yawn... wall of worry. rinse, lather, repeat. it will be over when it's over. trying to predict it just cuts into the massive profits available gold, silver, platinum, transports, ER2, Nikkeii all off the hook
From the way I learned it, and I may have learned it wrong... economic growth leads to higher interest rates, leading to lower profits, leading to a declining stock market. That's a complete 'cycle'.
FWIW. Something took place in Iran in thursday. I have an Iranian friend who came to see me. He was visable shaken up and upset. He is extremely intelligent and knowledgeable. In the past he was always optimistic that things would get sorted out. Now he says no chance. Any sign of attack and Iran will take out UAE/ Dubai, Kuwait and a few other targets they have set up. Fridays sell off was more than employment numbers. I hope Bush and company don't create a huge mess.
I think the important question to ask is this: With rising interest rates and a widening trade deficit, as well as structural inflation being introduced into the system: Why isn't the market lower? Why hasn't the dow traded to 9000 again by now? With so much cash sitting on the sidelines, and the boomer retirement predicting overall lower equities, why hasn't this been priced into the market? Why, in the face of overwhelming bearish sentiment, haven't we gone lower? I'm in sufficient cash to protect myself, but in the light of this reality and some other factors (like, why can't we get into triple digit down days in the dow when it pisses out lately? Anyone else but me find that kind of weird?) Without getting into it too much, I think that there is significant potential upside to the market without as much downside. One of those 3:1 risk/ratio profiles that you have to take structurally. If it doesn't pan out, fine. But if you miss a huge upmove, well there you go. And I think it is difficult to expect serious economic hardships in front of the mid-term elections that will send the market crashing. So, I'm cautiously long, with riskier positions warranting smaller positions. We shall see...
i think it's because the fed's solution is to print dollars with abandon. more dollars = weaker dollar = higher priced assets. the rationalization is that creating artificial liquidity and credit can be a permanent solution in the absence of competetive growth, or at least mask the absence of growth. these guys don't care if we lose the dollar along the way. in fact, the less it's worth, the more likely joe public is to turn around and spend it immediately economic strength is only one potential reason for rising equity markets. on a 50 year timeframe, the crb is breaking out bigtime will the equities fall? not necessarily. does that mean the economy is competetive with other nations who don't rely on war? not necessarily.
The market is weak because it is weak. There are a lot of other things besides Iran that are in play.
Not necessarily---------you have to watch the flow of funds into and out of our markets and others. The U.S. markets have just experienced a several day removal of funds that was accelerated on Friday. These funds will be hard to replace as the countries and groups of the middle east who have started selling our market last week may very well continue the extraction this week. There was selling into strength on Wednesday and Thursday that was (stopped any S&P price breakout to new highs) creating some equilibrium. Friday changed this balance and it would not be too surprising to have additional buy/sell imbalance carried out through the week ahead.
This could not be more incorrect-------------- having plans in place to profit from such potential market possibilities is what will have you already in place to be rewarded. Sitting back and waiting for daily price action to put you into trades is still a reactionary game which does not pay the best. Managed proactive positions in place with a plan are some of the most profitable trades you could ever have.
Exactly The trades you envsion and plan beforehand like the night before usually turn out to be the biggest wins mainly because a. You put serious size on it because of your confidence in research and analysis.