I am going to do a lot of homework over this weekend. I am readying my tactical plans, but first I see a 3-5% correction imminent that should give a much better entry point....stocks above their 50DMA continues to diverge from the new highs. Egyptian "euphoria" is out of the way, now back to reality.....normal is rallies that get way ahead of themselves, as this one has IMHO.
Then......it is my focus to be on emerging mkts, especially China....and especially if the 2009 highs are bettered. In 2003 bull it wasnt until LATE 2005 that China exploded in a parabolic fashion....with rising int rates IMHO the sentiment has been dampened enough to lay the groundwork for a bullish outcome.
Some things never change. Parallel MA'S (especially weekly of the 10/40 kind) that move together are a CLEAR signal of the market voting mechanism, when rising one above the other it is unmistakingly BULLISH. PERIOD. Calling a top or bottom, requires much more attention and TA, but for purpose of a trend, there is NOTHING better.
ONLY when these MA'S reverse course CROSS, then begin to diverge Parallel downward do we have confirmation that the voting machine has cast its vote for a bear market. PERIOD You cannot have bull without the rising MA's, you cannot have BEAR without falling MA's....not the 5/ 20 day kind.
Now this will not tell you that a top is here.....not trying to do that......and depending on the amount of buying and selling, like in 2009, the cross will come way too late to be helpful, everything has exceptions, but ONCE TREND GETS ESTABLISHED s it has been.....the MA'S will confirm every single time....each share bought or sold is a vote.
NOW, in our current situation, we are getting NO HELP from interest rates, and this is one of my reasons for seeing this s cyclical bull. Long term rates YES rising, but because of HUGE DEBT requirements.....wouldn't you think supply and demand would take hold, I do. BUT THE FED FUNDS RATE HELD AT 0% for 2 PLUS YEARS, that is ANYTHNG but BULLISH......that is the essence of BEARISH...WHY? because FED FUNDS RISE WHEN ECONOMY IS STRONG ENOUGH TO HANDLE THEM......RISING RATES ARE BULLISH!!! (even if initial reaction may cause selling).
FED FUNDS FALLING IS BEARISH, WHY? because economy is WEAK and cannot stand on its own.....sell into falling rates.....BUT AT SOME POINT, THIS WILL ALMOST ALWAYS OCCUR when rates have reached the bottom of move (1% in 2003, 0% in 2009)..........the don't fight the FED scenario will finally play out, as those BOTTOM CATFISH RATES begin to work their magic, by then FEAR has swarmed over would be bargain hunter, and only the in crowd begins to buy. AS the FED finally began raising rate
in 2003 http://www.msnbc.msn.com/id/5333876/.....THAT WAS signal bull was oN!!!!
NOTICE falling rates in 2000 (BEAR) rising rates (2003) BULL.!!!
BUT what's different this time friends? RATES ARE STAYING at 0% for a historic period of time.....I CANNOT interpret this as BULLISH BY ANY SCENARIO!!!! not by any historic measure or experience.
FED ACTION is then fostering probably the greatest, most dangerous BUBBLE of our lifetimes and this bull maybe only chance to prepare for its arrival.
FROM "NO EXITS" CREDIT BUBBLE REPORT
"Indeed, I would argue strongly that not until the government finance Bubble bursts will it be possible to comprehend the true costs of the ongoing mortgage crisis. The scope of this problem won’t really be appreciated until today’s extraordinary fiscal and monetary stimulus has run its course; not until market yields are left to adjust to less government intrusion and intervention; not until inflated U.S. income levels are weaned from massive government expenditures; not until the requisite restructuring of the U.S. economy is on course; and not until private Credit is able to make inroads into market-based home lending.
The Administration and congress are content to delay a timely exit from massive fiscal stimulus, fearing the economy might fall right back into recession. The Fed is also content, worried of what an exit from quantitative easing would mean for a marketplace that must muster the necessary liquidity to fund intractable federal deficits at low interest rates. And I believe all of Washington is content to defer any meaningful mortgage finance reform until they perceive that housing markets have recovered. Yet it will take years – and a huge increase in government-backed mortgage Credit – to revitalize our nation’s housing markets. And this is why I refer to – and worry greatly about - the unfolding government (Treasury, Federal Reserve, and the GSEs) finance Bubble.
Returning to Mr. Dimon’s comments from above, my guess is that the head of JPMorgan and many other persons of influence have similar thoughts about rapidly expanding Federal obligations as they did previously with the GSEs. As we witnessed with Fannie and Freddie, the powers that be will not intervene to repress a Bubble, especially when it is viewed as providing near-term benefits and rather nebulous longer-term risks. I have no doubt that there will be more crisis committees, inquests, and reports. There will be additional questions about Fannie, Freddie, and new issues with the FHA and unmanageable federal debt. I expect similar answers: “We all knew about it, we all worried about it, no one did anything about it.”
HOW can the GSE's be cut loose? there is NO private lending for mortgages!!!! the heroine addict is hopelessly addicted to guarantees.
NOW TO VIX......a falling VIX is BULLISH, RISING VIX BEARISH....very simple if you get trend correctly. even at 15 the VIX is signalling BULL MKT. Not until it hit SINGLE DIGITS last bull did it reach a level, that one would HAVE to consider exit strategy.....and not confirmed until it began bearish rising pattern.
That's my story and Im sticking to it, NO matter where you say it started, in 1974 or 1982, stocks hits all time highs in 2007, NOW just 2 years after bear ended, some indexes are at NEW ALL TIME HIGHS....and the favs are close behind....did the greatest bull mkt in history never end?
Then......it is my focus to be on emerging mkts, especially China....and especially if the 2009 highs are bettered. In 2003 bull it wasnt until LATE 2005 that China exploded in a parabolic fashion....with rising int rates IMHO the sentiment has been dampened enough to lay the groundwork for a bullish outcome.
Some things never change. Parallel MA'S (especially weekly of the 10/40 kind) that move together are a CLEAR signal of the market voting mechanism, when rising one above the other it is unmistakingly BULLISH. PERIOD. Calling a top or bottom, requires much more attention and TA, but for purpose of a trend, there is NOTHING better.
ONLY when these MA'S reverse course CROSS, then begin to diverge Parallel downward do we have confirmation that the voting machine has cast its vote for a bear market. PERIOD You cannot have bull without the rising MA's, you cannot have BEAR without falling MA's....not the 5/ 20 day kind.
Now this will not tell you that a top is here.....not trying to do that......and depending on the amount of buying and selling, like in 2009, the cross will come way too late to be helpful, everything has exceptions, but ONCE TREND GETS ESTABLISHED s it has been.....the MA'S will confirm every single time....each share bought or sold is a vote.
NOW, in our current situation, we are getting NO HELP from interest rates, and this is one of my reasons for seeing this s cyclical bull. Long term rates YES rising, but because of HUGE DEBT requirements.....wouldn't you think supply and demand would take hold, I do. BUT THE FED FUNDS RATE HELD AT 0% for 2 PLUS YEARS, that is ANYTHNG but BULLISH......that is the essence of BEARISH...WHY? because FED FUNDS RISE WHEN ECONOMY IS STRONG ENOUGH TO HANDLE THEM......RISING RATES ARE BULLISH!!! (even if initial reaction may cause selling).
FED FUNDS FALLING IS BEARISH, WHY? because economy is WEAK and cannot stand on its own.....sell into falling rates.....BUT AT SOME POINT, THIS WILL ALMOST ALWAYS OCCUR when rates have reached the bottom of move (1% in 2003, 0% in 2009)..........the don't fight the FED scenario will finally play out, as those BOTTOM CATFISH RATES begin to work their magic, by then FEAR has swarmed over would be bargain hunter, and only the in crowd begins to buy. AS the FED finally began raising rate
in 2003 http://www.msnbc.msn.com/id/5333876/.....THAT WAS signal bull was oN!!!!
NOTICE falling rates in 2000 (BEAR) rising rates (2003) BULL.!!!
BUT what's different this time friends? RATES ARE STAYING at 0% for a historic period of time.....I CANNOT interpret this as BULLISH BY ANY SCENARIO!!!! not by any historic measure or experience.
FED ACTION is then fostering probably the greatest, most dangerous BUBBLE of our lifetimes and this bull maybe only chance to prepare for its arrival.
FROM "NO EXITS" CREDIT BUBBLE REPORT
"Indeed, I would argue strongly that not until the government finance Bubble bursts will it be possible to comprehend the true costs of the ongoing mortgage crisis. The scope of this problem won’t really be appreciated until today’s extraordinary fiscal and monetary stimulus has run its course; not until market yields are left to adjust to less government intrusion and intervention; not until inflated U.S. income levels are weaned from massive government expenditures; not until the requisite restructuring of the U.S. economy is on course; and not until private Credit is able to make inroads into market-based home lending.
The Administration and congress are content to delay a timely exit from massive fiscal stimulus, fearing the economy might fall right back into recession. The Fed is also content, worried of what an exit from quantitative easing would mean for a marketplace that must muster the necessary liquidity to fund intractable federal deficits at low interest rates. And I believe all of Washington is content to defer any meaningful mortgage finance reform until they perceive that housing markets have recovered. Yet it will take years – and a huge increase in government-backed mortgage Credit – to revitalize our nation’s housing markets. And this is why I refer to – and worry greatly about - the unfolding government (Treasury, Federal Reserve, and the GSEs) finance Bubble.
Returning to Mr. Dimon’s comments from above, my guess is that the head of JPMorgan and many other persons of influence have similar thoughts about rapidly expanding Federal obligations as they did previously with the GSEs. As we witnessed with Fannie and Freddie, the powers that be will not intervene to repress a Bubble, especially when it is viewed as providing near-term benefits and rather nebulous longer-term risks. I have no doubt that there will be more crisis committees, inquests, and reports. There will be additional questions about Fannie, Freddie, and new issues with the FHA and unmanageable federal debt. I expect similar answers: “We all knew about it, we all worried about it, no one did anything about it.”
HOW can the GSE's be cut loose? there is NO private lending for mortgages!!!! the heroine addict is hopelessly addicted to guarantees.
NOW TO VIX......a falling VIX is BULLISH, RISING VIX BEARISH....very simple if you get trend correctly. even at 15 the VIX is signalling BULL MKT. Not until it hit SINGLE DIGITS last bull did it reach a level, that one would HAVE to consider exit strategy.....and not confirmed until it began bearish rising pattern.
That's my story and Im sticking to it, NO matter where you say it started, in 1974 or 1982, stocks hits all time highs in 2007, NOW just 2 years after bear ended, some indexes are at NEW ALL TIME HIGHS....and the favs are close behind....did the greatest bull mkt in history never end?
*(Let me add this, we don't find stats like this in an enduring new economic expansion, certainly one wouldn't think......new highs in people needing govt assistance, 9% unemployment but where it fell in 2 months from 9.8%, a record move, and both Obama and Bernanke tell us that's "VERY OPTMISTIC", but if we look deeper we find the DROP was caused by those "leaving the rolls...dropping off". And inside the calls on LOW INFLATION, we find soaring prices for food and energy across the world......so any wage gains, meager as they might be are eaten alive)
IT IS UNLIKELY that in such a short period, we corrected 30 PLUS years of bullish extremes....NO FED Intervention now 2nd and most historic in nature has interrupted nature from taking its course......each time a STRONG cyclical bull erupted maybe INSIDE a secular bull, who knows....but the malinvestments and adjustments have not been made....and FED policy is fostering maybe the biggest bubble of them all, and we know historically it will end in horror and abject pain, count on it. YOU DONT fix a debt bubble....with exceedingly more debt
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