Bullpen

[James48843]

With all the doom and gloom out there, I figured I would start this thread, for a place for the BULLISH information to start.

Ya gotta have a bullpen to warm up.

If you build it, they will come.


right?


right?

 

[KevinD]

I want in early.

 

[alevin]

Batter up! You're more than welcome to go first. I want to hit the homer when the bases are loaded.

 

[robo]

Time to Hold Your Nose and Buy?
By Adam Hamilton | March 06, 2009 | 1:17 PM | 0 CommentsTweet This



The bottom line is the stock-market action we've witnessed since late October looks uncannily similar to the bottoming process witnessed in late 2002 and early 2003. The utterly rotten sentiment, the overwhelmingly bearish SPX action, and the volatility signatures all match remarkably well. Despair reigns supreme and seemingly only fools hold out hope that things will materially improve anytime soon.

Just like back then, today it is easy to be short but sickening to be long. But I learned my expensive lesson on this mindset 6 years ago. When things look the bleakest is exactly when we need to hold our noses and buy. With the parallels between then and now uncanny in many ways, all the ingredients are in place for a monster rally. Since today looks, acts, and feels like an SPX bottom, odds are it is indeed an SPX bottom.

Adam Hamilton, CPA

http://www.greenfaucet.com/technical-analysis/time-to-hold-your-nose-and-buy/63452

http://www.zealllc.com/2009/bottoms.htm

 

[robo]

Quantifiable Edges
Assessing Market Action With Indicators And History


Friday, March 6, 2009
Can The Market Bottom On Light Volume?

One common misconception about steep selloffs is that they need to be accompanied by high volume in order to mark a bottom. October 10th and (to a lesser degree) November 20th, 2008 are two examples of big down days that came on big volume that soon led to a reversal. While this pattern can precede a bounce, you’d much rather see your new low accompanied by very low volume than very high volume.

Let’s look at some studies to illustrate this claim. First let’s look at performance following a 50-day low that has neither very high nor very low volume:


While the number of instances is less than desired these results are clearly superior to the other scenarios. Over 90% winners after both 4 days and once you get out over 3 weeks. The average trade over the next week and over the next 4 weeks is about 4 times the size of the base case. While they didn’t all mark the exact low, some success stories included 10/7/02, 3/10/03, and 1/24/05.

There are plenty of technical reasons we should see a strong rebound soon. Thursday’s light volume can be added to the list. Now let’s just hope the market stops ignoring these reasons.

http://www.quantifiableedges.blogspot.com/

 

[Show-me]

Well, I'm in. Bought 25% on 2/20 and another 25% on 3/09. If we go to 600 that will be another 12%. I will keep some in reserve and if we hit 600 I will buy 25% more.

This is DCA buying time.

 

[robo]

March 7th, 2009
A LACK OF CLARITY AND UNCERTAINTY IS MOVING THIS MARKET TO LEVELS NOT SEEN SINCE 1996. WE ARE ALL WAITING FOR THE BOTTOM. AT TIMES LIKE THESE, IT MAKES YOU WONDER IF THERE IS A BOTTOM. WE ARE OVERDUE FOR A BEAR MARKET RALLY AS I HAVE BEEN MENTIONING IN THIS BLOG FOR THE PAST THREE WEEKS. IT WILL COME AND I BELIEVE IT WILL BE SOON. THERE WILL BE A CATALYST, MOST LIKELY A POLICY STATEMENT OF SOME SORT OUT OF WASHINGTON REGARDING THE STIMULUS PLAN, MARK TO MARKET ACCOUNTING, THE BANKS OR HOUSING.

WE HAVE BEEN LOOKING FOR A CLASSIC CAPITULATION DAY, LIKE A HAMMER TYPE CANDLESTICK PATTERN ON MASSIVE VOLUME. HOWEVER, IT IS NOT REQUIRED TO HAVE A CAPITULATION DAY. THOSE OF US THAT TRADE AND COMMENT ON THE MARKETS ARE BECOMING WEARY OF THIS METHODICAL DEVALUATION OF THIS MARKET. IT IS NOT SO MUCH LARGE SELLING PRESSURE BUT A LACK OF BUYING. THIS LACK OF BUYING IS DUE TO LACK OF CONFIDENCE IN THE MARKET AND UNCERTAINTY AS TO THE GOVERNMENT’S DIRECTION.

THE BEAR MARKET RALLY WILL MOST LIKELY BE SHORT AND FURIOUS. IF YOU MISS THE BEGINNING OF IT YOU MAY BE TOO LATE TO PARTICIPATE. SO THE DILEMMA IS, DO YOU POSITION YOURSELF EARLY TO TAKE ADVANTAGE OF THE MOVE OR DO YOU WAIT. THAT IS AN INDIVIDUAL DECISION. IF YOU ARE EARLY YOU MAY GET CAUGHT IN FURTHER DOWNDRAFT AND LOSE AS MUCH AS YOU MAY GAIN IN THE BOUNCE.

A MORE CONSERVATIVE STRATEGY MAY BE TO ENTER A STOCK (S) OR A BROAD MARKET ETF THAT YOU ARE RELATIVELY SURE IS GOING TO BE HIGHER TWO TO THREE YEARS FROM NOW AND HEDGE WITH OPTIONS ON PULLBACKS AS IT BEGINS TO REVERT TO THE MEAN. IT NOW APPEARS THAT WE HAVE MUCH MORE ROOM TO THE UPSIDE THAN WE HAVE TO FALL. THE UPSIDE POTENTIAL IS VERY HIGH IF YOU ARE LOOKING FOR STOCK APPRECIATION GIVEN A LONGER TIME FRAME.

http://robinhoodtrader.com/

 

[Show-me]

From Mike Burke.

Conclusion
The market is as oversold as it has been at any time since June 1932. There have been three 20+% rallies since the early October low and another is long overdue, but, the extreme number of new lows suggest a retest so whatever we get will be a bear market rally.
I expect the major indices to be higher on Friday March 13 than they were on Friday March 6.

 

[Show-me]

http://www.stockmarket-ta.com/Gordon/Feb27,2009.PPT#256,1,Some Market Trends, Indicators And Signals

A very good power point from Mike Burke's site.

 

[Rod]

IF YOU ARE EARLY YOU MAY GET CAUGHT IN FURTHER DOWNDRAFT AND LOSE AS MUCH AS YOU MAY GAIN IN THE BOUNCE.

http://robinhoodtrader.com/

That was my predicament when I bought S&P @ 770 hoping 741 would hold. I was more than willing to ride the bear to 741. But once it fell below 741, I skedaddled!

 

[robo]

State of the Markets
More Pain Ahead? Or...

By David D. Moenning
Editor: The Top Gun Trader at StreetAlerts.com


David D. Moenning
Perhaps the understatement of the year is to say that stocks have had a bit of a tough time lately. For example, the Dow had yet another rough go last week and dropped -6.17%. For the month of February, the DJIA wound up plunging -11.7%. For the year, the venerable industrial index is down -24.49% already. And from the beginning of the bear market, the results are downright ugly as the Dow is off by -53.21%.

To make matters worse, the bears say that we're heading lower - much lower. Our furry friends point to the recent breakdown on the charts as exhibit A and suggest that the Dow could soon be staring at 4000.

In fact, there are lots of chart-based prognostications right now as it seems everyone who's ever bought a stock is suddenly a professional chartist. But, since there are some decent points being made, we thought we should pass them along.

First, as was pointed out in Barron's, the Dow breaking below 7000 means that one-half of the entire gain from the 1932 Depression low to the October 2007 high is gone. Yep, that's right, the subprime slime has wiped out more than half of a 75-year gain. Wow!

Another long-term chart-watcher points out that one can draw an uptrend line on the S&P 500 chart that starts in 1982 and is connected by several lows along the way. Everybody knows that the fall of 1982 marked the end of the misery that was 1965 - 1982 and was the beginning of a massive secular bull market. However, I'm guessing that not too many people know that a break below 700(ish) on the S&P will violate that uptrend. And since we closed Friday at 683.38.

Then there is the weekly chart pattern that many suggest is a double-top - a formation that began at the turn of the century. The thinking here is that this too has broken down and that the chart pattern projects a significant downward move. Ughh.


Wait Just a Doggone Minute!

However, let's also recognize that the doom-and-gloomers have already had their day in the sun (as well as month, quarter, and year for that matter) and that investors are often VERY good at preparing for what has just happened to them. So, with stocks having already plunged more than -50%, it isn't exactly surprising to hear our furry friends howling about another big drop.

But, before you succumb to the emotion of the day and start digging that hole in which to bury your head (and your cash) let's take a minute and take an objective look at what is really going on with the internals of the stock market.

Cutting to the chase, the bulls are pleased to announce that there are many bullish divergences occurring at the present time. In English, this means that although the market indices are breaking to new lows, there are lots of internal indicators that are not "confirming" the move lower.


Bullish Divergences Abound

Before we go any further, I want to warn you that what follows has been known to cause the eyes of all but the most enthusiastic market watchers to glaze over. So, if you're short on time or just not into the technical talk; feel free to skip ahead to the next section.

Okay, now that it's just us market geeks; let's get to it. What follows is our list of bullish divergences or non-confirmations seen during the current move to new lows.

Declining vs. Advancing Volume: Currently the ratio of declining volume to advancing volume is about 3 to 1, which ain't great. But at the same time, this is FAR better than the ratio we saw last October and November.

Advance/Decline Line: No, we're not talking about the NYSE A/D line, which is full of all kinds of things that aren't stocks. If you take a stock-only A/D line (meaning the A/D line of only operating companies) and smooth it out, you will see that the trend of the data recently (Feb 23rd) hit a five month high and is well above the lows seen in October.

New Lows: The same result is seen here. While the Dow and S&P are hitting new lows, the number of stocks hitting new 52-week lows is not anywhere near where it was in November.

It's a Small World After All: Ned Davis Research reports that of the 42 global indices it follows, only half have dropped back to their November 20th levels.

N's Over S's: The NASDAQ is the current market leader as the ratio of NASDAQ returns to the NYSE is at its highest level in 4 years. And more importantly, as of yet, the NASDAQ Composite has not followed the Dow and the S&P to new lows.

All Tech, All the Time: History shows that technology tends to lead after important market bottoms. So, the fact that the tech sector is the second best performing sector since November 20th is a good thing. It also doesn't hurt that the sector isn't involved with toxic assets.

Ditch the Dow Death Watch

The bottom line is we'd encourage anyone still in the game to simply stop doing the Dow death dance. The current message from the market is that despite the Dow and S&P heading to new lows, the internals are in much better shape than they were in November. Thus, we will argue that the current decline is not hitting on all cylinders at the moment.

The point is that the current action is more akin to a market in the process of making a bottom and perhaps in the early stages of a recovery.

As for our current strategy, we WILL admit that it's not game over for the bears and that they still have time to get their act together. However, let's also keep in mind that the stock market looks ahead 6-9 months. And if the Fed is correct in its projections that the economy will begin to recover in the second half of 2009, then the stock market may begin to discount this within the next couple of months.

Wishing you all the best for a profitable week ahead,

David Moenning
Editor Top Gun Trader Alert Service


http://www.streetalerts.com/topguns147.shtml

 

[robo]

The biggest mistake most investors make is to project the recent past into the indefinite future. --Steven Jon Kaplan

INVESTORS ARE IGNORING NUMEROUS POSITIVE EQUITY DIVERGENCES (March 8, 2009): There are numerous positive divergences in the global equity markets which are pointing the way toward the strongest short-term stock-market rally since the Great Depression. Let's examine each of them to more fully understand their profound significance.

The first and most important divergence is the recent collapse in government bonds worldwide, including U.S. Treasuries. Long-dated U.S. Treasuries, such as the fund TLT, have been collapsing since they completed a historic peak on December 30, 2008. Very few individuals trade Treasuries; this sector is primarily the domain of major institutions and pension funds. The flight out of Treasuries represents a decisive shift away from safety toward risk and signifies a clear rejection of the "deflationary depression" hypothesis. If the global economy were really set for a major contraction, money would be flowing into government bonds instead of out of them. Therefore, the global economy is set for a major expansion.

Another important divergence is the U.S. dollar index recently forming a pattern of several lower daily highs after having reached a three-year zenith. During times of economic stagnation, the greenback is a nearly perfect inverse indicator: when the U.S. dollar is rising, this indicates that the global economy is contracting, and vice versa. The fact that the U.S. dollar index has been starting to move tentatively lower shows that the most knowledgeable global traders are beginning to position themselves in favor of economic expansion--thus confirming the message of global government bonds.

Yet another divergence can be seen in the strong performance of global commodity-producing shares since October/November 2008. Gold mining shares have more than doubled in value since October 24, 2008, as can be seen in a chart of GDX and similar gold mining funds. As the most reliable harbinger of upcoming inflation and growth, this doubling indicates that increased global growth and rising inflation will be the major themes of 2009. Other commodity-share funds have been forming bullish patterns of higher lows, including KOL (coal mining) and more recently RSX (Russian shares). Russia's economy is very heavily based upon commodity production, and therefore the recent relative strength in RSX is similarly signifying that both inflation and growth will be important global themes in 2009.

High-yield corporate bonds have been forming a bullish pattern of higher lows since the first half of December 2008. While obtaining credit is still far from easy, lenders are much more willing and able to supply capital today than had been the case three months ago. Nearly all corporate-bond sectors have been choppily improving over this period of time, as have municipal bonds. As with government bonds, these are primarily traded by institutions and pension funds; the most knowledgeable investors are signaling that the most distressed period has already passed for obtaining borrowed money.

Implied volatility indices including VXO and VIX remain near 50, which is historically more than twice its average level, but which is far below the extreme readings of 80-90 that were seen in October 2008. Investors are becoming so accustomed to falling stock prices that an increasing number of surveys are showing more investors anticipating an additional 25% decline in the stock market than are expecting a 25% increase. This is among the most negative survey results ever recorded, and is in sharp contrast to the outlook in 1999-2000 when investors routinely anticipated annualized gains of 30% lasting for a decade or more. When so many average participants are gloomy, the only possible resolution is a powerful worldwide equity rally.

As a result of these and similar positive divergences, I am anticipating that the next half year will experience the most dramatic short-term global equity rally since the Great Depression.

http://truecontrarian.com/

 

[Guest2]

The biggest mistake most investors make is to project the recent past into the indefinite future. --Steven Jon Kaplan

INVESTORS ARE IGNORING NUMEROUS POSITIVE EQUITY DIVERGENCES (March 8, 2009): There are numerous positive divergences in the global equity markets which are pointing the way toward the strongest short-term stock-market rally since the Great Depression. Let's examine each of them to more fully understand their profound significance....

Food for troubled minds ! I like it ! Thanks Robo !

 

[robo]

Monday, March 9, 2009
Easy vs. Hard Bottoms


Today the major market indices have been fluctuating on both sides of Friday’s close, occasionally flirting with a short-covering rally only to make a hasty retreat and begin what looks like the beginnings of another bull whipping.

Last Thursday I stuck my neck out and said, “with the SPX at 687 as I type this, we are very close to an intermediate-term bottom.” Frankly, I envisioned a more impressive bounce than the current situation, which still has the SPX treading water at 687. A question that is worth pondering, however, is what type of bottom is most likely to stick. Sure, a 300 point jump in the DJIA is likely to attract some additional money on the long side, but it is also likely to further embolden many of the shorts. In the current market environment, I would call that type of V-shaped bottom an “easy bottom” and suggest that the shorts are not likely to let the current bear buffet end with one sharp move. The easy bottom is more likely to be yet another bull trap.

Compare an easy bottom with a hard-fought one. Instead of the 300 point jump that brings the markets more than a white knuckle distance away from the edge of a cliff, imagine a market in which every point becomes a matter of trench warfare, with some territory changing hands dozens of times between bulls and bears before bulls can finally lay claim to infinitesimal victories. These will be largely moral victories at first, but over the course of time as a war of attrition develops, many small gains will eventually add up to momentum. Said another way, I do not believe the bears will throw in the towel all at once, but will slowly lose interest as the pickings become slimmer.

So…as much as an SPX back over 700 might seem to give that devilish 666 bottom the best chance of holding, I believe that the hard bottom is more likely to hold than the easy bottom.


http://vixandmore.blogspot.com/

 

[James48843]

If you build it, they will come.


Wooosh.

 

[Buster]

With all the doom and gloom out there, I figured I would start this thread, for a place for the BULLISH information to start.

Ya gotta have a bullpen to warm up.

If you build it, they will come.


right?


right?

I posted this a couple of days ago in the Bear pit..so, I maybe all wet, but I'm still a glass half full kinda guy, in case you all haven't figured that out yet...

Okay, normally I don't speak too much about stocks and the market, mainly cuz I know very little about it and don't pretend I do...But my gut feeling and what I'm getting in way of overall vibes, listening and watching everyone in the news about the Market, etc...I know, not scientific enough for most of you..But If I'm right, we all win..If I'm wrong..well, lets hope not.

The Market is at it's bottom IMHO, or damn close to it..there are Trillions, yes TRILLIONS of dollars on the side lines waiting to jump in..Course these are very savvy and PATIENT investors as a whole..But they are getting itchy feet standing on all their money and the Winter of the stock market crash is past..Bears are on their way back into hibernation (southern hemisphere bears if wanna get technical) and the Bulls are ready for a long awaited run...Sit tight and be ready for a hell of a ride..I feel the DJIA will be back into the 12,000 range before the end of the summer..I'm ready are you?


God willing..Good luck to us all..

 

[dpmp]

I don't mean to ruin a perfectly good sentiment, but just trying to explore possibilities for a bull market. Realistically, can a bull market run off with an increasing unemployment, hence, personal consumption/spending and company's profit dwindling?

Are you referring to a bear rally or a true bull market?

 

[James48843]

Driving home tonight, I heard on the radio:

1. Citi bank actually turn a profit for two months.

2. Bernanke made some statement today that he was urging mark-to-market rules :
"Given what is going on in the world, we should look to identify the weak points of mark-to-market and try and make some improvements on a more expeditious basis," Bernanke said in response to an audience question after a speech to the Council on Foreign Relations. "We need to do a lot more to provide guidance to the financial institutions and to the investors about what are reasonable ways to address valuation of assets" in illiquid markets, he said

3. Rep. Barney Frank, chairman of the House Financial Services Committee, said he was hopeful the Securities and Exchange Commission would reimpose the "uptick" rule in about a month.


It's taken a year and half for Barney to recongize the uptick rule problem. After WE talked about it the day they did the change, back in January of 2008. We said it would screw everything up..... The S&P500 was falling past 1429 because they screwed up the Uptick Rule, and took out the circuit breakers.


FINALLY!


Those three things made the markets pop.


Ok folks- it's all over.

There is nothing left to see. Move along. Move along.

The recession is over. You can go back to your jobs now, (ooooops- you are out of a job? Don't worry- it will be all better again in a month.)

 

[James48843]

Yep-

the Uptick rule:

See: http://www.tsptalk.com/mb/showpost.php?p=147624&postcount=3

 

[James48843]

If the gap at 734 gets filled in today, I'm looking for another downturn tomorrow.