5 replies to this topic

[nimblebear]

But it ain't happening. Its literally impossible for this market to take a dive, based upon all the sentiment indicators, fundamentals, easy money, global growth, yada yada yada. Everyone is bearish based on the readings. AAII for one. Readings have never been this bearish when a market is making new historic highs like today. They are this bearish when the market has made a bottom, or is making a bottom. If you look at these factors the market has a lot of room to go. Cash levels have been pouring into money markets, and short funds, and everyone is waiting for a drop so they can short, or buy on the dips. But it isn't happening. A lot of pessimism is priced into the market. And it keeps going up. In fact if the market were to take a bit of a dive like in February, based on what happened in February it is just too strong. Everybody keeps waiting for the Shang hai to drop, but it doesn't. It just keeps getting more parabolic. In fact with our market, volitility is rising, akin to what it did in the mid to late 90's, where Vix went up, but the market kept climbing. We could go on for another 2 or 3 years with the way the market is acting. Heck even Buffet is saying subprime is a non-event. The market sucked it up, like a peanut into an elephant. The best thing about this is everyone is cautious and in total disbelief as to how it keeps rising. Even Prudent Bear fund has highest inflows ever, and yet it is not even coming close to matching the performance of other stocks and indices. Yet money keeps flowing in. People are nervous. As long as we are all nervous, we are all fine. Inflation is the insidious wild card. But everyone is nervous about it, yet with the exception of retail gas prices and food prices, it is tame. Until people get all bulled up, we have a long way to go. So drop your shorts, but don't tell anyone. The only direction is up for now. P.S. I forgot to mention full size pickups. Toyota's starts at $40K. I remember not long ago when you could buy a darn good pickup for $20K, and run it for 200,000 mile no problem. No pickup truck is worth $40k. Even a Toyota. So maybe there is inflation.

Edited by nimblebear, 07 May 2007 - 08:59 PM.

[thespookyone]

You'll have plenty to talk about, then, imho-by the end of the week. When you speak of fundamentals are you refering to the latest wall st "rising earnings" snowjob? When you lower expectations the way they did into the quarter-of course they beat them. But, in reality, how did the growth this quarter compare to the last couple years in reality-UH OH. It seems very clear that institutions have TONS of cash sitting on the sidelines, so if "everyone" is bearish-who exactly bought this market-and drove it up? Or, maybe joe sixpack is tired of the poor breadth, that has the indexes flying-but his stocks still down? I don't think the market is ready to stop going up-but that it is ready to stop going up for now. Counting on the market going up with Vix rising is a very risky bet. "Heck, even Buffet is saying subprime is a non event" To WHO? Builders seem to be feeling the heat, home prices are certainly not fresh, tons of possible buyers have been removed from the market, foreclosures are rampant-wonder if it is a "non event" to all those people losing their homes. If subprime is such a non event-why is congress talking bailouts-who needs em,subprime problems are a "non event". And the people holding all that bad paper-are they in the "Buffet camp", as well? Of course, at this point, perma bulls look at everything as a "non event"-like the recent GDP at 1.3 percent. I guess that rate of growth(and man is that dropping FAST) isn't a problem if you don't mind recession. Bulls also seem to think the carry trade will never unwind, as well. A dollar about to rise should speak pretty clearly to that notion. I love when folks comment that only gas and food prices are in an inflationary mode, which even if it were true ignores the fact that they are the two things we NEED to buy-and have a much higher marginal utility to us that what isn't inflating. You mentioned truck inflation, how about copper, steel, uranium,nickel, grains, orange juice, ect.,ect,ect? Tame? -surely you jest. Thespookyone

Edited by thespookyone, 07 May 2007 - 09:46 PM.

[nimblebear]

You'll have plenty to talk about, then, imho-by the end of the week.
When you speak of fundamentals are you refering to the latest wall st "rising earnings" snowjob? When you lower expectations the way they did into the quarter-of course they beat them. But, in reality, how did the growth this quarter compare to the last couple years in reality-UH OH. It seems very clear that institutions have TONS of cash sitting on the sidelines, so if "everyone" is bearish-who exactly bought this market-and drove it up? Or, maybe joe sixpack is tired of the poor breadth, that has the indexes flying-but his stocks still down? I don't think the market is ready to stop going up-but that it is ready to stop going up for now. Counting on the market going up with Vix rising is a very risky bet.
"Heck, even Buffet is saying subprime is a non event" To WHO? Builders seem to be feeling the heat, home prices are certainly not fresh, tons of possible buyers have been removed from the market, foreclosures are rampant-wonder if it is a "non event" to all those people losing their homes. If subprime is such a non event-why is congress talking bailouts-who needs em,subprime problems are a "non event". And the people holding all that bad paper-are they in the "Buffet camp", as well? Of course, at this point, perma bulls look at everything as a "non event"-like the recent GDP at 1.3 percent. I guess that rate of growth(and man is that dropping FAST) isn't a problem if you don't mind recession. Bulls also seem to think the carry trade will never unwind, as well. A dollar about to rise should speak pretty clearly to that notion. I love when folks comment that only gas and food prices are in an inflationary mode, which even if it were true ignores the fact that they are the two things we NEED to buy-and have a much higher marginal utility to us that what isn't inflating. You mentioned truck inflation, how about copper, steel, uranium,nickel, grains, orange juice, ect.,ect,ect? Tame? -surely you jest.

Thespookyone

First, my name is not Shirley , second I "jest" read this commentary which sums it up fairly well. Are you part of this "negativity bubble" too ?

"DJIA Hits Another Record into Final Hour on Lower Energy Prices and Buyout Speculation
BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Biotech longs, Medical longs, Semi longs and Computer longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is slightly lower, most sectors are rising and volume is below-average. Over the weekend, as usual, I read and heard numerous scary headlines despite the DJIA putting in its best showing in decades. Local papers had big headlines on the front of their business sections talking of a U.S. recession without even mentioning the Dow's record-shattering run. As well, around the web there was more depression comparisons and 20s crash talk. Finally, a recent Street.com column illustrates the prevailing sentiment among the many bears, in my opinion. David Tice of the Prudent Bear fund said, "We've never been more confident" and "I am as confident as ever that we are going to be right," in references to his belief in the market's impending 50% collapse. Even more telling, his fund is down 5% over the last decade including dividends, yet his fund sales are near their peak during the 2000-2003 market meltdown and his assets are at a new all-time high. The many bears still remain stunningly complacent, in my opinion. I continue to believe overall investor sentiment regarding U.S. stocks has never been worse in history with the DJIA at record highs. I view sentiment as closer to a major market bottom than a major market top. Sentiment gauges have been the best market-timing tools since the major bear market lows in 2002, in my opinion. I have noticed that the new bear catchword to describe the U.S. economy relative to the U.S. stock market is "disconnect." The market anticipates the future. In the current "U.S. negativity bubble" the thought that things could actually get better, not worse, isn't even considered. The mid-cycle slowdown in 1995 was much worse than the current one, yet stocks rose by double-digit percentages during that period as multiples expanded in anticipation of faster economic growth. The real "disconnect" is between the perception of investors regarding the long-term prospects for U.S. stocks and reality, in my opinion. I expect US stocks to trade mixed into the close from current levels as lower energy prices and buyout speculation offset profit-taking and positioning ahead of likely weak retail sales reports.

Posted by: Gary / 3:12 PM" (Between The Hedges)

[thespookyone]

Well, semi long term-I'm very positive about the market. But, for right now, the immediate market future, I guess I'm as big a part of the negativity bubble as I see prudent, at this point. Great article, but I trade for a living, so I'm gonna have to go with Ta that has paid me over the last 20 years. In my view we are in a reverse symetrical triangle that we just hit the top of for the thired time-and failed to penetrate-for the third time. I'm trading with the view that before we have any meaningfull further uptrend, we visit the bottom right hand corner of the triangle-quickly. Should be a nice correction. For myself, I'm a more cash than usual at this time. For fun, I'll post my positions here, which are mostly options that expire next Friday. I bought them strictly because, in my mind-the risk MORE than justifies the reward. They are: 120 May QQQQQ 46 puts, paid .30 200 May QQQQQ 46 puts, paid .24 15 May SPY 150 puts, paid .80 5 June SPY 150 puts, paid 1.85 200 shares SDS, paid 52.32 Total investment= roughly $20,820, comissions paid. Next Friday, I'll be glad to talk about what my positions are worth. Spooky

Edited by thespookyone, 07 May 2007 - 10:44 PM.

[Sentient Being]

I just went the other way, today I took one of my trading accounts and rolled it all into a "Freedom" fund aimed at my retirement date. A fund that invests in 22 or so fund of all shapes and sizes, bonds, equities, US, Foreign, etc. I'm going to take about half my trading dollars this year and add them to the buy and hold side of my world. I'll still leave myself with enough to play 6 or so positions. So I'm not going to give up on trading all together, but after years of spinning my wheels, it's time to make some changes. This is probably a contrarian indication that the present leg up is about over! Hey, that's ok, hopefully the bond side of my holdings would benfit.

[JAP]

But it ain't happening. Its literally impossible for this market to take a dive, based upon all the sentiment indicators, fundamentals, easy money, global growth, yada yada yada. Everyone is bearish based on the readings. AAII for one. Readings have never been this bearish when a market is making new historic highs like today. They are this bearish when the market has made a bottom, or is making a bottom.

It's impossible for the market to dive? You seem so certain. It's 7:45am and futures are dropping down fast.

The market has been up 25 out of the last 28 trading days... up over 1000 points in 6 weeks...

SHORT!

Edited by JAP, 08 May 2007 - 06:50 AM.