Bear Cave 2 (Bull Allowed)

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This is update #1965 for Tuesday night, January 21, 2014.


In the beginning of a new calendar year, investors sometimes buy the top performers of the previous year while selling the biggest losers. That definitely does not seem to be the case in 2014. Instead, most investors are buying whatever has been working best so far this year, while ignoring past history. Thus, Treasuries are being steadily purchased; mining shares (except for coal mining) continue to be bought even on days when their underlying commodities are lower; the S&P 500 continues to pretend to set new highs, while not actually surpassing its after-hours peak of December 31, 2013 and mostly going net sideways; emerging market shares continue to slump along with coal mining shares; and recently hot individual names receive unusually overhyped media attention and additional amateur buying. All in all, it's typical behavior for an extended transitional period between a major bull market and a severe bear market.

True Contrarian
 
Jan. 17, 2014, 9:00 a.m. EST
3 signs stocks are overpriced
These indicators all look bearish now

Wall Street will tell you stocks are still a good investment because they are reasonably valued when compared with last year’s earnings, using the “trailing price-earnings ratio.”

Wall Street will tell you stocks are still a good investment because they are reasonably valued compared with next year’s forecast earnings, using the “forward price-earnings ratio.”

Wall Street will tell you stocks still offer good value because the Federal Reserve is keeping interest rates on bonds and bank deposits so low—what we might call the “Quantitative Easing” argument.

Wall Street will tell you stocks must be a good investment because they have done so well over the past thirty years.

Wall Street is spinning you a line.

3 signs stocks are overpriced - Brett Arends's ROI - MarketWatch
 
RealMoneyIssues said:
If all of this were true, the markets should be going down... right?
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I'm not sure why you would ask me that question since you know the answer, but I'll take the bait since I have lots of time on my hands. Sure, the market continues to grind higher day-after-day just like it did when it topped in 2000 and 2007, and it appears this Bull will last forever. Ha....maybe it will last forever, and I'm wrong....and Dow 30,000 is on the way.

I guess you are talking about the US markets, because many others are down, and will probably bounce soon. We still have a chance for Blow off Tops in some markets, or many other possible scenarios, but to answer your question it will not be straight down, and tops are a process. This Bull will continue to drag on until it doesn't, but the signs are there for folks that know how to read them that the 3 Bears are coming.

Most investors will never see the next Bear Coming, and traders will continue to buy the dips as they have been conditioned to do during this Bull, but one day the market will not bounce back. In my opinion it will not be like the 2008 sell-off, but who can say for sure. As I said, Tops are a process, and NO ONE knows for sure, but my Risk Management data tells me that 100% moves into the S Fund is not something to be doing right now. During a Bull Market all early moves into stocks are corrected by the Bull, and it makes most Traders and Market Timers look pretty darn smart. During a Bear, (and I think we are close) a 100% move into the S Fund will not be fun if you are wrong, and we get more then these little 5% corrections. There could still be plenty of Big swings coming our way as the Bull dies, or maybe the Bull has years to go, but I'll stand by my opinion for now, and stay in the G Fund.

Again, I could be wrong and DOW 30,000 is on the way, but going against the data I have, and using my Risk Management rules, I'll be in the G Fund with my TSP and 401k retirement money. However, I might make some moves if I thought the set-up was good. As I said Tops are a process, and this Bull will not die easily.... I have a trading account for gambling, and I will not do that with my retirement money again...I have in the past!


Take Care and It's not what you don't know that hurts you, it is what you know that isn't so. I read that comment at another chat room, and thought about the so called CNBC Guru's when I read it.
 
The $23 Trillion Credit Bubble In China Is Starting To Collapse – Global Financial Crisis Next?

By Michael Snyder, on January 20th, 2014

Did you know that financial institutions all over the world are warning that we could see a "mega default" on a very prominent high-yield investment product in China on January 31st? We are being told that this could lead to a cascading collapse of the shadow banking system in China which could potentially result in "sky-high interest rates" and "a precipitous plunge in credit". In other words, it could be a "Lehman Brothers moment" for Asia. And since the global financial system is more interconnected today than ever before, that would be very bad news for the United States as well. Since Lehman Brothers collapsed in 2008, the level of private domestic credit in China has risen from $9 trillion to an astounding $23 trillion. That is an increase of $14 trillion in just a little bit more than 5 years. Much of that "hot money" has flowed into stocks, bonds and real estate in the United States. So what do you think is going to happen when that bubble collapses?

The $23 Trillion Credit Bubble In China Is Starting To Collapse – Global Financial Crisis Next?
 
Yes, a rhetorical question...

But then again, folks have been talking about a "bear"
smilielol.gif
market since August of 2011, when I lost my first 50%... ugly, ugly time for me... still digging out of that debacle...

I kept 25% in C since I no longer believe any selling, but am mostly on the sidelines for now... only time will tell...
 
RealMoneyIssues said:
Yes, a rhetorical question...

But then again, folks have been talking about a "bear"
smilielol.gif
market since August of 2011, when I lost my first 50%... ugly, ugly time for me... still digging out of that debacle...

I kept 25% in C since I no longer believe any selling, but am mostly on the sidelines for now... only time will tell...
Click to expand...


Well, you are correct and only time will tell. Whatever happens, I wish you the best in 2014 for you and your family.
 
Some comments from Kaplan:

The financial markets aren't always accompanied by wild fireworks and gut-wrenching moves in both directions, but I believe that 2014 will experience more than its share of back-and-forth behavior. With momentum players and hedge-fund technical traders representing an outsized proportion of all traders at any given time, the financial markets will repeatedly encourage many to jump aboard each apparent established trend just before there is a sudden countermove. In this way, those who keep chasing after the market will repeatedly lose money throughout the coming year. Now that investors foolishly believe that they have "learned the lessons of 2013", the market will demonstrate that they were merely ephemeral principles that have no lasting value. The only enduring concept is that, whenever the vast majority are going one way, you must do the opposite.

Whenever the financial markets are undergoing an important transition, this critical passage will be masked by the media's irrational attention to minor news events which are reported as though they were earth-shaking events. Because most investors don't pay attention to what is happening, they aren't interested in nuances of intraday extremes, divergences, insider activity, or fund flows. Instead, they want to trade in the direction of previous trends because they have been brainwashed into believing that they will continue indefinitely. Whenever the media feature a particular financial event, investors will be reminded that they have been tardy in jumping aboard the bandwagon, and will foolishly act just as it has become maximally dangerous because a trend reversal is either imminent or has already begun.


One important principle is that whenever insiders become aggressive sellers in any subsector, while amateurs are piling in, the media are talking almost entirely in a positive light, most brokerage prices targets are higher than current valuations, and the traders' commitments are sending a danger signal, it is essential to sell whatever you own in that subsector. If you alter your decisions based upon how much you've gained or lost, or whether you have long- or short-term capital gains, then you're likely to get yourself into serious trouble. In an ambiguous situation you can choose to sell only those assets which have long-term gains while holding the remainder, but as soon as it becomes compelling to unload anything then you must do so without delay. One reason is that the next equity bear market is likely to be approximately as crushing as the last one, and perhaps even more devastating for some subsectors. Since there is no way to know in advance which equity groups will be clobbered the most, or when, and since it is almost certain that virtually no subsectors will actually enjoy net gains by the time the dust clears at the next bottoming period around 2016, it is far too dangerous to hold onto your favorites in the vain hope that they'll somehow be among the very few assets to be spared.


True Contrarian
 
Wednesday, January 22, 2014

PATIENCE REQUIRED

In my last post I noted that gold could give a major buy signal in the next 2-3 weeks. Let me stress again that patience is required right here. Gold has to confirm the intermediate rally first. That means it needs to break above $1268 and make a higher high. If it doesn't do that then no buy signal will be generated. Without a reversal of the pattern of lower lows and lower highs then this is just another weak bear market rally destined to roll over and break the bulls hearts again.

So far every time gold gets close to breaking through the 1250-1260 resistance zone a huge seller materializes, usually in the pre-market, to dump several million oz. of paper gold on the market and drive gold back down. This happened again yesterday.

Gold Scents
 
I know Savage said Patience, but I'm buying some GDX in the pre-market in case gold makes it thru 1250 today. If it's just another Bust I'll just sell again. For now this is just a short-term trade as we are getting late in the cycle.


Looks like my USLV trade might get a nice pop today.

1/23/2014 7:16:33 AM ET GDX Bought GDX @ $23.42 Executed

Good trading.
 
CrabClaw said:
I have been following his projections. He is close on the cycles; way, way off on the price target.
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I have watched him for years, and he has made some pretty wild calls. He does take trades off his data, but shorting this market for other then day-trades has not been good for your trading account. I have several paid services, and none of them are currently long the S&P 500, but that doesn't mean it can't keep going up. What it does mean - is the The Risk Reward is to high for me to be long the S&P 500, and when you are my age, I think that's good advice for sure! I'm not taking big Risks with my Retirement money, but my trading account is another story.

Good luck on your trades today.
 
Putting a trailing stop on my TZA trade since it's in the money. The Bulls will fight back and I don't want to give up all my gains now that it's a winner.

Good trading.
 
CrabClaw said:
I have been following his projections. He is close on the cycles; way, way off on the price target.
Click to expand...

I like to keep on eye on SemiBizz. In my opinion a very good trader, and he took a DUST trade this morning. I thought about it as a day-trade, but passed.

Long DUST 29.00 stop low of day 28.50.

selling some more gold - Traders-Talk.com



I sold my USLV

1/23/2014 10:48:16 AM ET USLV Sold USLV @ $50.1736 Executed


I wasn't feeling the love for my GDX...sold them, and will buy NUGT when I get that Loving Feeling again.

1/23/2014 10:51:57 AM ET GDX Sold 2000 GDX @ $23.8201 Executed
 
Last edited:
My system still says stay in, I missed out on gains in the past by trying to call a top, so I'm not gonna start trying to here.
 
sniper said:
My system still says stay in, I missed out on gains in the past by trying to call a top, so I'm not gonna start trying to here.
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Tops are a process and this one is far from complete in my opinion, but I'm retired now and the Risk Reward set-up is to high for me to be in the C, S or I funds.

Good luck to you riding this Bull.
 
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