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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: SliderOnTheBlack who wrote (20463)	10/19/2002 3:55:56 AM
From: nspolar	Read Replies (1) \| Respond to of 36161

Slider, I'm still a walrus re gold, hoping to soon turn bull. Why? Starting with the following chart: stockcharts.com[l,a]waclyiay[df][pb50!b200][vc60][iUe12,26,9!Lh14,3]&pref=G The chart contains two indicators that give very good dual buy/sell points. A PPO crossover up, combined with a slow stoch crossover up is very bullish. Likewise a PPO crossover down, combined with the slow stochs turning down is bearish. It is easy to see that things don't look too bullish here. One can supplement by looking at the dailies, for slightly better timing. stockcharts.com[l,a]daclyiay[dc][pb50!b200][vc60][iUe12,26,9!Lh14,3]&pref=G The other thing to note is that the recent momentum cycles in gold equities have been very consistent, at roughly 2 quarters per. Assuming continuation we have another month left in a down. Then we should go through a up/basing period, maybe another 2 qtrs, probably less. (I don't agree with George, we are not quite basing here, we are in a correction.) Following that we hopefully will get a powerful move up. So where does this leave us? Timing wise it would leave us with bottom in about a month, followed by some basing to net up, followed by a powerful upsurge starting before mid year next year. How does this coincide with present general markets? It would coincide with a rising market starting about now, and peaking out before 1st half of next year, with a huge dump occurring in the latter half of '03 and early '04. The dump will probably be on the order of 5000 DOW points per present estimates, from around 9000. The dump would also likely presage a huge economic recession, which is likely to start late '03. The BOP will be way out of hand by then, the consumer will be further on the road to being a non-consumer, unemployment will be higher, and Green jeans will have wrung a good deal of what is left in the refi biz. In the meantime the dollar will have peaked, maybe higher than most presently think. The reason for the latter is that the rest stinks, especially the Euro. So what has the dollar got to fight against. Nothing except gold. We can supplement the above with some EW (Elliot Waves). Back to the weeklies on the XAU. Since the peak it has been in a clear 53(5?) sequence down, or an AB(C?). It is easy to count and has not wavered. We are presently at the end of the 1 of the last 5. Until it breaks this sequence - it doesn't, and assuming continuation we have a little up, a down, another up, following by a last down, all to go yet. The C should be as long as the A or longer. Voila, if we look closely, we come up with my previous mentioned number of about 45. How convenient. A nice double bottom. TA, whether it be dual indicators, EW or whatever can change in a hurry. I thought the 535 sequence was in danger about mid Sept. But it held. Until it breaks I'm sticking with it. Gold is also in a clear 535 since the peak. EW of the gold weeklies would end the ABC correction at about 295. The other interesting thing about this is that this ABC could be the end of a 2 of 5 in Gold, on the weeklies. For those that don't understand EW, this situation if true, is bullish bullish and more bullish. Continuation of the 5,from the 2, means the next wave up will be the almighty 3rd, and will probably power gold up well beyond 400 (maybe even quite a bit more). We discussed where we were regarding EW of the XAU, several times earlier this yr on this thread. A lot of things never worked out for us, but I've stuck with it, and the above scenario re POG (which EW's as well) only recently dawned on me. I think with gold we all too often look at the dailies, and there is perhaps more meat in the weeklies. I am currently gaining more confidence that this is the present situation, and LT it is very bullish! In the interim it requires just a little more patience, due to the volatility of gold equities. What would negate the EW situation described in gold? A clear break below about 295 imo. This would really be bearish. stockcharts.com[l,a]waclyiay[df][pb50!b200][vc60][iUe12,26,9!Lh14,3]&pref=G In looking at all this there are some key issues that could throw a monkey wrench in the works. Rogue events as you so often mentioned are one. The other is a general market rebound, which I think is just slightly necessary. I am currently 50/50 on this. We should soon know. I don't think the bears should count one out. There has been a lot of stimulation thrown at the economy. As of yet it hasn't done much, thanks to a couple of minor recessions. The stimulation is surely not going to turn this secular bear around, but a nice strong bear rally is not yet zero on the probability scale. The reason I think a market rebound would be positive, even if moderate, is that it will set the market up for a larger fall during the next dump. The size of the fall will probably correlate to the rise in POG. Coo Coo Ca Choo! This walrus smells something and it isn't a cow!

To: SliderOnTheBlack who wrote (20463)	10/19/2002 12:11:32 PM
From: SOROS	Respond to of 36161

Is there gold in the hills? Robert Shiller, of Yale University, wrote a book before the early 2000 bubble reached its peak. In "Irrational Exuberance", Shiller warned and documented the case that stocks were overvalued, and the bubble was ready to burst. He decided that in order to make some sense out of studying all the data, you had to have some constant to measure value, and he decided to use the PE ratio and the dividend yield. Contrary to some "new economy" nitwits today, who only are used car salesmen in disguise, the PE and dividend have always and WILL always matter. His highly-detailed data showed that the average historical P/E ratio for the S & P from 1895-1995 was 14.6 times earnings. A P/E of 14 roughly equals a simple annual return of about 7%. It just so happens that the long-term historical return for the stock market averages near 7%. It all makes sense. His data also showed that the average dividend yield for the stock markets was 4.6% from 1895-1995. Using this logic, if the P/E ratios are around 14, they are fairly-valued, neither a buy nor a sell. If they are cut in half -- 7 times earnings -- they are a buy and stocks are cheap. If they are 50% higher than fair-value -- at 21 times earnings -- they are expensive and indicate they should be sold. If they get to twice fair-value -- 28 times earnings -- it shows a speculative bubble. Stocks (remember we're talking averages now) should be sold quickly during a bubble environment. You can apply the same type formula to dividend yields. They have an inverse relationship to P/E ratios, so high dividend yields show stocks are undervalued and should be bought. Of course there are specific examples where companies debt ratings, etc. are poor and this is not a reliable indicator on a specific basis, but we are talking averages. Low dividend yields relate to overvaluation and should be sold historically. Shiller's message was simple. If you buy stocks (averages) when they are very undervalued -- a P/E near 7 -- chances are you will have a great return on your investments over time. If, however, you buy stocks when they are overvalued -- a P/E above 21 - the chances are great you will lose money or have no gains at all over a long period of time -- perhaps even a 20 year period. In the early 1920's stocks had very low PE's (under 5) and very good yields (about 7.5%). By the late 1920's, a bubble had developed. In the 1940's this opportunity came again with stocks peaking in the mid 1960's. In the early 1980's, this low PE presented itself again with a bubble developing and peaking in early 2000. So you have about a 10-year period after 1929 for the bubble to unwind and valuations to get cheap again. From the 1960's peak you have about a 20-year period for valuations to get historically low again. Now, we are near the 3rd year mark in waiting for stocks on average to get historically low in valuation again so the next long-term buy and hold period will begin. Where is the PE on average for the S & P now? Estimates seem to range from 25-30. We are not near a level that should be bought by long-term investors. Slider speaks of "low-risk/high-return" situations as all that interests him. PATIENCE is the key here. Everyone will suffer the volatility UNTIL we get to another historical low valuation period which should be bought. They will also set themselves up for ZERO return by buying now. Even if they buy more at the lows, their averages will be net zero over a long period of time. No one will find the exact bottom, but I'd say a good plan is to pull all your money out of the markets and make it safe -- even if it's only earning 1.5%. WAIT until the averages at least get to fair-value (PE of 14), and then begin dollar-cost-averaging back in. Sure, there are always "trades" that can be made during ANY given time period -- just look at QCOM the past 10 days. But you have to have volatility, risk, and great ability to profit much. For the average person, it is much more profitable to only have your money at work in the stock market when the low-valuation opportunities exists. This rally may go a little more, but if you look at the historical perspective, you can see where it is going to end up before the next long, bull run. And that is somewhere between 40-80% lower. The average person who is within 10 years of retirement and is fully invested because they ar buying the garbage being sent to them from totally-biased people (TV, brokers, bankers, analysts) will be severely hurt before this is over. Many will have to work another 10 years for which they did not plan. Wait for Slider's "low risk/high return" opportunity if you only want your money in the stock market. I could go on about why gold investments should prosper extremely well during the time the stock markets eventually reach this "once in 20 year buying opportunity level", but this old man is tired. Back to pain killers. I remain, SOROS

To: SliderOnTheBlack who wrote (20463)	10/19/2002 12:42:32 PM
From: Michael July	Respond to of 36161

Thanks for your insight. I understand the leverage gained through options/LEAPS. Just didn't know if you were expecting a quick up move after the 95-110ish levels in the HUI since the clock is ticking on those options/LEAPS whereas a KGC or DROOY act as a long term option anyway. I've always been a ND fan but their offense has not been that great. Should Air Force get up on them by a couple touchdowns I wonder if ND will be able to come back and duke it out in a slugfest.

To: SliderOnTheBlack who wrote (20463)	10/21/2002 3:00:53 AM
From: nspolar	Read Replies (1) \| Respond to of 36161

Slider, we've discussed the housing refi and related issues off and on. Got a couple of pieces of info that fit into the puzzle. - Know personally of a some recent refinance cases, of upper middle level income families. In all cases they took out some equity, paid off credit card debt, and saved the rest. They didn't spend it on new whatever. - AK PF dividend refunds are quite important to the average AK folk. A huge amount of money paid out all at once, annually. Many use it for special purchases, such as computers, autos, once a year feel good junk, and the like. Local banks have very good statistics on how quickly it is spent. Well, guess what? It ain't moving very fast this year. Large chunks are remaining in the bank accounts, i.e. being saved. Appears like we are slowly entering phase III or whatever you want to call it regarding the consumer. They are slowly pulling in their horns and instead of spending they are starting to save and pay off debt. IMO this will lead to a very deep recession within a year or so, which will probably be one of several over the next 5 years, as this bear marches onward. FWIW.