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portefeuille (99.56)

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January 01, 2010 – Comments (35)

no Lehman vacuum effect? maybe you are just looking at it in the wrong currency ...

S&P 500 index in EUR.



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THE “LEHMAN COLLAPSE VACUUM”

In 2008, after the Lehman collapse, the S&P 500 fell from 1250 to 900 in a mere four weeks. The S&P 500
has now moved into what Ian McAvity refers to as “The Lehman Collapse Vacuum.”

Thus today Leuthold, The Bullish Technician, sees no overhead resistance of significance before S&P
1200-1250….. My initial upside target zone over the next six months (possibly even by year end 2009). This assumes
the still cautious do capitulate and the dollar is not decimated prior to Q2 2010.

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(from here (pdf))

35 Comments – Post Your Own

#1) On January 01, 2010 at 5:35 PM, portefeuille (99.56) wrote:

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Steve Leuthold says "short term correction, 1100 for the S&P 500 before year end."

June 24, 2009 

Steve Leuthold, who has his own version of the Coppock curve, is bullish. And as mentioned in a previous blog he is not a permabull or permabear. In fact his bearish Grizzly short fund returned more than 70% last year...!

Also check out this article I posted before on the Coppock curve:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aW6PiO4Yzdz8

 

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#2) On January 01, 2010 at 5:44 PM, dragonLZ (99.69) wrote:

Thanks porte. I like Steve...

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#3) On January 01, 2010 at 5:51 PM, portefeuille (99.56) wrote:

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#8) On June 25, 2009 at 2:30 AM, portefeuille (99.96) wrote:

...

Great video. At the end of it you could click another one. In yours he said that he had advised people not to invest in his grizzly short fund. That second video is from March 4 and what does he say there? Exactly that. Don't invest in my grizzly fund. Buy stocks. He is a good man.

...

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(from here)

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#4) On January 01, 2010 at 5:53 PM, portefeuille (99.56) wrote:

that other video from March 4, 2009.

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#5) On January 01, 2010 at 6:49 PM, portefeuille (99.56) wrote:

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#6) On January 01, 2010 at 6:55 PM, portefeuille (99.56) wrote:

can't be that hard to rise 114.34%, hehe.

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#7) On January 01, 2010 at 7:07 PM, portefeuille (99.56) wrote:

¡Ándale! ¡Arriba! ¡Arriba!

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#8) On January 01, 2010 at 7:21 PM, portefeuille (99.56) wrote:

So What'cha Want

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#9) On January 01, 2010 at 7:30 PM, portefeuille (99.56) wrote:

Sure Shot Ride

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#10) On January 01, 2010 at 8:01 PM, portefeuille (99.56) wrote:

S&P 500 index (green) vs. S&P 500 index in EUR.



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#11) On January 01, 2010 at 8:10 PM, portefeuille (99.56) wrote:

Colombia’s IGBC Index Rises to Record, First in Major Markets



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#12) On January 01, 2010 at 8:18 PM, portefeuille (99.56) wrote:

Chile stocks hit record, led by commodities



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#13) On January 01, 2010 at 8:27 PM, checklist34 (99.73) wrote:

i like it when you point out the S&P in Euros...  its interesting. 

Leuthold said, i think, in one of his more recent written commentaries that a stabilizing/strengthening dollar was one key to his belief that we'd rise to S&P 1500 in a few years. ... 

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#14) On January 01, 2010 at 9:07 PM, HarryCarysGhost (99.76) wrote:

This is off topic, but I was wondering if you had an example of the psychology displayed in comment #39 of Tasty's last blog.

I just call it Karazzy!

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#15) On January 01, 2010 at 9:29 PM, HarryCarysGhost (99.76) wrote:

Would have posted this on Tasty's blog. But I don't feel like starting the new year with a lawsuit : )

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#16) On January 01, 2010 at 9:53 PM, portefeuille (99.56) wrote:

Leuthold said, i think, in one of his more recent written commentaries that a stabilizing/strengthening dollar was one key to his belief that we'd rise to S&P 1500 in a few years. ...

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And my 18 month target for the S&P 500 would be the 1500
level (challenging the old highs), if global confidence in the dollar returned.

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(from page 6/12 of the article mentioned in my post above (pdf))

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#17) On January 01, 2010 at 9:54 PM, portefeuille (99.56) wrote:

so 1500 in early 2011 ...

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#18) On January 01, 2010 at 9:57 PM, Tastylunch (29.54) wrote:

1500 and then what?

Thta's the question now I think. Will the next corection (when it invariably comes) be of the normal subdued variety or the not so fun crash variety?

Still 1500 is a pretty impressive move from here.

 

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#19) On January 01, 2010 at 10:06 PM, Tastylunch (29.54) wrote:

This fellow says 1685 in 2012

http://disciplinedinvesting.blogspot.com/2009/10/stock-markets-upside-potential.html

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#20) On January 01, 2010 at 10:08 PM, checklist34 (99.73) wrote:

now, i'm sure its occured to you that if we actually hit 1500 in early 2011...  thats another nearly 40% up.

So, basically, thats a much bigger move than we've seen since july ...  and similar to what we saw from the march bottoms to the may 8 peak. 

Since July CBI=2.5x, BAC=+50%, CNO=~3x, BZ=~3x, etc etc.  There have been many multibaggers in that timeframe. 

From march bottoms to May 8 temporary peak, BAC=4x, HIG=4x, ACAS=4x, GNW=4x (all rough figures) etc etc etc.  More multibaggers.

Point being, a 40% move in the broad index will seem dramatic enough, but it will conceal MANY multi-baggers and the real opportunity to double the money for whomever is most on top of the game.

If nobody sees where I am going with this commentary because i'm blabbering and making no sense...  what i'm saying is this:

Checklist has sort of assumed that we're going to be in a holding pattern for a while.  The kind of market where we see sputtering and sector rotation and some stocks moving up alot and all, but no grand majestic upward behavior that makes everybody feel smart.  As part of this belief I have been wondering if selling shares makes sense.  For example, the LVS that I have no particular urge to hold, which I hedged a while back, ...  but if i sell it i lose about 40% of its value (counting hedges) as its basically all profit.  If I hold it for several more months I'd lose only 20% or so (capital gains tax).  This belief that the easy money has been made leads me to want to sit on everything, especially everything hedged, and wait for capital gains and its 20% real gain. 

Leuthold suggests a distinct possibility of what amounts to a continuing ramp upward.  The kind of rising tide that raises all ships.  If this were my strong belief, ... I would be actively stock searching instead of sitting around watching time tick by.

Awall said 12,000 after Abitare said 4000 and Porte, you responded with 12,0001.  I take 11,300.  For Dec 31, 2010. 

Who's right?  Lots of money stands to be made or not made depending on which of two optimistic (i'd say its still optimistic to not expect a market crash) views you prefer...  Mine (sideways) or Leutholds (ongoing upward ramp). 

He is clearly more experienced and has sueprior eyeglasses.  I, however, made alot better returns in 2009.  hee hee

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#21) On January 01, 2010 at 10:41 PM, starbucks4ever (98.98) wrote:

I wouldn't be surprised to see S&P at 1500; however, if that happens, I would then expect another crash. Not a crash to 666 of course, but a crash back to 1100. When I imagine that ISRG will cost $430 and GMCR, AAPL, and XOM go up another 40%, I can't see how it's going to be sustainable.  

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#22) On January 01, 2010 at 11:18 PM, checklist34 (99.73) wrote:

zloj, the old up, crash, back up, crash, back up...  crash? 

thats actually basically the view that my financial advisor (who is in mensa, which has to count for something) has.  One more cyclic bear (i.e., crash) within what will ultimately be a 15-20 year secular bear market.  He doesn't konw when or why, but he feels we'll get one more big dump.

what we're seeing now (a secular bear market with considerable commodity inflation) is not new.  This is essentially what the 70's were, and what many other periods of time were. 

I read a fantastic piece on it recently...  throughout recorded history stocks have outperformed commodities dramatically.  However there have been mixtures of periods when stocks monstrously outperformed and periods when stocks underperformed.  Periods of strong commodity inflation and periods of strong stock advances. 

The article noted that this period of commodity inflation / stock stagnation was already about as severe as any on record, although not yet the longest. 

One more cyclic bear (i.e., crash) at some point somewhere in the future would basically cement this period as the worst one on record, i believe.

I gotta find that article.  So basically, just when everybody thinks commodities will go up forever, they probably will show stagnating prices while stocks enter a new secular bull.

 

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#23) On January 01, 2010 at 11:39 PM, starbucks4ever (98.98) wrote:

Hi checklist34,

I see that we're essentially on the same page. I anticipate a new secular bull sometime around 2017. For now, there is enough liquidity to support these generous valuations, but there is not enough companies that can triple or quadruple from this level. We have some that could grow another 30-50%, but a genuine secular bull needs at least a couple 10-baggers among those that are already valued at $100+ Billion. So far I don't see any.

 

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#24) On January 02, 2010 at 12:03 AM, Tastylunch (29.54) wrote:

checklist34

He doesn't konw when or why, but he feels we'll get one more big dump.

I'd say Baby boomers retiring and not getting their full social security could be a likely spark. the boomers hitting 65 is supposed to crest in what 2016-2018 or so I think?

back in 2001 I read a Harvard (Phd? can't remmeber)thesis I think it was that showed a distinctly strong inverse correlation between commodity and stock performance  repeatbale over time.

That thesis led me to get hard into commodity plays around 2002. Worked out pretty well. BHP Billiton made me a boodle, probably my favorite was PetroKazhkstan :)

What says to me that this one isn't over is that a commodity cycle typically ends on a bout of abundant oversupply to my recollection, the crash in 2008 was largely lack of demand driven so I took it to be a false end to the commodity cycle.

What will be interesting  to see is whether the Peak (Gold, Oil, Copper, Coal etc) situation complicates this normal end to a cycle... we may not be able to actually get a to a true oversupply situation in some of these.

well except for natural gas. Oversupply is pretty bad there at the moment.

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#25) On January 02, 2010 at 12:15 AM, anchak (99.86) wrote:

I think....if Jan sets the tone - onward and upward on a decent trend ( like not an exhaustion candle or something crazy)....I would say...Dow has a shot at 12000.

I am not in this camp....I believe we may set a close range - and then correct....

(a) combination...vicious...up .....down...side...and up/down side...

(b) or steady...vicious down....up...steady.

My bottom range would be 9000 Dow 

Net net side-ways in some fashion. 

Steady down would be worrisome.....

 

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#26) On January 02, 2010 at 12:26 AM, anchak (99.86) wrote:

Also with the exception of 1980....everytime there's been a healthy retracement before the real rally.

And in 1982 it came close to derailment as per my charts - the real reason there - of course besides the innovations etc....money actually got cheaper ....

That was the Long Bonds tip. Rates got cheaper and money flow easier. We simply do not have that currently.

This simply delayed the correction IMHO by 5 years then.Of course as Hans points out Colombia,Chile possibly Mexico and soon to follow Brazil will post All time Highs. This may very well perpetuate the frenzy a bit.

And that would definitely cause a crash - except due to the high levels - I would still maintain a decent lower bound - I think SP will not print anything below the 870-890 range

 

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#27) On January 02, 2010 at 12:54 AM, FleaBagger (29.37) wrote:

Is there a quick, easy-to-understand explanation of comment 5 for the uninitiated?

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#28) On January 02, 2010 at 2:02 AM, checklist34 (99.73) wrote:

tasty, ...  judging from how much supply (alcoa, cenx, chk... etc the commodity stocks that I own have all been yanking supply like mad) one could argue that 2008 saw excess supply.

But...  that supply was brought out in response to unusually high prices.  I got nothing, I have never read or studied these commodity/stock cycles save that one paper that I mentioned earlier and which is now apparently misplaced.

This is a fantastic thing to have learned, however, as ... as it offers two things counter-cyclic to one another and perhaps...  perhaps a way to sit out big bear markets in the future.  Its fairly clear when markets have peaked or are peaking (not to the day or month but say within 10-20%).  IPOs rage, stocks with decent valuations are few and far between, fund investment levels are high, individual investors participating, etc etc. 

These signs ar enot in place right now.  For all the panic about valuations of stocks, frankly, there are plenty of individual names well below historical norms for their sectors and the market overall is basically reasonably priced, probably neither cheap nor high. 

This should be explored.  The "go go" market of the 60's gave way to a period of monster commodity inflation and stock underperformance.  The Nasdaq bubble of the late 90s gave way to another, which we are in some point of...

When it starts to seem logical to get out of stocks, having something that tends to inflate as stocks go haywire would be a distinct aid to an investor over the course of a lifetime. 

a piece of the puzzle...

There is always a system...

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#29) On January 02, 2010 at 2:08 AM, checklist34 (99.73) wrote:

zloj,

     I'm with you.  I don't see too many big cap names that can really justify wildly higher prices.  Valuations on some of the tech leaders are a bit stretched, frankly. 

    And thats the thing...  in March when the markets bottomed (quite possibly for all time, the way the 1974 lows were an all time low), stock prices were stupid.  I am very proud of my 250+ percent return in 2009, but frankly JUST BUYING ANYTHING THAT WASN'T IN FAVOR in late feb/early march would probably have matched that or at least gotten close.  Banks, insurance, specialty finance, REITs, just pick the least loved ones back then and you are sitting on multi-baggers aplenty.

    And in July stocks were silly cheap also, at least SOME were.  CBI was 8 bucks, BZ and CNO were $1.50, GNW was $5, TCK was $15, DOW was $15.  Tons of things you could look at and say "you know, thats a multibagger in time".

     Not so much now.  Maybe thats a tell that the market isn't going to go another 30% (thats all we've gone from july, basically).   What stocks are cheap enough to justify it? 

     I got nothing.  I do have a plan for a marked downturn, however....

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#30) On January 02, 2010 at 2:14 AM, checklist34 (99.73) wrote:

anchak, good thoughts. 

There are alot of potential sources for flow into us stocks including the much-vaunted "cash on the sidelines", the markedly higher flow into bond funds than stock funds, emerging markets coming out of favor, i don't konw...  basically, the US market remains distinctly not in favor.  Its far more people advocating something other than US stocks than touting US stocks.

But we def can't get a boost from cheaper credit.  And looking around i'm not 100% sure what a huge driver going forward could be for the economy the way tech was in the 80s and 90s.  it won't be green or clean tech, there just isn't demand for those outside of social trends and government funding. 

I wouldn't call 1987 a correction as much as a miscalculation.  portfolio insurance gone massively haywire...

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#31) On January 02, 2010 at 2:17 AM, checklist34 (99.73) wrote:

flea, i think porte is just having some fun in #5

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#32) On January 02, 2010 at 10:15 AM, anchak (99.86) wrote:

Actually #5, its Hans new year gift come jab at me - trying to do my technical analysis - which I may suggest he enjoys especially on his favorite stock - EMC.

LOL!

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#33) On January 02, 2010 at 11:18 AM, rofgile (99.33) wrote:

Technology has been a driving force of economic development over the entire last century.  (Cars, Radio, Television, Refrigeration, Air conditioning, Computers, Internet, Phone). 

Why should this stop?   

This seems to be the year of the tablet, with companies stepping up to make App playing devices with larger screens than cell phones.  Examples: Camangi Webstation, ICD Vega, Entourage EDGE, and possible Apple Tablet.  All of these have touch screens and all but the hypothetical Apple run Android.  Using computers with a single flat screen, touch interactions without key boards, etc is a technology from science fiction (Star Trek).

My question right now for investors is how big can Google become?  Its already a 200 billion market capital company.  Could it be a 300 billion market capital company?  What does that mean? 

What does the future bring for TV and mobile providers?  Are we moving to an entirely internet based distribution system?  

---

Anyways, with a continued economic recovery, jobs returning, etc -> I see a better future in consumer spending in 2010 than 2009.  Manufacturing is also doing well lately, since its now time to rebuild inventories.  Q4 2009 should be fine, and Q1 2010 should be good.

 -Rof

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#34) On January 02, 2010 at 3:38 PM, Tastylunch (29.54) wrote:

checklist34

well I can see that argument.

But the way Interpreted what occurred was a unusually large demand spike that disappeared first

in my experience/recollection demand is usually less volatile and whena  commodity boom occurrs towards the end producers have so many new projects come on line at once that it drowns the world in supply.

That isn't what happened if you ask me. Oil, in particular, supply was not able to keep up until early 2008 even with a plethora of projects coming online (new finds were being offset to large degree by major declines in old fields like Cantrell) and then demand started falling.

Everyone was surprised by how elastic demand was for Oil, if I recall correctly demand for Oil was down 20-30% in France, a huge number for Oil! Demand had never been so volatile before. 

That's why i think Natural gas is diffrenet from the rest, we've had major new deposits discovered and the supply increased honest to goodness out of sync with demand

Yes we have overuspply in copper/oil etc, but if demand were at 2007 levels we would not.

To me that says  it was headfake ending to the commodity cycle.

But there could be another shakeout come if China's speculators are forced to unload what they've been hoarding.

I guess we'll see.

perhaps a way to sit out big bear markets in the future

Mos def. It's been a godsend this past decade.

For all the panic about valuations of stocks,

I think stocks are fair to slightly overvalued. which is basically back to normal.

But what isnt normal is unemployment and how much of GDP is being manufactured directly by the US gov't.  Once that's removed I think we'll know if this recovery is truly sustainable or just a Japan style blip....

Well I'm doing my part I created 9 jobs last year. :)

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#35) On January 02, 2010 at 3:42 PM, Tastylunch (29.54) wrote:

rofgile

you know the funny about techonology is that it has real hot and cold cycles for an economy. If I recall corretcly every major US depression was preceded by a huge game changing technological brekathrough.

The reason being the new tech in the short term was so disruptive and efficient it actually destroys more jobs than it creates ( e.g. railroads and now of course the internet) . But of course ultimately over the long term the economy adapts and change employmnet allocation.

My question right now for investors is how big can Google become?

I personally don't care I like smaller companies. cuz they double and triple more easily and more quickly.  

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