22 replies to this topic

[Douglas]

RP is so wrong. Literally anyone could do better than him. Its guesswork. Even if the marekt does soon fall, the chances are it will bounce and rebound at some point. he will continue being bearish forever and eeevveeeerrrrrrrr......

The only thing that would take the world stock markets down or cap the world's growth rate from here would be a third world war. Having the war in Iraq quite contained in the region and the low polarity that is not quite increasing among the other nations, it is unlikely to happen within a decade. However, if these resource driven problems and the trade protectionism increase over time, the tension will also increase since the rising inflation is a big problem for the USD and USD based assets --although I think the USD is near a secular low. There is no doubt that the day the USD looses its reserve status --not saying it will, there will be a big adjustment in the financial and political picture. I don't think that is happening anytime soon either though...

I think the only thing that can derail the bull are much higher interest rates because this bull has always been about liquidity and easy money and what it has wrought - a boom in private equity buyouts.

Speaking of higher interest rates. Anybody watching the Bond? According to my weekly chart, it broke a long trend line and looks to be heading a lot lower. Any other bond bears out there?

[ed rader]

What was needed in 2000? or at any other top for that matter. It always looks like it could go on forever, at the TOP of the mountain.

it could be another new paradigm !

ed rader

[Douglas]

I think the only thing that can derail the bull are much higher interest rates because this bull has always been about liquidity and easy money and what it has wrought - a boom in private equity buyouts.
[/quote]


Gary, speaking of higher interest rates, the bond appears to be breaking down. See the following chart.

[OEXCHAOS]

I think the only thing that can derail the bull are much higher interest rates because this bull has always been about liquidity and easy money and what it has wrought - a boom in private equity buyouts.

Exactly. There's no shortage of cash, but there's beginning to be a shortage of places to put it (i.e. funds earmarked for domestic deployment). Unless you think realestate is likely to be a hot contender.

Can we sell off here? Sure. No problem. But is it likely to go very far or last very long? Nope. Too much money and too many Bears.

M

[thespookyone]

I think the only thing that can derail the bull are much higher interest rates because this bull has always been about liquidity and easy money and what it has wrought - a boom in private equity buyouts.

Exactly. There's no shortage of cash, but there's beginning to be a shortage of places to put it (i.e. funds earmarked for domestic deployment). Unless you think realestate is likely to be a hot contender.

Can we sell off here? Sure. No problem. But is it likely to go very far or last very long? Nope. Too much money and too many Bears.

M

Mark- I have to credit you for furthering my take on sentiment, BUT, I believe it was you who told me that Joe Sixpack was not the one to fade-no?, which I was feeling like, and have come to embrace. Commercials, visa vie the COT-are not showing a ton of bearishness. So my question is-exactly which "too many bears" do you refer to? Are you reverting, and now counting the Joe Sixpacks in the AAII survey as being important-even though they trade such a tiny slice of the pie? As far as the liquidity issue, gold and especially silver prices point toward liquidity drying up, imho.

[OEXCHAOS]

I think the only thing that can derail the bull are much higher interest rates because this bull has always been about liquidity and easy money and what it has wrought - a boom in private equity buyouts.

Exactly. There's no shortage of cash, but there's beginning to be a shortage of places to put it (i.e. funds earmarked for domestic deployment). Unless you think realestate is likely to be a hot contender.

Can we sell off here? Sure. No problem. But is it likely to go very far or last very long? Nope. Too much money and too many Bears.

M

Mark- I have to credit you for furthering my take on sentiment, BUT, I believe it was you who told me that Joe Sixpack was not the one to fade-no?, which I was feeling like, and have come to embrace. Commercials, visa vie the COT-are not showing a ton of bearishness. So my question is-exactly which "too many bears" do you refer to? Are you reverting, and now counting the Joe Sixpacks in the AAII survey as being important-even though they trade such a tiny slice of the pie? As far as the liquidity issue, gold and especially silver prices point toward liquidity drying up, imho.

The average investor is a smaller part of the pie. They matter, but the market can make them right or wrong rather easily and such can be predictable by looking at Small Specs and Small Hedge funds.

Right now, nobody is all that Bulled up and some are down right Beared up.

There's signs at the edges, mind you. The Street .com has 58% Bulls, and the II numbers are up there, but by themselves, I don't think I'd be looking really Bearish without a serious change in the fundamental picture.

Of course, things can change fast, so I'd not marry the bullish case, either. The real curve could come with a pullback and a sudden switch to dip buying. And I'm not saying that we shouldn't buy dips, but we may want to change our tune quickly if we see that we're getting too much company.

Mark

[thespookyone]

I think the only thing that can derail the bull are much higher interest rates because this bull has always been about liquidity and easy money and what it has wrought - a boom in private equity buyouts.

Exactly. There's no shortage of cash, but there's beginning to be a shortage of places to put it (i.e. funds earmarked for domestic deployment). Unless you think realestate is likely to be a hot contender.

Can we sell off here? Sure. No problem. But is it likely to go very far or last very long? Nope. Too much money and too many Bears.

M

Mark- I have to credit you for furthering my take on sentiment, BUT, I believe it was you who told me that Joe Sixpack was not the one to fade-no?, which I was feeling like, and have come to embrace. Commercials, visa vie the COT-are not showing a ton of bearishness. So my question is-exactly which "too many bears" do you refer to? Are you reverting, and now counting the Joe Sixpacks in the AAII survey as being important-even though they trade such a tiny slice of the pie? As far as the liquidity issue, gold and especially silver prices point toward liquidity drying up, imho.

The average investor is a smaller part of the pie. They matter, but the market can make them right or wrong rather easily and such can be predictable by looking at Small Specs and Small Hedge funds.

Right now, nobody is all that Bulled up and some are down right Beared up.

There's signs at the edges, mind you. The Street .com has 58% Bulls, and the II numbers are up there, but by themselves, I don't think I'd be looking really Bearish without a serious change in the fundamental picture.

Of course, things can change fast, so I'd not marry the bullish case, either. The real curve could come with a pullback and a sudden switch to dip buying. And I'm not saying that we shouldn't buy dips, but we may want to change our tune quickly if we see that we're getting too much company.

Mark

Thanks for your take Mark, which I truly value. As far as having company buying dips-from the speed of the turnarounds lately,in the face of some pretty bad economic news(GDP, ect.), I'd say the bus has gotten fairly loaded, in terms of dip buyers. I must question though, if "nobody" is all that bulled up how the PC ratio has hit 52 week highs in the past week or so, and is actually heavily leaning to the call side now-it seems "someone" is mooing-no?

[wyocowboy]

Equity yields are still much higher than bond yields, so, as Gary says, unless interest rates move much higher, the fundamentals remain intact for stocks. The other part of the equation would be earnings moving much lower - but it looks like analysts are already underestimating the next quarters earnings - and the huge number of stock buybacks will help boost earnings.

[thespookyone]

Equity yields are still much higher than bond yields, so, as Gary says, unless interest rates move much higher, the fundamentals remain intact for stocks. The other part of the equation would be earnings moving much lower - but it looks like analysts are already underestimating the next quarters earnings - and the huge number of stock buybacks will help boost earnings.

In reality-the growth of earnings WAS lower. The fact that they lower estimates-is not causing earnings to rise at a better rate-merely creating an incorrect perception that they are.

[Gary Smith]

Equity yields are still much higher than bond yields, so, as Gary says, unless interest rates move much higher, the fundamentals remain intact for stocks. The other part of the equation would be earnings moving much lower - but it looks like analysts are already underestimating the next quarters earnings - and the huge number of stock buybacks will help boost earnings.

Wyocowboy, you may have seen this in this week's Barron's.


"Stocks' bull run has been fueled by deals, deals and more deals. As Wells Capital Management's Jim Paulson points out, even at these levels stocks' value relative to bonds (the S&P earnings yield versus the 10-year Treasury yield) favors equities by the biggest margin in 25 years......"