11 replies to this topic

[denleo]

It is not a problem. The market is telling us that it is not a problem. It is a short-term excuse. Why? Because S&P 500 has been nearly perfectly correlated (inversly) to the Japanese Yen. And Japanese Yen has nothing to do with our mortgage practices. This has been a liquidity driven bull market. Liquidity provided by the FED and the Yen carry trade. FED will continue to provide it. They simply don't know anything else. And if they do, Goldman Sucks and the White House will quickly tell them to keep providing it. Yen is a different story. It scares me a little bit. I am still in a camp that this is just a correction in a bull market, but I remember 2000 when we had many short-term excuses, but the real reason was much bigger and different. Back to technicals: Just watch the Yen!!! June Yen has formed a bullish flag. If it is true to the form and resolves to the upside after the FED (FED is just another excuse, which should and will provide the most positive statement in years) then S&P will go to new lows like 200-day MA or 1325ish. If the Yen sells off, we are going back up. We need volume on the up side to make it more convincing. Today's breadth was very good, but it occured on one of the lowest volume days of the year. And I keep reading sentiment articles (23 so far since Friday). All 23 agree that sentiment is very bullish for the market. Consensus!!! Help me interpret that: What should I think when 100% agree that sentiment indicators are bullish because everyone is bearish. Help me. Help me please!!! Problems are ahead of us and it is not sub prime. Denleo

[hiker]

everyone was bearish on copper from the recent 2.80 to 2.40 bottom of the trading range...peaked in 2006 then retraced the multi-year run, first setting up 3.30 to 3.60 approx resist zone... now copper is back above $3 for two consecutive days. I have no idea whether a sustained run in copper will launch from any price base that may be forming...this does remind me of the bearish views and wall of worry ideas for equities, while a bottoming process may be in the works for both equities and copper..copper process may be further along than equities

Edited by hiker, 19 March 2007 - 07:59 PM.

[greenie]

And I keep reading sentiment articles (23 so far since Friday). All 23 agree that sentiment is very bullish for the market. Consensus!!! Help me interpret that: What should I think when 100% agree that sentiment indicators are bullish because everyone is bearish. Help me. Help me please!!!

That is funny


Regarding Yen, general market, etc. this is what I think. If Fed statement is optimistic about the economy, the market will assume there is no rate cut soon. So, subprime lender and homebuilder stocks will be kicked in the @ss. If Fed hints at rate cut, dollar falls and yen rises. So, the market will sell off. Subprime and homebuilders will again be kicked, because they get hurt in any market correction.

Among two options, I think market is thinking that Fed will not lower rate, but will make their statement a bit more accommodative. That is possibly why dollar is selling off, and yen forms bullish pattern.

Real cause of the selloff, however, is the recession, which has already started.

Next IT rally will be in late April, when Fed is ready to cut.

[VolPivots]

Everyone's worried about a Yen meltup. Well what happens if it crashes and you see a full scale liquidation out of Japan?

[ed rader]

It is not a problem. The market is telling us that it is not a problem. It is a short-term excuse. Why?
Because S&P 500 has been nearly perfectly correlated (inversly) to the Japanese Yen. And Japanese Yen has nothing to do with our mortgage practices. This has been a liquidity driven bull market. Liquidity provided by the FED and the Yen carry trade. FED will continue to provide it. They simply don't know anything else. And if they do, Goldman Sucks and the White House will quickly tell them to keep providing it. Yen is a different story. It scares me a little bit. I am still in a camp that this is just a correction in a bull market, but I remember 2000 when we had many short-term excuses, but the real reason was much bigger and different. [color=#FF0000]
Back to technicals:

Just watch the Yen!!! June Yen has formed a bullish flag. If it is true to the form and resolves to the upside after the FED (FED is just another excuse, which should and will provide the most positive statement in years) then S&P will go to new lows like 200-day MA or 1325ish. If the Yen sells off, we are going back up.

We need volume on the up side to make it more convincing. Today's breadth was very good, but it occured on one of the lowest volume days of the year.

And I keep reading sentiment articles (23 so far since Friday). All 23 agree that sentiment is very bullish for the market. Consensus!!! Help me interpret that: What should I think when 100% agree that sentiment indicators are bullish because everyone is bearish. Help me. Help me please!!!

Problems are ahead of us and it is not sub prime.

Denleo

i've really appreciated your analysis Denleo. you were one of the first to call the IT downtrend with conviction -- you went 100% short quickly.

i see a lot of similarities to 2000 but some things are different too.

i was talking to a friend's son today. in 2000 he worked for handspring. he could have cashed out a portion of his options that had matured for about $2m but he didn't sell a grunion.

today he tells me that RE is in for a wrold of hurt except for areas like silicon valley where there is limited inventory. of course he recently bought a huge home and spent a fortune remodelling it. in 2000 my next door neighbor bought CSCO at the last split ($80). she said she knew a downturn was on the way but CSCO was a good company that would continue to grow.

in general people seems more pessimistic today than in 2000 despite the fact that we're in a multi-year bull market but i think that's mostly for reasons other than the economy.

work is very slow for me for the past month or so and just about everyone i know in the building trades and related industries (vendors, hone depot etc) and real estate are slow. of course this time of year is usually a bit slow because of taxes.

it feels like something more ominous than just taxes.

last time i felt that way was last october and then work picked up better than it had for a couple of years.

ed rader

Edited by ed rader, 19 March 2007 - 08:16 PM.

[Data]

today he tells me that RE is in for a wrold of hurt except for areas like silicon valley where there is limited inventory. of course he recently bought a huge home and spent a fortune remodelling it. in 2000 my next door neighbor bought CSCO at the last split ($80). she said she knew a downturn was on the way but CSCO was a good company that would continue to grow.

Silicon Valley is one of those areas where gains in the stock market figure heavily in employee
compensation. The New York metropolitan area would be another because of the financial
services sector employment. RE would hold up in those areas at present.

[ed rader]

today he tells me that RE is in for a wrold of hurt except for areas like silicon valley where there is limited inventory. of course he recently bought a huge home and spent a fortune remodelling it. in 2000 my next door neighbor bought CSCO at the last split ($80). she said she knew a downturn was on the way but CSCO was a good company that would continue to grow.

Silicon Valley is one of those areas where gains in the stock market figure heavily in employee
compensation. The New York metropolitan area would be another because of the financial
services sector employment. RE would hold up in those areas at present.

you buy my home right now on a 30-year fixed mortgage and you could rent it for half the mortgage. when we bought it in 1999 -- height of the nasdaq bubble -- we were one of five bidders, the value was less than half of what it is now and we could rent it out for the complete mortgages, which was about $1900.

i've since refinanced the house down to $1450 (5.25%, 30-year fixed) and $1500 is about what i could rent it for now.

my home is 900 sq feet.

i think homes are too expensive no matter what the interest rate, and i think buyers have figured that out.

ed rader

[pdx5]

I agree with the post saying sub-prime is not related to ST trading. It is more like cancer. Initially you don't even know there is a problem. But it grows ever so silently and eventually it will put you in chemo or radical surgery. I think the overall debt levels is a more dangerous situation. Once it reaches critical mass, head for the hills. The Yen carry trade, oil prices are what affects ST price movements. So I would anamolise those to catching a bad cold. You know immediately you are sick but it could change rather quickly.

Edited by pdx5, 19 March 2007 - 11:19 PM.

[OEXCHAOS]

So far, they've been right. Which, of course, will get them more Bullish.

Sentiment can get VERY mercurial, especially if more folks are using it. I've seen it before.

Given how Bulled up the "hedge fund" sentiment got going into the top, I'm pretty sure the spike we got at the low wasn't enough and the Bullishness I'm seeing now is already too much.

My read: bigger picture: no major top in place. No IT low in place, either.

Every day, they turn over a new card and we can make a new bet.

T-4 got up there on 3/14 at 72 but that's not high enough for a signal, in my view. So, we're still waiting for a Buy (no guarantees that we get one, but that would be logical).

Mark

It is not a problem. The market is telling us that it is not a problem. It is a short-term excuse. Why?
Because S&P 500 has been nearly perfectly correlated (inversly) to the Japanese Yen. And Japanese Yen has nothing to do with our mortgage practices. This has been a liquidity driven bull market. Liquidity provided by the FED and the Yen carry trade. FED will continue to provide it. They simply don't know anything else. And if they do, Goldman Sucks and the White House will quickly tell them to keep providing it. Yen is a different story. It scares me a little bit. I am still in a camp that this is just a correction in a bull market, but I remember 2000 when we had many short-term excuses, but the real reason was much bigger and different.

Back to technicals:

Just watch the Yen!!! June Yen has formed a bullish flag. If it is true to the form and resolves to the upside after the FED (FED is just another excuse, which should and will provide the most positive statement in years) then S&P will go to new lows like 200-day MA or 1325ish. If the Yen sells off, we are going back up.

We need volume on the up side to make it more convincing. Today's breadth was very good, but it occured on one of the lowest volume days of the year.

And I keep reading sentiment articles (23 so far since Friday). All 23 agree that sentiment is very bullish for the market. Consensus!!! Help me interpret that: What should I think when 100% agree that sentiment indicators are bullish because everyone is bearish. Help me. Help me please!!!

Problems are ahead of us and it is not sub prime.

Denleo

[OEXCHAOS]

i've since refinanced the house down to $1450 (5.25%, 30-year fixed) and $1500 is about what i could rent it for now.

my home is 900 sq feet.

To freak you out: You can get a 2000' rehabber in a sexy, happening area, with a yard and off street parking, out here for about $40K, and get financial incentives. Some go for more (up to 100k), or less (down to about $30k for still worthwhile properties) depending upon their state, off street parking, amenities, and how hot and established the neighborhood is.

M