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What cash level are you planning to go out on?
Gizmo
Look's like we could be headed to the bottom of the channel which would seem to coincide with your worst case scenario of a gap fill at 1842. Have your indicators given you further direction on where we're headed next week?
Gizmo
Mutual Fund inflows........
7:01am 10/17/03
U.S. stock funds have inflows of $4.4 bln last week By Tomi Kilgore
NEW YORK (CBS.MW) -- Funds investing primarily in U.S. stocks took in $4.4 billion in new money during the week ending Oct. 15, estimates Trim Tabs director of research Carl Wittnebert, vs. inflows of $4.3 billion the week before. International stock funds had outflows of $200 million, after taking in $1.1 billion the prior week. Bond funds had inflows of $500 million, adding to inflows of $200 million the week before.
Gizmo
Risky business -- or business as usual?
By Dick Satran
NEW YORK (Reuters) - Now playing in a stock market near you: It's Bubble 2.
The year-long upturn in stocks looks like a sequel to the action that took place prior to the March 2000 crash. Some of the same dotcoms are taking a starring role in this Deja Vu rally, with Amazon up 210 percent in the past year, Yahoo up 163 percent and Monster.com up l56 percent.
But does this mean we are heading for the same sad ending that we saw when stock prices went through a meltdown three years ago?
Not necessarily, say stock market strategists and fund managers. Even though some professional investors are jittery about the market's increasingly frenzied speculation, there are explanations for the market's risky behavior, they say, and there are plausible theories about why things might end up differently this time.
First, there is the technical market rebound theory, a well-scripted Wall Street behavior.
BIGGEST REBOUND
"When things improve, it's the stocks that were punished most in the last decline that rebound the most," said Joseph Stocke, portfolio manager for StoneRidge Investment Partners LLC. "I don't know why this should surprise anybody."
Indeed, even with the Nasdaq composite's rise of 70 percent over the past year, the index is still less than half its lifetime high of 5,132.52, reached March 10, 2000. This week it hit its best level in a year-and-a-half at just over 1,900.
The Dow industrials didn't fall as much as the Nasdaq stocks in the downturn and so haven't gained as much in the recovery rally. After climbing 34 percent in the past year, the Dow is now just 17 percent below its all-time high of 11,750, reached in January 2000.
For the week, the Dow rose 1.07 percent, while the S&P 500 rose 0.8 percent and the Nasdaq rose 1.85 percent. The Dow was higher for the eight time in the last 10. The Nasdaq and S&P were up seven of the past nine weeks.
Ed Keon, chief quantitative strategist with Prudential Financial, predicts that technology stocks will continue to lead the Nasdaq higher because the same factors that spurred the rally a year ago are lending support as investors begin to shrug off worries about the economy and global risks.
"Think about what the world looked like a year ago," Keon said. "People were extremely risk averse, and rightly so."
RISK PROFILE
A weakening economy, the aftermath of the Sept. 11 attacks and the looming war with Iraq combined to create a risk profile that Keon compares with 1942 after the bombing of Pearl Harbor. Against that backdrop investors were in no mood to add risky stocks to their portfolios.
Things have continued to improve since then, he said, and "the market went from being extremely risk averse to a more normal level of risk aversion -- and in that process the riskiest stocks did best."
So the formula has been to buy volatile "high-beta" stocks, those that fall hardest in declines and rise most in upturns. Technology stocks are typically the most volatile.
"During a market advance more aggressive, higher-beta type stocks have higher returns," agrees Stocke. Conversely, "they have lower returns in downturns."
But Stocke doesn't dismiss the surge in tech stocks as mere market speculation. He sees it as an indicator that a tech-sector earnings rebound is in progress. Indeed, Yahoo, one of the first companies to report results, showed surprisingly strong results and its stock soared 10 percent Thursday.
TECH SHARES BENEFIT
"Tech earnings are going to be the biggest beneficiaries of a pickup in the economy -- and they have the highest expected earnings growth," Keon added.
Still Stocke concedes, the stock market, as a predictor, "is not always right."
Looking back to March 2000, the stock market was predicting a brave new world of ever-expanding growth in an economy infused with new technology. It was like the plot of a futuristic movie.
But Matt Kelmon, of Kelmore Strategy Funds, says he's skeptical that the market will keep buying into the exciting-New-Economy plot for much longer.
"Right now I'm betting on some of the boring stuff that hasn't done well this year," Kelmon said. Household names like Gillette , Merck and Johnson & Johnson , which have barely gained at all during the rally but have steady earnings prospects, are among his favorites.
Even the technology stock advocates say that, over time, the old boring stuff -- high-quality stocks with steady earnings growth -- will reward investors the best.
But timing is everything. "If I'd been telling clients over the past year to chose the highest quality stocks, least risky stocks they wouldn't have been very happy with me," Keon said.
Moreover, the risky business continues. Tech stocks continue to ride on the momentum of investors chasing the hot stocks, says Kelmon. "It reminds me of the 90s. A lot of it is liquidity driven." Professional investors like the stocks because there's lots of money pouring into them -- which lets them make a quick profit by getting in and out in a hurry.
That's the definition of a short-term rally driven by momentum.
But what will happen next?
The sequel is still being written.
10/10/03 17:18 ET
Copyright 2003 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. All active hyperlinks have been inserted by AOL.
Where's the Beef?
BEING STREET SMART
by Sy Harding
WHERE'S THE BEEF? October 2, 2003
While the stock market still seems to believe the promised big upsurge in the economy is underway, the economic numbers that were stronger last spring and into July, and prompted that promise, are now mostly going the other way, continuing to disappoint and not meet economists' expectations.
Merrill Lynch economist David Rosenberg was quoted last week as saying that at that point 80% of the economic reports in September had failed to meet expectations.
In the last week or so we have seen still more:
The Commerce Department reported that growth in real disposable income slowed to 0.6% in August from 1.3% in July (when many consumers received a tax rebate check).
The University of Michigan ’s Consumer Sentiment Index declined again in September to 87.7 from its level of 89.3 in August.
The Conference Board's Consumer Confidence Index also declined sharply in September, falling to 76.8 from August's level of 81.7. The sharp decline was totally unexpected, and is the lowest level since March. All of the monthly improvements in consumer confidence during the summer as a result of Washington's rhetoric about the tax cuts, and relief over the outcome of the invasion of Iraq, have now been given back, and more.
On Tuesday we learned that the Chicago area PMI Index of Manufacturing plunged to 51.2 in September from 58.9 in August, now just barely in the positive area (above 50). It was the Index's lowest reading since April. Economists had expected manufacturing activity to at least hold steady (the consensus was for a reading in the area of 58).
On Wednesday, the national ISM Manufacturing Index came in at 53.7 for September, still showing some growth, but weaker than the reading of 54.7 in August.
The Bank of Tokyo-Mitsubishi-UBS reported "a fundamental softening in consumer demand in the U.S. over the past three weeks." Its weekly chain-store index fell 0.4% last week, its 3rd straight weekly decline, after strong sales in August.
On the positive side, on Wednesday the Commerce Department reported that construction spending grew 0.2% in August, following a 0.2% increase in July. But that was only half of Wall Street’s expectation of an increase of 0.4%. However, the stock market liked the number, and surged up more than 2% on the day. But it’s an August number, and the big question is whether construction spending remained positive in September, or when we get the number for September a month from now, will we learn that it followed the majority of other economic indicators by declining in September.
This morning we learned that 13,000 more workers filed first time applications for unemployment insurance last week than in the previous week, (399,000 new people applied for unemployment last week).
This morning we also learned that, despite hefty increases from the Defense Department, factory orders fell 0.8% in August. That was also unexpected, and came after three straight months of increases had helped create the promise of a big upturn in the economy being near.
The factory orders numbers also give us an idea of where the economy would be if it were not for the big hike in government deficit spending. Overall factory orders declined 0.8% in spite of a 37% increase in orders for defense capital goods.
But is the stock market worried that the big economic upsurge it has built into stock prices seems to be going the way of the similar promises in 2001 and 2002, that a big economic rebound would take place in the 2nd half of those years? Apparently not. Tom McManus, Bank of America strategist says “the continued willingness by individual investors to contribute to stock mutual funds suggests satisfaction with the economy’s progress.”
If only corporate insiders had the same confidence, instead of selling for four straight months (at an almost record pace), into the strength of the individual investor buying.
Sy Harding is president of Asset Management Research Corp., in Meredith, NH, publisher of The Street Smart Report Online at www.streetsmartreport.com and author of Riding The Bear - How To Prosper In the Coming Bear Market, which warned in 1999 of the approaching bear market just 9 months before the Dow topped out on January 14, 2000.
Harding also warned in an article in the March 6, 2000 issue of Barron's that the Nasdaq was about to plunge to 3300. The Nasdaq topped out (at 5048) just 4 days later. In 2000, Harding also predicted a summer rally for the Nasdaq that would retrace 50% of its decline at the time, but would top out at 4,250. The summer rally topped out in August at 4,234, and Harding recommended selling it short again. Its subsequent low was 1,745.
In 2001, Harding gave a buy signal for the market on April 1, in expectation of a "significant" rally, just 3 days before the market bottom of April 4, and took the profits in mid May and June, and moved to short-sale positions expecting a decline to a "significant low and buy signal in the Oct/Nov. time frame", which produced gains from the downside of as much as 10% a month. Those profits were taken Sept 21., 2001 at the exact market bottom, and a buy signal was given on October 3, 2001 for the Sept.-December rally.
Last year (2002) StreetSmartReport.com gave a sell signal on the market on April 9 and moved to short-sales. The market was down for six months in a row. Harding then gave a buy signal on October 15, just a few trading days after the market bottom of October 9. You need to know his current outlook.
Copyright ©1992-2002 DecisionPoint® All Rights Reserved
Gizmo
Inflation will be the debtors friend.
Gizmo
Do you see Friday's gap being filled Monday?
Gizmo
Started a position in Rydex Juno when the 30 year Bond was yielding under 5% last week. I plan to average in on further dips. Seems like a good way to play the inevitability of rising rates as bond yields reverse from 40 year lows.
Gizmo
The Fed didn't let the economic cycle of boom and bust play out. Without a strong recession creating pent up demand how could we have a strong recovery? They've merely delayed the inevitable. Economic inbalances still need to be addressed and in my opinion only recession has the power to do it.
Gizmo
Bubble Junior.
Gizmo
Liquidation of market positions to fund consumption. The baby bust generation (those born between 1965 and 1976)are not of sufficient size to replace those assets. IMO a multi year decline on the horizon due to this phenomenon.
Gizmo
Any thoughts on how the markets will be effected when the baby boom generation begins to retire? Personally I hear a big sucking sound on the horizon.
Gizmo
Do you have a fair and reasonable value level, based on historical standards, for any of the major indexes?
Gizmo
$TYX... Anyone have a link to a chart going back further than 10 years? TIA
Gizmo
I wonder if the Bulls have enough steam to take it to 1560. If we close above that I'll believe the cyclical bull has arrived and turn to the long side for a run to 2000. Perhaps tomorrows employment report will decide whether it's up or down?
Gizmo
AJ, IYO does the first breach of the wedge (downside) have more significance than the recovery high close? My opinion is that it was quite significant and signifies the bullish case is weaker than would appear by price action.
Gizmo
Shorted Nasdaq 100 through 2X RYVNX yesterday...although I suspect the worst case for this position could be a rise to 1521 to 1560 Naz. Decided to do this now in an attempt to front run seasonal weakness.
Gizmo
Sorry, I got carried away.
Gizmo
Basserdan, as a matter of prudence, I was stopped out of all Gold & Silver stocks yesterday. Now POG breaks out. LOL
Seriously though technical damage was done and I'm not sure these stocks can do better than fill their gap downs from yesterday (HMY) or runup to their former up-trend lines from underneath (WHT,GSS,KGC). I'll wait for a higher high and consider buying a retracement.
Gizmo
Possibly... but I really believe this war was predicated on control of oil. WMD/Hussein just an excuse to further our goals.
Gizmo
Yep, even if U.S. covert ops have to plant them!
Gizmo
Dollar collapsing. Last trade 97.71 Change -0.96 (-0.97%)
Gizmo
I stopped out for 2% loss on HMY and 1% loss on AEM. Now, I want to see the HUI break the high of the latest rally. IMO "ain't gonna happen" looking for HUI 105 now.
Gizmo
Bought HMY near the close. Why? I'd rather buy near the bottom of the range than near the top. Also got a smaller position in AEM.
Gizmo
Time to short?
Gizmo
Dan, I have a small speculative position in CAU on the premise that the law could be overturned. From a Company press release..........
Press Release Source: Canyon Resources Corporation
Montana Poll Shows Majority of Voters Want to Modify or Overturn Earlier Anti-Mining Initiative (I-137)
Thursday March 27, 3:01 pm ET
GOLDEN, Colo., March 27 /PRNewswire-FirstCall/ -- Canyon Resources Corporation (Amex: CAU - News), a Colorado-based mining company, today summarized results of a Montana poll and events in the Montana Legislative session related to citizen efforts to modify or overturn the anti-mining initiative (I-137) passed in 1998 that bans the use of cyanide in open-pit gold and silver mining. The poll, conducted in January 2003 by Moore Information, a highly respected polling firm, showed that a substantial majority of voters (58%) support replacing I-137 with a new law that includes new safety and environmental controls but allows the type of mining banned by I-137. Twenty-one percent of those polled were undecided, while 22 percent were opposed. Further, of those who had voted for I-137 in 1998, over 50 percent of those voters would vote today to replace it and allow the use of cyanide in gold mining if new controls were included.
The Moore Information poll also indicated that 84 percent of Montanans believe that it is possible to have a healthy mining industry in the State while maintaining a healthy environment. When informed that overturning I-137 could result in the creation of over 1,000 new jobs, over 68 percent of those polled indicated that they would vote to repeal the I-137 prohibition. The Moore Information poll has a potential error of five percentage points.
"There is clearly room for optimism that I-137, which has cost the mining industry and the State of Montana dearly, may be overturned in a free and fair election where the issues can be honestly discussed," said Richard H. De Voto, President of Canyon Resources Corporation. Canyon's Seven-Up Pete Venture has invested over $75 million in the development of the 10 million ounce McDonald Gold Project near Lincoln, Montana, which was halted by the passage of I-137. The Company is challenging I-137 in State and Federal Courts. "I-137 costs the State up to $150 million dollars per year in wages, taxes, goods and services that would have been paid or purchased by an otherwise healthy gold mining industry. That kind of loss is tragic in a State that remains at or near the bottom rank in per capita income and is now struggling to close budget deficits forecast up to $200 million per year," said De Voto.
Initiative I-137 was passed in 1998 by a 52 to 48 percent margin in an unfair election that was marred by the inability of mining companies and other for-profit entities and associations with for-profit members, such as the Montana Mining Association and Chamber of Commerce, to correct misinformation and tell their side due to a previously passed initiative, I-125, which was declared unconstitutional with only 10 days remaining in the campaign.
An effort to place the issue back on the ballot in 2004 through a legislative referendum, sponsored by Senator Debbie Shea (D) and supported by a broad coalition of labor and industry, was under consideration by the Montana Legislature until the effort was halted by Senator Shea in mid-March. Rather than proceeding with a referendum placed on the ballot by the Legislature, Senator Shea announced that the coalition would place an I-137 repeal initiative on the 2004 ballot through traditional means by signature gathering, a method more trusted by Montanans. At a press conference following her announcement, Shea and a host of other legislators and industry supporters stressed the importance of the mining industry to the State and vowed to bring the issue to the people in a free and fair campaign.
"Canyon is excited by the very real prospect of overturning I-137 at the ballot in November 2004 as these poll results clearly indicate," said De Voto. "We are looking forward to participating in a vigorous campaign along with others who have lost so much and have so much to gain by repealing this ill- advised initiative."
Actual results may differ materially from any forward-looking statement whether expressed or implied in this news release. The following risks and uncertainties which could cause actual results to vary include, but are not limited to: speculative nature of mineral exploration, precious metals prices, production and reserve estimates, production costs, cash flows, environmental and governmental regulations, availability of financing, judicial proceedings and force majeure events. Most of these factors are beyond the Company's ability to control or predict.
Gizmo
Is there any change on your on your short term outlook for a gold run to 360 and NEM 29-30? I, believing the correction in gold stocks was overdone am underwater a few percent on GLG, GFI, NEM, DROOY. Above water HMY.
Gizmo
Not interested.
Gizmo
If we get the breakdown we're certainly building alot of future resitance here.
Gizmo
It's gonna be a helluva weekend for bull-bear debates.
Gizmo
Perhaps the ones who got ran will be fuel for the fire if we get another leg down?
Gizmo
Your turnips are quite bright and I agree with your prognosis. I re-entered my leveraged short fund. "May the force be with us." <G>
Gizmo
The action of late looks to me like "running the shorts". If we get a rat-tail close I'm back in RYVNX.
Gizmo
"rh, if you're not sure what's going to happen, the best trade you could make is not make any." (ajtj99)
Is anyone ever sure?... Traders who were sure are probably broke now. Sorry AJ, but.........?
Gizmo
Seems to me the Friday ramp was so sudden and so late that potential sellers did not have time to decide. After a long weekend I would guess there are many stops set just under the market and a bit of down... and we have a waterfall.
Gizmo
Delete...was too political.
Thanks for the definitive post. I also appreciated this one. http://www.investorshub.com/boards/read_msg.asp?message_id=753274
Gizmo
IMO over valuation is the cause and under valuation the cure.
Gizmo
Outrageous Bid.