8 replies to this topic

[denleo]

Buying small caps here (IWM). This thing is strong and it is leading. Good buying opportunity here. Denleo

[arbman]

[fib_1618]

Buying small caps here (IWM). This thing is strong and it is leading. Good buying opportunity here.

Mid Caps as well.

Fib

[arbman]

Yes they got a nice terminal push, but where will the liquidity come from to push them higher? At 47.1% foreign holding two years in a row, the foreign holdings of the US Treasuries might be already peaked, it will be hard to finance without promising higher rates. I would not dare to touch them in the long side before the rates go lower and it will not happen before the market gets a good correction...

But of course, you must be thinking about the next 2 days...
- kisa

[denleo]

Look, S&P just had a 3 point correction. Buying more spooz here. Correction is over. We are bottoming here. Denleo

[arbman]

[fib_1618]

But of course, you must be thinking about the next 2 days...

The market, not I, nor you, nor anyone else, has generated enough energy in the last two days to continue to trend higher for another 3 weeks in what might be a final momentum push, but certainly not a terminal one on a longer term basis.

As far as liquidity is concerned, you haven't even seen the record amount of corporate cash enter the marketplace as yet...it's just a matter of time. And if you thought home prices and commodities were "irrational", you're going to have a whole new definition of the word before this is all said and done.

Fib

[arbman]

Terminal in the intermediate term sense, let's be clear... If the Treasury had not make those $36B in repos last week, the IT top would've been already in with that SPX reversal. The observation is the commodities and the late bull issues rallied this week, that's inflation and the USD responded immediately. There wasn't a sharp reversal in the consumer discretionary and the technology stocks in this rally. The growth issues are not benefiting from the liquidity injections at the moment, that's my clue... OTOH, the consumer discretionary stocks are still relatively holding up very well, so my guess is this is still the early stages of a much larger bull cycle. There is a rotation out of the financial sector, probably very long term lows (such as 2002-2003) for the indices are now in... The home prices are still correcting, the commodity prices corrected big time, I am not sure the market made the most rational decisions bidding them as high as they did, I think we will never find a common point. I believe the participants can make very emotional decisions, apparently you don't... I built my real estate portfolio from 2000-2003 on several rental units in multiple complexes, there is a lot of equity built up in them that I never expected, they are the cash cows, yet the tax consequences vs the long term prospects are preventing me from selling them at the moment, but I am getting worried at the moment as the rates continue to stay elevated... - kisa

Edited by kisacik, 02 February 2007 - 03:29 PM.

[fib_1618]

The home prices are still correcting, the commodity prices corrected big time, I am not sure the market made the most rational decisions bidding them as high as they did, I think we will never find a common point. I believe the participants can make very emotional decisions, apparently you don't...

I agree, we are both on the same page, emotional decisions are part of what make markets move.

I only commented that in all of the perceived chaos out there, there is technical order...technical meaning that any highly emotional decisions that are made in the course of a price sequence, either up or down, the market will always find a way to find some neutral ground between buyers and sellers once an extreme is seen (and felt). What's always up for debate is when and by how much these extremes are in need of corrective action. If money (demand) continues to support the price action (supply), fine - if the money is not, a vacuum is created which eventually pushes the market back to a level in which money again agrees that this same price as being fairly valued based on the current conditions in force at that time.

Fib