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Strategies & Market Trends : Raptor's Den II -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (282)	4/19/2003 2:08:57 PM
From: Win-Lose-Draw	Read Replies (1) \| Respond to of 3432

there is nothing to say that the market would not decline long with them 100% agree, smooth out the noise and imo we will find the market can and will decline along with $vix/$vxn. my take on the weekend chit chat is we have two fairly wide consensuses: (1) this coming week starts down for 1-2 days, and (2)the next top will be both above the recent highs and shortable. i am flat and doubt i will take an overnight position in either direction sunday night. the overnight pops seems to coincide with europe/london waking up but i belive europe is closed monday.

To: Justa Werkenstiff who wrote (282)	4/19/2003 2:17:55 PM
From: SOROS	Read Replies (2) \| Respond to of 3432

Buy and Holders are going to get wasted again. Many are sitting on 30-50% losses from the bubble peak, but in all probability, they will get cut by at least that much again . . . or more. Someone sent me thoughts addressing all of this. Here is a summary: Jobs are leaving the USA in droves. And why not? Would you rather hire an American in America for $20, $30, or $40 an hour and have to provide health insurance, retirement, taxes, deal with their unions, their attorneys, etc. or a bunch of Chinese workers for less than .50 cents an hour and no benefits or potential legal hassles? The dollar is under pressure and now perhaps even questioned as the future reserve currency. ALL government budgets from the top to the bottom are in deep trouble. Corporate pensions have not been putting the money required by law to keep up with falling values -- they are way under-funded and hoping for a stock market miracle to bail them out. Insurance companies have made guarantees that can't be guaranteed on huge amounts of investor money. The airline and auto industries are on the verge of needing bailing out. The trade imbalances are huge. We just keep printing money to buy real goods. Derivatives gambling is spiraling out of control -- one mistake here could crumble the world's economy, especially the USA. Corporate accounting "crap" is still going on with "pro forma" numbers. Corporations state earnings without reporting the losses they have from buying their own stocks at retail and then giving them as employee options at huge discounts. Just this fact alone and the unfunded pension problem is enough to wipe out all the "profits" of most companies. Reality is, it makes huge losses for them which the government and Wallstreet allow to go unreported to sustain the ridiculous valuations seen today. The Dow Theory Letters reports that if you take the unfunded pensions and account for the options trickery going on, the S & P is selling at near 46 times earnings. This is the TRUE reality. However, if you go by the "reported" earnings of the same companies, you get about a 27 PE. Even this is not enough lies and tricks for Wallstreet though. They want investors to buy the garbage "pro forma" numbers -- FUTURE, guessed at earnings, with no option accountability, and no pension accountability gives a PE of near 16. They call this a "good value" with the low interest rates of today! You know, if they stop counting wages as an expense, they could make stocks an even better value! The "war on terror" will continue to stretch budgets and make tax cuts more unlikely. Let's not even go to what happens if we have more attacks in the USA. What about those in retirement or near retirement? Their portfolios have been brutally chopped in the past 3 years, and their chance of fixed income has gone down the drain. Any problems seen creeping up from this? Put this all in perspective. There have been three long Bull markets in the last 90 years. From 1913 to 1929 the market got to a PE of 20. It then collapsed, and did not reach a bottom until 1949 where the PE was 5.4 and there was a dividend yield of 7.5%. That's a 20-year decline after a 17-year Bull. Then, from 1949 until 1966, the market again reached a PE of 20, but the subsequent decline too it to an eventual bottom of a 6.8 PE and a dividend yield of 5.7% in 1982. That's a 16-year decline following a 17-year Bull. Now we have another 17-year BUll from 1982 until 2000. But there is a difference this time. The PE reached 40. So where are we today? How great of a value is the stock market after a 3 year decline? Based on the TRUTH -- taking options and pensions into account -- the PE is about 46!!! The Bulls love history when it points to some obscure "fact" that supports buying stocks. Let them calculate where stocks will be if the market returns to an "historical" valuation of a PE under 7 and a 7% dividend. Greenspasm's rate cuts have done little or nothing to help for the first time in history. And then you've got a Federal Reserve who plain states they will do whatever it takes to avoid deflation as in Japan. They have clearly said they will print as much money as it takes! They've said they will buy back all the T-bills, T-notes, and T-bonds if necessary to keep short-term, intermediate-term, and long-term rates down. Can you imagine a society with a 10-12% inflation rate while interest rates are at near ZERO%? Jim can explain what that would be like, I'm sure. If you watch Wallstreet Week or CNBC, you'd think clear skies are ahead. The most bearish say they can see 7-9% steady growth for investors in the markets. I guess if corporations can make up their earnings and ignore their expenses, then the American investors can close their eyes and pretend that none of the above actually exists or means anything. But then again, most ostriches end up with their thinking parts severed from their sitting parts because both are functioning at near the same level. I remain, SOROS .

To: Justa Werkenstiff who wrote (282)	4/19/2003 3:12:55 PM
From: Lone Ranger	Read Replies (2) \| Respond to of 3432

Justa, "LR: Vix and Vxn could decline further but there is nothing to say that the market would not decline long with them." Maybe I'm dense<g> but what makes you think this? Usually as the market declines the fear gauges increase. And I thought the basis for the people expecting a decline, even a waterfall decline, were basing a lot of that on the super complacency indicated by these indicators and the 21 day moving avg of the put/call ratio. But what might happen if a trend reversal is occurring or has occurred, is then these indicators might rightly show a decrease in nervousness as the market rises but I don't understand how these would decline in a declining market. LR

To: Justa Werkenstiff who wrote (282)	4/20/2003 1:24:23 PM
From: Michael	Read Replies (1) \| Respond to of 3432

Justa, The chart below offers a possible support for a lower vix and higher index before a turn. I don't say this with a great deal of conviction as the chart is a wee bit messy but it would seem to offer food for thought. I don't have stockcharts membership so I can't annotate it, but there seems to be two possible support lines on here. One running from Feb 01 through to now (ignoring Mar 02 as an outlier), which seems to have given reasonable support to a lot of the turns during that time. If it is valid then the recent action has fallen through it. The second level of support is the trendline running from Aug/Sep 2000 through the Mar 02 bottom. Projected forward to today, that would allow for a lower vix higher spx combination. Do you think this has any predictive value ? Mike stockcharts.com[w,a]daclyiay[df][pb21!b200!f][vc60][iut]&pref=G