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"during the secular bear of 1966 to 1982, the economy's average rate of GDP growth was greater than during the following secular bull market from 1982 to 2000"
Excellent point Zeev. This was precisely why PE's on the Dow got below 10 in 1982 on a trailing basis which marked the beginning of the bull market. Now we have the NDX sporting PE's of 38 using next year's earnings. I think the trailing PE on the NDX has hit triple digits right now which should make this a rally a bear market rally. So from the valuation prespective it should be fully retraced. The timing of it is obviously another matter.
Metsin, I don't know what he will say. I know there people waitin to buy the dip. Another thing, as you said the SPX has not produced a weekly close above 1000. Tomorrow may be the day. They have to get it or risk the end of the rally. If it turns down tomorrow I think we may have firecrackers next week. If close above it we will have a weekly white candle on all stock indicies which says we may have a lot more upside. I follow Ralph he is smart guy, I think he's right.
"everyone is long"
Metsin, I think most of the "dummies" are long but lots of "smart" operators are still caught on the short side. I know of at least two very smart people who are deep in the red in NDX put options and futures. In fact one of them added to his NDX short position yesterday and I bet he didn't like the tape today.
Those public moneyflows I think are probably coming from monthly retirement account contributions providing fuel in the absence of selling pressure. Let's see what the big boys will do in the next couple of weeks.
"the piper will be paid"
That is absolutely true but when? It's the damn timing I have problem with. As I am watching this thing sailing upstream I am thinking how to deploy my cash. Still on the sidelines and trying to figure out how to best play this thing for the next 2 months. I am expecting volatility to increase goin forward and right now with options as cheap as they are I am thinking Jan04 straddle.
Metsin, Grasso's $140M package is another indication that there is money to burn. The guy is a regulator for god sakes. What the $ell did he do for NYSE that any other nickel-and-dime politician couldn't have done? I tell you despite all the negatives about bankrupsies, employees losing their jobs, etc, people in general are freakin loaded to the gills with cash. I see it everywhere here in Los Angeles where I live. Malls are packed, stores are packed, drivers with new Lexus, Beamers and Benzies everywhere on the streets. Expensive foreign restaurants at night are packed, we have to wait half an hour to be seated and that is WITH a reservation.
If a trickle of all this excess money comes to the market I can see NAZ 2000 real soon and guys like you and me will still be talkin bout how expensive this freaggin market is. It wouldn't be the first time we see pigs fly.
When you don't know what's hapenning stand aside and wait till the smoke clears. We got a market gaining strength at overbought levels, something is definitely going on. Either we are witnessing the biggest buy signal of the century or the biggest sell signal.
Thinking of puttin on straddle position on the cubes tomorrow.
hiker, cuttin costs is always bullish and cuttin LABOR costs is even more bullish. It's the best way to improve the balance sheet.
TrainGuy, the COMP has broken out and continues to be bought today. With no selling pressure to be found (i.e., expansion in new lows, downside volume, etc.) the fake out above last week's high is a near certainty IMHO. This has got to be "hot" money chasin here, it's hard to believe the new highs in the COMP will stick.
Having said that the market is continuing to surprise on the upside despite what we think and we got to respect that and stay away from the dark side.
TrainGuy wow, great chart from Jason Goepfert! Once you take the cubes out, equity only PCR looks super bearish. This terrific chart combined with the lo VIX and Investor Sentiment and record August insider sells says the up-trend is runnin on fumes. A good size drop is definitely in the cards goin forward. The problem is that we have NO SELLING PRESSURE. As everybody knows if people aren't interested in sellin it ain't gonna drop.
Interesting that Goepfert thinks QQQ PCR alone has zero forecasting value. Also QQQ put volume 30% of total equity put volume! Looks like QQQ is now major institutional portfolio insurance product.
"i wouldn't bet on institutions chasing up next week"
Every time I thought I knew what institutions would do, they end up doing oposite. This time I'll wait till I see them back on job. Market very expensive but nobody cares. Professional shorts pulling hair. Junk bonds, junk stocks, crap biotechs not broken. 80% of stocks above 200 MA. NVLS could have upside surprise, don't know. But if NAZ gaps up 30-50 points for no reason tomorrow I'm gonna short it for sure. This thing needs a breather it ain't 1999 anymore.
Metsin chop action. Looks like impatient shorts stepping over each other whos gonna be first to short and first to cover. Most people don't want to sell at these prices. Buyers taking a break. Maybe when the big boys get back in town they'll buy this thing but 1740 no deal for me today. Was hopin for 1700-1720 for entry later this week. May not get it but ain't chasing either. Staying liquid here and looking for opp. to get in.
Metsin, binoculars on, just spotted 1 seller. We are super overbought especially NAZ, desperately needing pull back. No alarm yet, still bull trend and "buy dips, tight stops" is king. But me thinks next attempt at new highs will fail.
Metsin, I don't do the day thingie, wiggly red/green lines and color numbers flashing too stressfull for for me. Current thinking: retest of Fridays high to start later from the low 1700's. Volatility will expand 4sure going into Sep. Good trading ops ahead. Wouldn't touch it here though.
Metsin, should stabilize in 1700-1750 range for a bit as we suck in shorts. Binoculars on and scanning for sellers.
lol. Maybe I'll spot the sellers on Mars with all the buyers here on earth. lol
hiker, kudos to fleck for callin the march rally. Didn't know he did, I stand corrected. Do you know if he even touched the long side on his call? Cause if he didn't it means he had no conviction as in talking the walk but not walking it. I know Zeev's turnips not very accurate and Brinker caught the low but gettin out inb time is a whole nother matter.
Metsin, today I bought me a new pair of binoculars. Large magnification. I plan to use them next week to see if I can spot any sellers. They might show up afterall, who knows lol
I have no conviction on any particular outcome. I got stopped out Friday on a profit taking stop when we lost all our morning gains. In cash now and waiting for you guys to take it down 5% or so where I will try to come in on strength. I am just getting a little tired of the crash talk.
hiker, I can't trade off of Fleck's stuff. He confuses the hell outta me. Due respect, Fleck's timing has never been right. His macro stuff is right, but I sure can't trade on that. Most important of all he's missed the important rallies of this bear market.
He writes well though and I read his stuff too.
metsin, you can become a bagholder in either direction. How many bagholders you think we made from the March lows? I am talking about the shorts that didn't honor stops. I bet you plenty bagholders are probably still among us on this board.
The market never crashes the minute after it makes new yearly highs. First it makes an attempt at a new high which fails and then it can crash. At least it will have to take out previous resistance in this case 1600 NAZ. What's with everybody talking crash all of sudden. They must be serving crash opium in cyberspace these days.
FR, Barclay Leib is big bear that got left in the dust on this rally like many of us did. Fleck has always been a bear and an important brick in the "wall of worry". These guys sell subscriptions for living, they don't trade. Because if they traded their opinions they would have been bancrupt 10 times over.
So sell the SOX because we hit some Fibbonachi Smibonachi resistance line? Give me a break. I say let the SOX correct a little from being short term overbought right here and jump in with both feet when it turns up. Don't listen to these scare momgers and professional top-and-crash callers cause they don't trade. They take inocent people's money under the pretense of providing "expert" market advice. Pure hogwash. Sell when the charts say sell and not a day too soon.
"The savvy chart this weekend highlights the 5 wave move in the NAS"
Oh man, I've been lookin at that guy's website too. Problem is he changes his mind on the count at least once a week. I wouldn't get my hopes up on what that guy's Ewave flavor of the day is.
As for the doomsday you expect in October remember that it takes sellers to make it happen. The economy and overvaluation have nothing to do with crashes. Sellers do and it doesn't look like anybody wants to sell here. Study the chart of the SOX for a minute and see what you make of it. Bottom line is that we got little activity in the market overall with the shorts squeezing each other as they focus on all the wrong things (i.e., this that and the other news in Iraq and which big name bear said what).
Since the market does what people least expect, how about a tiny pullback here to suck in some shorts and then melt up with 10K print in mid October? That would really be the "right" market action to confound most. Buy the dip with tight stop still looks to me like the only game in town.
Yeah, they did. They stopped me out. It was time to take profits anyway. I expected more follow through, very disappointed. I bet you is new shorts climbing on board. They'll get their turn. Now wait until you see 2-3 straight down days and then buy the first up-bar for a shot at new highs. I am tellin you this is the only thing that works in this trending enviromemt. The weekly and monthly trends are still up. Only the daily looks bad. Honor those buy signals while the weekly is up. If they manage to turn the weekly down then it will be time to throw short.
Metsin, it sure is. I don't trust this new bull as far as I can spit but the long side has been and still is the place to be. Now if we close negative today you gotta respect it and take some profits.
I am goin off to shoot a couple of rounds. Best of luck.
Metsin, they are still looking to short this gap. They are still thinking crash. This is exactly the mentality of a strong bull rally. It'll go further than they can stand.
Having said that, if we loose today's gain it's a clear "sell" signal. I just moved my stops up.
ml, you may well be right. But proforma is what people use right now not GAAP or core. And on this basis the S&P doesn't look expensive. Considering of course the environment we are in with the stimulus that's has been unleashed upon us a PE of 20 ain't bad. As I read in a good trading book once the truth is not important but the perception of the truth is very very important. This is why smart people lose money in the market and don't pay attention how the public receives and intrpretes the same info.
Buy the dips with tight stops is the only sensible thing to do here. The odds of your sell order being profitable are quite small if AG is taking the other side of your trade.
well we here in the US consume everything everybody else makes. It's not just AG and our leaders that want us to prosper but so does every nation that sells goods and services to us. If we went into a recession or god forbid some kind of depression who here in the states is gonna be buying japanese cars and chinese anything? That's why exporters like China and Japan need us to be prosperous so that we can continue to spend and consume their crap. They gotta keep buying our bonds and our dollars or else their exports will become uncompetitive. I am no economist and I maybe wrong on most of the above but I do know it is to nobody's interest to see this fine country go into another recession. They will pull all the stops including putting a carry tax on cash and savings accounts if they need to get this economy out of it's func. Eventually they will fail but that's waaaay down the line.
Small fry keeps comin! The most interesting part is that they are just beginning to wake up to the idea that this could be a new bull market.
inthehills: I am sure you will agree that the USA is NO brazil. If the USA goes out of business so does everybody else. The chinese, japanse and europeans will crater if we go down here in the beutiful US of A. On the other hand if brazil goes out of business everybody else catches a cold for a day or two and that's that. I didn't make the rules. Thta's just how it is.
Everybody on dark side should remeber Marty Zweig's classics
(1) Don't fight the fed
(2) Don't figh the tape
Choosing to do the opposite can and will cost you. That's just the basics.
ml, market trades on proforma. Nobody uses core. It's just the way it's been for years. If we changed that then all our historical databases on valuations will be out of whack.
"I'm beginnning to hate that guy"
I used to hate the guy with a vengence but now that I am long he's my main man. "Wall of worry", "Wall of worry" ...
mlsoft, you must honor those tight stops its the only way to play. As for a lot of selling being done at the highs don't believe it because there is a buyer for every seller. That's just how markets work. Having said that who knows you could still be the guy who caught the exact top. That why we all have our stops in.
Here is another thingie I got today. EPS for SPX upped to $60 for 2004. Doing the numbers by slappin a conservative 20 PE on that we get 1200 SPX in 04. That's a cool 20% from here and that's fair value. Now how can you get the strength to short that with the tape as strong as it is?
Bear I live here in southern CA too and my take is that people don't care if gas goes to $3. If they did care we wouldn' have the number of SUV's we have on our freeways. People are loaded and flush with cash from their refinanced cash-out real estate. They are driving expensive cars and buying boats. I went to a furniture going-out-of-business sale the other day and they wanted $800 for a broken table that I wouldn't pay $100 for. The guy didn't even bother to negotiate a lower price with me. ANd he is goin out of business! I am telling people have too much money around here.
"the Gambit is running out of gas here"
mlsoft, I find myself agreeing with you on everything except the above. I can't see how the gambit is running out of gas when we are making new highs. I think you can say that if and when price breaks down but not when it breaks up. I thought upside breakouts mean the gambit is picking up steam. Of course the gambit will be over at some point but that is like saying we are all gonna die some day. Very true. The hard part is to time it just right. You could end up being right about today's price being the final high of this rally but chances are overwhelmingly against you. Just like there is always somebody that wins the lottery. It's always somebody else though.
Let's say the economy is not recovering and that rates have gone up for all the good (bad) reasons you mentioned none of which has to do with increased demand for capital. Why has the stock market not gotten the message? Is it a simple case of "don't fight the fed" and "don't fight the tape"? Is it going to have a delayed reaction?
When I can't make sense of the crap I am being served I usually go with the tape.
"loan demand is not there"
Well I don't have real evidence that this is hapenning. I am only going by what I read myself. If we are in a recovery then demand for capital should increase which inturn should lift interest rates. That part makes sense. But if we are not in a real recovery, how can you explain the rise in log-term treasury rates? Is it fear of the deficit spiraling out of control?
I'll tell you one thing that stinks for me is that in a recovery money comes out of bonds and goes into stocks. But since the sudden ramp in rates in June we have seen little movement in the S&P. The s&p should have ran up and not been stock in a range during this time. That's the part that kept me bearish on stocks in june and july.
What do you expect it to do? the economy is in recovery mode. Every number that has come out so far tells you that. Of course rates will go up a notch from here because as the demand for capital increases so does the price of capital (i.e., interest rates). I just can't find anything wrong with interest rates as long as TNX stays below 5%.
Punkle I resent that. I have never been a perma-anything. Yes I change my mind but no like the weather. And I'll change it again in September, just watch. I took a @#$!* loss on the shorts last week and revesred. I am trying to make a buck like everybody else. If it don't work one way try another way. Some people like to dig themselves deeper and deeper graves. There is no fun in that. As for the Philly number you gotta admit it's a damn good one. Positive for the market. Could we crash in October? Sure, why not? I plan to be short by then. But you gtta go with the flow right now and the flow is up. Read Zen and the art of archery, damn good book.
mlsoft, I am with you on the news. I don't buy it either. But if everybody else buys it and I don't then chances are I am gonna be roadkill. What the others think is always more important than what I think and the trend is more important than the news, what AG is doing in his spare time, who said what when, etc. etc. Follow the trend, it really is "yoiur friend".
For any descent decline to take place the "buy the dip" strategy in the uptrend has to stop working. If you are playing for nickels you don't have to worry about that. But if you are playing for dollars then you gotta pay attention. So far buying the dips has been working great. It's really a simple strategy and I have made good money with it in the past.
It's so simple here I'll give it to you here: (1) identify the 3 month trend direction which is now UP, (2) wait for a pullback, (3) get you buy order in on penetration of last bars's high, (4) put a tight stop below the low of the bar you used to go in with. This is how I got in long the nasdaq last week after closing out shorts for a good size loss. Hit the jock pot immediately and still holding with stop at B.E. The best thing about this approach is you don't need stinking indicators or stinking news. Just go with the market. I think of myself as a bear with bull's horns at the moment and waiting for the 1015 SPX to crack. That is the motherload IMHO and worth playing for.