reading is September of 2002. BUY.BUY.BUY.BUY.
(*END*)
Hey I am buying, my cash dropped under 20%, how bullish can I be? And with the buy of IMOS here at $6.05 (one of Jim's favorites), cash dropped to 15%...I trust Wecus notes the little horns on my forehead here at Naz 2123...well above where I was planning to put them back on (2050 or so...) and ZBRA is slowly approaching my bid as well.
01/04: (341050) (*COMMENT*)
Zeev: Market doesn't look like simply deferred taxable gain sale. The silver lining is that it should wash out the excess and set the stage for stronger rally later. Agree?
(*END*)
I think we should rally before the end of the week, probably by lunch tomorrow. Note the lack of expansion in new lows. However, the fact that todays declined happened with something close to a record (at least trailing 12 months) volume, is a shot over the bow of this market indicating to me that my assumption of a coming Nassacre sometime late this months or next month is probably correct, the next move up should probably be used to get out. The lack of put buying today is puzzling and not very positive.
01/04: (341076) (*COMMENT*)
Break of Aug 2004 Up Channel [Suppressed Chart Link]
(*END*)
You may want to update cash, went out at 10% only cash and back in bullish mode with a 150 to 200 Naz points advance target, even if we breach 2100 temporarily in the next few days.
01/05: (341181) (*COMMENT*)
Zeev, In my opinion the market has changed much in the last few years and therefor a put little thought into past occurances.
In past the market represented the collective psychological sentiment of broad range of players. Now the market has been taken over much by a small set of program traders. I would be weary of past performance indicating likely future results. We have a whole new market here from what we saw in the past before 2002. JMO.
(*END*)
No disagreement, but the problem is that the only thing my model can look at is past performance, and hope the changes are gradual enough to be reflected in more recent market behavior
01/05: (341594) (*COMMENT*)
Zeev..I know you are fully loaded, but the mkt looks dead..ending at LOD today. What is the catalyst in your opinion that will turn this thing around?
(*END*)
The catalyst is the market itself, it has created a very strong oversold condition here in the last three days. The market may use news from Las Vegas, or from AEOS fantastic showing, but that would be just an excuse.
01/05: (341606) (*COMMENT*)
A thought has been nagging me today....
Could the Nassacre have already begun?
(*END*)
I doubt so...but everything is possible... Note that we never got an EPC excursion under .4, it is rare for a nassacre to start before that, usually, we get a week or two of topping after such an excursion (when other parameters are in place for a nassacre).
01/07: (342725) (*COMMENT*)
You're not alone. I'm ready for a turn up.
(*END*)
5 down days in a row early January, like 1991, unusual.
01/07: (342824) (*COMMENT*)
One time hot flyer NVEC, and you made good moola trading this one(g) currently hitting 52 week lows in the afterhours. Any interest in it at this time?
(*END*)
Nope. My NEM however filled just before the close at $41.39. That leaves me at 12% cash, very tight, and that elusive rally better materialize soon.
01/07: (342826) (*COMMENT*)
Zeev, it was a tough week to be long. I felt the sting today, but had a good week being short early on. What is your near term outlook now. TIA.
(*END*)
Not changed. Early in December I expected a swoon to the 2040-50 to occur before Christmas it seems to be materializing now (and since we got higher than I expected prior to that, the depth of the swoon may not be that deep). The MSFT bolus of liquidity must have delayed that denouement. From that level I still expect another run to 2275 or so.
01/07: (342834) (*COMMENT*)
As I recall you were expecting a swoon of 100 points in early December. Today's low is a little more than that from Monday's high. Maybe today was the low?
(*END*)
Maybe, though I would not be surprised if we try for a deeper oversold first. The SMH, however, is showing signs of turning, bouncing from $31. The BBH is also showing some good strength. So yes maybe we get some relief next week.
I fear the weekend editorials will be full of the January postulate (as the first week of January goes, goes January and as January goes goes the year).
01/09: (343000) (*COMMENT*)
(Part 1)
A pretty good rally is in progress near the close of trading in Tel Aviv, maybe a precursors of a slightly better week ahead, or just a reflection on the smoothness of the elections next door??
(Part 2)
Hi Zeev: I really don't know, but there are a few trades possible tomorrow; futures, ER2's may be a buy on a soft ooening, the same for the Ym's, Russel 2000's. ANTP, GERN, INMD, PRTL and ZOLT may be day-tradable. But I'm still looking. Look, find, prepare, cull 'em down to a manageable few, for me, and then trade.
(*END*)
Make sense, but what if we gap?
ZEEV, ROAD MAP - up to ZEEV:343026, 01/09/05
Wecus has a chart of Zeev's ROADMAP on the ZEEV'S ROADMAP CHARTED Board (#board-2299).
The ROADMAP chart is updated through January 3rd, 2005
01/08: (342887) (*COMMENT*)
(in contrast to my usual practice, I decided to include this quote for the reader's convenience. flg.)
*** John Mauldin's 2005 Forecast ***
Forecast 2005: The See-Saw Economy
January 7, 2005 By John Mauldin
Forecast 2005: The See-Saw Economy The Dollar: Same Song, Fourth Verse I've Got a Secret - Fed Style Stocks: A Year of Disappointment Gold and Commodities One Last Thought on the Trade Deficit My Personal 2005 Forecast
Once again it's time for me to demonstrate the foolhardy part of my nature by putting to electronic pen my forecast for 2005. I spend more research time on this one letter than on any four or five combined, simply reading hundreds of pages of research, looking at mountains of data all in an effort to try and catch the gist of the markets. It is a daunting task, but one to which I actually look forward, as it challenges the mind like few other endeavors.
If I go into as much detail as I usually do on each topic, there is the potential for this e-letter to be much too long. Therefore I will try and take the larger picture, make specific and shorter predictions and save the details and the arguments for later issues. Let's begin by quickly reviewing how we did last year.
Each year as I sit down for my forecasts, I try to focus on what the main macro- economic forces are and how they will affect the markets and our investments. In 2001 it was the coming recession; in 2002 it was a weak recovery and the beginning of the Muddle Through Economy; in 2003 it was Surprise and Transition. When I looked back last January on my 2003 predictions, I decided that "All in all, not bad. For masochists and those with lots of time, you can go to the archives at www.2000wave.com and read the 2003 (and now the 2004) forecast issue. But in general, given the vagaries of prediction, I would be glad to do as well this year."
I can echo that again this year. All in all, not bad, with just one major miss.
I called last year "The Silver Lining Economy" as my outlook was fairly upbeat. I called for above trend economic growth, a flat stock market, a falling dollar, rising gold and oil prices and a Bush victory by a small margin. I even thought longer term interest rates would not rise, although I was right for the wrong reason, so that one doesn't count (more on that below).
Where I really missed it was my prediction that the Fed would not start to raise rates until after the election, and then would do so swiftly. I wrongly guessed that Greenspan and Co. would not want to be seen as interfering in the election. Clearly, they showed the usual Fed independence and have since started to raise rates at a slow and steady tempo - what they term as "a measured pace."
The See-Saw Economy
We are all familiar with the see-saw. Who among us did not play upon one as a kid? See-saws work as long as both partners work together. Indeed, with the proper cooperation, they are quite fun. However, there are more than few of you who let your partner get to the top of his ride and then jump off, allowing him to drop to the ground. I, of course, never did that to my younger brother.
The world is in a kind of see-saw economy, precariously balanced between a US trade deficit and foreign central bank buying of US treasuries. In general, I think the game continues though 2005. It is in no one's best interest to stop the game. It should be another good year for the economy, but we are getting closer to the endgame, when one partner decides they are doing all the heavy lifting and the other partner is just along for the ride. And as I explain at the end, it may not be our foreign partners who bail out of the game first.
As is my usual style in the forecast issue, we will look at the macro environment which drives the various markets, make predictions about those forces and from that model will see if we can opine upon the effect those macro- economic forces will have upon the various investment markets.
On the global economic front, first and foremost, the US trade deficit looms large upon my mind. There are those who say deficits no longer matter. We do not care that Oklahoma has a trade deficit with Texas, so why in a global economy should we care if the US has a trade deficit with Asia? Clearly, the US has been running an ever increasing trade deficit for years and our growth is just fine, thank you. Arthur Laffer maintains in this week's Wall Street Journal that a trade deficit is a sign of strength, not weakness, as it means that people are lining up to invest in the US.
Well, not exactly, Art. First, there is no currency risk between Oklahoma and Texas, so doing business is merely an issue of solving credit risks. Doing business in another currency (and with another government) poses major additional risk to the lender and the borrower. The US has so far gotten away with a trade deficit that is almost (and unprecedented) 6% of GDP, but that is primarily because we are the world's reserve currency.
But that may be slowly changing. Roughly half of China's growth in foreign exchange since 2001 was placed into dollars. However, last year China saw its reserves grow by $112 billion, but the dollar portion was only $25 billion. (Source: Bank Credit Analyst)
China has made it clear they are spreading out their reserves and putting less emphasis on the dollar. It is reasonable to suspect that this move to diversify out of the dollar is also putting upward pressure on the euro and other "floating currencies."
Secondly, the level of private investment in US securities has plunged dramatically in the past four years. The difference has been made up by (mostly Asian) central bank's buying of US treasuries. Roughly half of that buying has been by Japan in an effort to keep the yen from rising too much against the dollar and the Renminbi, with other Asian countries doing their part.
This buying spree by primarily Asian Central Banks, and not the lack of Fed action, is what has kept longer term US rates low. It has allowed US consumers to accumulate even more debt at low costs and spend it on Asian goods.
In the 90's, private foreign investors lined up around the corner to buy our stocks and invest in America. Today, the private foreign flow is inconsequential. There is little or no foreign investor confidence in the US. Indeed, look at the very astute Bill Gross's latest column from Pimco. (www.pimco.com) He is not exactly a raging bull on US securities, suggesting foreign bonds as among his favorite investments. This is from a conservative US bond guy!
Foreign central bank purchases of US Treasuries in order to maintain a competitive currency valuation to attract the US consumer is not a sign of strength. It is a sign of desperate foreign central banks trying to maintain their economies which are dependent upon US consumers. They KNOW they are going to get hosed on their dollar holdings, but feel they have no choice.
This is a trend that cannot continue indefinitely, but it can (and probably will) go on longer than we think. The world must re-balance from US-centric growth to a more balanced growth, with Japan and Europe, as well as the rest of Asia, becoming their own consumer engines. But this will not happen overnight, or even in a few years. This is a longer, more drawn out process. When it starts, it will not be fun.
This next part of the process will start in earnest when the Chinese let the Renminbi float. "Ah," you ask, "but when is that?" It will be when we least expect it, or at least when the market does not expect it.
The Chinese agreed to let their currency float by 2007 when they joined the World Trade Organization, so we have an "end date" in the process. They would be foolish to wait until then, as the pressure would become too big, with no way to gauge the response. The longer they put it off, the more the market knows they must move.
So it is likely to be done before then. My guess is that it is done gradually, starting sometime no earlier than the last half of this year (and of course, since I do not expect it until the last half, that means it will almost certainly be at some other time). There are two likely ways for them to go. They could simply set a limit or a "band," say 5%-10% of the current peg, and over time increase that limit. That would allow for gradual change.
Let me point out that it is not altogether clear that the Renminbi would immediately rise if the currency were allowed to float and the Chinese people were allowed to hold non-Chinese currencies. There might be a lot of Chinese companies and individuals who would like to diversify their holdings. Over time, the Renminbi almost surely rises, and perhaps significantly, but the initial moves could be a surprise. Since the Chinese Central Bank and government do not like surprises, they are likely to approach things on a gradual basis. And they will also do it when it benefits them the most.
Or, they might announce that instead of having a dollar peg as they do now, they are going to peg the Renminbi against a fixed basket of currencies (perhaps trade-weighted, perhaps not). That would allow the Renminbi to rise against the dollar but stay relative to their neighbors. It would also allow Asian currencies to stop the competitive devaluation contest they have been in for a decade. They could all allow their currencies to rise, more or less in tandem, against the dollar.
The Asian organization SEATO, composed of ten major Southeast Asian countries, basically announced such a basket of currency reserves policy when they declared last quarter that they would work toward a free trade zone including China. It would be the largest such zone in the world. Part of the deal would be to value their reserves in a basket of currencies of their trading partners, lessening their dependence on the dollar.
(So, how does the US respond to the growth of free trade everywhere? Maybe asking to join? No, we slap a huge multi-billion dollar tariff on foreign shrimp today. Now, there's a threat to the US economy. Coming to a restaurant near you: jumbo shrimp at much higher prices. Your government at work protecting you. Maddening.)
The Dollar: Same Song, Fourth Verse
Before we move on, let's make our more or less annual (since 2002) prediction about the dollar. It will go down in 2005. The dollar went sideways for much of 2004, and then started to fall. It went too far, too fast. Last year I though it might touch $1.40 against the euro. It got to 1.36 before it began to correct last week.
I think the dollar is likely to get stronger for some time, just like it did in the first part of last year. There are just too many dollar bears, and they need to be flushed out of the trade. It will happen. The dollar will rise for some time, and then once again begin its long climb down. This year we could scare $1.50. We are less than half way, in percentage terms of the last dollar bear market, through this dollar bear market. The last dollar bear took ten years, with much of the damage in the first part of the bear.
The revaluation (not demise!) of the dollar is part of the global re-balancing process, and part of the answer to the US trade deficit. So far, the process has been fairly stable. Hopefully it will take several more years. We don't want to live in a time when it happens all at once.
Because the only major currencies which really float are the euro, the Canadian and Australian dollars and the British pound, they have born the brunt of the revaluation process so far. They will bear more of it this year, sadly for them. When I was talking about a euro ultimately in the range of $1.50-$1.60 back in 2002, readers wrote to ask me what I was smoking? Now I get few such letters.
But this, too, shall pass. I think the euro may again trade at parity with the dollar in the next decade. But not before overshooting way too far to the upside in this one. I have written about why this swing is coming in the past, and may do so again. It is an important topic.
(As an aside, we spent New Year's at the Red Eye Grill in New York, watching the ball drop for the first time in my life. I thought dinner was excellent, if rather pricey. But the couple sitting next to us from London thought they were getting the bargain of the year. New York was filled with Europeans looking for a bargain. Meals in London and Paris last year cost me twice what they do in Dallas, and maybe it is just my taste for home cuisine, but I thought the food was not as good. And forget the cost of hotels. And Geneva is even worse!)
Once the Chinese start the ball rolling the pressure on the currencies mentioned above will ease. But until then, they are the true outlet for a falling dollar. Yes, the Asian currencies will slowly let their currencies rise, but not much until they see the Chinese willing to play ball.
And speaking of China, I do not see any real problems for the country this year. Just the usual emerging market, fast growth type of issues that we have seen for the past few years. The country seems to have a handle on inflation. Growth is still very high. Their own consumer market is developing. I will do a series of letters on China in the next few months, but I am still bullish on the country, despite all the problems.
And speaking of international growth, the world economy will slow down from the very robust pace of 2004, but it is not headed for recession and should do quite well, mainly due to Asia. Europe will struggle to post a positive GDP, and sometime later this year, even the incompetent European Central Bank will actually lower rates, though do not hold your breath. Though the ECB is only a few years old, they are making a run at Japan's title for the Most Incompetent Central Bank.
I've Got a Secret - Fed Style
Some of us are old enough to remember the old TV game show called "I've Got a Secret" where panelists tried to guess what a guest's secret was. They would get clues, and could ask questions, and sometimes they would guess the secret and sometimes not.
The Fed is trying to be as clear as they can about current policy, but I am pretty sure they do not know when they will stop the tightening cycle. They are trying to guess the "secret" of when to stop by getting clues from the economy and the market.
The Fed has raised the Fed fund rate by 25 basis points for each of their last five meetings. I think they have made it pretty clear they are going to raise for the next 3-4 meetings. But what do they do after that? Let's look at some recent events.
First, Alan Greenspan gave us the following warning last November (after the election) in Frankfurt: "Rising interest rates have been advertised for so long and in so many places that anyone who has not appropriately hedged this position by now obviously is desirous of losing money." I think that is pretty clear. His intention is to keep raising rates. The carry trade is in danger.
Secondly, the Fed has started to release the minutes of its meetings on a faster pace, so now we have the minutes from the December 14 meeting. From the minutes:
"...Some participants [meaning Fed governors[believed that the prolonged period of policy accommodation had generated a significant degree of liquidity that might be contributing to signs of potentially excessive risk-taking in financial markets evidenced by quite narrow credit spreads, a pickup in initial public offerings, an upturn in mergers and acquisition activity, and anecdotal reports that speculative demands were becoming apparent in the markets for single-family homes and condominiums."
How could you take this as anything but a warning that rates would continue to rise? So, the question is not whether rates will rise, but when will they stop raising rates?
The Fed started raising rates in June. Looking at the St. Louis Fed database, the ten year note was bouncing around 4.74 %. They have raised short term rates by 1.25% since then. Normally (like almost always), when the Fed starts raising rates, long term rates rise as well. Maybe not in perfect tandem, but there is a high degree of correlation.
Yet today ten year rates are at 4.28%. Admittedly, they have risen somewhat in the past few weeks, but last June, who would have thought long term rates would go down while short terms rates would rise?
In fact, let me pose you this question. Let's say I told you on Jan.1, 2004, that in the coming year inflation would almost double, short term rates rise by 1.25%, gold goes to $450, the dollar falls to $1.36 against the euro, the economy grows 3.5%, Bush gets re-elected, corporate profits grow by 25%, bank consumer loan delinquency rates fall to multi-year lows, the savings rate drops to 1% (!), the government deficit swells to well over $300 billion and the trade deficit grows to $600 billion. Who, besides Gary Shilling (who always and everywhere expects rates to drop), would have predicted that the ten-year rate would essentially be flat for the year?
I can tell you, I would have missed that one, and I bet you would, too. So what happened? Asian Central banks, and especially Japan, is what happened. Normal foreign investments by private individuals and companies are spread across a wide range of investments. Foreign central banks buy US Treasuries and government obligations. They have bought enough that the price of the longer term obligations has remained fairly stable in the face of a Fed tightening mode.
And now we come to the conundrum. It is quite likely they will continue to buy massive amounts of US government debt. It is also quite likely that short term rates go to 3.25% by this summer. Can ten year rates stay flat with a spread of only 1% between the short term rate and ten year bonds?
Let me jump ahead. I expect the economy to once again grow above my Muddle Through Decade trend of 2-2.5%. We should do about 3%. The trade deficit will grow. The savings rate will stay abysmal. The dollar will drop. Inflation will rise. Government deficits will still top $300 billion. Gold will rise.
What's different about this year and last year if the central banks of the world keep plowing into our bonds at an even bigger pace in 2005? Could it be that long term rates stay flat?
If that were the case, the yield curve would be quite flat by this summer. Would the Fed continue to raise rates, and risk an inverted yield curve? Why would anyone buy a ten year bond for a lousy extra 1% and the risk that goes with it? Unless, of course, you thought the US was going into recession. A long term bond might make sense at that point.
But the flip side of that coin is that long term rates do start to rise. A 5% to 5.5% ten year means a plus 6% mortgage rate, and that will put a serious damper on mortgage refinancing, which has been a major source for consumer spending. Not to mention putting a crimp in the growth of housing prices.
But this is a forecast issue, and I am not supposed to waffle, even if this was the one major area I missed last year (after multiple years of getting it right) and I should be more cautious. Let's see if we can start another multi-year string.
I think longer term rates rise gradually, but not as fast as the Fed funds rate does. I am aware I am disagreeing with Paul McCulley and a host of people smarter than me, but I think the Fed keeps on raising rates, with perhaps a pause or two, until it gets to at least 4%. Their history is that once they get started, they do not stop until there is some pain. Since the signals of "pain" tend to lag, it is quite possible the Fed tightens too much before it stops.
(By signals I mean that most economic data is a few months old before we get it, or can establish an actual trend.)
That is not good for bonds, and it is not a good environment for credit spreads. (A credit spread is the difference between a type of bond, like a corporate or high yield bond, and the corresponding government bond.) Credit spreads are "tight" now, which means the difference between a government bond and other bonds is historically very low. And by tight, I mean REALLY tight. There is no room, or very little, to get any tighter.
How did we get here? Because interest rates are so low, investors looked for any place to get higher yields. And as they poured into high yield bonds, corporate bonds, and emerging market debt, the yield on those bonds relative to government debt has come down, making it a fairly risky proposition if you are playing the spread game.
The Fed is going to continue to raise rates until the economy shows signs of trouble. While the Fed in the past has been willing to cause a recession, I do not think this Fed will do so. They are on the See-Saw between worrying about inflation and creating another speculative economy with interest rates too low and the concern that raising rates too much will squeeze the growth out of an economy that has grown addicted to, if not fat upon, - maybe even dependent upon - low interest rates.
One Caveat: if long term rates do not rise, the Fed will stop sooner than 4%. They will not create an inverted yield curve on their own.
Stocks: A Year of Disappointment
Stocks have "issues," as my kids would say, in the coming year. Right now, they are priced for perfection. We have low interest rates, low inflation, we are coming off a 25% annual rate of increase in earnings and corporate balance sheets are the best we have seen in years. But...
Consensus forecast for earnings are 10% or more. Yet corporate earnings as a percentage of GDP are at an all-time high. There is very little room for above long term average growth. Average corporate earnings rise 6% or so a year over the long term. While I think earnings do grow this year, they do not grow as much as the consensus forecast. Small disappointments will be the norm. And in a market with high valuations, small disappointments are not good. It puts a lid on overall stock market growth.
Further, we are facing one of two scenarios. Either inflation goes up further, or rates go up enough to kill the rise in inflation. Either one, higher inflation or higher interest rates, is not good for stocks.
The economy is going to be good, so I don't think we see the start (yet) of the next major bear leg, although this year will mark the high for what I think will be many years. This will be a frustrating year for stock market investors. You can always do well if you are a good individual stock picker, but broad indexes and mutual funds are not the place to be. The market is a sideways to down market, with the risk to the downside as we get toward the end of the year and a possible recession on the horizon in 2006.
And not to put too fine a point on it, I still think we are in a long term secular bear market. In a few years, we will look back and realize this was a bear trap - another sucker rally.
Gold and Commodities
It goes without saying that if I think the dollar is going down then I think gold will rise. Gold is a neutral currency. As the dollar rallies from its oversold condition over the next few months (or maybe longer), gold will languish. Maybe we even get a chance to buy some more at $400 or less, but at the end of the day, we will see new highs.
The risk to oil is on the upside. OPEC has seen the light. As an example, Saudi revenues are up 90%. Think they want a return to $30 oil? Ditto every oil producing nation. There is a floor in the mid-30's on oil, unless the world falls into a major recession. But as Asian demand (especially China) increases, the pressure on oil is on the upside. Ditto most industrial commodities.
So there you have it. The dollar continues is slide after a rally; the economy grows above trend; short term interest rates rise until there is a sign of problems, long term rates rise a swell, but not as much; the stock market is sideways to down for the year; gold is up and oil is in a trading range with the pressure on the upside; Europe and Japan look to continue to slow; and the Chinese start the floating process later in the year.
One Last Thought on the Trade Deficit
A falling dollar will not be enough to cure the trade deficit. It will also take a rising savings rate from the consumer. What will bring that about? When the next recession comes in 2006 or 2007, the stock market will drop. Average drops during a recession are 43%. The Baby Boomer generation will realize that the stock market is not going to bail out their retirement hopes. They will stop spending and start saving with a vengeance. Problem solved, only it creates more problems. The world will not like it when the American consumer retrenches.
Since the bond market usually anticipates the actual recession, which means that long term bond rates will fall, we should see an inverted yield curve prior to a recession. Major caveat: with Fed manipulation and foreign central bank buying, we are in new territory. The old rules may no longer apply, or be applied differently. Pay attention, gentle reader. This is one we will watch closely.
As far as the end game, the short version is that once the recession starts, the Fed moves aggressively to stimulate the economy, brings back inflation and we get high rates and inflation. Over time, we end up in stagflation. Of course, we will hit the reset button, work our way through that and start the next big bull move. But all that is in our future. For 2005, we can enjoy the see-saw, and hope our partners don't jump off.
My Personal 2005 Forecast
A few months ago, I decided to travel less in 2005. What an optimist. My travel schedule is just as hectic as it was this time last year, although I have hopes it slows down. I am not speaking in the next three months, except in Tampa in early March and possibly London later that month (details coming), but I already have about 12 cities booked for the first four months of the year, plus the usual quick trips which I am sure will develop. Business is good and getting better, but it demands more and more travel. You can't evaluate a manager or a fund over the phone. But these are all good problems.
Yet travel does give me time to read (as well as meet friends), and this year I am going to read more books and essays and less market commentary. I want to think more about change; about changes in the past and what we can learn from them to give us insights about change in the future; what the world will look like in the face of change in the coming decade; and how we as a society adapt to an increasing pace of change. It should make for some interesting, and hopefully thought-provoking, diversions in the weekly letter. Feel free to suggest reading material.
So I see more travel, lots of good times with friends and family, a business that continues to grow, an even more thought-provoking letter. Not a bad forecast.
Last week I finished the letter in New York, with all the staff having the day off. Thus, a major mistake slipped through. I told you the wrong link for my own web site. Not one of my better marketing ploys.
So, repeating from last week, (sans mistake) "... if you think about it, feel free to forward my 2005 forecast to your friends and suggest they go to www.2000wave.com and subscribe for free for themselves." I would be happy if they could join you as one of my one million closest friends.
Here's to our best year ever,
Your dreaming big and thinking large analyst,
John Mauldin
http://www.2000wave.com/article.asp?id=mwo010705
(*END*)
Thanks Dan, this time I decided to read Mauldin all the way through, quite a task...Strangely enough, I am not comfortable since his scenario is very close to my own Christmas ( #msg-4929099) outline....
ZEEV, TECHNICALS - up to ZEEV:343026, 01/09/05
01/04: (341065) (*COMMENT*)
Naz first trading day Jan % losses since 1987:
Year 2001 first trading day dropped 7% *Fed cut 1997 first trading day dropped 0.8% ,then up almost 4% within 4 days and up 5% within 9 days. 1995 first trading day dropped 1% ,then up 1% within 4 days and up 2.5% within 9 days. 1994 first trading day dropped 0.8% ,then up 1.6% within 4 days and up almost 3% within 9 days. 1993 first trading day dropped 0.1% ,then up 2% within 4 days and up 4% within 9 days. 1991 first trading day dropped 0.4% ,then down 3.7% within 4 days and down 4.7% within 9 days. 1989 first trading day dropped 0.7% ,then up almost 2% within 4 days and up 2.3% within 9 days.
Only 1991 was a washout early January.If we use the 1995 pattern[Naz dropped 1.07% yezter],then by Friday Naz could tag 2173+ and by the following Friday could tag 2205+.How about that sportfans.
(*END*)
When was the last time we had the first three days in January down? We may have a first for a long time? I think not.
01/05: (341160) (*COMMENT*)
(Part 1)
RSI-5-day buy signal
http://www.vtoreport.com/rsi.htm
(Part 2)
Interesting to note that since 1997, he never got such a low RSI, and the two times he entered the RSI gambit under 20%, the gains were 12.9% and and 6.7% respectively, amongst the highest gains the gambit has yielded over the last seven years.
(Part 3)
Those 2 times also were a peak to lead to maximum loss in the ndx . If that holds true then we get a bounce off of this signal and then another low print then a bounce leading to a severe correction.
(*END*)
Yup, that is more or less what the 2005 map has...
01/05: (341157) (*COMMENT*)
Zeev, the failure and posture of the net nyse highs/lows doesn't bother you?? A print of 0 or lower net new highs/lows is a decent sell signal on the $nyhl.
http://stockcharts.com/webcgi/Pnf.asp?S=$nyhl&Y=U&B=70&N=A&C=2
(*END*)
No, it just reconfirm that the mood is changing, but the dip buyers are not yet beaten, and the excessive one sided decline in the last two days usually is reversed rapidly. Maybe not before a little more pain early today.
01/05: (341266) (*COMMENT*)
Of course, there's always those "low probability events" (crashes). I went back and calculated the 5-day RSI's for the SPX in October 1987 (no NDX back then). The week before the crash, the RSI dropped to a very low 16.66, recovered the next day to 43, then dropped four straight days to 10, before hitting 3.3 on the day of the crash (10/19).
(*END*)
That is correct, but do you think we have crash conditions in place? An accident in the dollar could cause such, but I don't see that for now.
01/05: (341618) (*COMMENT*)
(Part 1)
Zeev, spike low tomorrow ought to do it for the indices, but we should drop lower after a re-trace up.
I'm looking for 1549 NDX tomorrow, a rise to maybe 1613 NDX, and a drop to around 1529 NDX. We'll see.
3-black crows on the RUT are a clue. SOX is getting near support near term.
(Part 2)
So, you do not expect 2200 on the Naz to be challenged?
(Part 3)
Well, maybe after a trip to 2050 COMP. First I think we may move up to 2154/2164 for options expiration, then back down to 2050 COMP to finish the correction off the high.
(*END*)
Hm, interesting, you expect INTC report to be a "dud"?
01/05: (341671) (*COMMENT*)
Hey ZH, for many weeks we had RSI & MACD divergence with readings in the .5's before dipping into the .4's for a few sessions. Could this qualify as Nazzacre material? Sorry if my question seems redundant, but my thinking is that we saw the equivalent without the major extremes you mentioned...
(*END*)
I think that qualifies as a change in direction from bull to bear being imminent, but a triggering extreme would be useful. This particularly in view of the rapid shift to extremely oversold here in the last three days. I still expect new highs with fewer NH in both exchanges and on lower volume and an extreme EPC to mark the top, probably still in the window of 1/17 to 2/5 or so.
01/07: (342833) (*COMMENT*)
Equity put/call finally rising at the close today, so I'm a little relieved that the rally can "start."
GO, RALLY, GO.
(*END*)
I would have preferred a reading nearer to 1 than to .8 (g).
01/08: (342919) (*COMMENT*)
Do the turnips consider the fact that the commercials are now heavily net short the major stock indexes?
(*END*)
I have not found a good correlation, take 2003, they went heavy short just a month after the rally started. It is probably an early indicator of troubles brewing, and as you know, they can and ave turned on a dime before.
01/08: (342966) (*COMMENT*)
Zeev, When you look at Price/Vol. do you have a method to look at the data better than what one normally sees on a chart? If so would you elucidate for me?
(*END*)
In stockchart, you can get "Price by Volume" (shows areas of "congestion", but not very detailed), but when I speak about a price/volume reversal, it is really comparison of the volume on a sharp turn day to average volume (like GILD last Wednesday, a big spike down finishing close to the high on three times recent volume, 5 to 10 times is even better).
ZEEV, MARKET/ECONOMY - up to ZEEV:343026, 01/09/05
01/09: (343020) (*COMMENT*)
Look at mutual fund flows for this time of year last year to current numbers. Does not bode well for equities. makes you wonder what supported prices at the end of the year. One would think that with the run we had for November and December that January flows would be much higher.
I would also question the high volume that we saw the last few months. It does appear that it came from mutual fund inflows. Program trading maybe??
http://www.geocities.com/dollarbear2k3/FUND_FLOWS_CHARTS/fund.flows2_24836_image004.gif
(*END*)
Joe, I am not sure about your conclusion, fund flow out of these funds at local lows, look last August for instance, or March 2003, on the other hand, last january as we were going down into the spring lows, they had huge inflows. Should not that be a contrarian indicator?
REGULATION SHO - up to ZEEV:343026, 01/09/05
01/08: (342877) (*COMMENT*)
The Reg SHO list is out in case anyone cares:
http://www.nyse.com/Frameset.html?displayPage=/threshold/
(Excerpted from the NYSE link for the reader's convenience. flg.)
"Threshold Securities"
"On July 28, 2004 the Securities and Exchange Commission ("SEC") adopted Regulation SHO with a compliance date of January 3, 2005. Regulation SHO requires Self Regulatory Organizations ("SRO") to disseminate a daily list of 'threshold securities' where such SRO or its market center is the primary listing venue for any such security. Rule 203(c)(6) of Regulation SHO defines a threshold security as any equity security of an issuer that is registered under Section 12, or that is required to file reports pursuant Section 15(d) of the Exchange Act where, for five consecutive settlement days: (1) there are aggregate fails to deliver at a registered clearing agency of 10,000 shares or more per security; (2) the level of fails is equal to at least one-half of one percent of the issuer's total shares outstanding; and (3) the security is included on a list published by an SRO. Accordingly, the NYSE will post a list of threshold securities to this site for every settlement day, including any such day where DTCC is
(The following was copied from THE TRADER colume in the January 10, 2005 issue of Barron's. flg)
"Now, get ready to start hearing about the release of 'threshold lists.' Beginning Monday, the major stock exchanges will begin posting lists of stocks that have a certain number of shares which have "failed to deliver." This serves as a proxy for the shares sold short without the seller's broker having firmly arranged to borrow them. These so-called 'naked short sales' have been targetted by regulators. Exchanges must now publish stocks with many unconsummated trades, a rule meant to force brokers to clean up the practice.
The Securities and Exchange Commission rule, called Regulation SHO, requires that any stock with at least 10,000 shares and 0.5% of the stock's float categorized as failed to deliver will be on the threshold lists. Brokers will then be required to cancel or close out short sales in these names, presumably through forced buying of the stocks.
Heavily shorted small stocks likely will show up on this list, and many traders have decided to speculate on potential upside 'short squeezes' by buying them in anticipation. Early indications are that popular day-trader favorites and short targets such as TravelZoo, American Pharmaceutical Partners, Biosite, Pre-Paid Legal, Martha Stewart Living and Novastar Financial will be featured on the initial lists.
Let the games begin. But note that because of technical reasons, no genuine short squeezes are likely to occur for a couple of
(That's the end of the material I excerpted/copied. Please see #msg-5051271 for the author's report of the NYSE Threshold List. flg.)
(*END*)
It would be interesting if they listed also by how much the failure to deliver is (at least as percentage of outstanding stock). Have you used this list to select candidates for short squeeze?
01/09: (343022) (*COMMENT*)
(Part 1)
A pretty good rally is in progress near the close of trading in Tel Aviv, maybe a precursors of a slightly better week ahead, or just a reflection on the smoothness of the elections next door??
(Part 2)
More likely a response to certain Israeli companys naked short positions being addressed....Real problems exist with naked shorts on these companies. Of couse this is limited to those companies with dual listings in our markets.
(*END*)
You think that new regulation will impact shorting? longer term, it may alleviate some of the fast short covering in such stocks....though, it may also reduce the severity of the short attacks on others.
01/09: (343026) (*COMMENT*)
will it cause a short cover run on those that make the list?
(*END*)
I have no idea, usually, I don't like playing against the shorts, most of the time, these guys know what they are doing. Professional shorts are more dedicated to their analysis then long, IMTO.
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