At SOME point, my mindless ramblings will suddenly have someimportance....or all of this is in my head leaning to delusions of grandeur? Not so, I Know I am just another bozo....so come on let's clown around.
What is MISSING (MIA)in this market? WHY oh WHY can't I be convincedwe are in ANOTHER bull market and just GO LONG young man and all my troubles will be done? WHY oh why am I so damn stubborn? or worse?Let's explore my insanity shall we?....or my inability to do as toldand follow the herd.....man do I always have to rock the baot?What is missing is the LACK OF DOUBT in this market, I am not talkingabout the preverbial "wall of worry" I am talking about an absence of BEARS!! a DEN of bears.....foaming about how the end is near, watchout for trouble etc....where is the PLURALITY of GRRRRRR'S???? WHY isthere a dull thud, an ECHO in the cave?During the GREAT BULL MKT of the 90's do you know we had a periodwhere we went an entire year where Bears outnumbered Bulls? From OCT EWFF ".....the significance of the optimism keeps expanding, the LONGER the BULLISH BUZZ lasts, the harsher the BUST is likely to be.
"It has been "502 WEEKS"!!!!!! (last 1995) since the bears outnumbered bulls in a period. EWFF points out that during that time, almost 10years, bears ONLY outnumbered bulls (by 5%) of the time 26 weeks!!!and this coming DURING the most devestating BEAR mkt since the great depression!ADD to that during this recent 2004 DOw series of DECLINING tops andlower lows, the SENTIMENT of bullishness has been GROWING!!!Now bulls outnumber bears 2 to 1.
After ALL that has happened, speculation in GOOG has drove it to new highs near $200 near double just a month or so ago!Both MArket VAne and Investors Intelligence readings are at levelsseen at PRIOR TOPS......so GOOG skyrockets (over $50 Billion mktcap!!!!!!!!!! DOUBLE GM!!) as the not important anymore DOW giantsDIVE?? AIG GM FNM??? 3M PFE !!!! at same time SPX 600 Small caps madenew highs? but have now started to decline.Coming into an uncertain election, we find the recent 5 day CPC plummeting to .70???
However, maybe annomaly but VIX spiked Friday. It is likely the TRAN index is some kind of important high RSI oversold, should put pressure on it, so we now are situated where theTrannies at LEAST need a breather, but Dow will persist higher?Like in 2000 we have the NAZ rising as the Dow has been declining....ANOTHER divergence.
This past Recession (2001) was called MILDEST on record, but theRecovery in ALL Aspects has been the WEAKEST, no one is talking aboutthat.In recent report Help Wanted ads index sunk to low of 36, missingestimates, yet not a peep in press. Wages stagnant, hours workedstagnant....employment stagnant.....COSTS are RISING.Phase I of Bear market had completed, and IMHO Phase II is about tobegin in earnest....it has been seperated by a 2 YEAR CyclicalBull......the JOB of has been to set up the next phase in lullinginvestors to think the coast is clear.We KNOW what a bear market BOTTOM is supposed to look like. 6% SPXdividend yields and SINGLE digit PE ratios.The bear bottom has NOT been allowed because of stimulus and FEd policy.....it has NOT eliminated its coming...ONLY delayed it.
D
Sunday, October 31, 2004
Friday, October 29, 2004
Better SIT DOWN to read this
$20 billion added to money supply this week, but after 2 weeks totaling $79 BILLION in DECLINE, I am not too impressed.
If watching money supply is valid indicator at all, the damage has already been done.
We see CHina REALLY trying to put on the breaks to runaway economy.
WE see FNM probed. We see AIG probed.WE see MRK drug pulled from market.We see Star GAs PArtners stock obliterated.WE see almost $200 GOOGLE! Stock has doubled in less than 2 months??!!
VIX inched up today, interesting...staying above its 20 MA...we see 5 day CPC at .70
We know total credit market debt is ABOVE 300% of GDP now (well above the level which brough us a depression)
http://www.unknownnews.net/040217pb.html excerpt FEB 2004
"What is perfectly clear from simple arithmetic is that without a sudden increase in the number of jobs and the wages they pay, individual debt can not be serviced by personal income. Worse yet, not only are people not saving, but their financial reserves are not in real cash. The only thing keeping the “national ponzi scheme” going is the illusion of wealth created by the Federal Reserve’s low interest rates and liquidity that has allowed stock market valuations and housing prices to artificially inflate."
http://www.economagic.com/em-cgi/charter.exe/var/vel-gdp-per-m3 Velocity of money at LOWEST levels in over 40 years.
WILL or HOW WILL consumers "keep it up"? From THURSDAY COMSTOCK
"The negative effect of poor jobs numbers on incomes is easy to see. In past expansionary cycles personal income adjusted for inflation and transfer payments was up an average of 12 percent at this stage, compared to only 4 percent now. To maintain even the present level of tepid spending, consumers have gone into record debt in addition to getting plenty of help from tax refunds and mortgage refinancing. Now mortgage refinancing is down over 80 percent from the peak, and the tax refunds are in the past. Under these circumstances consumer spending is likely to be restrained and the economic soft patch is likely to continue. With Taiwan Semiconductor recently confirming the continuing pattern of gloomy forecasts for the chip industry from leading companies, we see no relief from the tech sector as well."
HOUSING BUBBLE? Read this from AUG 2002 iTuliphttp://www.itulip.com/qc082002.htm
"What's "cannot afford" mean when buying a home? The historical average for the cost of a mortgage is 25% of gross income. That's what the banks used to recommend, before they got desperate for households to sell mortgages to. In bubbly real estate market like Boston's today the average mortgage has reached 44% of income.
That's a housing bubble. Period."
March 2004 headline:
Consumer debt loads at recordBy Barbara Hagenbaugh, USA TODAYWASHINGTON — U.S. consumers have taken on record levels of debt as low interest rates have lured them to buy bigger houses and fancier cars and to charge more on credit cards than ever before.
•Wheels. Borrowing for cars has jumped as consumers are lured into auto showrooms by promises of no money down and 0% interest rates. Through mid-February, the average amount financed for a new car purchase in 2004 was $24,157, up 11% from 2001, according to Power Information Network, an affiliate of consultant J.D. Power and Associates. About 40% of consumers trading in cars currently owe more than their car is worth.
***OK enough enough already......WHat I am saying is we have BORROWED from FUTURE demand...autos, housing.....almost everything!
And we have managed to let our dollars flee this country to Asia, and so has INVESTMENT dollars, and we have built CHINA into a manufacturing SUPER POWER, now India and PAkastan are luring SERVICE SECTOR jobs away from this country.
With record budget deficits, and record trade deficits....you would think ALL this demand for credit would drive UP Interest rates?
http://mwhodges.home.att.net/hodges.htm GRandfather Economic Report
AUG 2000 Prudent Bear Debt is truly the “sword of Damocles” hanging over the American economy at this juncture. At some point, even the soothing words of Alan Greenspan about America’s productivity miracle will not be sufficient to obfuscate this reality.
WELL 4 years later and we are even more in debt...hey nothing has happened!!
Surely there is NO reason for China and Japan to stop buying our debt?
HAS the DOW REALLY recovered???
http://tinyurl.com/43ccb
If you figure since 2002 the dollar index is down some 30%.....the dow VALUE has nosedived.
WE go from credit expansion to credit contraction...level off for many years....and begin cycle again....IMHO the period ahead of us is for contraction...K-Winter....tough sledding....my long term view.
SHort term? RIPE for manipulation, be careful.
Duratek
If watching money supply is valid indicator at all, the damage has already been done.
We see CHina REALLY trying to put on the breaks to runaway economy.
WE see FNM probed. We see AIG probed.WE see MRK drug pulled from market.We see Star GAs PArtners stock obliterated.WE see almost $200 GOOGLE! Stock has doubled in less than 2 months??!!
VIX inched up today, interesting...staying above its 20 MA...we see 5 day CPC at .70
We know total credit market debt is ABOVE 300% of GDP now (well above the level which brough us a depression)
http://www.unknownnews.net/040217pb.html excerpt FEB 2004
"What is perfectly clear from simple arithmetic is that without a sudden increase in the number of jobs and the wages they pay, individual debt can not be serviced by personal income. Worse yet, not only are people not saving, but their financial reserves are not in real cash. The only thing keeping the “national ponzi scheme” going is the illusion of wealth created by the Federal Reserve’s low interest rates and liquidity that has allowed stock market valuations and housing prices to artificially inflate."
http://www.economagic.com/em-cgi/charter.exe/var/vel-gdp-per-m3 Velocity of money at LOWEST levels in over 40 years.
WILL or HOW WILL consumers "keep it up"? From THURSDAY COMSTOCK
"The negative effect of poor jobs numbers on incomes is easy to see. In past expansionary cycles personal income adjusted for inflation and transfer payments was up an average of 12 percent at this stage, compared to only 4 percent now. To maintain even the present level of tepid spending, consumers have gone into record debt in addition to getting plenty of help from tax refunds and mortgage refinancing. Now mortgage refinancing is down over 80 percent from the peak, and the tax refunds are in the past. Under these circumstances consumer spending is likely to be restrained and the economic soft patch is likely to continue. With Taiwan Semiconductor recently confirming the continuing pattern of gloomy forecasts for the chip industry from leading companies, we see no relief from the tech sector as well."
HOUSING BUBBLE? Read this from AUG 2002 iTuliphttp://www.itulip.com/qc082002.htm
"What's "cannot afford" mean when buying a home? The historical average for the cost of a mortgage is 25% of gross income. That's what the banks used to recommend, before they got desperate for households to sell mortgages to. In bubbly real estate market like Boston's today the average mortgage has reached 44% of income.
That's a housing bubble. Period."
March 2004 headline:
Consumer debt loads at recordBy Barbara Hagenbaugh, USA TODAYWASHINGTON — U.S. consumers have taken on record levels of debt as low interest rates have lured them to buy bigger houses and fancier cars and to charge more on credit cards than ever before.
•Wheels. Borrowing for cars has jumped as consumers are lured into auto showrooms by promises of no money down and 0% interest rates. Through mid-February, the average amount financed for a new car purchase in 2004 was $24,157, up 11% from 2001, according to Power Information Network, an affiliate of consultant J.D. Power and Associates. About 40% of consumers trading in cars currently owe more than their car is worth.
***OK enough enough already......WHat I am saying is we have BORROWED from FUTURE demand...autos, housing.....almost everything!
And we have managed to let our dollars flee this country to Asia, and so has INVESTMENT dollars, and we have built CHINA into a manufacturing SUPER POWER, now India and PAkastan are luring SERVICE SECTOR jobs away from this country.
With record budget deficits, and record trade deficits....you would think ALL this demand for credit would drive UP Interest rates?
http://mwhodges.home.att.net/hodges.htm GRandfather Economic Report
AUG 2000 Prudent Bear Debt is truly the “sword of Damocles” hanging over the American economy at this juncture. At some point, even the soothing words of Alan Greenspan about America’s productivity miracle will not be sufficient to obfuscate this reality.
WELL 4 years later and we are even more in debt...hey nothing has happened!!
Surely there is NO reason for China and Japan to stop buying our debt?
HAS the DOW REALLY recovered???
http://tinyurl.com/43ccb
If you figure since 2002 the dollar index is down some 30%.....the dow VALUE has nosedived.
WE go from credit expansion to credit contraction...level off for many years....and begin cycle again....IMHO the period ahead of us is for contraction...K-Winter....tough sledding....my long term view.
SHort term? RIPE for manipulation, be careful.
Duratek
ADDITIONAL LINKS
Can be found at the BOTTOM of this blog for Elliott Wave Theory.
Very interesting and FREE WEEK is coming click on any news story or link I provided to access your FREE week of EWT analysis coming NOV 3rd.
Duratek
Very interesting and FREE WEEK is coming click on any news story or link I provided to access your FREE week of EWT analysis coming NOV 3rd.
Duratek
"LISTEN TO THE MARKETS" by John Makin
Listen to the Markets
By John H. Makin
Posted: Friday, October 22, 2004
ECONOMIC OUTLOOK
AEI Online
Publication Date: November 1, 2004
This essay is also available in Adobe Acrobat PDF format.
Market behavior in 2004 has defied most predictions. Interest rates and stock prices have dropped--the reverse of most forecasts at the start of the year. The dollar has been broadly trendless despite a rising and "unsustainable" current account deficit that was supposed to have pushed it down. And, of course, the price of oil, which was widely expected in January-not to mention February, March, April, May, and June--to drop back below $30 per barrel has risen relentlessly to well above $50 per barrel.
Accompanying all of this supposedly bizarre market behavior has been a path of the U.S. and global economies that has not followed the script at the beginning of the year. Last year's deflation scare turned into a brief inflation scare during the second quarter, and by July the Federal Reserve was predicting second-half 2004 growth of well over 5 percent. As expectations for inflation and growth have drifted lower since mid-year, the Fed has boosted its interest rate (the federal funds rate) by 75 basis points and appears ready to adopt another 25-basis-point increase on November 10.
Outside of the United States, Japan's highly touted growth surge ended in the spring, while China has applied selective measures to cool off its economy and met with mixed results. Europe, especially Germany, continues to languish at low growth levels while monetary tightening by the Bank of England has cooled the housing bubble in the United Kingdom and slowed the economy. Forecasts of 2005 global growth, already set below 2004 levels, are contingent upon an oil price of $30 to $35 per barrel. Even though oil is above $50 per barrel and the effects of U.S. policy stimulus have largely run their course by now, few analysts have been discussing the likelihood of a global recession, but such an outcome is looming. Acknowledging that possibility instead of denying it is a necessary condition to avoid a recession next year. Unusual Behavior Reflects Unusual Conditions
The unconventional market behavior observed this year and over the past several years needs to be understood rather than simply characterized as irrational, unsustainable, or resulting from measurement flaws such as allegedly faulty inflation data. If we do not understand what is driving markets and the economy now, we shall be ill prepared to anticipate and to deal with future behavior. Policy mistakes could occur that destabilize rather than stabilize the U.S. and global economies. The basic distinguishing factor of the unusual global economy and attendant market behavior we have witnessed over the last several years is the existence of excess capacity--especially in global markets for traded goods. Starting in 1996, the U.S. stock market bubble drove down the cost of capital, especially in the tech sector, so that over-investment in turn drove down the return on new and existing capital. The spillover into broadly higher stock prices also artificially depressed the cost of capital and created excess capacity. Excess capacity in global goods markets has been severely exacerbated by the emergence of China's production platform, which has attracted capital from domestic and foreign investors to combine with huge reserves of cheap domestic labor. This is not a criticism of China. It is simply a fact with which policymakers and the global economy and financial markets must reckon. It is important to remember that a world where demand is scarce, rather than supply, does not fit underlying assumptions of most economic models, which are driven by assumptions of the need to allocate scarce resources in a supply-constrained world. The persistent excess-supply problem has evolved over several phases since the mid-1990s. First, both the U.S. tech bubble and accommodative Fed policy since Alan Greenspan's famous December 1996 "irrational exuberance" address to the American Enterprise Institute drove an investment boom in the United States and Asia. The Asian investment bubble almost collapsed in 1997 and 1998 but was reinflated by the Fed's rescue of Long-Term Capital Management in the fall of 1998 under the banner of avoiding "systemic risk." That event solidified the view that the Fed would indemnify financial risks attached to aggressive lending and investing. U.S. stocks soared until the bubble burst in March 2000 after the Fed started to withdraw some stimulus during the last half of 1999. U.S. Policy Boosts China's Capacity
U.S. investment spending collapsed after mid-2000 and did not turn positive until the second quarter of 2003. To deal with an extreme excess-capacity problem in the United States, massive monetary and fiscal stimulus was employed. Much of this stimulus (especially the monetary stimulus) spilled over into China by virtue of its currency peg to the dollar, which effectively makes the Fed China's central bank. During the ten quarters following the end of 2001, after sharp rate cuts by the Fed in response to fears that households would stop spending after the September 11 attacks, the U.S. economy has grown at an average rate of 3.5 percent. Over that same period, consumption growth has been somewhat lower, averaging 3 percent, suggesting that a substantial portion of the U.S. stimulus spilled over into foreign markets. Indeed, U.S. imports rose at an 8.3 percent annual rate during the same ten-quarter period since the end of 2001 after having contracted sharply for a year and a half prior to that.
The U.S. effort to alleviate excess capacity by boosting demand ironically contributed to a global capacity problem by creating a rush of lending to Asia that helped to boost global supply. This combination, of course, contributed to a surge in America's external deficit that has widely been associated with the expectation of a weaker dollar. The spillover of U.S. demand-boosting fiscal and monetary policy into Asia, awash with a swelling supply of traded goods, was accommodated and recycled by Asia's central banks. Aggressive purchase of dollars and recycling of those dollars back into U.S financial markets via purchases of U.S. government and agency securities helped to sustain U.S. demand growth at stable interest rates and prices. It is hard to overemphasize the extraordinary combination of U.S. policy stimulus, price stability, and falling interest rates over the past several years. The U.S. federal budget deficit swung from a surplus of 2.4 percent of gross domestic product in fiscal 2000 to a deficit of about 4 percent of GDP in fiscal 2004, a swing of 6.4 percentage points, far larger than the swing of 2.5 percentage points during the first four fiscal years of the Reagan administration (1981-85). On the monetary policy front, since the end of 2001, after a sharp Fed response to fears of a post-September 11 slowdown, the real (inflation-adjusted) federal funds rate averaged minus one half of one percent, the lowest level seen in a period of falling inflation since the Great Depression.
All of this stimulus held growth at an average level of 3.5 percent (which is about the Fed's estimate of the trend rate of U.S. growth) during the ten quarters following the end of 2001. Three-percent consumption growth, coupled with strong growth of imports and a surge of government dissaving (rising budget deficits), boosted the U.S. current account deficit (the amount of external borrowing necessary) from 3.5 percent of GDP, just before the March 2000 stock market crash, to 5.7 percent of GDP by mid-2004. No Inflation and Falling Interest Rates
The powerful demand boost from a combination of extremely easy fiscal and monetary policies would have created inflation, high real and nominal interest rates, and a surging current account deficit accompanied by a falling dollar if all this had occurred in a fully employed economy. Had foreign investors been unprepared to lend more to the United States to finance the rising current account deficit, either real interest rates would have had to rise or the dollar would have weakened sharply.
In fact, the activity of U.S. macroeconomic variables has been radically different from what standard analysis would have predicted. Interest rates, both real and nominal, have persistently oscillated downward to lower levels. Inflation has dropped sufficiently to have produced a deflation scare in the spring of 2003. At the time, the Fed was contemplating the purchase of long-term U.S. government bonds as traders drove yields on ten-year Treasury notes to a low of 3.1 percent while stock prices fell. The trade-weighted dollar actually rose until early 2002 and then fell irregularly, declining by about 15 percent by late 2003. Since then it has moved slightly higher, while trading in a narrow range. This year has perhaps been the most surprising year for markets since the March 2000 stock market crash. After the spring 2003 deflation scare passed, the U.S. stock market rose strongly until year-end. Economic growth was well above trend during the second-half of 2003, averaging almost 6 percent at an annual rate. By then it appeared that concerted monetary and fiscal policy stimulus had put the U.S. economy on a sustainable growth path. After a sharp jump from 3.1 percent to 4.5 percent in the yield on ten-year notes following the mid-year economic pickup and stock market rally, U.S. interest rates stabilized and fell slightly by late 2003. Ominously, the price of oil began to rise during the second half of 2003. During the first quarter of 2004, the long awaited employment rebound expected to accompany a sustainable recovery did not materialize. Stocks languished and interest rates fell. The dollar held up because Asian central banks financed virtually all of the U.S. current account deficit, with Japan alone purchasing $140 billion during the first quarter of 2004. We learned in the first quarter of 2004 that the supply-oriented producer economies in Asia simply would not let the United States reduce its current account deficit or allow the dollar to fall. In effect, by supporting the dollar, Asia exported its excess capacity to the United States by helping to sustain U.S. demand growth at levels far above U.S. income growth. The Fed's easy-money dollars that spilled abroad were simply recycled back into financial assets to help sustain the growth of U.S. demand for Asia's huge supply of traded goods.
To complicate matters further, U.S. employment growth surged briefly during the second quarter of 2004, seeming to confirm the notion of a sustainable recovery. At that time, U.S. interest rates rose again, with yields on ten-year Treasury notes reaching 4.9 percent. Higher yields and the rising price of oil kept stocks from rising by much and, in fact, most stock indices drifted broadly lower. The end of the first half of 2004 saw the U.S. economy shift from the tailwinds of policy stimulus and stable energy prices to the headwinds of stimulus removal (in the case of fiscal policy) and reversal (in the case of monetary policy), coupled with steadily rising energy prices. Fears of a resultant slowing in the U.S. and global economies caused interest rates to fall while fears of weaker earnings growth caused stocks to drift lower. The dollar held steady thanks to continued support by Asian central banks and recycling of petrodollars. Classic Post-Bubble Scenario
The unusual landscape in global markets and the global economy is a broad manifestation of excess capacity in the traded-goods sector. It represents a classic post-investment bubble scenario. The effort to sustain U.S. growth in the face of symptoms of that global excess capacity (including weak U.S. employment growth) has spilled stimulus into Asia, where substantial excess capacity still exists. Prices of commodities, especially oil, have begun to constrain growth as China and other Asian producers are driving up those prices to sustain production of finished traded goods at extraordinarily low prices. The combination of those two trends puts producers in other industrial countries in a serious terms-of-trade squeeze. The response to this scenario needs to reflect the reality behind it. Investors should bet on lower interest rates and lower equity prices. Producers should resist the temptation to add further to productive capacity, especially in the area of globally traded goods. Policymakers should be very cautious about further interest rate increases. Higher oil prices will slow growth without creating higher inflation, given the fact that substantial excess capacity produces a profit squeeze rather than higher consumer prices. If oil stays above $50 per barrel through year-end, a recession is likely to occur in 2005. The current tendency of policymakers and corporate planners simply to ignore that possible outcome is dangerous. Meanwhile, markets are flashing warning signs as interest rates and the stock market grind lower and the dollar has slipped to a six-month low.
John H. Makin is a resident scholar and the director of fiscal policy studies at AEI.
By John H. Makin
Posted: Friday, October 22, 2004
ECONOMIC OUTLOOK
AEI Online
Publication Date: November 1, 2004
This essay is also available in Adobe Acrobat PDF format.
Market behavior in 2004 has defied most predictions. Interest rates and stock prices have dropped--the reverse of most forecasts at the start of the year. The dollar has been broadly trendless despite a rising and "unsustainable" current account deficit that was supposed to have pushed it down. And, of course, the price of oil, which was widely expected in January-not to mention February, March, April, May, and June--to drop back below $30 per barrel has risen relentlessly to well above $50 per barrel.
Accompanying all of this supposedly bizarre market behavior has been a path of the U.S. and global economies that has not followed the script at the beginning of the year. Last year's deflation scare turned into a brief inflation scare during the second quarter, and by July the Federal Reserve was predicting second-half 2004 growth of well over 5 percent. As expectations for inflation and growth have drifted lower since mid-year, the Fed has boosted its interest rate (the federal funds rate) by 75 basis points and appears ready to adopt another 25-basis-point increase on November 10.
Outside of the United States, Japan's highly touted growth surge ended in the spring, while China has applied selective measures to cool off its economy and met with mixed results. Europe, especially Germany, continues to languish at low growth levels while monetary tightening by the Bank of England has cooled the housing bubble in the United Kingdom and slowed the economy. Forecasts of 2005 global growth, already set below 2004 levels, are contingent upon an oil price of $30 to $35 per barrel. Even though oil is above $50 per barrel and the effects of U.S. policy stimulus have largely run their course by now, few analysts have been discussing the likelihood of a global recession, but such an outcome is looming. Acknowledging that possibility instead of denying it is a necessary condition to avoid a recession next year. Unusual Behavior Reflects Unusual Conditions
The unconventional market behavior observed this year and over the past several years needs to be understood rather than simply characterized as irrational, unsustainable, or resulting from measurement flaws such as allegedly faulty inflation data. If we do not understand what is driving markets and the economy now, we shall be ill prepared to anticipate and to deal with future behavior. Policy mistakes could occur that destabilize rather than stabilize the U.S. and global economies. The basic distinguishing factor of the unusual global economy and attendant market behavior we have witnessed over the last several years is the existence of excess capacity--especially in global markets for traded goods. Starting in 1996, the U.S. stock market bubble drove down the cost of capital, especially in the tech sector, so that over-investment in turn drove down the return on new and existing capital. The spillover into broadly higher stock prices also artificially depressed the cost of capital and created excess capacity. Excess capacity in global goods markets has been severely exacerbated by the emergence of China's production platform, which has attracted capital from domestic and foreign investors to combine with huge reserves of cheap domestic labor. This is not a criticism of China. It is simply a fact with which policymakers and the global economy and financial markets must reckon. It is important to remember that a world where demand is scarce, rather than supply, does not fit underlying assumptions of most economic models, which are driven by assumptions of the need to allocate scarce resources in a supply-constrained world. The persistent excess-supply problem has evolved over several phases since the mid-1990s. First, both the U.S. tech bubble and accommodative Fed policy since Alan Greenspan's famous December 1996 "irrational exuberance" address to the American Enterprise Institute drove an investment boom in the United States and Asia. The Asian investment bubble almost collapsed in 1997 and 1998 but was reinflated by the Fed's rescue of Long-Term Capital Management in the fall of 1998 under the banner of avoiding "systemic risk." That event solidified the view that the Fed would indemnify financial risks attached to aggressive lending and investing. U.S. stocks soared until the bubble burst in March 2000 after the Fed started to withdraw some stimulus during the last half of 1999. U.S. Policy Boosts China's Capacity
U.S. investment spending collapsed after mid-2000 and did not turn positive until the second quarter of 2003. To deal with an extreme excess-capacity problem in the United States, massive monetary and fiscal stimulus was employed. Much of this stimulus (especially the monetary stimulus) spilled over into China by virtue of its currency peg to the dollar, which effectively makes the Fed China's central bank. During the ten quarters following the end of 2001, after sharp rate cuts by the Fed in response to fears that households would stop spending after the September 11 attacks, the U.S. economy has grown at an average rate of 3.5 percent. Over that same period, consumption growth has been somewhat lower, averaging 3 percent, suggesting that a substantial portion of the U.S. stimulus spilled over into foreign markets. Indeed, U.S. imports rose at an 8.3 percent annual rate during the same ten-quarter period since the end of 2001 after having contracted sharply for a year and a half prior to that.
The U.S. effort to alleviate excess capacity by boosting demand ironically contributed to a global capacity problem by creating a rush of lending to Asia that helped to boost global supply. This combination, of course, contributed to a surge in America's external deficit that has widely been associated with the expectation of a weaker dollar. The spillover of U.S. demand-boosting fiscal and monetary policy into Asia, awash with a swelling supply of traded goods, was accommodated and recycled by Asia's central banks. Aggressive purchase of dollars and recycling of those dollars back into U.S financial markets via purchases of U.S. government and agency securities helped to sustain U.S. demand growth at stable interest rates and prices. It is hard to overemphasize the extraordinary combination of U.S. policy stimulus, price stability, and falling interest rates over the past several years. The U.S. federal budget deficit swung from a surplus of 2.4 percent of gross domestic product in fiscal 2000 to a deficit of about 4 percent of GDP in fiscal 2004, a swing of 6.4 percentage points, far larger than the swing of 2.5 percentage points during the first four fiscal years of the Reagan administration (1981-85). On the monetary policy front, since the end of 2001, after a sharp Fed response to fears of a post-September 11 slowdown, the real (inflation-adjusted) federal funds rate averaged minus one half of one percent, the lowest level seen in a period of falling inflation since the Great Depression.
All of this stimulus held growth at an average level of 3.5 percent (which is about the Fed's estimate of the trend rate of U.S. growth) during the ten quarters following the end of 2001. Three-percent consumption growth, coupled with strong growth of imports and a surge of government dissaving (rising budget deficits), boosted the U.S. current account deficit (the amount of external borrowing necessary) from 3.5 percent of GDP, just before the March 2000 stock market crash, to 5.7 percent of GDP by mid-2004. No Inflation and Falling Interest Rates
The powerful demand boost from a combination of extremely easy fiscal and monetary policies would have created inflation, high real and nominal interest rates, and a surging current account deficit accompanied by a falling dollar if all this had occurred in a fully employed economy. Had foreign investors been unprepared to lend more to the United States to finance the rising current account deficit, either real interest rates would have had to rise or the dollar would have weakened sharply.
In fact, the activity of U.S. macroeconomic variables has been radically different from what standard analysis would have predicted. Interest rates, both real and nominal, have persistently oscillated downward to lower levels. Inflation has dropped sufficiently to have produced a deflation scare in the spring of 2003. At the time, the Fed was contemplating the purchase of long-term U.S. government bonds as traders drove yields on ten-year Treasury notes to a low of 3.1 percent while stock prices fell. The trade-weighted dollar actually rose until early 2002 and then fell irregularly, declining by about 15 percent by late 2003. Since then it has moved slightly higher, while trading in a narrow range. This year has perhaps been the most surprising year for markets since the March 2000 stock market crash. After the spring 2003 deflation scare passed, the U.S. stock market rose strongly until year-end. Economic growth was well above trend during the second-half of 2003, averaging almost 6 percent at an annual rate. By then it appeared that concerted monetary and fiscal policy stimulus had put the U.S. economy on a sustainable growth path. After a sharp jump from 3.1 percent to 4.5 percent in the yield on ten-year notes following the mid-year economic pickup and stock market rally, U.S. interest rates stabilized and fell slightly by late 2003. Ominously, the price of oil began to rise during the second half of 2003. During the first quarter of 2004, the long awaited employment rebound expected to accompany a sustainable recovery did not materialize. Stocks languished and interest rates fell. The dollar held up because Asian central banks financed virtually all of the U.S. current account deficit, with Japan alone purchasing $140 billion during the first quarter of 2004. We learned in the first quarter of 2004 that the supply-oriented producer economies in Asia simply would not let the United States reduce its current account deficit or allow the dollar to fall. In effect, by supporting the dollar, Asia exported its excess capacity to the United States by helping to sustain U.S. demand growth at levels far above U.S. income growth. The Fed's easy-money dollars that spilled abroad were simply recycled back into financial assets to help sustain the growth of U.S. demand for Asia's huge supply of traded goods.
To complicate matters further, U.S. employment growth surged briefly during the second quarter of 2004, seeming to confirm the notion of a sustainable recovery. At that time, U.S. interest rates rose again, with yields on ten-year Treasury notes reaching 4.9 percent. Higher yields and the rising price of oil kept stocks from rising by much and, in fact, most stock indices drifted broadly lower. The end of the first half of 2004 saw the U.S. economy shift from the tailwinds of policy stimulus and stable energy prices to the headwinds of stimulus removal (in the case of fiscal policy) and reversal (in the case of monetary policy), coupled with steadily rising energy prices. Fears of a resultant slowing in the U.S. and global economies caused interest rates to fall while fears of weaker earnings growth caused stocks to drift lower. The dollar held steady thanks to continued support by Asian central banks and recycling of petrodollars. Classic Post-Bubble Scenario
The unusual landscape in global markets and the global economy is a broad manifestation of excess capacity in the traded-goods sector. It represents a classic post-investment bubble scenario. The effort to sustain U.S. growth in the face of symptoms of that global excess capacity (including weak U.S. employment growth) has spilled stimulus into Asia, where substantial excess capacity still exists. Prices of commodities, especially oil, have begun to constrain growth as China and other Asian producers are driving up those prices to sustain production of finished traded goods at extraordinarily low prices. The combination of those two trends puts producers in other industrial countries in a serious terms-of-trade squeeze. The response to this scenario needs to reflect the reality behind it. Investors should bet on lower interest rates and lower equity prices. Producers should resist the temptation to add further to productive capacity, especially in the area of globally traded goods. Policymakers should be very cautious about further interest rate increases. Higher oil prices will slow growth without creating higher inflation, given the fact that substantial excess capacity produces a profit squeeze rather than higher consumer prices. If oil stays above $50 per barrel through year-end, a recession is likely to occur in 2005. The current tendency of policymakers and corporate planners simply to ignore that possible outcome is dangerous. Meanwhile, markets are flashing warning signs as interest rates and the stock market grind lower and the dollar has slipped to a six-month low.
John H. Makin is a resident scholar and the director of fiscal policy studies at AEI.
Thursday, October 28, 2004
Bernie Schaeffer on Stock Futures Manipulation?
schaeffer's on yesterday's SPX futures manipulation
Looks like we had some pretty big program buying going on yesterday in front of the Presidential election, as volume was very strong. You've got to admit that the Dow above 10,000 sure looks a lot better than it does under 10,000. Could it be manipulation? I don't know but here is something to think about before you answer. Between about 10:45 and 11:05 a.m. about 150,000 e-mini contracts traded on the S&P 500. This comes out to nearly 1/5 of the average daily volume. The bottom line is the easiest way to manipulate the stock market is through the futures market and this sure looked like what happened yesterday. It's going to be very interesting to see what happens in the market heading into the election. This I write from the conspiracy side of my brain.
Looks like we had some pretty big program buying going on yesterday in front of the Presidential election, as volume was very strong. You've got to admit that the Dow above 10,000 sure looks a lot better than it does under 10,000. Could it be manipulation? I don't know but here is something to think about before you answer. Between about 10:45 and 11:05 a.m. about 150,000 e-mini contracts traded on the S&P 500. This comes out to nearly 1/5 of the average daily volume. The bottom line is the easiest way to manipulate the stock market is through the futures market and this sure looked like what happened yesterday. It's going to be very interesting to see what happens in the market heading into the election. This I write from the conspiracy side of my brain.
WEAKEST Recovery in History
350,000 employment report, AGAIN, missed expectations!!
Now folks, we keep hearing of SHALLOWEST recession in history...why NO PRINT on the WEAKEST recovery in history from so called Recession?
BEAR....when it decides...has a lot of making up to do.....the lemmings have IGNORED history!
We're slaves http://www.house.gov/paul/tst/tst2004/tst102504.htm
HUFF and we're still PUFFING http://scotlandonsunday.scotsman.com/business.cfm?id=1232682004
plunk....
MAIN impetus to increased SPX earnings have been the financials ..beneficiaries of the low interest rates and the housing BOOM/BUBBLE and hasn't that driving force peaked/topped?
http://tinyurl.com/4hsur (SERIES of DECLINING TOPS)
D
Now folks, we keep hearing of SHALLOWEST recession in history...why NO PRINT on the WEAKEST recovery in history from so called Recession?
BEAR....when it decides...has a lot of making up to do.....the lemmings have IGNORED history!
We're slaves http://www.house.gov/paul/tst/tst2004/tst102504.htm
HUFF and we're still PUFFING http://scotlandonsunday.scotsman.com/business.cfm?id=1232682004
plunk....
MAIN impetus to increased SPX earnings have been the financials ..beneficiaries of the low interest rates and the housing BOOM/BUBBLE and hasn't that driving force peaked/topped?
http://tinyurl.com/4hsur (SERIES of DECLINING TOPS)
D
FSO MArket wrap and SIGNS
http://www.financialsense.com/Market/wrapup.htm
The thing I harp about (long term and short term) is total crditmarket debt, another chart of such offered at fSO.I don't know where TOP is of credit expansion, but I do know every DAY it goes higher it sets NEW records as % of GDP!!I also know that broad money supply as measured by M3 FELL $79BILLION last 2 weeks....it has been in leveling off falling trend formore than 2 months now.....when this happens in the past the economy weakens in the near future.
Now, I do not know whay this stock does or why the index rises whenyou think it shouldn't yada yada....I like COLD hard facts...money supply rises...so usually do economy and stocks. If adding $40 Billion in a week for money supply has beencalled "crisis" levels....what is a decline of $79 B in 2 weeks saying?
A SERIOUS low is put in DOW, then 2 days later....the bulls aredancing in the streets? NO, we haven't seen bear really get going yet again.....when I haven't a clue of certainty, but if DOW THEORY says the low comeswhen valuations BELOW KNOWN VALUES (1 X book or LESS!) and we knowlast 3 bear market BOTTOMED at around 6% dividend yields and 8-13 XSPX....what is THIS?Have another HARD look at the credit debt chart.....boggles the minddoesn't it, now let them explain it away.
EVERYTHING goes in CYCLES....LOOK at 1929-30 PEAK in that chart, lookat bottoming phase...how long it took, then LOOK WHEN the trend beganto rise (beginning of LAST great BULL MKT) and rest you weary eyes onwhere we are NOW!I am a man who uses observation to help me think....this cannot endgood.....when the CONTRACTION BEGINS....is the declining money supplya SIGN? and who else is talking about it?Perched atop a precipice?
http://tinyurl.com/3l9ds BULL MARKETSBEGIN....well, not at 2000 TOP levels here.http://tinyurl.com/3w7gg BULL MKT...period to period higher highs. WE NOW HAVE lower highs and lows as the trend.
http://www.economagic.com/em-cgi/charter.exe/var/vel-gdp-per-m3 ZOOM ZOOM, Velocity of money is how fast it changes hands in the economyrising velocity healthy...WHAT do you see? AFTER RECORD PUMPING and stimulus?In less than 10 years we have more than DOUBLED the money stock.The store next to where we had dinner tonight sold shoes...signread...."made in USA"....no customers....and you know what...nobody gives a hoot!Remember all those TV ads suggesting patriotism in BUYINGAMERICAN...what happened?Something is VERY wrong folks....I think gum and string is all thatis holding it up!
D
The thing I harp about (long term and short term) is total crditmarket debt, another chart of such offered at fSO.I don't know where TOP is of credit expansion, but I do know every DAY it goes higher it sets NEW records as % of GDP!!I also know that broad money supply as measured by M3 FELL $79BILLION last 2 weeks....it has been in leveling off falling trend formore than 2 months now.....when this happens in the past the economy weakens in the near future.
Now, I do not know whay this stock does or why the index rises whenyou think it shouldn't yada yada....I like COLD hard facts...money supply rises...so usually do economy and stocks. If adding $40 Billion in a week for money supply has beencalled "crisis" levels....what is a decline of $79 B in 2 weeks saying?
A SERIOUS low is put in DOW, then 2 days later....the bulls aredancing in the streets? NO, we haven't seen bear really get going yet again.....when I haven't a clue of certainty, but if DOW THEORY says the low comeswhen valuations BELOW KNOWN VALUES (1 X book or LESS!) and we knowlast 3 bear market BOTTOMED at around 6% dividend yields and 8-13 XSPX....what is THIS?Have another HARD look at the credit debt chart.....boggles the minddoesn't it, now let them explain it away.
EVERYTHING goes in CYCLES....LOOK at 1929-30 PEAK in that chart, lookat bottoming phase...how long it took, then LOOK WHEN the trend beganto rise (beginning of LAST great BULL MKT) and rest you weary eyes onwhere we are NOW!I am a man who uses observation to help me think....this cannot endgood.....when the CONTRACTION BEGINS....is the declining money supplya SIGN? and who else is talking about it?Perched atop a precipice?
http://tinyurl.com/3l9ds BULL MARKETSBEGIN....well, not at 2000 TOP levels here.http://tinyurl.com/3w7gg BULL MKT...period to period higher highs. WE NOW HAVE lower highs and lows as the trend.
http://www.economagic.com/em-cgi/charter.exe/var/vel-gdp-per-m3 ZOOM ZOOM, Velocity of money is how fast it changes hands in the economyrising velocity healthy...WHAT do you see? AFTER RECORD PUMPING and stimulus?In less than 10 years we have more than DOUBLED the money stock.The store next to where we had dinner tonight sold shoes...signread...."made in USA"....no customers....and you know what...nobody gives a hoot!Remember all those TV ads suggesting patriotism in BUYINGAMERICAN...what happened?Something is VERY wrong folks....I think gum and string is all thatis holding it up!
D
Some 10/28 thoughts
I must paraphrase mostly, I will do my best to share some thoughts .....http://www.elliottwave.com And feel obligated to postand give credit for this update.NDX fills gap at 1481....they see perhaps odds good for one more DOWN UP sequence. It would take a close below 1425 to suggest trend hasturned back down.
**I add also note where upper trendline crosses just below 1500, italso looks like relative strength index has waned during rise.
"Despite the surge of the past few days, the bear market is not over.A short term selloff should begin some time tomorrow. How thisdecline unflods and where it finds support will provide a strong clueas to whether the downtrend has returned, or another push up isneeded to complete rally."**WILL the BLACK BOXES now buy the SPX since it is above 200 SMA?(Thebears might get skinned alive IMHO.)
Dollar reached new record for 10 day DSI of 7.2% bulls!!Bond bulls have been ABOVE 90% last 3 days! 10 day average sentimentis 86.1% bulls, the MARCH extreme was 89.8% Yields above 4.26% wouldbe sign trend change is a foot.Daily sentiment gold hit 91%! We have had a throw over of the endingdiagonal and retunr to the triangle area. 10 day RSI at 81.6% !!!
***Folks indeed, I did notice the VIX did NOT give back during thisrally much, options sellers smell something? I am sure the VIX has fallen HARD every rally after decline, you could count on it, nottoday or yesterday, I think it is still aout 20 EMA....yes, if itfalls hard.....but a rising VIX could mean selling pressure INVISABLE could pick up. Hope this helped, I Love the service for the sentiment info as I have said before.
Duratek
**I add also note where upper trendline crosses just below 1500, italso looks like relative strength index has waned during rise.
"Despite the surge of the past few days, the bear market is not over.A short term selloff should begin some time tomorrow. How thisdecline unflods and where it finds support will provide a strong clueas to whether the downtrend has returned, or another push up isneeded to complete rally."**WILL the BLACK BOXES now buy the SPX since it is above 200 SMA?(Thebears might get skinned alive IMHO.)
Dollar reached new record for 10 day DSI of 7.2% bulls!!Bond bulls have been ABOVE 90% last 3 days! 10 day average sentimentis 86.1% bulls, the MARCH extreme was 89.8% Yields above 4.26% wouldbe sign trend change is a foot.Daily sentiment gold hit 91%! We have had a throw over of the endingdiagonal and retunr to the triangle area. 10 day RSI at 81.6% !!!
***Folks indeed, I did notice the VIX did NOT give back during thisrally much, options sellers smell something? I am sure the VIX has fallen HARD every rally after decline, you could count on it, nottoday or yesterday, I think it is still aout 20 EMA....yes, if itfalls hard.....but a rising VIX could mean selling pressure INVISABLE could pick up. Hope this helped, I Love the service for the sentiment info as I have said before.
Duratek
Wednesday, October 27, 2004
Market Advance
http://tinyurl.com/5fu5j
Well, one of the reasons for my Blog, was to get on record my views and keep track of any "calls" I might make, or observations.
Above chart shows NDX at top of Bolinger Bands, RSI nearing overbought, but right now the DOW bounding off its oversold and lower BB is pulling everything up.
Falling oil does not mean bully for stocks, in fact, rising oil mirrors rise in stocks and Vice Versa.
Interest rates SHOULD be going up, and IMHO it all lays on Friday GDP report, and on Briefing.com thier own call is for 5%.... an UPSIDE surprise above last qtr GDP and avg estimate could send bonds tumbling (rates rise), if there is a downside surprise the opposite, the way the GOV manipulates data, this is last report BEFORE election....look at market advance BEFORE election.....not that I believe in PPT or anything...
Highest FIB retrace allowed to prior advnce is .786 which is near 1476, we are there NOW(a REVERSE COULD come from this area)....I am standing pat and considering adding to my short position, but I have been adding longs as well, trying to even out my exposure.
I have NO confidence at this time for a steep drop, tough market! But I am NOT jumping on bull bandwagon....YET.
Knowing FULL well NO year ending in FIVE (2005) has been a DOWN year for Wall Street....it is ture don't ask me why, becuase I don't know it just is.
D
Well, one of the reasons for my Blog, was to get on record my views and keep track of any "calls" I might make, or observations.
Above chart shows NDX at top of Bolinger Bands, RSI nearing overbought, but right now the DOW bounding off its oversold and lower BB is pulling everything up.
Falling oil does not mean bully for stocks, in fact, rising oil mirrors rise in stocks and Vice Versa.
Interest rates SHOULD be going up, and IMHO it all lays on Friday GDP report, and on Briefing.com thier own call is for 5%.... an UPSIDE surprise above last qtr GDP and avg estimate could send bonds tumbling (rates rise), if there is a downside surprise the opposite, the way the GOV manipulates data, this is last report BEFORE election....look at market advance BEFORE election.....not that I believe in PPT or anything...
Highest FIB retrace allowed to prior advnce is .786 which is near 1476, we are there NOW(a REVERSE COULD come from this area)....I am standing pat and considering adding to my short position, but I have been adding longs as well, trying to even out my exposure.
I have NO confidence at this time for a steep drop, tough market! But I am NOT jumping on bull bandwagon....YET.
Knowing FULL well NO year ending in FIVE (2005) has been a DOWN year for Wall Street....it is ture don't ask me why, becuase I don't know it just is.
D
Monday, October 25, 2004
"Surging Security Stocks May Be Dangerous"
http://tinyurl.com/5fuo8
It is always exciting to latch onto an investment idea, or react to news. But when "HERDING" occurs, they can switch directions rather abruptly.
If you are in BEFORE the "herd" bully for you. Can you maintain disciline to take profits when they are in front of you? Do you set goals BEFORE you buy something? Do you have an exit strategy?
The stock you buy for $5 can go $10, and from there it could go higher, but it is also likely to retrace a portion, many times a goodly portion of the move BEFORE the trend might continue.
SO, maybe it helps to set an area that if you are right, and or lucky enough to get that run, that you have already planned how you would deal with it, calmly, coherently.
Ye' ole' "bird in the hand......." it works with investing to, more so for speculating"
Duratek
It is always exciting to latch onto an investment idea, or react to news. But when "HERDING" occurs, they can switch directions rather abruptly.
If you are in BEFORE the "herd" bully for you. Can you maintain disciline to take profits when they are in front of you? Do you set goals BEFORE you buy something? Do you have an exit strategy?
The stock you buy for $5 can go $10, and from there it could go higher, but it is also likely to retrace a portion, many times a goodly portion of the move BEFORE the trend might continue.
SO, maybe it helps to set an area that if you are right, and or lucky enough to get that run, that you have already planned how you would deal with it, calmly, coherently.
Ye' ole' "bird in the hand......." it works with investing to, more so for speculating"
Duratek
Sunday, October 24, 2004
Death of a BULL Market?
DEATH of a bull markethttp://tinyurl.com/5ohr9 OK one more, I decided to remove the Euro and leave the Dow in $$ (I had first run chart $INDU in euro's) It makes the recovery the bulls love to remark about look better, but it hasn't changed one thing.
And that is IMHO The bull market which WAS supported by these lengthy long term moving avg's as I input the 200 and 400 WK SMA's....rising and the 200 above the 400. WHAT do you observe happening now?IMHO, this is quite significant, no other chartist has brought this up to support their claim of a new bull mkt and rightly so!
As I choose to see this, as bitter proof the GREAT bear market which began in 2000 and was interrupted by a cyclical bull mkt now over is going to GAIN MOMENTUM going forward. The SLICING through the 400 WK by the 200 WK will be the icing on the TA cake for me....and IMHO an irrefutable one.
Duratek
And that is IMHO The bull market which WAS supported by these lengthy long term moving avg's as I input the 200 and 400 WK SMA's....rising and the 200 above the 400. WHAT do you observe happening now?IMHO, this is quite significant, no other chartist has brought this up to support their claim of a new bull mkt and rightly so!
As I choose to see this, as bitter proof the GREAT bear market which began in 2000 and was interrupted by a cyclical bull mkt now over is going to GAIN MOMENTUM going forward. The SLICING through the 400 WK by the 200 WK will be the icing on the TA cake for me....and IMHO an irrefutable one.
Duratek
Looking at the Dow performance in eyes of the EURO
http://tinyurl.com/4gvr4
Looking at Dow recovery in terms of the EURO,is quite interesting. What it shows is a rather meek recovery from lows in 2002!
ANd an OMINOUS occurance of a PENDING VERY LONG TERM trend line crossover which hasn't occurred in more than 10 years . (most my chart could hold)
GDP number coming out Thursday, IMHO it will be UGLY, could roil any pity rally we get this week. 7 trading days to election.
Dollar feels like on edge of precipice, EWT reports near record lows in bullishness towards the currency.
Duratek
Looking at Dow recovery in terms of the EURO,is quite interesting. What it shows is a rather meek recovery from lows in 2002!
ANd an OMINOUS occurance of a PENDING VERY LONG TERM trend line crossover which hasn't occurred in more than 10 years . (most my chart could hold)
GDP number coming out Thursday, IMHO it will be UGLY, could roil any pity rally we get this week. 7 trading days to election.
Dollar feels like on edge of precipice, EWT reports near record lows in bullishness towards the currency.
Duratek
Saturday, October 23, 2004
UPSIDE DOWN CAKE and eat it TOO
We not only have a Dow Theory UPSIDE non confirm but with NEW Dowlow we also have a downside non cofirm! Yikes!!!
NAZ had a reverse week, andis nowhere near oversold on the daily...JUST closing below the 200SMA. CAN it will it move counter to the Dow if the Dow begins to rally?
Here are my other observations:
Dow is at or near oversold on Rsi daily. (weekly neutral and not soIMHO ANY move will reset the daily to continue selling lower)
TRansports AUG low is 2959.60 and RSI WEEKLY and daily ovebrought(now coming down on daily) LOWS of MArch 2004 (new low for year) was2743.50 FRI CLOSE was 3371
SO for the trans to close BELOW last low is 412 points for AUG low.
Dow recent high was OCT 10,270 FEB for year was 10.753 TO closestlast high OCT is 513 POINTS!
YOU MUST ask yourself, WHICH is more likely?
Could it be any crazier? more confusing? let's make it simple.
Dow weekly is neutral MUCH room to decline IMHO but daily oversold.
Transports WEEKLY is OVERBOUGHT and DAILY is JUST coming down fromoverbought...with MUCH room to fall.
IMHO one scenario has the TRAN falling as Dow corrects oversold.ALSO NAZ has room to fall, both daily and weekly.
THEN there is this! http://tinyurl.com/5sfr7
AND, the action of the money supply is SCREAMING lookout IMHO, when is last time it fell over $79 Billion in 2 weeks?
And guess what? nobody knows.
Yours til I have another brain cramp
Duratek
NAZ had a reverse week, andis nowhere near oversold on the daily...JUST closing below the 200SMA. CAN it will it move counter to the Dow if the Dow begins to rally?
Here are my other observations:
Dow is at or near oversold on Rsi daily. (weekly neutral and not soIMHO ANY move will reset the daily to continue selling lower)
TRansports AUG low is 2959.60 and RSI WEEKLY and daily ovebrought(now coming down on daily) LOWS of MArch 2004 (new low for year) was2743.50 FRI CLOSE was 3371
SO for the trans to close BELOW last low is 412 points for AUG low.
Dow recent high was OCT 10,270 FEB for year was 10.753 TO closestlast high OCT is 513 POINTS!
YOU MUST ask yourself, WHICH is more likely?
Could it be any crazier? more confusing? let's make it simple.
Dow weekly is neutral MUCH room to decline IMHO but daily oversold.
Transports WEEKLY is OVERBOUGHT and DAILY is JUST coming down fromoverbought...with MUCH room to fall.
IMHO one scenario has the TRAN falling as Dow corrects oversold.ALSO NAZ has room to fall, both daily and weekly.
THEN there is this! http://tinyurl.com/5sfr7
AND, the action of the money supply is SCREAMING lookout IMHO, when is last time it fell over $79 Billion in 2 weeks?
And guess what? nobody knows.
Yours til I have another brain cramp
Duratek
READ THIS! Charts Don't lie but DO tell a story
http://www.financialsense.com/Market/wrapup.htm
And, defend it did, but this is OPEX DAY, if PPT was OUT, maybe "OUT" of phoney money was it.
I see as important NEW LOW in DOW was achieved just now as previous LOW OF 9783.90 was taken out, all bets are off.....I understand anything is possible.
Was it the HIGH in OIL prices that killed the market today? Weak it was, not to be explained away. Now what? STAY TUNED.
Duratek......on the PULSE, like a dog on a bone!
And, defend it did, but this is OPEX DAY, if PPT was OUT, maybe "OUT" of phoney money was it.
I see as important NEW LOW in DOW was achieved just now as previous LOW OF 9783.90 was taken out, all bets are off.....I understand anything is possible.
Was it the HIGH in OIL prices that killed the market today? Weak it was, not to be explained away. Now what? STAY TUNED.
Duratek......on the PULSE, like a dog on a bone!
Friday, October 22, 2004
MEXICAN STANDOFF or PRECIPICE? or lift off
http://tinyurl.com/4zrr6 And it is said, when an incumbant did not win the POPULAR vote, he doesn't win a second term. WOuld it not be fitting, if Kerry somehow PULLS it out (as he has before)but also does not win popular vote?
Without stirring who is for whom, I bring this up because, this race, like the markets seem to be LOCKED,and is there more to that than just coincidence?
8 wk insider sell/buy ratio moved up to 4.37 (bearish) but put call supports potential extended rally IMHO
Much else is neutral.BUT:
Investor's Intelligence Bulls/Bears+Bears (10 week moving average) .65 That is an EXTREME reading!
Like everything else WHAT IS most important overiding factor?
DO we NEED a point system?
BULLS:1)High PC2)High TRIN3)Transports making new highs4)Getting thru OCT with little damage5)High Beta stocks leading rally6)Pro's positioning for year end rally7)Selling pressure at LOW end.8)Interest rates still very low.
Bears:
1)Low VIX (could be interpreted 2 ways though)2)Markets diverging, not moving together3)Near previous tops of bullish % and ALL sentiment readings4)3 months in row FALLING (negative)LEI5)BUsiness INventories still rising6)Low Factory CAPAC and INdustrial Production7)Falling Consumer Sentiment8)Non-Farm Payrolls continue BELOW expectations9)Record budget and Trade deficits10)Help Wanted STUCK at 3711)This chart http://tinyurl.com/6ttpp NOTE!!! if you switch to 2 year chart you will see NOT since May of 2002 has 10WK been BELOW 40 WK!!! MACD declining! RSI neutral
http://tinyurl.com/6kpt2 Compq more neutral cept OBV not yet crossed up, has stayed below during rally and stoch reaching WEKLY overbought, and market is to UNDERSIDE of top declining trendline.
NEXT chart SURPRISED ME!http://tinyurl.com/3pyba From a WEEKLY standpoint, this doeasn't look bullish. Trend with declining tops is bearish so IMHO convergence will lead to crossover. STochastics curling DOWN and if you switch indicator to MACD histograms you see it as zero and DECLINING!
AGAIN, this is all WEEKLY
http://tinyurl.com/4ub4y DOW MACD already declining, trend looks firm and leading the way, both SPX and Dow seem in synch....with NAZ and TRAN giving us strong divergences.http://tinyurl.com/43tgu TRAN RSI where it has topped before (WEEKLY) but notice MACD weaker than other tops! 3500 IMHO should CAP this rally if it can reach it, would leave ONE lower high in place, all LOWS have been LOWE lows! dating back to 2003 !!!
http://tinyurl.com/5ggxd DAily TRAN looking to blow OBV OF the charts, RSI nearing extremes of overbought...
http://tinyurl.com/472ra LASTLY (if you made it this far!) the NDX which is leading is also near OFF the charts on the move, though can continue, is it likely from these overbought or near so levels, OBV off the charts and HUGGING trendline, could go either way.
ALL of this I contend SHOULD lead to a coming decline.....and MAYBE that sets up year end rally, because if not....IMHO this will be like brush fire which consumes itself!
ALL of course JMHO
Duratek
Without stirring who is for whom, I bring this up because, this race, like the markets seem to be LOCKED,and is there more to that than just coincidence?
8 wk insider sell/buy ratio moved up to 4.37 (bearish) but put call supports potential extended rally IMHO
Much else is neutral.BUT:
Investor's Intelligence Bulls/Bears+Bears (10 week moving average) .65 That is an EXTREME reading!
Like everything else WHAT IS most important overiding factor?
DO we NEED a point system?
BULLS:1)High PC2)High TRIN3)Transports making new highs4)Getting thru OCT with little damage5)High Beta stocks leading rally6)Pro's positioning for year end rally7)Selling pressure at LOW end.8)Interest rates still very low.
Bears:
1)Low VIX (could be interpreted 2 ways though)2)Markets diverging, not moving together3)Near previous tops of bullish % and ALL sentiment readings4)3 months in row FALLING (negative)LEI5)BUsiness INventories still rising6)Low Factory CAPAC and INdustrial Production7)Falling Consumer Sentiment8)Non-Farm Payrolls continue BELOW expectations9)Record budget and Trade deficits10)Help Wanted STUCK at 3711)This chart http://tinyurl.com/6ttpp NOTE!!! if you switch to 2 year chart you will see NOT since May of 2002 has 10WK been BELOW 40 WK!!! MACD declining! RSI neutral
http://tinyurl.com/6kpt2 Compq more neutral cept OBV not yet crossed up, has stayed below during rally and stoch reaching WEKLY overbought, and market is to UNDERSIDE of top declining trendline.
NEXT chart SURPRISED ME!http://tinyurl.com/3pyba From a WEEKLY standpoint, this doeasn't look bullish. Trend with declining tops is bearish so IMHO convergence will lead to crossover. STochastics curling DOWN and if you switch indicator to MACD histograms you see it as zero and DECLINING!
AGAIN, this is all WEEKLY
http://tinyurl.com/4ub4y DOW MACD already declining, trend looks firm and leading the way, both SPX and Dow seem in synch....with NAZ and TRAN giving us strong divergences.http://tinyurl.com/43tgu TRAN RSI where it has topped before (WEEKLY) but notice MACD weaker than other tops! 3500 IMHO should CAP this rally if it can reach it, would leave ONE lower high in place, all LOWS have been LOWE lows! dating back to 2003 !!!
http://tinyurl.com/5ggxd DAily TRAN looking to blow OBV OF the charts, RSI nearing extremes of overbought...
http://tinyurl.com/472ra LASTLY (if you made it this far!) the NDX which is leading is also near OFF the charts on the move, though can continue, is it likely from these overbought or near so levels, OBV off the charts and HUGGING trendline, could go either way.
ALL of this I contend SHOULD lead to a coming decline.....and MAYBE that sets up year end rally, because if not....IMHO this will be like brush fire which consumes itself!
ALL of course JMHO
Duratek
"Meltdown Dead Ahead?"
http://www.goldseek.com/tools/print.php
As a Bear I am shaken, but not changing stance yet. Transports hit ANOTHER new high yesterday as Dow fell! If you believe in Dow THeory, it smealls trouble, but from where?
D
As a Bear I am shaken, but not changing stance yet. Transports hit ANOTHER new high yesterday as Dow fell! If you believe in Dow THeory, it smealls trouble, but from where?
D
Sunday, October 17, 2004
Time to wake up and smell the Deflation?
No gas in the Tank, or did you throw that egg in?
Bear market is gone right? http://www.elliottwave.com
The Elliott Wave Theorist -- October 15, 2004 (just one Q and A I can share from new EWT)
An Interview by Chris Oliver, Money Editor, The South China Post
Q: Can the Federal Reserve prevent deflation?
A: No. We have a huge bond market of $30 trillion, which is debt already created. If bond investors
came to believe that the Fed would begin printing money and throwing it around, what would they do?
They would sell every bond they've got, which would lead to a decrease in the supply of credit because
bond prices would fall and interest rates would rise. So there aren't any alternatives to deflation.
Q: What will be the outcome of deflation?
A: The ultimate result is going to be a worldwide depression. There were deep depressions in the 1790s,
the 1840s and the 1930s, and I think the next one is already underway. It started in 2001. We have had one
or two every century, and we are headed into one now.
**Take the housing bubble. See FNM run, but it can't hide!
Unlike the stock market very liquid, the housing market is anything but! I think the real estate market is already SLOWING, what will start as a trickle with a leveling off of price appreciation can turn into a torrent, a cascading , an imploding of the prices.
COMMERCIAL loans are DOA< look at ANY chart.
8 months into supposed BIG year for stocks, the HOOAHH Presidential cycle....and what do we have folks? Declining tops in DOW which topped in FEB. and a historic Transportation non confirm.
But surely folks see this, and other things and are turning bearish?
HA! you kid yourself, self....bullish readings (Investors Intelligence etc) have been climbing as the dow has been declining! 2000-2002 a distant memory. Letter writers are almost unanamous in their bullishness....jumping out of their skin bullish, all the while oil is near $55.
To me, it's frightening, what is going on and more so the lah lah attitude.
Most have stuck to tried and true LTBH and allocation...as if that plan has no risks.
Hardly a PEEP about what has been going on with the money supply!!?? It has been stalling/declining for almost 3 months now!! Especially the unusually large $40 billion DECLINE of last week! This kind of money action fortells a weakening economy which should lead to possible dramatically lower prices....even if it takes 2005 to show it...a supposed LOCK for a good year.
WHat has propelled the fabulous profit recovery is the financials, was the housing BOOM.....this is looking more and more as a non factor going forward.
Next qtr GDP could realy suck the air out of market should it be as weak as I think it is going be.
Caveat Emptor....as I see MOST still worrying about missing something(most bears I know turned bullsih) than about protecting what they got.
Duratek
Bear market is gone right? http://www.elliottwave.com
The Elliott Wave Theorist -- October 15, 2004 (just one Q and A I can share from new EWT)
An Interview by Chris Oliver, Money Editor, The South China Post
Q: Can the Federal Reserve prevent deflation?
A: No. We have a huge bond market of $30 trillion, which is debt already created. If bond investors
came to believe that the Fed would begin printing money and throwing it around, what would they do?
They would sell every bond they've got, which would lead to a decrease in the supply of credit because
bond prices would fall and interest rates would rise. So there aren't any alternatives to deflation.
Q: What will be the outcome of deflation?
A: The ultimate result is going to be a worldwide depression. There were deep depressions in the 1790s,
the 1840s and the 1930s, and I think the next one is already underway. It started in 2001. We have had one
or two every century, and we are headed into one now.
**Take the housing bubble. See FNM run, but it can't hide!
Unlike the stock market very liquid, the housing market is anything but! I think the real estate market is already SLOWING, what will start as a trickle with a leveling off of price appreciation can turn into a torrent, a cascading , an imploding of the prices.
COMMERCIAL loans are DOA< look at ANY chart.
8 months into supposed BIG year for stocks, the HOOAHH Presidential cycle....and what do we have folks? Declining tops in DOW which topped in FEB. and a historic Transportation non confirm.
But surely folks see this, and other things and are turning bearish?
HA! you kid yourself, self....bullish readings (Investors Intelligence etc) have been climbing as the dow has been declining! 2000-2002 a distant memory. Letter writers are almost unanamous in their bullishness....jumping out of their skin bullish, all the while oil is near $55.
To me, it's frightening, what is going on and more so the lah lah attitude.
Most have stuck to tried and true LTBH and allocation...as if that plan has no risks.
Hardly a PEEP about what has been going on with the money supply!!?? It has been stalling/declining for almost 3 months now!! Especially the unusually large $40 billion DECLINE of last week! This kind of money action fortells a weakening economy which should lead to possible dramatically lower prices....even if it takes 2005 to show it...a supposed LOCK for a good year.
WHat has propelled the fabulous profit recovery is the financials, was the housing BOOM.....this is looking more and more as a non factor going forward.
Next qtr GDP could realy suck the air out of market should it be as weak as I think it is going be.
Caveat Emptor....as I see MOST still worrying about missing something(most bears I know turned bullsih) than about protecting what they got.
Duratek
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