has the next bear started?

Discussion in 'Trading' started by empee, Feb 18, 2007.

  1. Mvic


    Thanks pabst, and I yours, especially your treasury commentary. Don't recall any political disgareements but I went through a period of reactionary pacifism after 9/11 in part because of a belief in Christianity. I have since liberated my mind from that particular bondage and am far more pragmatic.
    #31     Feb 20, 2007
  2. I played it the way I saw it at the time. stayed short for 4 days and took my stop today. Good trading to all and congrats to all who got it right. Keep looking for the next set-up.
    #32     Feb 20, 2007
  3. I agree that it would be far too naive to blindly follow the slogans (such as "Don't fight the Fed"). However, the correlation is there, although it's not directly between the monetary policy and the equity prices, but between the long term interest rates and the equities' expected return. More precisely, despite the 17 rate hikes, the spread between E/P stock yields and the 10yr bond is positive, and its absolute value is very significant. To me, it explains perfectly why we've seen such a straight and consistent advance in the S&P 500 and other indices. And the advance is far from over, as the current spread still indicates that the stocks are undervalued by as much as 30% compared to bonds. To put it differently, if there is a crash, it would be in the bond prices, not the stock prices.
    #33     Feb 20, 2007
  4. Asia has to stop using the bond market as a tool to manipulate our economy and the global economy. The yield curve used to provide vital price signals to the markets. With active manipulation they no longer function.
    #34     Feb 20, 2007
  5. empee


    well, i guess the divergence is showing up :) So has it started?
    #35     Feb 27, 2007
  6. Still love ya, Pabst. :p
    #36     Feb 27, 2007
  7. empee


    its rather amazing I called this ahead of time, so I guess my indicators work. Now the question is since I had never seen anything like this does it indicate:

    a) a crash
    b) correction (maybe major)
    c) bear market

    I note that even during selloffs like 2006/2004s these indicators didn't diverge like the did recently. So I dont think its #2 (since in past correction the correlations held).

    In short, I have never seen the action I saw in the past on the indicators as of now; thus I dont have anyway to say this action leads too.. since its the first time its happened.

    I would think its C.

    #37     Feb 27, 2007