And this Bear recognizes that trend across most indexes and world markets is UP. But here and in Japan, it is more of like a trading range, as we bob between the extremities. On the Dow, has there been much talk of the 2000 top ONLY being 700 or so points away? On the SPX 20% from top. Q's STILL over 50% from top. TRANNIES made NEW top as did small caps! Both have fallen away.
As I scratch a few seconds and think, the AREA that would signal a "new friend" has arrived would seem to be in the BOND MArket and that would be a significant rise in rates, because falling rates don't seem to bother anyone. (yet rising rates could be signal of strength in economy....and the coveted inflation FED has tried to induce?) Second the US Dollar. EWT theory sees a rise to around 94 the .382 retrace of entire swoon. As it bounced off 80 the 10 YR support, and has risen some 6%, not a bad argument.A SERIOUS breakdown in the dollar would be early warning to get out of equities, to me, that would be a BREACH of 80 on the index.....so if trend is UP for dollar....shouldn;t markets hold up OK?
But lately gold has revived, off trend lines, could a multi week or better rally have begun? Reading some snippets from Dines and a few other respected market timers, the argument for being guardedly optimistic for now is understood.
A down JAN is meaningless IMHO CYCLE has been bottoming every 4 years like clockwork 1990 1994 1998 2002, if still holding TRUE next one up 2006, however I have read from some pundits NO problems until 2007...so that would not agree with this cycle analysis. I also don;t read much for a case of a down 2005, though 1st year of second term is usually the worst, last 2 years better, that supports a bottoming in 2006 and a rise into 2008. I think there is NO calling the end to a credit expansion until FIRM evidence it has begun....I don;t see it yet.
But if one believes in Kondratief cycles, seeing the US debt, the TOTAL CREDIT MKT DEBT as per cent of GDP grow to OVER 300% of GDP, I am rather, very concerned with that figure, be it mortgage debt or not. IN 1929-1930 era, the other PEAK of WINTER WAVE, it stood at 265% of GDP.. ...so what comes next is a CREDIT CONTRACTION.....and a pretty rotten environment there after until it troughs.
ACCESS to CHEAP rates doesn't WASH AWAY FACT that what used to be a $250- $350K mortgage DEBT 3-5 years ago is now more like $600- 700K.....but LOWER rates make payments possible....some interest ONLY....some ADJ. EVEN an increase like we have seen in property taxes can STRANGLE the finances of some NEW home buyers...who HAD to STRETCH to buy in. ANY additional needs are funded by MORE EXPENSIVE CREDIT CARD DEBT.....which if I ventured a guess MUST be rather substantial in its increase....and effect on those trying to keep it together, for unfortunately WAGES have NOT grown much at all this expansion. WHO can call the end to the housing boom? I can't others have tried and lost their shirts if short....but LIKE TASR...all good things eventually come to an end....I say WATCH the home builders group closely....FRI there were some steep losses.
CYCLICAL BULL may still be intact, BUT the trendline from the 1870's 1980's lows WAS BROKEN by the previous BEAR market, we operate BELOW that trendline today...a GOOD argument for the SECULAR BEAR still being in effect. Trading accounts for the MAJOR HOUSES are really being worked, the black boxes are alive and kicking. SMALL investors to this point have little or no impact, IMHO. ALL this program trading IF and WHEN the BEAR returns is really going to make this nasty IMHO. Market volume is not impressing me either way.
MANY talking about need for URANIUM.....and limited supply.
WMT (Walmart) stock looks DOA yet I ventured in one today and it was MOBBED.
Restaurants are MOBBED.
SHopping malls FULL. New homes being built everywhere.
FED STILL ON GAS even as they continue to raise. If you look at history, at some point the raising of FED FUNDS rate SLOWS economy....it shows you BUY stocks in falling rate envrionment......you SELL IN RISING RATE ENVIRONMENT.
This market smells of MAJOR DISTRIBUTION. (the insiders selling to the lemmings)
TECH has serious OVER CAPACITY issues and profitablitiy.
I think even IF SPX moves higher.....tech very well may lag behind....eventually bringing them all down. 2002 lows seem SO FAR AWAY....even I cannot see them...or imagine a trip back there...at this time. But a buy and hold portfolio has been taken to its best levels IMHO....we are now in a traders market....all else should be wary.
Last thought, since lows of 2002 many portfolio's are up 40%, maybe even getting back MOST of what was lost last BEAR MARKET............and I just wonder......is this just a wonderful 2nd chance to GET OUT or reposition your portfolio to be more defensive? The action in Bond market tells me MANY HAVE.
I, nor anyone else can forsee the future. But with valuations still near historic highs, with dividend yields barely 2% on the Dow and SPX.......this cannot be the NEW BEGINNING, not from these levels, IMHO. I expect after a high for this move is in, a fairly good move down is coming.
Duratek
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