ork, I would be careful with that 73-74 retrace. Some of that was due to Watergate.
I like....1929, 1987, and 2000. They all include long bull runs. Two include stock bubbles, which I believe we're in again right now.
Looks like Bernanke is following in Greenspan's footsteps and trying to bail out one busted bubble with another. He's flooding the system with dollars.
Look, GDP has sunk. We went from 6 - 8% to 2.2% last qtr. What has the stock market done? It went up in parabolic fashion. The stock market right now has disconnected itself from the economy.
But, it's early in the year. And they want to get everyone in, all bullish and all lathered up. They're also training the public to "buy every dip".
I'm looking for a hard-down later in the year.
Right now, they're holding the "Fed rate cut carrot" in front of the sheep, (as if it's even going to make a difference), keeping them in the game. But, by June/July, no rate cut......the sheep will get scared.
One thing that could change everything in the near term is if Bush hits Iran. If he or Israel does, you're probably looking at $100 oil and chaos.
All of the money has been made in foreign markets over the last few years Last year, Venezuela went up 170%. In 05 Russia climbed 85%, others went up anywhere from 40 - 65%, the Dow closed down. China is growing at 10 - 11% gdp and India isn't far behind. The markets here are dead, and I suspect it will stay that way for a long time.
I wouldn't chase foreign markets now though. When we go down....they're going down even harder since they went up so much. Since Americans have dog-piled into foreign markets, they will crash eventually. Americans have sent close to 85% of all fund flows in the last year, into foreign markets.
While they cheer that the Dow is making new all-time highs now, in reality, inflation adjusted, the Dow is still down like 17% from it's 2000 high. It's been 7 years now and the S&P still can't get back to it's 2000 high. It's been dead money. It's all about timing, when to get in, and when to get out.
Another thing that's interesting is, oil has dumped hard, down $25/barrel back to 2004 levels. And, oil stocks here make up a big part of the S&P's earnings. But, oil stocks here haven't followed oil down. It's another disconnect. If those oil stocks go back to their 04 levels due to lower oil, it should put a big dent into some of the indices. Check out XOM now vs it's 04 level.
I think real estate stocks too are in a big disconnect. They may go back to single digits eventually, where they came from.
Interesting times. I'm staying flexible at this point. There's too much manipulation out there in the markets today, too many disconnects, and and too much money being pumped into the system. It will end though.
I'll probably be more bearish later in the year, when I can see the white's of their eyes. ;-) |
