Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (65725)	8/25/2010 8:26:09 AM
From: TobagoJack	Read Replies (1) \| Respond to of 218183

too many folks are expecting a plunge and all with a single set time frame in mind i fear events may not turn out that simple and so i fear

To: carranza2 who wrote (65725)	8/27/2010 7:23:35 AM
From: TobagoJack	1 Recommendation Respond to of 218183

re recent market wobbles and the hindenburg omen, player 1:: So we are making moves in the market that has a 20% accuracy as per the Wall Street Journal. Don’t get me wrong but that seem to me like a dubious strategy. Love the amount of Bulls today as well hitting 20%. So lets do a quick logical analysis. 1. Economic Data Bad. Yup nothing new here. Well documented. 2. Hindenberg no need to go there we are all can read words printed everywhere. 3. Going with that the Market is going to crash talked about everyday scaring the out of the retail investor to move on to bonds after a 30 year secular move. Liquidation out of funds for 17 weeks in a row. Do I think the market crashes form here NO, but I have to put the 2% probablity of a nuke, assination, etc. player 2: i don't think it 'crashes' either. I would note though the 21% bulls in the AAII survey are a bit similar like the Hindenburg omen in a way - got a lot of press too, but the indicator has a statistically significant record of producing good rallies 3 months out (just as clusters of the HO have a statistically very significant record of doing the exact opposite). the only problem is - most of the statistics are from a secular bull market period. yes, there have been huge outflows from stock funds. but then again, there were huge inflows into stock funds throughout the 1980's and 1990s - that didn't keep the market from going up a lot, rather the opposite. On the other side of these outflows are a bunch of extremely hopeful fund managers, who hold one of the lowest cash reserves in history (3.8% of assets - only a handful of readings were lower, and they occurred at the top in 2007 and in March - June of this year). WS strategist average stock allocation is at 61% - this is not exactly low either (tough not excessive - they have been up at over 70% in the past). I'm certainly not claiming that there is a lot of bullish sentiment...but AAII is just one survey. Most other surveys are basically in neutral territory, and so are most positioning indicators. Judging from the totality of sentiment indicators, i would say there is no signal at all. Not many bulls, but not many committed bears either - and certainly no fear whatsoever. Actually it's just about what you would expect to see after prices have been going down for a while. The economy is going downhill, it's true, but just because the stock market hasn't reacted a lot to it yet, doesn't necessarily mean it never will. Just as an example of how lethargic the market can be in pricing in what is apparently blindingly obvious, in late 2007, after the ECB and the Fed had to pump in hundreds of billions of dollars into the banking system to avoid a complete breakdown of the payments system because of mortage securities becoming toxic everywhere - a fact everybody was aware of - you could still sell FNM at $72, ABK at $65, WaMU at $35, etc. etc. - the market isn't as good at 'discounting' things as lore has it. So when the sentiment picture is actually not all that clear, then we are left with the price action. Of this we can say it looks slightly oversold in stocks, and very overbought in bonds. What we can't say is that the action in stocks looks good. Possibly we'll be in a trading range for a while. However, from the fall of 09, after the initial thrust from the lows, we had a grind up lasting for many months, accompanied by many extremes in bullish sentiment. A grind down accompanied by bearish sentiment could happen just as easily. player 1: The investor intelligence data came out this AM, all the other stuff has been on the tape for two weeks minimum. player 3: I prefer to look at bulls-bears, and anytime we get a spike down to/below the white line, a tradebale bottom was at hand. Au/Ag ratio is just above 65, having come in from almost 69 intraday 3 days ago. On top of that there are some good positive intraday macd/px divergences evident on the S&P, NDX, Nasdaq, DAX, FTSE etc at the 60min, 120 min, 240min, and 480min timeframes. This to me is st bullish. There is a gap between 1063-66 on the S&P which is likely to get filled. Could we go lower first? absolutely. There is no conviction and until PMs come back from their hols and start taking volume away from those HFTs, anything can happen. Just look at today - they slammed the market in the last 5-10 minutes after it made a nice mid-afternoon comeback. This is not fundamental trading. Longer term, what worries me is the financials look poor and stocks can't get very far without them. As an aside, you can count the bulls amongst the PMs and HF guys on one hand out here (in fact population =1 out of 20 of those I speak to). Everyone is looking at the same data and interpreting it the same way - ie bearish. Yes the fundl backdrop IS bearish no doubt about it, but as Heinz pointed out, that doesn't mean equities notice right away. The 2nd derivative in bad data points has not become broad enough yet so as to convince investors it is not just a one-off (as they believe with existing home sales/new housing starts for eg) and there is still a strong belief the CBs are in control and can avert the coming double dip with more pump priming, and until that changes, the market will almost certainly not crash imo. player 4: Yes, the PMs are bearish but surprisingly they are heavily weighted in stocks. player 5: They cannot figure where else to put their money either..... Pulling money out of stocks and into money funds at 0.01% isn't much of an alternative. player 1: As for the Financials who in the right mind would think they would be the leaders on the other side, too much dilution, damage etc. Need to rebuild and hang for while. Had the big overold bounce off the bottom. Maybe five years or more. trading them yes but no secular move. Me I just take them off my screen. There is much more out there that that crap. player 6: Totally agree. Lots of little vampire squids. A broker friend (this might be second time I tell story) told me his budget for korea. Their costs are way higher with guarantees and more staff – and their revenues are 1/3 less than they were a few years ago. It’s like thousands of people in a company owned by shareholders have agreed to continue bypassing shareholders and pay themselves whatever they want.