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Bull Pen - Fall 2006
- Thread starter Griffin
- Start date
Bullitt
Well-known member
Foreign funds have recently been beefing up their exposure to Western investments without making a splash.
Dubai International Capital takes a stake in Sony, Mubadala Development Co. takes on an 8% stake in AMD and Oil rich Abu-Dhabi takes a 4.9% stake in C.
China Investment Corp. alone has about $67 Billion and is looking to put it to good use.
http://online.wsj.com/article/SB119621328472106044.html?mod=dist_smartbrief
Dubai International Capital takes a stake in Sony, Mubadala Development Co. takes on an 8% stake in AMD and Oil rich Abu-Dhabi takes a 4.9% stake in C.
China Investment Corp. alone has about $67 Billion and is looking to put it to good use.
http://online.wsj.com/article/SB119621328472106044.html?mod=dist_smartbrief
robo
Well-known member
Saturday, December 01, 2007
Strengthening Dollar Stokes Stock Rally
The bear market in US stocks may be just about over. If you don't believe we've been in a bear market, consider that from high to low, the most liquid and dynamic part of the stock market, composed of the 2000 stocks in the Russell Index, dropped 18.63% from its early 2007 high water mark (after adjusting for changes in the value of the US Dollar). That's more than a correction, it has definitely been a bear market. But, why would this be the end of the bear market now? The answer has everything to do with the dollar itself.
The US Dollar bounced off its long term support trendline last week shown on our Dollar Index chart. This rebound in the dollar sent the US stock market soaring. Tagging along for the ride, other world markets joined in on the rally, proving once again that the US stock market continues to be the "lead dog" for the planet. Although we may not have seen the absolute low in the Dollar (Ray Merriman points to the Bush-Clinton dollar cycle to suggest that the next big turn in the dollar may coincide with the election of Hillary next year), the five-year bear market in the dollar is probably over and a trading range bottoming pattern in the currency will help bolster confidence in the US markets and draw money back from foreign markets which had exited the country during the bear market. A turn in the currency flows from foreign markets, which are overbought and overvalued, should be enough to send US share prices, mired in an oversold and undervalued state, soaring in a new bull market.
Actually, if you think this is just a hopeless permabull fantasy, you must realize it's not a hypothetical situation at all. It happened exactly 13 years ago in fact! In 1994, the stock market underwent a 13% correction (dollar-adjusted) as the dollar dropped sharply lower all year, keeping stocks in a trading range in nominal terms, just like 2007. Several months before the absolute low in the dollar bear market, stocks started a rally which carried them 313% higher. Part of those gains came from the rise in the value of the dollar as foreigners recognized that US stocks were on sale and that, even if stock prices remained unchanged, the rising value of the dollar would generate substantial profits in their own currency. And, for the middle part of that bull market, European investors in particular were seeing 60% per year annual returns from the fact that both stock prices and the dollar were rising in tandem.
Last week, the Dow Industrials rose 742 points in non-dollar-corrected (i.e., in nominal price) points. But, when you take the rise in the dollar into consideration, the rise was actually 796 points. Clearly, US stocks are a far better bargain than foreign stocks. The latter have benefitted from the falling dollar for the past half-decade. But, with the dollar cycle close to its bottom, the worm is turning.
Here are Friday's results, not corrected for dollar fluctuations:
http://marketclues.blogspot.com/
Strengthening Dollar Stokes Stock Rally
The bear market in US stocks may be just about over. If you don't believe we've been in a bear market, consider that from high to low, the most liquid and dynamic part of the stock market, composed of the 2000 stocks in the Russell Index, dropped 18.63% from its early 2007 high water mark (after adjusting for changes in the value of the US Dollar). That's more than a correction, it has definitely been a bear market. But, why would this be the end of the bear market now? The answer has everything to do with the dollar itself.
The US Dollar bounced off its long term support trendline last week shown on our Dollar Index chart. This rebound in the dollar sent the US stock market soaring. Tagging along for the ride, other world markets joined in on the rally, proving once again that the US stock market continues to be the "lead dog" for the planet. Although we may not have seen the absolute low in the Dollar (Ray Merriman points to the Bush-Clinton dollar cycle to suggest that the next big turn in the dollar may coincide with the election of Hillary next year), the five-year bear market in the dollar is probably over and a trading range bottoming pattern in the currency will help bolster confidence in the US markets and draw money back from foreign markets which had exited the country during the bear market. A turn in the currency flows from foreign markets, which are overbought and overvalued, should be enough to send US share prices, mired in an oversold and undervalued state, soaring in a new bull market.
Actually, if you think this is just a hopeless permabull fantasy, you must realize it's not a hypothetical situation at all. It happened exactly 13 years ago in fact! In 1994, the stock market underwent a 13% correction (dollar-adjusted) as the dollar dropped sharply lower all year, keeping stocks in a trading range in nominal terms, just like 2007. Several months before the absolute low in the dollar bear market, stocks started a rally which carried them 313% higher. Part of those gains came from the rise in the value of the dollar as foreigners recognized that US stocks were on sale and that, even if stock prices remained unchanged, the rising value of the dollar would generate substantial profits in their own currency. And, for the middle part of that bull market, European investors in particular were seeing 60% per year annual returns from the fact that both stock prices and the dollar were rising in tandem.
Last week, the Dow Industrials rose 742 points in non-dollar-corrected (i.e., in nominal price) points. But, when you take the rise in the dollar into consideration, the rise was actually 796 points. Clearly, US stocks are a far better bargain than foreign stocks. The latter have benefitted from the falling dollar for the past half-decade. But, with the dollar cycle close to its bottom, the worm is turning.
Here are Friday's results, not corrected for dollar fluctuations:
http://marketclues.blogspot.com/
Bullitt
Well-known member
Apparently MS thinks it's a good time to begin overweighting the I Fund.
"Morgan Stanley strategists, the top-ranked in Europe, advised investors to add to equities in the region following this week's market plunge."
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aC_0.S1ALv4w
"Morgan Stanley strategists, the top-ranked in Europe, advised investors to add to equities in the region following this week's market plunge."
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aC_0.S1ALv4w
James48843
Well-known member
Anybody who is expecting a rate cut this week is out of touch with reality.
They just gave it a .75% cut. They are not about to do it again so soon. They have to save arrows in the quiver for later this summer when the sub-primes really hit. We haven't seen the worst of subprime yet, and they need some wiggle room for later cuts when necessary.
My bet is - zero rate cut this week.
They just gave it a .75% cut. They are not about to do it again so soon. They have to save arrows in the quiver for later this summer when the sub-primes really hit. We haven't seen the worst of subprime yet, and they need some wiggle room for later cuts when necessary.
My bet is - zero rate cut this week.
Show-me
Well-known member
That is how I feel too. I am going short this morning with SDS. Ben got buffaloed into the .75 by the Frenchman. He was probably going to do a .50 but the Frenchman spoked him. Now that he realizes the error he will correct it.
I did hear that Cramer was pumping some BS story that a MAJOR financial company told Ben that they would go completely under if they did not get some relief immediately. Cramer is full of BS.
Bullitt
Well-known member
Re: Bull Pen - Winter 2008
A little dated, meant to post this over the weekend. Take notice of the downtrends that have been broken before you get too bearish.
In particular, XHB has finally broken a steep, persistent, and long downtrend that started around May or June of last year. As I said in the last missive, I know it's painful to think of even buying these, but the Fed is providing some wind behind the sails with its panic to drop rates low, low, low. I think the idea now is to get mortgage rates back down low enough so that when the bulk of the ARM resets hit, folks may be able to afford them or at least be able to refinance to decent fixed rates. At the very least, the chart of the XHB is telling the shorts it is about time to lock in those profits.
http://www.drduru.com/money/080201_WorstMonthIn18YearsBut.htm
A little dated, meant to post this over the weekend. Take notice of the downtrends that have been broken before you get too bearish.
In particular, XHB has finally broken a steep, persistent, and long downtrend that started around May or June of last year. As I said in the last missive, I know it's painful to think of even buying these, but the Fed is providing some wind behind the sails with its panic to drop rates low, low, low. I think the idea now is to get mortgage rates back down low enough so that when the bulk of the ARM resets hit, folks may be able to afford them or at least be able to refinance to decent fixed rates. At the very least, the chart of the XHB is telling the shorts it is about time to lock in those profits.
http://www.drduru.com/money/080201_WorstMonthIn18YearsBut.htm
Bullitt
Well-known member
Re: Bull Pen - Winter 2008
If it turns out to be a brief and mild recession or a midcycle slowdown, then the S&P's recent bottom of Jan. 22, which represented an 18.5%tumble from its peak, might have been the worst of it.
-Mark Gongloff
http://online.wsj.com/public/us
If it turns out to be a brief and mild recession or a midcycle slowdown, then the S&P's recent bottom of Jan. 22, which represented an 18.5%tumble from its peak, might have been the worst of it.
-Mark Gongloff
http://online.wsj.com/public/us
Bullitt
Well-known member
In other words, hedge funds have stopped betting that the broad U.S. stock index will fall and are now betting that volatility, or sharp moves on the index, will ease off.
http://www.reuters.com/article/hedgeFundsNews/idUSNOA75227620080207
http://www.reuters.com/article/hedgeFundsNews/idUSNOA75227620080207
Bullitt
Well-known member
The Bull Never Left
Richard Russell, editor of the Dow Theory Letters newsletter. He says he now believes the stock market has been in a primary bull market since the early 1980s. The first, according to Russell, is that "the major stock averages have been building huge bases," and therefore appear ready to move much higher -- to new all-time highs, in fact. The second factor is that, at the market's low earlier this year, just as was the case at the October 2002 bottom, stocks were not even close to being as cheap as they were at the major bear market bottoms of the past.
http://www.marketwatch.com/News/Sto...4970-A89F-6F65A5007C8C}&siteid=nwhnwhnr&lsn=3
Richard Russell, editor of the Dow Theory Letters newsletter. He says he now believes the stock market has been in a primary bull market since the early 1980s. The first, according to Russell, is that "the major stock averages have been building huge bases," and therefore appear ready to move much higher -- to new all-time highs, in fact. The second factor is that, at the market's low earlier this year, just as was the case at the October 2002 bottom, stocks were not even close to being as cheap as they were at the major bear market bottoms of the past.
http://www.marketwatch.com/News/Sto...4970-A89F-6F65A5007C8C}&siteid=nwhnwhnr&lsn=3
Bullitt
Well-known member
Re: Bull Pen
The uptrend in homebuilders continues on above the 50 DMA. Currently waiting for the confirmation from the Financials and DJIA that we're climbing out of the hole. Homebuilders, unlike the news, are forward looking.
Some words below from Louis.
1. Current cash levels are at a point where historically the Wilshire 5000 has produced double digit returns 63% of the time.
2. Large cap growth historic undervaluation-greatest in nearly 28 years.
3. Excessive pessimism offers bullish opportunity.
http://www.navellier.com/downloads/BullishBullets.pdf
The uptrend in homebuilders continues on above the 50 DMA. Currently waiting for the confirmation from the Financials and DJIA that we're climbing out of the hole. Homebuilders, unlike the news, are forward looking.
Some words below from Louis.
1. Current cash levels are at a point where historically the Wilshire 5000 has produced double digit returns 63% of the time.
2. Large cap growth historic undervaluation-greatest in nearly 28 years.
3. Excessive pessimism offers bullish opportunity.
http://www.navellier.com/downloads/BullishBullets.pdf
Bullitt
Well-known member
Forget about Meredith Whitney. This guy has been in the trenches a heck of alot longer than any one hit wonder.
"Once in a Generation Opportunity to Buy Bank Stocks"
Every study I have read is convinced that housing prices will continue to drop for an extended period. This is as dead wrong as the reports that argued some years ago that housing prices would keep rising for an extended period. Think of this:
• Money supply is growing rapidly;
• Commodity prices are soaring;
• The dollar is falling sharply; and
• Real estate prices are falling.
Does this last line make sense? When was the last time real estate prices fell in a general period of commodity inflation? I cannot think of such a time. I live in Florida where foreigners can and are buying prime real estate at deeply depressed prices with very, very cheap dollars. This may turn out to be the bargain of the century and I mean century.
http://ftalphaville.ft.com/blog/200...n-opportunity-to-buy-bank-stocks-punk-ziegel/
"Once in a Generation Opportunity to Buy Bank Stocks"
Every study I have read is convinced that housing prices will continue to drop for an extended period. This is as dead wrong as the reports that argued some years ago that housing prices would keep rising for an extended period. Think of this:
• Money supply is growing rapidly;
• Commodity prices are soaring;
• The dollar is falling sharply; and
• Real estate prices are falling.
Does this last line make sense? When was the last time real estate prices fell in a general period of commodity inflation? I cannot think of such a time. I live in Florida where foreigners can and are buying prime real estate at deeply depressed prices with very, very cheap dollars. This may turn out to be the bargain of the century and I mean century.
http://ftalphaville.ft.com/blog/200...n-opportunity-to-buy-bank-stocks-punk-ziegel/
James48843
Well-known member
We are definately in need of some fresh thought for a bull market. This thread used to be hyperactive, and since the first of the year has really died out.
I hereby declare this thread ready for action once again- with the recent runup of stocks, I'm willing to go way out on a limb and declare the Bulls are now ready to charge forth a bit.
I hereby declare this thread ready for action once again- with the recent runup of stocks, I'm willing to go way out on a limb and declare the Bulls are now ready to charge forth a bit.
Bullitt
Well-known member
James,
That's because The Bull can't carry everyone on his back when he's charging up The Wall of Worry. He'll do whatever it takes to shake em off.
-----------------------
Best investing advice ever: Forget the headlines and turn off CNBC.
Despite the doom and gloom outlook for the US Economy and regardless of the 'secular commodity bull market' (allegedly), the Dow Transports are now up ~20% from their January closing lows. Buying Gold and Commodities at this point might work short term, but as an investment it's merely buying the top.
robo
Well-known member
Yes Sir Bullitt! I'm currently looking at 4 screens from my chair. Two have Scottrade up, one is a laptop for back-up and one has CNBS on with NO VOLUME.
When you have a trading and an investing plan, all that crap from CNBS is NOISE. However, if I see Rick come on I take off the mute. I'm also taking the mute off when the oil pits come on. Folks, I'm very concerned about oil, gas, and food prices for my LT bullish position and thinking. I know many of you are also. It is my biggest concern. The Bulls will be in trouble if oil and gas keeps heading up. That is a fact, and I don’t care what the Bulls say!
I can't believe oil and gas are this high, but when I fill up I can. I can afford it, but what’s it going to do to the average Joe. I think oil is a bubble, but as we all know, bubbles can stay bubbles for a longtime. However, they always come to an end.
Did you buy China Stock at the top or Gold at a 1000. Well, some folks did... Yeah, CNBS pump Monkeys were pushing it that’s for sure.
I'm with Bullitt and still LT bullish, but watching oil, gas and world food prices. Making fuel out of corn and other food products is starting to look like it was a very bad idea.
Looks like the crooks might be starting a squeeze on the baby bears to bank some profits. Since I'm long that's a good thing. I'm still looking maybe to short later this week if we rally up to 1400 again and stall. The ticker is indicating the bears are coming back. Can the Boyz hold 1380 today? Can they take us positive by the close? We shall see!
robo
Well-known member
I read this comment at traders-talk on one of the threads.
"There is a rumour among hedge funds that the FED is contemplating the idea of dramatic increase in margin to hold crude oil or energy related commodity positions. That is why I got out of XLE just in case. They will now try to be preemptive when it comes to potential bubbles."
Denleo
Sounds like it could be true. It's about time regulators figure out ways to get some of this darn leverage out of all these markets. Yeah, put up 10 dollars to buy 1000 dollars worth and I'll back up my trade with my old Chevy as collateral. Say What!!! I hope it's coming, because it will slow down the crooks. Maybe it is just a rumor, but it's a good idea. Many traders will not be happy if it's true.
When I trade I need to have the money in my account and so should the crooks....
Example
Jean buys a share in Universal Widgets SA for $100, using $20 of his own money, and $80 borrowed from his broker. The net value (share - loan) is $20. The broker wants a minimum margin requirement of $10.
Suppose the share goes down to $85. The net value is now only $5, and Jean will either have to sell the share or repay part of the loan (so that the net value of his position is again above $10).
Bottom Line : Don't fight the Fed folks!
hessian
Member
All, take a trip to the past:
Remember Gold at $340-ish/oz?
Silver at $5.40-ish?
Gas? -well, lets just remember it was under a $1.00/gal.?
That all wasn't all that long ago -was it?? Ok what 5-7 years, right??
-what happened? Come on, we still enjoy all the babes in bikinis! (they still live there in my mind). Can't be just that we aged all that much?? - NO WAY!
View attachment 3773
Remember Gold at $340-ish/oz?
Silver at $5.40-ish?
Gas? -well, lets just remember it was under a $1.00/gal.?
That all wasn't all that long ago -was it?? Ok what 5-7 years, right??
-what happened? Come on, we still enjoy all the babes in bikinis! (they still live there in my mind). Can't be just that we aged all that much?? - NO WAY!
View attachment 3773
Bullitt
Well-known member
From Bill Miller's letter to the Legg Mason Value Trust shareholders 1Q08. Sorry, no link. I only have the hard copy.
For planning purposes here is my forecast: I think that we do better from here on and that the worst is far behind us. I think the credit panic ended with the collapse of Bear Sterns, and the credit spreads are already much improved since then. If spreads continue to come in, the writeoffs at financial institutions will end, and we may even have some writeups in the second quarter instead of write downs... I think likewise we have seen the bottom in financial and consumer stocks, but not necessarily the bottom in headlines about woes in those sectors.
I've been pounding my fist on the table about the bubble in commodities for a while now.
The wild card is commodities. If commodities break, or even just stop their relentless rise, equity markets should do well.
For planning purposes here is my forecast: I think that we do better from here on and that the worst is far behind us. I think the credit panic ended with the collapse of Bear Sterns, and the credit spreads are already much improved since then. If spreads continue to come in, the writeoffs at financial institutions will end, and we may even have some writeups in the second quarter instead of write downs... I think likewise we have seen the bottom in financial and consumer stocks, but not necessarily the bottom in headlines about woes in those sectors.
I've been pounding my fist on the table about the bubble in commodities for a while now.
The wild card is commodities. If commodities break, or even just stop their relentless rise, equity markets should do well.
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