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Still just a correction?

Recs

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July 01, 2010 – Comments (15) | RELATED TICKERS: BIG , BDD , BR

If you've read any of my posts, you know that I am very bearish on...well, just about everything :) [Although I must admit that I did buy 300 shares of TNA near the close today anticipating a dead-cat bounce soon]

Being a bear, I believe we are still in the early stages of a new bear market. Or, more properly stated, the end of the cyclical bull that began in March 2009 and the continuation of the secular bear market which began in 2000. I have stated many times that I believe we will at least test, and will most likely break, the lows set last spring (SPX=666).

I'm sure that many of my bearish brethren agree with me. I'm more interested in hearing from the bulls out there. Is this still just a correction in your mind? Are you scooping up shares at these rock bottom prices? Have you begun to protect yourself with stop-losses or by buying puts? I'm trying to get a feel for the mindset of the bulls at this stage of the game.

15 Comments – Post Your Own

#1) On July 01, 2010 at 12:13 AM, binve (< 20) wrote:

>>I'm sure that many of my bearish brethren agree with me.

You know I do :) 

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#2) On July 01, 2010 at 12:25 AM, JGus (28.78) wrote:

binve

Yes, I know we stand united ;) March '09-April '10 was a dark time for us. Fortunately, we both own gold and know how to effectively use stops. I did lose some money in that stretch as I was stopped out numerous times. However, I'm up more than 40% since late April/early May. I rec nearly every one of your posts, brother!

 

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#3) On July 01, 2010 at 12:27 AM, JGus (28.78) wrote:

Just to be clear - this post was not meant in a taunting fashion. I am genuinely interested in hearing the other side of the argument. I am also curious to see how many bulls have turned in to bears over the last month or two...you know what happens once one side of the trade becomes too crowded...

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#4) On July 01, 2010 at 12:31 AM, binve (< 20) wrote:

Thanks my man! 

>>I rec nearly every one of your posts, brother!

Same here bro!

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#5) On July 01, 2010 at 1:18 AM, alexreising (33.34) wrote:

That's interesting you consider this a continuation of a secular beark market from 2000...

Personally I think we're in a market pattern similar to the 1960-1980 time period, and we're taking one last dip before resuming a healthy growing market, though I doubt the growth will be anything like the 1980-2000 horizon, unless debt levels are normalized to an appropriate GDP ratio and new a new tech industry emerges to lead the market.

 

 

While I certainly wish I would have timed some entry points a bit better, I actually see this as a huge buying opportunity provided one's investment horizon is medium-long term. There is just soooo much negativity in the market right now that it's overshadowing some positive trends that signal the typical beginning phase of a recovery. We all know the bad signs - housing, unemployment, consumer confidence, europe, oil spills... 

 

What I like to see as someone holding long positions-

 

1. Record low interest rates, vastly expanded monetary supply

2. Business confidence and investment increasing

3. Manufacturing is strong

4. Earnings are beating estimates at a pretty high clip in Q2. This is after we've had several quarters of GDP growth and earnings growth, so we're growing earnings on top of decent earnings and analysts are still betting short on most of the estimates. Notably bad earnings were at places like best buy and KBH homes... I'm not too worried about that when I see the wide range of earnings beats at other firms more closely associated with the beginnings of a cyclical recovery.

 

We have an expansionary monetary supply and business investment and business seems to be picking up... we just haven't felt it ripple through the economy yet because we're really just getting started in our recovery after an extreme recession. I almost feel like the market just got way ahead of itself and now it's trying to fall back in line with where we're really at this stage of recovery. 

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#6) On July 01, 2010 at 1:29 AM, ChrisGraley (29.95) wrote:

I think that we are in a worse situation than the 70's and that we are running out of tricks.

We are going to have to print a lot more money on top of the money that we've already printed and that money is getting less and less effective. 

 

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#7) On July 01, 2010 at 1:43 AM, alexreising (33.34) wrote:

Chris-

 

Agree with that comment, definitely more severe, but I still see a return to upwards growth. 

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#8) On July 01, 2010 at 8:12 AM, Seansonfire (36.59) wrote:

I think that we are actually right about where we should be right now.  We are definitly better off then back at the end of 2008, but worse off then in 2005-2006.  I think the markets will actually not go down much here or up much either.  With good earnings news coming in a couple of weeks I think we hold this levels and maybe push to 1100 on the S&P.

 Also for me the key is the fact that personal debt levels have come down significantly since the peak in 2008.  With consumption being 75% of our economy, once the consumers come back we will be back as a country.  Unemployement numbers this morning look to be improving which is good.

Sean

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#9) On July 01, 2010 at 10:40 AM, Griffin416 (99.98) wrote:

I've been a raging bull since Dec 2008, but a couple a days ago, I am a bear now. 

Geez, if I'm even bearish, you know its bad. I majorly hightened my cash position about 3 days ago. Every technical indicator I follow points down. Although I think it will be at most 3 months (the 3rd quarter of the presidents first term). So to keep my accuracy, I will not be changing my caps positions, but my points will likely fall off for a while.

If I had to guess, I would say we will go down another 5%-10% before moving back up

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#10) On July 01, 2010 at 10:44 AM, Griffin416 (99.98) wrote:

I did tone down my aggresive bull positions back in early Jan 09, as I said in my Jan-09 blog. I moved a lot to slow high yielding etf's. My thought back in Jan was 2010 would be a single digit gain year...I stand by that. I believe, chart wise, it is 2004 again.

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#11) On July 01, 2010 at 3:05 PM, dwot (56.31) wrote:

Grrrr, I am a bear as well...

I tend to think the lows will be re-visited as well.  Those lows were just where I was thinking it was time to start looking.

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#12) On July 01, 2010 at 4:09 PM, EnigmaDude (88.88) wrote:

Snort!  I have to say that I am amused by all you silly bears running around congratulating yourselves this week.  Too much honey in the honey jar...

I did buy some shares of TZA a while ago.  Sold them for a small profit and used the proceeds to add to my long position in AEZS, which I hope has found a near-term bottom at least..

Although I remain a bull I do see more bearish signs in the market which is making me more cautious.  Being very selective about adding any new long positions as I think we will continue to move sideways for another month or 3. 

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#13) On July 05, 2010 at 10:33 PM, kkotwani (99.61) wrote:

One among very few bullish around here.

In last two days....market has recovered drastically from lows.. even though market was net down....volatility coming down sharply...There is strong divergence between volatility and market price..This divergence has started building after sharp increase in volatility and sharp decrease in market.

This indicates strong sense of confusion between bears and contrarions (bullish) at this point.

Market is not very undervalued but somewhere less than fairly valued and more than undervalued. We can see 10 to 15 points more drop in S&P here where it will start feeling like great bargain. Given large number of people are net short at this point...any small good news will trigger huge gains in index as it will be defficult to cover short positions. Well thats how the classical contrarion theory works.

I am totally not convinced that we will see bad 2nd quarter earnings...More and more companies trying to run lean and mean...cutting costs/hiring and improving bottomlines....We will see the way we saw first quarter earnings most companies beating street estimates. 

Yes, there is no reason at this point that S&P will go above 1200 but also there is no reason that S&P will go below 1000. Its trading at the lowest of its fair range....I am buying bargains like hell here. I am betting mostly on basic material, energy, health and some bargains in other sectors.

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#14) On July 07, 2010 at 7:58 PM, eatenbybears (< 20) wrote:

I am amazed at the number of people who expect "good earnings news"

 

I will guarantee that every reporting company, no matter how they ended the Q, will be preaching the same story of slower sales growth and profits in the next Qs

 

It must be ... Euro Exchange rates .. slowing of Asia ... US unemployment .. US housing locking up trillions in equity, business not willing to expand or hire .... Lower consumer spending

 Time to stop smoking the wish pipe and focus in on reality ...  and it stinks

 Bears

 

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#15) On July 07, 2010 at 8:20 PM, AvianFlu (33.73) wrote:

Business is bad and getting worse.
However, I expect a nominal increase in the stock market over the next few years due to moving in tandem with inflation, which I expect to start surfacing before the end of the year.

Even though the indexes will rise, after adjusting for inflation you can expect a decline in real terms. At least that is how I predict things will play out.

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