Thursday, December 28, 2006
M and A activity, mostly PRIVATE EQUITY FIRMS!
8 of the 10 LARGEST deals ever were done in last few years and were private equity firms.
More and more of these are running after the same deals pushing up prices paid, HUGE multiples and premiums being paid saddling new companies with mountains of debt.
“the things that used to turn the economy/markets no longer do…” chances for defaults because of huge premiums is growing.
Money continues to FLOW into these private equity firms.
In some ways me bucko’s this is MUCH LARGER THAN 2000 action, it just isn’t seen as same as before meaning huge runups in penny stocks etc, the BUBBLE is in the MA activity and the higher multiples being paid, too MUCH money running after too few deals pushing prices paid up way beyond reasonable value.
Investors are complacent and comfortable with only blue skies seen ahead.
Tuesday, December 26, 2006
SIGNS OF AN IMPENDING TOP
Transports very weak, sensitive to economic conditions. Have not confirmed new highs in the Dow.
Several FED indiactors showing contraction of economy.
DOA residential housing.
Democratic control of both houses means stagnation and less possibility of keeping or adding tax incentives.
Bull market long in tooth in cycle.
Peter Eliades points out MANY cycles predicting top between Jan0March period.
NAZ underperforming. Strength becoming more selective. Energy weak.
This may be a period where one would weed out weaker performers in portfolio, I may not be short just yet, but I am on defensive and not long. JMHO
Thursday, December 21, 2006
Wednesday, December 20, 2006
Saturday, December 16, 2006
http://www.hussmanfunds.com/wmc/wmc061211.htm DR JOHN HUSSMAN
http://www.stockmarketcycles.com/current_observations.htm PETER ELIADES
http://www.safehaven.com/article-6516.htm JOHN MAULDIN
http://www.safehaven.com/article-6515.htm DOUG NOLAND
http://www.safehaven.com/article-6514.htm DR RICHEBACHER
Corrections are short and painless, advance decline line continues to advance, life appears good for the ongoing bull market. As this bull from 2002 lows has exceeded its previous highs, we can consider it a Secular trend, most cyclical bull markets were long since dead.
What has also helped the market is the comeback of the hated weak sister US DOLLAR, mostly because sentiment got too negative, once this works off, new lows are possible.
Interest rates are still LOW historically speaking, and money is easy to obtain, it is possible that the housing sector has temporarally stabilized as some buyers may be inticed to come back into market. Sellers still reluctant to lower prices aggresively, but in ost areas they have stopped going up or have come down slightly, 2nd chance buyers may appear.
HEAVY foreign investment money is still POURING in, money supply has begun to grow again http://research.stlouisfed.org/publications/usfd/page3.pdf but this years growth has been stunted.
Merger and acqusition activity has reached new extremes beyond even 2000 top, there is a LOT of money sloshing about.
Fund managers want extreme bonuses too, so year end performance should remain in bullish control. Early next year we could see some weakness, but not sure it will amount to much, yet.
This may be the first time in market history where a NEW BULL MARKET began near historic extreme valuations, valuations have come down because of record margins and profits also at record levels, but now SPX PE of 18 is getting pricey especially if profit gains slow or regress.
Everything returns to its norm sooner or later, that trip for the stock market will not be a pretty sight, from a BELOW 10 VIX (volatility) there is a TON of FEAR to feed on, but I must say a new BEAR MARKET is nowhere in sight.
A well diversified portfolio must be doing rather well, the question is, when the winds of change DO finally come, are you prepared to make changes?
Question marks, last bull market charge led all to new highs, near the end, the Transports began to fall onths ahead of final top in DOW, then NAZ in March. The SPX is still below its 2000 top, the NAZ 50% below. The Transports have not CONFIRMED the NEW HIGHS in the DOW, according to Dow Theory, these non confirmations have led to MAJOR MARKET TOPS!
So, I am watching the TRansports to see if they can rally to new highs with DOW, the NAZ? not gonna happen. However, the NAZ is VERY close to an area of HUGE resistance, of which a month ago I charted and pointed out if it could "get inside" this area, a SURGE on 100's of points should occur.
I also charted the double tops on Q's near $43.30 once broken could be riden long, a buy near $43.50 on a close above was there and use of $43.25 (just below breakout) would define a well controlled stop loss. We're about a dollar above that now.
FED meeting and OPEX Fri wnet with a whimper, bulls in control UNTIL SERIOUS SELLING PRESSURE arrives.
I will attempt to post every Sat, so check back until then take care
Wednesday, December 13, 2006
There is underlying weakness on the nazdaq IMHO, market may go higher, I feel within next 4-6 weeks a severe correction will be upon us.
That said, I cannot rule out Bull mkt continues, as adv/decline line is rising as does mkt.