20 replies to this topic

[James Quillian]

It is not within me to flip and turn bullish when classic indicators like the 10 DMA of new highs in the Russell 3000 are flashing danger signs. But, I have finally conceded that there are problems in using old stalwart indicators that used to be highly reliable. For example, the long-standing divergence between price and 52 week new highs still means there is serious distribution going on as the averages move higher. It doesn't necessarily mean that a serious decline is at hand like it used to. There is a problem developing but the timetable is obscured.
Why? Anyone can make a guess. I sense an unnatural source of apparently limitless funds that is supporting the market. There is a floor of bids supporting the market 100% of the time. I call them mystery bidders.
They don't chase stocks up. The public and short sellers do that after the mystery bidders sop up any real supply that is offered. Who these people are is not what is important. The bids will be there no matter what. The market will not drop until either the public stops chasing stocks or until shorts stop covering everytime the market stablizes. But, I have no idea when that could happen. Maybe tomorrow, next week or next year, but danger is present.
Yes, I am getting a job. Starting on Febuary 15, I am going to return to teaching. (high school math) Quillian & Taylor will remain in tack and the weekly "Stockmaket Forecast & Comments" will continue as long as time permits. Please, no regrets. Trading full time is not that rewarding as a way of life. Actually, I do much better when I don't watch the tape all day anyway.

James

[Gary Smith]

It is not within me to flip and turn bullish when classic indicators like the 10 DMA of new highs in the Russell 3000 are flashing danger signs. But, I have finally conceded that there are problems in using old stalwart indicators that used to be highly reliable. For example, the long-standing divergence between price and 52 week new highs still means there is serious distribution going on as the averages move higher. It doesn't necessarily mean that a serious decline is at hand like it used to. There is a problem developing but the timetable is obscured.
Why? Anyone can make a guess. I sense an unnatural source of apparently limitless funds that is supporting the market. There is a floor of bids supporting the market 100% of the time. I call them mystery bidders.
They don't chase stocks up. The public and short sellers do that after the mystery bidders sop up any real supply that is offered. Who these people are is not what is important. The bids will be there no matter what. The market will not drop until either the public stops chasing stocks or until shorts stop covering everytime the market stablizes. But, I have no idea when that could happen. Maybe tomorrow, next week or next year, but danger is present.
Yes, I am getting a job. Starting on Febuary 15, I am going to return to teaching. (high school math) Quillian & Taylor will remain in tack and the weekly "Stockmaket Forecast & Comments" will continue as long as time permits. Please, no regrets. Trading full time is not that rewarding as a way of life. Actually, I do much better when I don't watch the tape all day anyway.

James

James, good luck in your new job. Even though we were on opposite ends of the spectrum when it came to trading philosophy, I was always impressed with the class you demonstrated in dealing with your critics. Sounds like you are describing the massive worldwide glut of cash (liquidity) that has been driving this market since at least mid 2005.

[IndexTrader]

Good luck James. Hope to see you around. IT

[James Quillian]

James, good luck in your new job. Even though we were on opposite ends of the spectrum when it came to trading philosophy, I was always impressed with the class you demonstrated in dealing with your critics. Sounds like you are describing the massive worldwide glut of cash (liquidity) that has been driving this market since at least mid 2005.

"I was always impressed with the class you demonstrated"

Gary,
I hope you will change that to present tense. I will still be around. What I am describing may be the massive worldwide glut of cash of which you speak. We all know that it is cash, whether it is a glut or not. My arguement with you (a friendly one I might add) is whether the gut is expanding or shrinking. As soon as it starts shrinking it is dangerous no matter how big it is. What I am interested in is who are the bidders? In 45+ years I have not seen stock accumulated in this way.
I have entertained the idea that all that we are witnessing is a whole slew of institutions accumulating stock in what is now the state of the art technique. If it is just institutions and hedge funds on auto accumulate the market will be in big trouble when they switch to auto distribute.

James

[Gary Smith]

James, good luck in your new job. Even though we were on opposite ends of the spectrum when it came to trading philosophy, I was always impressed with the class you demonstrated in dealing with your critics. Sounds like you are describing the massive worldwide glut of cash (liquidity) that has been driving this market since at least mid 2005.

"I was always impressed with the class you demonstrated"

Gary,
I hope you will change that to present tense. I will still be around. What I am describing may be the massive worldwide glut of cash of which you speak. We all know that it is cash, whether it is a glut or not. My arguement with you (a friendly one I might add) is whether the gut is expanding or shrinking. As soon as it starts shrinking it is dangerous no matter how big it is. What I am interested in is who are the bidders? In 45+ years I have not seen stock accumulated in this way.
I have entertained the idea that all that we are witnessing is a whole slew of institutions accumulating stock in what is now the state of the art technique. If it is just institutions and hedge funds on auto accumulate the market will be in big trouble when they switch to auto distribute.

James

James, I clip all sorts of articles on this liquidity phenomenon such as the amount of cash in the hands of worldwide pension, insurance, private equity, buyout shops, hedge funds etc. and it's truly staggering and shows no signs of ebbing. Just last night I clipped an article about how at yearend 2006 domestic investors had parked a record 3.7 trillion in savings and money market accounts and over 1.16 trillion in retail bank CDs according to Federal Reserve data. But what I have always believed is propping up prices most are the record amount of corporate buybacks.

Your mere words that you haven't seen anything like to me is bullish in and of itself. Yes, it will all end someday very badly but I as I am wont to say "in the meantime" why not exploit this phenomenon for as much and as long as you can?

Edited by Gary Smith, 01 February 2007 - 07:58 PM.

[OEXCHAOS]

Gary, I was just getting ready to trot out the shrinking supply of companies to invest in, when I read you're post. The Supply and Demand equation is tough to beat right now. That doesn't mean we can't correct (I think we can and will), but it's making any serious decline darned hard to get purchase. M

[Rogerdodger]

GOD! I HATED HIGH SCHOOL MATH!

All 5 years of it.



Anyway,

I sense an unnatural source of apparently limitless funds that is supporting the market.

says it all IMHO.
But we have to work with what is present, not what we think "should" happen in a sterile environment.

I sometimes watch the local education television station math program.
Then I have this weird flashback to 1969...and Jimmy and Janice with John Fogerty singing" There's a bathroom on the right."

Good luck with your day job.

[arbman]

James, first off congrats on your new job... The debt is feeding the corporate profits and it is self feeding eventually. Unfortunately, the debt is a wealth transfer process, not a real growth. In the mean time, the distortions in the growth rates are butchering the world's resources and balances. We are a bunch of greedy and selfish rats, I'll tell ya... Good luck, - kisa

[selecto]

I wonder how much of the 2 billion a week spent on Iraq trickles down or trickles back stateside and if that contributes signficantlty?

[James Quillian]

GOD! I HATED HIGH SCHOOL MATH!

All 5 years of it.



Anyway,

I sense an unnatural source of apparently limitless funds that is supporting the market.

says it all IMHO.
But we have to work with what is present, not what we think "should" happen in a sterile environment.

I sometimes watch the local education television station math program.
Then I have this weird flashback to 1969...and Jimmy and Janice with John Fogerty singing" There's a bathroom on the right."

Good luck with your day job.

Roger:
I keep getting closer to Oklahoma. Where we are going it will still be in Texas but the ground is red clay.
I don't teach rocket science style math. I teach the method and have faith that understanding will become apparent. That way it is like learning to program a VCR and any kid can do that.

About the bids:
I don't think it is good enough to say it is just the glut of global liquidity. Like I told Gary, its not how big the bubble is but whether it is getting bigger or smaller.
I don't know who is fueling the market right now and I think it is an important question. I don't know whether it is a mindset or an agenda but I am guessing that folks that don't think is relevant will be looking at it all differently in the not too distant future.

James