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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Crimson Ghost who wrote (55808)12/1/1999 6:31:00 PM
From: BigBull  Read Replies (2) of 95453
 
George, Your call for a 7% long bond is looking better and better, 30+ oil will do it. IMO this is looking more and more like the "unfinished business" this market needs to work out. However, at that point the bears should be real carefull. Imo bond prices need to adjust to the new reality of a booming world wide economy. I believe based on the long term charts that rates will then oscillate between low 6% to 7% for approximately 2 years. At a 7% yield there is massive support, bonds WILL get bought there and bought hard. We are now in a period of "adjustment" wrt rates and commodities. Like you, I believe that 30+ oil is unsustainable for the long term. Were I disagree is that I believe $25 oil is sustainable. Remember, 25 dollars ain't nearly what it used to be, right? <g>

After the +/- 7% bond yield the bearish sentiment will become overwhelming. The bears will then have do deal with those sentiment readings plus 4th qtr earnungs, which will be reeeeal good. As psychology adjusts to the new reality of somewhat higher rates and commodity prices the Bull will return and a sustainable market rally will commence. IMO it will be broad. It will be accompanied the belief that 6-7% yields will not induce recession and the conviction that world economic growth (hence earnings) will be sustained for many qtrs going fwd.

What I will be looking for at the bottom.

1. Utility averages diverging bullishly.
2. Bullish ad line divergences
3. MACD buy on the daylies.
4. Put/Call ratios and Vix the reverse of what they are now.

JMVVHO

Bull
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