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Do Your Part to Help End the Current Bull Market. Become a Bull!

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August 08, 2009 – Comments (45)

Did you read that right? Did I write that right? How does that make any kind of sense? Well it does (in a weird, binv-sense way) make sense, which I will expound upon in a moment. This post will delve into a bit of FA, some sentiment indicators, and TA of several key markets. Not the micro TA, but big picture kind of stuff.

INTRO

I wanted to take a step back and look at the big picture. Take a breath. Stand up and take a look around. This will be a departure from the minute charts and micro counts of my recent series of posts. I will return to those soon, but I just wanted to share some observations this weekend regarding the “bigger picture”.

So let me first say that I am not a bear because I want to be, I am a bear because I think that is the long term direction that the market is headed. I believe we are in a secular bear market. I tend to look at “green shoots” and other positive economic developments skeptically, and not take the positive spin that usually accompanies it. This isn’t to say that there aren’t some genuine positive developments out there economically speaking. There are. It’s just that, on net, the negative developments are bigger and there are more of them.

Fundamentals and Technicals can diverge, and sometimes they can diverge in a big way. But they can’t very diverge for very long (relatively speaking). Nothing goes up and down in a straight line. And even in a really bad bear market, we will have bullish corrections. In fact, we can a very strong bullish correction that will seem like we are in a new bull market. Maybe your “investing” timeframe is only a couple of months at a time. In this case the term secular has little to no meaning for you.

But many at this site are the traditional “investor” types. LTBH, multiple decade investing horizon, buy it and forget it, etc. And so what this post is really aimed at is those who think or are beginning to think that we are in a new “secular bull market”. We are in a bull market right now. Just one that will end in the next couple of months. I will explain in a minute.

FUNDAMENTALS

Why we are in a long term “secular” bear market.
I have discussed this in many places and have remarked on this in many blog posts. I will refer you to this post for the majority / fleshing out of my argument Still Bearish: FA and TA on S&P500, Observations on the Economy May 10, 09 - LINK.

But let me summarize briefly here:

- Consumer spending makes up 70% of GDP
- Consumer is getting squeezed
- Consumer is spending less
- Consumer, despite spending less, are still losing their jobs
- Unemployment is rising (despite pauses / minor corrections in the rate)
- Consumer are therefore defaulting on mortgages
- Much mortgage debt has been “monetized” by the Fed via the bailout / takeover of Fannie and Freddie
- However a brand spanking new wave of mortgage defaults are occurring – Option ARM resets
- There is still so much bad debt hanging over the economy and much of it will be either defaulted upon or monetized (and despite what the Fed or Keynesians tell you, is not a significantly “better” option)
- Monetization has been an overused band-aid, and is now saturated with the dripping puss from the economy (sorry to be so graphic). The is done to avoid short term pain, but is destroying the value of the US Dollar
- A currency crisis in the Dollar is almost inevitable at this point
- Look at the Treasury market for a clue. During the deleveraging crisis in 2007-2008, safety was sought in Treasuries, now at bubble proportions. Since the subsequent Quantitative Easing (fancy / almost misleading term for monetization) and the value of the Dollar has been further depreciated, will Treasuries continue to be the save haven during the next crisis?
- Going back the consumer for a minute: consumers spend less which hurt business, but also the government
- Tax Revenues are Down
- Municipalities and States are insolvent and on the verge of bankruptcy
- What will happen: Denial of Services (social unrest) or will they get bailed out by the Fed and Treasury (further monetization of debt)
- GDP: The biggest growth sector is … the government
- The government does not have a wealth, all it has are claims on future tax revenue of US citizens and debt that it can sell to foreign governments (more in a minute)
- So when the government grows it is not growing the GDP truly. Any effect is temporary because it is paying for it through deficit spending or dollar devaluation (or both)
- Which mean in real terms (in devalued / inflation-adjusted dollars) GDP is severely contracting.
- China is not growing as strongly or as sustainably as many suggest: Steve Saville: Getting Some Things Straight Regarding China
- If China continues of the path of holding the yuan fixed relative to the dollar, it will have it is own inflation nightmare to begin with (read article above for explanation)
- China will likely need to stop purchasing new US Treasury debt at the levels they used to (it is unclear what they will do with their current US holdings, but they have already begun rotating into commodities)
- This means the Fed will have to continue to step up buying US Treasury debt (to keep interest rates low so that we can “borrow our way out of this mess”).
- This  further debt monetization further undermines the dollar, and furthers the likelihood of a currency crisis in the dollar.
- Businesses are by and large NOT doing well
- The past 2 quarters have seen earning growth relative to the previous quarter.
- Revenues for leading companies have grown slightly (relative to previous quarter), but across the board, they are mostly flat or down
- Compared to a year ago, earnings and revenues are in the toilet.

I could go on and on. But you get the picture. The outlook for any “true” GDP growth (that is growth that is not driven by government spending) is bleak due to all the points made above.
The problem, as you have surmised, is debt. There is simply too much of it. At the core, this is the issue that must be dealt with.

And there are 2 main options: default or monetization. Based on the track record, what do you think will happen? However, either way we have a currency crisis. And either way, this spells bad news for both the US Dollar and Equities



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THE GREAT DELEVERAGING EVENT OF 2008, AND WHY NEARLY ALL THE GLOBAL EQUITY MARKETS HAVE BEEN POSITIVELY CORRELATED RECENTLY

Money moved out of equities and commodities in a big way and into Treasuries, which de facto means into the US Dollar. The US Dollar did not gain the last 8 months because it was strong. On the contrary, due to all of the points made above, it has become substantially weaker.

But like I said at the beginning of the post, even within a long term secular bear market (which the Dollar is in), there will be bullish corrections – Thoughts on the US Dollar, Analysis of the USDX Long Term, Follow up on the Gold Blog Jun 17, 09 - LINK. Please read this for more thoughts on the US Dollar (I think it is worth your time if you have not already done so).

So all of this money sloshed around the system and into Treasuries. And via Sovereign Wealth Funds and other institutions, they stepped in during historically oversold conditions and went long. In nearly all of the markets. It is really uncanny (well not really, once you think about how the money is moving around). We did rally because we found a bottom, or because the economy is improving, or because the market was “priced for Armageddon” (a phrase that I love, but is ultimately incorrect). It was due for a technical bounce, pure and simple. Nothing goes up or down in a straight line and all rallies or declines must have corrections. We have no bottom, no new secular bull market. We have a cyclical bull market correction in a secular bear market. The fundamentals and the technicals diverged because a correction was needed.

So before I get into some charts, let me talk about a term that I have mentioned before: Primary Wave 2. This is an Elliot Wave Concept. In any 5-wave sequence there are 3 waves that act in the direction of the trend (1, 3, 5) and two countertrend waves (2 and 4). I believe we are in a Cycle Wave pointed down (the secular bear market I keep referring to). Based on the Fundamentals, and the fact that all of the government actions have not fixed anything, and have in fact guaranteed that the long term consequences would be worse, I still stand by my opinion that we are in a secular bear market. This large Cycle Wave is a 5 wave sequence. Primary Wave 1 (the subwaves of a Cycle-degree wave are Primary-degree Waves) lasted from Nov 2007 to March 2009 (in most indices, the timing is off a little in some of the sectors). The current “bull market rally” is simply Primary Wave 2, which is counter to the prevailing trend of the current Cycle Wave.

.... continued in the Comments section ....

45 Comments – Post Your Own

#1) On August 08, 2009 at 8:53 PM, binve (< 20) wrote:



This is why I say we are not in a new secular bull market. The fundamentals do not support it. And the Wave structure does not either.

There are some characteristics that Elliott (and then Frost and Prechter later) put forth that would describe some of the technical, fundamental and sentiment aspects of Wave 2. Here are some of those (modified to be bullish, as this Wave 2 is bullish):

From EWP: “Second Waves often retrace so much of Wave one that most of the losses endured are gained back by the time it ends. At this point investors are thoroughly convinced that the bull market is here to stay. Second waves typically end on very low volume and volatility.”

Additionally, bullishness sentiment returns, and is often as high as it was at the peak, despite the technical long term damage that was done by Wave 1.
As you look through the charts below, and especially the long term chart, keep these concepts in mind

The charts

A few things to notice on the charts below (in the context of deleveraging as indicated above): look at the synchronicity of the move down in the indices across the globe, as well as the bottoming and the bounce back up. In particular, look at the “shape” of how the markets have bounced back up. (For those of you who know a bit about TA, a rising wedge should give you a very clear signal). Additionally, look at how these indices appear to be drawn to particular Fibonacci retrace levels. But most importantly, notice how the trend lines converge and notice how they all seem to converge around the same time …. September to October of this year.



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So, this should open your eyes to how connected these markets are right now (AND THEY SHOULD *NOT* BE), and how the global money moves are effecting these markets simultaneously. I also have two more shorter term charts. These help to illustrate that even though the rallies have taken different shapes since the bottom, they still point to the same conclusion



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SENTIMENT

Getting back to the sentiment concept of Primary Wave 2. Since P2 is just a bullish correction in a secular bear market, it makes it the ultimate bull trap (in a long term / secular sense).
The “illusion” of a new secular bull market will be extreme. Bulls will come out of the woodwork. Bears / shorts will be squeezed. There will upside capitulation.

Even in the CIL, I am hearing statements from long time bears that the current price levels are “the last chance for the bears”. These types of statements are *extremely* characteristic of a Wave 2.

Nearly everybody will doubt the possibility of more downside, that a new bull market is here to stay.
 
I have been looking at bullish sentiment indicators via Barrons, WSJ, etc. Bullishness is rising, but it is not manic yet. I think about 1-2 more months should do it based on the current trends. And again, that fits with timeline for the wedges that you see on all of the charts above.

Here are the CPC and the Bullish Percentage for SPX charts. Read the notes of the charts



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TYING THE POST BACK INTO THE TITLE

So, the theme from the sentiment section is that everybody gets squeezed. Bears will be crying uncle. The bulls will be parading out “green shoots” and “signs of an economic recovery”. Many bears will doubt their positions and capitulate upwards.

I firmly believe this is *not* a new secular bull market. I don’t believe it fundamentally and I don’t believe it from a long term wave count perspective either. In fact I believe this bull market move since March will be over in October based on all the charts above.

But I think we get one more fairly big rally out of it in September.

So if you are bearish, for a trade, why not capitulate to the upside for the blow off top for P2 ? Once everybody turns bullish, then we can end this correction and get back to economic reality.

**LET ME BE VERY CLEAR** I am not bearish for the sake of being bearish. I am bearish because of the long term technicals, wave counts and fundamentals. I do not want people to lose money who are long. On the contrary, I hope this post is read by LTBH-types, who have recently become un-scared enough to jump back into the market from the long side. DO NOT BUY IT AND FORGET IT WITH THIS RALLY. IT IS A BULL TRAP !!.

There is still upside to be had, but I think the very long term risk / reward is not upside from here. I think it is down …  a lot.



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But if you have to be long (and I am) from an investment standpoint, I would highly suggest gold and commodities.  These are investments for me. I will hold them for years if not decades, as the US economy takes its next nose dive. I don’t do it because I want the economy to tank, I invest in hard assets / real assets because I have seen no compelling argument that it will not tank over the long term. Please read this for more of my thoughts on gold: Market Thoughts and Analysis: The Gold Blog. Gold/Silver/GSMs (and a little Oil for good measure) Jun 15, 09 - LINK

Please feel free to comment, disagree, discuss. And even if you don’t agree with my conclusions, please rec if you appreciate the effort or the explanation of my thoughts, even if you use them draw different conclusions than mine.

The binv standard disclaimer: This in no way constitutes investing advice. All of these opinions are my own and I am simply sharing them. I am not trying to convince anybody to do anything with their money. I am simply offering up ideas for the sake of discussion. As always, everybody is expected to do their own due diligence and to ulimately be comfortable with their own investing decisions.

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#2) On August 08, 2009 at 10:32 PM, outoffocus (23.22) wrote:

Good post as always Binve. I almost tried to rec it twice. I rec'd it based on the title alone. I'm not an expert on TA but I do know WB. Warren Buffet that is. And he says be fearful when others are greedy and greedy when others are fearful.  Theres alot of greed going around and I'm gettng pretty fearful.

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#3) On August 09, 2009 at 2:29 AM, BigFatBEAR (29.29) wrote:

Epic post, per usual! Two recs from my 2 acounts.

...ERM, I mean, I only wish I was able to double rec this.  :P

I'm buying into it, but very slowly and consciously, and am DCA-ing, not buying all at once. I'm still short with some puts and SDS, and will get VERY short around 1050-1100.

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#4) On August 09, 2009 at 3:23 AM, awallejr (81.59) wrote:

Glad you are at least in gold and oil long term Binve.  I am not sold on the "bull trap" argument.  I think the market is where it really should be and that March was the overshoot down.  Now we will probably overshoot up.

There are a couple things that I think worth considering.  The bulk of the Federal stimulus hasn't really been spent yet. This rally may very well be a somewhat typical cyclical upswing. And if so, that added stim ulus can really push things up.

Much ado over the last earnings report about how profits were more a result of cuts than earnings growth.  But that is EXACTLY what happens in a recession.  Now should the economy move positive those cuts plus potential increased revenues means greater profits down the road.  I honestly think the market is predicting exactly that. 

Yes you are right about unemployment and excessive debt as being concerns.  However, and I know people hate this term, but unemployment simply lags.  Companies cut, they layoff people, they start to recover, they expand and then start to rehire.  2010 is going to be a pivotal year, either we tank or we recover from a normal recessionary pattern.

Debt is going to be a problem and it will take years to resolve. 

October is going to be an oh so interesting month.  I could see a decline on the one hand or I can see a massive wave up.

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#5) On August 09, 2009 at 10:43 AM, IIcx (< 20) wrote:

On July 29 and 31st I entered underperform on a basket of stocks I found listed at 52 week highs. About 2/3rds of the picks underperformed last week - some by 20% or more.

I've retired a majority of them - working on improving my accuracy score and retired some that gained only because of the S&P rise. Feels like cheating but I guess it's part of the Caps game.

Any way, I think we are already seeing a pull back in overpriced stocks and stocks that are missing their numbers. It looks like market behavior is returning to some kind of normal but is still very edgy (looking for a pull-back).

The markets need to pullback (why?) but they may be doing this on a stock by stock basis. This trend will cause the markets to trend higher until either a significant basket of major stocks move lower or an event occurs. Even with bad news, panic isn't likely to return to the markets.  

Just my 2 cents for what its worth. 

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#6) On August 09, 2009 at 10:53 AM, IIcx (< 20) wrote:

I just looked over the stock gains and losses from my #5 post and should amend my comment to "some have pulled back more then 10%". Most of them are a 5-10% decline but many continue to rise in value.

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#7) On August 09, 2009 at 11:07 AM, portefeuille (99.60) wrote:

combination of your chart and an update of the chart I posted in comment #36 here.

 



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#8) On August 09, 2009 at 11:31 AM, IIcx (< 20) wrote:

#7 -- 950 target does seem reasonable and I agree with the trend - we've also heard a lot of news about what could happen in November if earns aren't good so the drop could also occur.

SPX_080909

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#9) On August 09, 2009 at 11:37 AM, portefeuille (99.60) wrote:



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#10) On August 09, 2009 at 11:39 AM, TigerPack1 (96.74) wrote:

portefeuille & binve -

Responding to comment #7, this chart for the next few 6 months fits closer to what I am thinking. 

I am preparing for a decent 5%-10% drop in the market into early October from present levels, FOLLOWED BY A MOVE TO NEW HIGHS ABOVE 1100 IN THE S&P 500 INTO ROUGHLY THE MARCH-MAY 2010 SPAN. 

However, the context of the 2009 situation versus the 1987 situation, which I invested through, are completely different.  1987's crash occurred after a relatively strong period from 1982 with only a few minor 10%-12% corrections.  Bullishness and confidence in the stock market and economy during August & September 1987 was the highest in at least 20 years, and would only be surpassed in the late-1990s Tech Boom.  2009's chart is happening after the worst 2-year price decline and panic in confidence in modern history in all stock market's of the world.  WE ARE NOT GOING TO RETEST THE 700 S&P 500 LEVEL EVER AGAIN, IN MY OPINION.  Look at charts from the 1975-1982 stagflation period to get a good feel for what we are facing the next 3-5 years.

Interest rates have likely reached an historic low, and will zig-zag higher for many years.  Spending/confidence plus inflation and business earnings are starting to rebound.  In the end, investors will have to worry about whether stock returns will keep up with increases in the cost of living and decide for themselves if real estate investments make MORE SENSE (cents) to own.

Cash and bonds should be avoided at all costs right now.  I would rank real estate as the #1 place for investment capital today, after the 50% jump in stock quotes, as forward thinkers prepare for the onslaught of inflation with the global increase in the basic money/credit base.  Stock investors should focus on REITs and businesses that increase/offset rising production costs easily.

-Tiger's Two Cents

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#11) On August 09, 2009 at 11:42 AM, portefeuille (99.60) wrote:

in anticipation of comment #10 I removed that 1987 thing in comment #9, hehe ...

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#12) On August 09, 2009 at 11:46 AM, portefeuille (99.60) wrote:

That non-wiggly green line shows the unspectacular option that the rally simply tapers off. No major turns, just boring business as usual.

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#13) On August 09, 2009 at 11:50 AM, portefeuille (99.60) wrote:

So that lower grey line would simply need to be readjusted every few weeks. As I said, an utterly unspectacular option.

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#14) On August 09, 2009 at 11:50 AM, binve (< 20) wrote:

outoffocus, Hey, Thanks! I really appreciate that!!. Yep, I will agree with that stance totally. People were too fearful in March, so we needed a bounce. And people are greedy now, but I think they will be positively gluttonous in about 2 months. And I think we are ripe for a turning point about that time (Sept/Oct)

BigFatBEAR, Hey BFB! Thanks man :) and LOL!

Yeah, I think we are going to get a pullback here to 950 territory over the next 3 weeks or so. And then we get another rally from 950 to 1050-1100 in late Aug - Sept/Oct. I bet it will accelerate. I bet we will get a lot of short covering at 1020. And it will look like a very bullish move, but I think it will amount to capitulation / blow-off.

Like you I have been trying to navigate this mess. And as we approach the apex of this wedge, never once having a decent pullback since March (the pullback from 956 to 869 was a very minor correction in retrospect), and I find the fundamentals to be worse, not better, than when I put my mammoth posts together in May, I get even more bearish.

I will probably be long in Sept for a realtively short term trade, but beyond that, I will probably start going to the mindset of a LTSH (long term short and hold) :). Thanks man!

awallejr, Hey man, thanks for the thoughts :) Yeah, I have been long gold and oil for a couple of years now (adding during the commoditiy correction). I have commuicated this before, but it never hurts to re-iterate fundamental stances occassionally :)

I did realize that we still see the economy differently. I really do appreciate your thoughts and can see where you are coming from! But I have some different takes. Let me just jot down a few thoughts:

Re: Federal Stimulus

The is more of the band-aid mentality that I have been talking about. Like I was saying above, the government has no wealth of its own. So any Federal Stimulus is by defintion temporary with very long term negative consequences. I am highly dubious of the claims that the deficit spending on stimulus is actually doing what it intends to do (in terms of taking the long term hit to generate new economic activity). I could be proven very wrong in the future, but that is just how I lean now

Re: Earnings and Revenue

I think we simply have to agree to disagree here.

Re: Unemployment

I hear what you are saying about it being a lagging indicator, and that is the conventional wisdom. I don't know that I agree that it is the correct wisdom. I will offer to posts (one from bigcat1969 and the other from SolarisKing) as counterpoints.

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=240049

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=240124

Re: GDP (something we have talked about before)

Government is one of the few (and by far the biggest) portion of GDP growth. And that is far from bullish. Mark910 has 2 great posts that talk about this.

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=238047

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=238672

But yea, the biggest problem is debt. And I see no solutions. Just band-aids and a lot of pushing this problem off to the right in terms of schedule.

Thanks for the thoughts!

IIcx, Hey man! I agree that we need a pullback and will get a pullback. As I have been talking about in my Market Thoughts series and in the charts above, I think we will get a Wave B pullback to 950 over the next 3 weeks, and then a move to 1050-1100 from late Aug - Sept/Oct.

As for the panic phase, I agree not yet.

Even after Primary Wave 2 ends, we will get into Primary 3 down (the big mama). But even that have must have a 1-2 in it. And since it is a Wave 3, it will likely be extended, so another 1-2 is in order

So starting in Oct, I think we will get a 1-2, 1-2 down over the next 6-9 months. So what this will look like is just some corrective market action probably down to the 850-900 level. I will look like a routine pullback, but in reality it will be setting up for the next big phase down.

So I agree, no panic for awhile. The turmoil will be bubbling beneath the surface for a bit.

Thanks!.

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#15) On August 09, 2009 at 11:55 AM, binve (< 20) wrote:

portefeuille, Comments 7, 9, 11-13. Thanks for the differnt view man! I really like your fusion thoughts, and they always give an interesting take!

But read my response above to IIcx regarding what I think will happen after Oct. I don't think the market drops immediately like it did in 2008. We will have some corrective churning for the 6-9 months. But I don't think any of those corrections will make a new high. 

In this case, the rally will still look more or less like your curve fit analysis and historical comparison above. Thanks!..

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#16) On August 09, 2009 at 12:08 PM, binve (< 20) wrote:

TigerPack, Thanks for the thoughts! I really appreciate them!!

I really do appreciate and acknowledge the fact that you have lived through and invested through these time, and I definitely respect your opinion because of it.

I too am a big fan of hard assets / commodites (gold and oil in particualr).

I hear what you are saying about Real Estate, but for private RE there is still a lot of inventory and the next wave of Option ARM resets will affect the buyers for many years. And for commercial RE, it is such a mixed bag. I have recently live in AZ, CA and northern VA. AZ (phoenix area) has so much inventory, and *lots* of brand new office buildings that have *never* been poplulated, just sitting there. CA (Mountain View / Palo Alto) is mixed. Heading back toward San Jose, things are bleaker. There are lots of empty buildings and it seemed like the problem was still getting worse. Northern VA / Washington DC (Sterling, Arlington, Southern Maryland, etc) is still growning a lot from government spending. Government contract firms (SAIC, Northrop-Grumman, Lockheed, etc.) all have growing presences there. But there are places like Herndon that have lots of empty buildings around. When you look at the pockets, even in that "healthy" maket there are still some big signs of weakness.

But I really do like your aggressiveness!

Thank you for your thoughts, they are always welcome!..

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#17) On August 09, 2009 at 12:52 PM, IIcx (< 20) wrote:

Related to #7: thanks for the great response binve -- we hugged the MA (200) for about 45 days before the climb to 1018. A drop to retest the MA (50) also logically supports the Wave B pull-back depth.

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#18) On August 09, 2009 at 1:51 PM, GeneralDemon (< 20) wrote:

Binve, you and I have come to similar conclusions regarding oil and gold. Where you need to convince me is how a currency erosion (extended pressure on the dollar) will lead to lower equity prices.

Shouldn't the opposite be true? The way I see it is this:

RE becomes a sitting duck for the tax man (nowhere to hide).

Cash is eaten away by inflation.

Fixed income produces gains that are taxed annually at an escalating rate.

Equities rise due to the fact that gains can be had without taxation due to the nature of the tax code (gains taxed only when sold).

So, in my view it will come down to a war against inflation and taxation, with equities rising to occupy the throne of "least bad option".

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#19) On August 09, 2009 at 4:12 PM, binve (< 20) wrote:

IIcx, Thanks! Yes, that is another reason why I find 950 a compelling pullback location.

GeneralDemon, Thanks for the comment. Here is my little speil on why I think US equity prices will still drop despite the inflationary environment

- If I thought the outcome was truly deflationary, I would be making a call for the S&P to drop to 133 (during 1929, after the initial 50% drop, the stock market dropped another 80%! over the next few years). 20% of 666 = 133. And no I do not think that is realistic given governement policies. I think something like ~400 on the S&P (~4000 on the Dow) is more realisitic
- But what the big drop in the middle of inflation?
- Because earnings still stink!
- Inflation is not enough to keep prices high (I think all the inflated money will find itself in real assets, not the stock market), however, I think inflation will keep prices in the stock market from dropping as low as they otherwise would
- Inflation will also help earnings from dropping in prices terms as low as they would go (in real terms they will be much lower)
- I have said before, that the market needs to make a bottom in terms of valuation before it can go up again, and historically that is when PE is 6-10.
- Just for kicks, lets use PE = 8 as the bottom.
- Earnings (GAAP) from good analysts (such as Mauldin) are around $40. And for the sake of argument, lets say they stay the same for the next few years (I see a much stronger argument that they will actually shrink, I see no compelling argument that they will grow). But lets say inflation keeps them about $40.
- PE of 8 * $40 earnings = $320 Price of S&P at the bottom
- This is where I get my ~400 estimate for the S&P.
- I think we will have inflation big time, but I think the market fundamentals are so bad that they will fall regardless of inflation
- Indicidentally, my gold argument still stands. Dow at the bottom of ~$4000 (not as bad as an equivalent Great Depression move) still puts Gold at $4000 eventually if you believe like I do that the Dow-Gold ratio will bottom at 1 (or even less).

So that's my story, and I'm sticking to it :).

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#20) On August 09, 2009 at 5:18 PM, awallejr (81.59) wrote:

Binve nothing wrong with sticking to your story as long as you are willing to change positions if your "thesis" doesn't look like it will pan out.  The problem with using pure mathematical analysis comparing 1929 to today is it is literally comparing apples to oranges.  The US (and Global) economic, environmental, political and social systems are drastically different.

Man if the S&P would hit 133  I could own major companies for pocket change.  To get to that price valuation you would need a total collapse of the US and world economies, since we are all linked.  And I pray that doesn't happen because way too many people would get hurt hard.

One day we could see gold at $4000/oz., but then I would expect to see the DOW at 40,000.  I would also take a look at Value Line PE analysis since it covers more stocks and seems to be less controversial in its calculations.

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#21) On August 09, 2009 at 5:20 PM, awallejr (81.59) wrote:

P.S, Value Line had its March bottom PE at 10, so that does cover your bottom range of 6-10.

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#22) On August 09, 2009 at 8:51 PM, alexxlea (60.30) wrote:

Why are past rallies and declines cited at all, when the trading environment is not comparable in any way, shape, or form whatsoever? The mere ways that trades take place are not the same, cash flows are not the same, traders are not the same, so I don't get why people can say things like (well in so and so timeframe such and such never happened so...).

Just putting it out there. I'm skeptical as to how the entire system operates at this rate. I have a very small amount of capital to move and I have no doubt if some dude is out there churning hundreds of mil a day it affects what I trade. 

Take care everyone and awesome charts, thanks for putting it out here for us to all see! 

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#23) On August 09, 2009 at 9:45 PM, rexlove (99.46) wrote:

Binve,

 Since I believe the market is forward thinking - could it be the market has factored in all the bad news already? The market fore-saw high-unemployment, inflation, high rates of foreclosure etc. and that is the reason we reached the market low of 666? Most analysts are predicting higher earnings for next year and that is what is driving the markets higher.

 

Should be interesting how this all plays out....

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#24) On August 09, 2009 at 10:37 PM, Tastylunch (29.41) wrote:

Hey binve  

Fundamentally I'm with you

The following as usual is where you and I diverge

- A currency crisis in the Dollar is almost inevitable at this point

Is it really? As Portefuille likes to point we often tend to get so Amero-cetric that we forget about foreign investors and what may look attractive to them.

What if foreign currenices become so bad in places that actually expereincing large inflation/weak currency now that it leads to a huge bubble in the dollars? What if the Chinese inflate their M2 so much that theChinese money pours into the dollar assets?

But what I  really can't reconcile with your point of view is how we can be in a great deleveraging event and have a weak dollar simultaneously?

I agree with your charts but when I look at the Saville article (which was great btw), your very reasonable estimate of stocks going down forward, tremendous slack in industial demand for commodities and the aforementioned deleveraging,  I see strength flowing into the dollar.

I also think 12 months oil & nat gas will drop tremendously and I think that will propel stocks higher into the Time Frame TigerPack suggests (especially if it happens simultaneosuly to when inventories get built back up to the "new normal", unlike now they are now admittedly extremely light)We both know this isn't like 2006-7 when demand far outstripped supplyin Oil. The Chinese can't stockpile forever and storage is about maxxed out.

I really don't think we know the outcome for sure yet Re: the dollar but for now All I can see is strength relative to other currencies

I'm not sure of course but that's how I see it.

 

 

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#25) On August 09, 2009 at 11:07 PM, CrackerHockey (< 20) wrote:

With regard to the dollar and the lack of takers for new credit, see Karl Denninger's recent comments on the fundamentals:

http://market-ticker.denninger.net/archives/1313-Economic-Bottom-Calls-Willful-Ignorance.html

 

...and also the Fed Reserve's response to no new takers of credit (i.e. there is no longer any way to expand the "monetary base" except perhaps if Ben get's his helicopter out!!):

http://market-ticker.denninger.net/archives/1304-BLATANT-Monetization-Uncovered.html

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#26) On August 10, 2009 at 12:26 PM, binve (< 20) wrote:

awallejr,

Binve nothing wrong with sticking to your story as long as you are willing to change positions if your "thesis" doesn't look like it will pan out.

No need to chide, we are all older than 10 here :) And I believe I have demonstrated my ability to admit when I am wrong on several occassions. I am not interested in defending my ego or my incorrect positions. I simply share my thoughts on the data that I see and interpret. That's all.

The problem with using pure mathematical analysis comparing 1929 to today is it is literally comparing apples to oranges.  The US (and Global) economic, environmental, political and social systems are drastically different.

..... uhhhhh.... That is why I didn't.

I completely acknowledge that things are different this time around, which is why I wrote: Inflation is not enough to keep prices high (I think all the inflated money will find itself in real assets, not the stock market), however, I think inflation will keep prices in the stock market from dropping as low as they otherwise would. It should also be abundantly obvious from the meat of the post, how much I am delving into the fundamental issues. You may not agree with my analysis, that's fine. But I think you have a poor case if you are arguing that all I am doing is a purely mathematical analysis.

P.S, Value Line had its March bottom PE at 10, so that does cover your bottom range of 6-10.

... LOL!! .... okay.

I know that we don't agree on some of these issues. And again that is fine. But we always manage to maintain a good atmosphere of discussion. I would very much like to keep that. Thank you for your comment.

alexxlea, Thanks for the comment.

Why are past rallies and declines cited at all, when the trading environment is not comparable in any way, shape, or form whatsoever?

Because that is not a stricly true statment. Many people (including me), compare rallies and corrections against previous precedents. Not only the technicals, but the fundamentals as well. The current decline, *and the causes for this decline* have quite a bit in common with the decline in 1929-1933. Granted, there are some *major* differences too. Which is why you can't do a one-to-one analysis. But simply saying things are too different for any kind of comparison is not accurate (IMO).

But I do hear what you are saying and you make some very valid points. Thanks!

rexlove, Hey, thanks for the comment!

Since I believe the market is forward thinking - could it be the market has factored in all the bad news already?

I know this is controversial, but I really do not buy "the market prices things in" philosophy. If it did, how could we have a broad market PE of 47 at the height of the biggest debt bubble in history.

I think the market listens to too much "news" (CNBC, etc.) and the media is always a step behind.

So maybe the market prices things ahead 6 months, but since the news is a lagging indicator (and almost always reactionary, attributing the incorrect causes to the observed effects), maybe the market is "right on time" but only with the obvious "media-spun" or "government-spun" news.

I really don't mean to belittle your point. Far from it. I am just thinking through that argument and there are too many mammoth exceptions.

But I completely agree, this will be an interesting year coming up :) Thanks!

Tastylunch,

The following as usual is where you and I diverge - A currency crisis in the Dollar is almost inevitable at this point

LOL! I know man. I very much understand where you are coming from, but as usual I take the opposite side of the argument :)

I do think a currency crisis is in the cards.

Not only do we have all the problems that I list above in my bullet list, but I will expound on the 2 biggest:

1. GDP is fake. All consumer based GDP components are dropping drastically. All production based growth is anemic / slightly negative. And the biggest growth portion is the government.

We are defecit spending (and devaluating the dollar) on non-productive GDP growth just to make GDP look "not as bad as it really is".

2. Treasury auctions are so much worse that most people imagine. The Fed is now buying a *HUGE* portion (like 50%) of the latest treasury auctions.

They are hell-bent on keeping interest rates low at the direct expense to the value of the dollar.

And yes, while I realize that the US is not the only one doing this, no other central bank is even close to the magnitude that Fed is engaging in debt monetization.

But what I  really can't reconcile with your point of view is how we can be in a great deleveraging event and have a weak dollar simultaneously?

I think the "great deleveraging event" has had its major salvo. I think further deleveraging events will not be as impressive. That not to say that there isn't more debt out there to unwind. There is lots in fact. I just don't think we will have it all occur in a 3 month window like we did in 2008. 

Because what happened? Money rushed out of equites and commodites and right into US Treasuries.

Based on the fact that the Fed is now the biggest buyer of Treasury debt, do you think Treasuries will be the go-to safe haven during the next crisis?

I don't.

I think we will see (in the next 6-18 months) and inexorable ratcheting up of real assets. This is why I am not fundamentally opposed to TigerPacks position on RE. I just hate the risk right now.

Also all of your points regarding oil supply are also valid. Long term prices are going higher (at least I think so), but there are a lot more dynamics to this puzzle.

Which means for me, the best place to park money for the long haul is gold. 

Tasty, I do get what you are saying. And I do agree that there are many ways this could play out. But I have to call it the way I see it, and this is the way I see it. Could I be wrong? Absolutely! But I feel compelled to share what I think, even though it could be incorrect.

Thanks man!

CrackerHockey, Thanks for the comments and the links! I have actually read those already, but they speak directly to the Fed / Treasury / QE / monentization issues going on. Thanks!..

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#27) On August 10, 2009 at 1:52 PM, awallejr (81.59) wrote:

Oh I wasn't trying to chide, and sorry if it came across that way.  I enjoy reading your blogs.  You take a position;  you try to support it;  and you always respond to people replying in a nondenigrating fashion.  We just have different crystal balls heheh.  I am more concerned about repeating the Jimmy Carter years than anything (double digit unemployment, double digit inflation, and double digit interest rates).

There is merit in this comment of yours :

"1. GDP is fake. All consumer based GDP components are dropping drastically. All production based growth is anemic / slightly negative. And the biggest growth portion is the government."

 

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#28) On August 10, 2009 at 2:45 PM, Tastylunch (29.41) wrote:

binve

Agree with GDP, govt' is picking up the slack no real traction in the private sector.

I think the treasury argument you make makes a lot of sense, but I guess I see it more as an arms race. When our auctions start to fail what do you think the chinese etc are going to do?

I think they are going to try to outinflate us for as long as they can.They still haven't diversified enough away from us to safely decouple yet.

 Regardless it does make Gold look attractive either way.

Cool I found something new we can disagree on!

I think the "great deleveraging event" has had its major salvo. I think further deleveraging events will not be as impressive. That not to say that there isn't more debt out there to unwind. There is lots in fact. I just don't think we will have it all occur in a 3 month window like we did in 2008.


I dunno, I think it's likely to be as big just a lot slower would be my guess. Realistically many commodities are perhaps as much as 50% overvalued I can see that ending very badly and I don't think housing is done, last I looked CRE and jumbo mortgage defaults still haven't hit.

My guess is it will feel a lot different this time. I would think the amrket would take falling commodities as a  positive this time (as they normally do), So maybe not a freefall but a staggered slow 'plosion (commodities-then RE -then Stocks)

I guess it all depends on how you define "major salvo", I don't see cliffdiving again, but I do see a slide down a mountain of despair as  a very real possibility.

Then i think we're done and the dollar gets wracked (2012 ish Mayans say it's the end of the world!):)

we'll whose guesstimate is right, neither one is pleasant so hopefully we are both wrong.

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#29) On August 10, 2009 at 6:19 PM, IIcx (< 20) wrote:

#7: man, enough already :-\ - can you believe they squeezed another trading day into this triangle?

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#30) On August 10, 2009 at 9:46 PM, binve (< 20) wrote:

awallejr, Cool man. No offense meant so none taken :)

We just have different crystal balls heheh

Absolutely. Everybody has different perspectives. And no crystal ball is "crystal clear", so everybody's opinion is part of the overall larger truth! Thanks man :)

Tastylunch, Cool, I am glad we agree on these outcomes positively affecting gold :)

Cool I found something new we can disagree on!

Actually, I don't think we are in disagreement on this one. What I meant by that statement is that say there was so much money being deleveraged in 3 months, that the *rate* of deleveraging (or the speed of deleveraging if you will, was very high).

I think in the future there will be more dollars to be deleveraged than there was in 2008 (there is still so much bad debt and tied up investement capital), but I don't believe it will occur in the same compressed time frame. I think the "speed" of future deleveraging events will be slower.

This, I believe, goes along with this statement of yours.

I guess it all depends on how you define "major salvo", I don't see cliffdiving again, but I do see a slide down a mountain of despair as  a very real possibility.

And as for 2012 being the end of the world. LOL! You see they are already making end of the world movies for 2012, just like they did for 2000. I believe that 2012 might bring significant social, economic, and maybe even a conciousness change. But I most definitely will not be the end of the world. Perhaps, the end of the world as we know it ... :)

Thanks bud :)

IIcx, I know man. Craziness :)..

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#31) On August 10, 2009 at 10:17 PM, StopLaughing (< 20) wrote:

Our auctions can't fail as long as the fed monetizes. However, the more they monetize the weaker the $ gets and the higher oil and other imports go.

 

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#32) On August 10, 2009 at 10:34 PM, TigerPack1 (96.74) wrote:

Has anyone else done reserach or thought about the carry trade that is now available to banks to reflate the financial system?

With zero inflation today, and short-term rates to borrow from savers and the Fed at 0%, banks can purchase long-term Treasury bonds and safe corporate securities at risk-free, profit guaranteed spreads of 5%+, especially if mark to market accounting is not being enforced for future bond values.  Historically this is a very positive number for the banking system, loan growth generally, the future availability of credit, the economy in 12-18 months and the stock market RIGHT NOW.  One of the pickles we faced last year was the fact that there was almost no spread for the traditional carry trade.  Today's number is the best since the early 1990s, if not earlier.

For example, the 1930s Depression exerience saw almost no spread between these rates for many years, which really tied the hands of money-making authorities.  As a result, all deflation arguments are moot, at least in my mind for 2009-2010.  Plus, those looking for a huge retest/decline in the stock market are really not very good students of history or of unemotional logic.  The government and the banks can create credit and loan availability in practically any amount today, which was not possible in mid-2008.

The symptom of rising long-rates is actually a very good signal for the economy and credit creation, since the March lows, not the negative that nearly everyone will be crying about as an excuse to dump stocks during the coming mini-correction through early October.

An addtional note, when economic growth really kicks into gear in about 12-18 months, that's the point to get excited about inflation expectations and all the monetary inflation.  At that juncture I will be loading up on gold and silver assets.  Until then we could see a monster sell-off in the precious metals as the "fear" trade is blown out of the water.

My Dow to gold price ratio prediction is for a 2 to 1 or 3 to 1 reading in 5-7 years.  I project general rates of inflation will hike the price of gold considerably, as well as the dollar value of most operating businesses.  Dow Industrials of 10,000 to 15,000 and a gold priced in US Dollars of $3,000 to $6,000 an ounce is my guesstimate.  After we get back above 10,000+ on the Dow in early 2010, I would definitely lighten up on most regular stock positions and move toward commodity-type investments just before the economy picks up steam.  At least that's the plan in my head right now.  Interest rates across the yield curve will probably zig-zag higher for several years from the historic, early 2009 lows.

-Tiger's Two Cents

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#33) On August 11, 2009 at 2:11 AM, awallejr (81.59) wrote:

"With zero inflation today, and short-term rates to borrow from savers and the Fed at 0%, banks can purchase long-term Treasury bonds and safe corporate securities at risk-free, profit guaranteed spreads of 5%+, especially if mark to market accounting is not being enforced for future bond values."

Now you see why I like financials, especially C and BAC. 

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#34) On August 11, 2009 at 3:53 AM, uclayoda87 (29.36) wrote:

binve

Rec #50.

It is interesting that you view October to be a turning point for the market.  Besides being the historical month for market crashes, it will also be the time when the current Congress decides if it will send President Obama a Cap & Trade or Healthcare bill.  Purely coincidence, I’m sure.  Either of these two bills could be the spark which ignites a financial conflagration in the US.  The sense that I get from this discussion is not about making money, but preserving buying power in an uncertain time.

My plan for what it’s worth:

1.     Mining companies, which I view as banks with their commodity reserves in the ground.  USAGX plus the usual suspects (FCX, PCU, etc.)

2.     Canadian and other equity markets (Asia, Australia).  Many are also miners, energy stocks, commodity plays and some financial stocks.  I own TCK, PDS, CNQ, POT plus the mutual fund FICDX.

3.     Large dividend producing stocks via Vanguard Dividend Growth (VDIGX).  If these companies go under, there is probably not much hope for the rest of the US economy.  I just like the dividend yield, which is better than a money market account.

4.     Energy play, both large and small companies.  Mutual funds:  VGENX and FSENX.

5.     International REITS via mutual funds:  TAREX and CGMRX.

6.     Speculative bets on potential game changing companies:  AAPL, SQM, MON, FTEK.  TCK already qualified for this honor.  My speculative mutual fund:  VINEX.

7.     Buy GLD and CEF with current cash, looking for transient sell offs to pick up more shares.

I used the last two equity bubbles to eliminate all debt, including my mortgage.  I had parents who lived through the great depression and taught me to hate debt and live below my means.

If I was just starting out, I would probably be doing just the opposite and buy a home with the lowest fixed rate mortgage I could find and use a minimal down payment.  The rest of my money would be put into GLD and CEF.  I would then wait for inflation to raise the value of my home equity and gold holdings.  The risk of rising property taxes would limit the potential gains.

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#35) On August 11, 2009 at 9:35 AM, binve (< 20) wrote:

StopLaughing, Absolutely.

Our auctions can't fail as long as the fed monetizes. However, the more they monetize the weaker the $ gets and the higher oil and other imports go.

That is a true statement. And while this line is technically accurate: Our auctions can't fail as long as the fed monetizes.. It really shows what a sham this whole process becomes. And this is most likely going to end very badly of the US Dollar. Thanks for the comment!

TigerPack, As always, you perspective is very much appreciated!

Your carry trade observation is a very valid one.

But I have been thinking about this statement.

The symptom of rising long-rates is actually a very good signal for the economy and credit creation, since the March lows, not the negative that nearly everyone will be crying about as an excuse to dump stocks during the coming mini-correction through early October.

The problem is there are no clear signals, and the one the is being generated by the Fed is artificial. Long term rates are not being allowed to rise. The QE policies are keeping rates much lower than they would otherwise be. And maybe if the Fed was a small player, this would be easy to wave off. But it's not. The Fed has been buying 30-50% of the latest Treasury auctions!. The aggregate demand for US governement debt is so much lower than the bond market is telling us.

Where does that leave us long term? I have a bunch of ideas (such as the unwind of the carry trade, massive inflation, etc.) which I will not expound upon right now.

But short term, unless the Treasury market implodes, you are totally correct, this does nothing but help banks.

I am very please that we are looking at the long term picture very similarly. If we get a major pullback in gold, I will be a huge buyer, And a breakout above 1050, I will be a huge buyer. But since I already have a very large based position in gold established, I can afford to wait at these prices and simply buy dips.

Tiger: Did you ever read my gold blog post? I have a long term Dow-Gold chart in there. Your statement prompted me to think about that. I you have not read my gold post, I think you would really enjoy it. Yeah, I think the Dow-Gold could easily bottom at 3, I think 1 really won't be too unreasonable given current Fed policies toward the Dollar.

Thank you for taking the time to share your thoughts. They are always welcome!

awallejr, Point taken :)

uclayoda87, Thanks man!. Yeah, Oct/Nov have by far the highest odds of being crash months.

But I am just going by what the wedges on the charts (*all* the charts of major global indices) is telling me.

Man, your overall plan is extremely similar to my own! Thanks for sharing!!

And gold (in particular CEF) is my largest holding and is the basis for my long term investing thesis.

Thanks!.

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#36) On August 11, 2009 at 12:16 PM, TigerPack1 (96.74) wrote:

Yes, I read your expansive gold blog.

I think there are some good long-term ideas in it, but how many of the current gold investors will hold as the price plummets below $750US an ounce the next couple of months, and be willing to wait another 2-3 years just to get back to the present $950 quote?

The answer is - NOT THAT MANY.

When we get a sinus clearing debacle, that washes out the weak holders of gold, I will start buying again.  But the gold market moves slowly and can take years to do what you expect it to do.  I will be patient and play the downside for now.  A rising Dollar value (as witnessed by the insane 3% bullish futures trader sentiment last week, which is predicting a huge turn in the U.S. Dollar's fortunes [We are also in the sweet spot of the normal economic cycle when the Dollar typically rises in value, by the way.] in the near-term and the vast supplies of overloaded gold holdings by every freaked-out investor globally, should lead to a "gimme putt" 15%-20% decline in gold and silver.

Given a 15%-20% decline in metals pricing and a 5%-10% sell-off in the stock market generally the next 2-3 months, I estimate most gold mining equities will fall 35%-50% in price before year-end.  Why would I buy and hold through that?

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#37) On August 11, 2009 at 1:24 PM, portefeuille (99.60) wrote:

 

(from here)

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#38) On August 11, 2009 at 1:32 PM, portefeuille (99.60) wrote:

 

(also from there)

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#39) On August 11, 2009 at 1:34 PM, binve (< 20) wrote:

TigerPack, LOL! Thanks :)

I hear what you are saying. I think where we differ is that I think a currency crisis in the US Dollar is quite imminent. I am not saying it is a certainty or that it will happen in 6 months. I just think the Fed is playing an extremly dangerous game (via QE / debt monetization), and a lot bigger one than than the mainstream investment community realizes. 

So I hear what you are saying about $750 gold. And I agree that is a very possibile option. I just don't think it is the "most likely" option.

Given a 15%-20% decline in metals pricing and a 5%-10% sell-off in the stock market generally the next 2-3 months, I estimate most gold mining equities will fall 35%-50% in price before year-end.  Why would I buy and hold through that?

But if you are right, that is a very fair argument.

portefeuille.,

Thanks man. Yeah that very much goes with the thoughts in my latest post: http://marketthoughtsandanalysis.blogspot.com/2009/08/spx-rally-still-unconfirmed-dollar.html.

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#40) On August 11, 2009 at 3:01 PM, Tastylunch (29.41) wrote:

portefeuille

I saw that too. virtually nobody is bullish on the dollar. It would be rare for the crowd to be very right on a call.At the very least we could get a powerfulsnapback rally...

I'm tempted to go long hard UUP, I think I will in CAPS. short Oil looks very attractive here as well (and hopefully nat gas which I'd love to buy at 2 bucks since I think it will 6-8 when supply/demand should normalize in 2011 ish)

binve 

You got your own intewebs blog now? Cool! when were you going to tell people?.:)

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#41) On August 11, 2009 at 3:17 PM, binve (< 20) wrote:

Tastylunch, Hey man :) I wasn't keeping it a secret, but I did put it up recently (just a couple of days ago). I was going to put up a link in my next post here.

But please check it out!

http://marketthoughtsandanalysis.blogspot.com/

I was toying with "binve's Tin Foil Hat Zone" for a minute, but then decided to be more "professional" :)..

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#42) On August 12, 2009 at 11:30 PM, Momentum21 (80.66) wrote:

another rec for you binve, great stuff. I am in your camp but I am going to take a different twist to my short term strategy based on the dialogue...

- why short financials these days? been there, done that and it wasn't pretty.

- Gold is just to emotional to go long or short...stay out the way...

- the dollar trade might be the way to go right now. when I used to have trouble at red or black at roulette I switched to even or odd and found it refreshing! it is also more american than shorting or hording gold. : )

ALL IN on UUP and EUO!!!! 

I appreciate everyone's perspective

 

 

 

 

 

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#43) On August 13, 2009 at 12:05 AM, binve (< 20) wrote:

Momentum21 , Thanks! I really appreciate that!

And FWIW, I agree with you that the dollar has made a temporary bottom here. I wrote a blog post about it. There has been talk that the Dollar has made a "major" bottom. I think that is a terribly misleading qualifier. But I do think it made a bottom for a couple of months. Please check this post out, I think you would enjoy it..

.http://marketthoughtsandanalysis.blogspot.com/2009/08/usdx-count-update-and-thoughts.html

Thanks!

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#44) On August 13, 2009 at 9:06 AM, Londamania (63.81) wrote:

Hey Binve :)  I am jumping all in today and then I read your post lol.  We talked a few weeks ago about a pullback to S&P 950 and then a jump in - that ain't gonna happen IMO so getting in today.

As far as LTBH, I hope to be one but have learned the hard way that you can never not be watching :)  If we shoot up for a while and the winds turn I will turn with them.  If only it were so easy to know that in the moment :)

I still see an L.  I agree with lots of your posts but think instead of a drop we will just L.  Or in other words when we went down to the March Lows it was too far and we are more or less where we should be now.  I side with the posters who did the P/E analysis here (in early July I think it was) that show a market valuation of around 12 which is fine for me.  Disputing that just leads us right into the GAAP vs non-GAAP discussion which I continue to maintain is at the heart of most fo the disgreements here :)

Revenues on my companies are growing from last quarter and the companies have cut back costs so they can make a profit at that level.  Ride it up from here on a slow crawl back to normal.  :)

GE, INTC, BBL, HD, CTL, BBT all are bright to me.

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#45) On August 13, 2009 at 10:40 AM, binve (< 20) wrote:

Hey Londa :), You have more guts than me. Jumping in on the overbought rally could be high reward, but I also think it is high risk. I am saying no thanks without a pullback. I would prefer 38% (as measured from 869 on July 9), but heck, I would even settle of 24%. We haven't even come close since July 9.

I think with regards to this particular moment in this particular rally, fundamentals mean jack squat. Too much emotion. And I hate banking on emotion to give me higher gains. I am a vulture / bottom-feeder. I like pullbacks. Much safer :)

But very seriously, good luck in all your trades!!...

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