HISTORYMarch 17: "Reversal" Starts: DOW/SP double bottom-Oil/Gold/Euro 'bubble' burst

Discussion in 'Trading' started by increasenow, Mar 21, 2008.

  1. HISTORY Begins on March 17: "Reversal" Starts:
    ***DOW/SP bounces off a 3 month double bottom
    ***Oil/Gold/Euro 'bubble' burst, now in Bearish slide
    ***market has accepted FEd will always act and rescue
    ***worst of credit mess behind, market has accepted this
    ***cash moves from commodities in huge dump back into stocks
    ***upcoming earnings will point to brighter future as bottom is behind...
    ***market will see improving economic numbers and not so good numbers will be shrugged off

    honestly...prove me wrong...what makes the DOW/SP go lower (break final support) than this 3 month double bottom and what makes Oil/Gold/Euro find current standing support and retrace upward?...the dollar truly is strengthening...REMEMBER MARCH 17..."REVERSAL DAY" for DOW/SP and Oil/Gold/Euro/USD...go ahead and prove this wrong...I'm open to any logical and researched thought...
     
  2. AAA30

    AAA30

    They are calling a top after 2 days of selling? Would not suprise me to see gold and oil at new highs in a few weeks.
     
  3. aiki14

    aiki14

    I am gonna agree with you OP, I changed my bias from short to long and my hedges to the down side. I think we see the financials lead us out, with the economy as a whole beginning to show growth trends 5 months out from here.
    The crisis of liquidity has been countered by the FOMC accepting the paper that caused it as collateral and allowing the primaries access to the window. This, in my opinion of course, will be the act that history will look to as the inflection point.
     
  4. Commodities are only going higher because we're in global economic boom and the demand for wheat, con, oil, and other commodities is huge. Very bad time to short.
     
  5. 1. The consumer, who makes up 70% of GDP is still underwater, regardless of credit markets starting to work again

    2. Lending will never be what it was in the "Free money for all" liar loans era

    3. Unemployment will continue to rise for awhile, (see #1)

    4. Inflation is still hurting the consumer like a big tax hike. A correction in the commodity bull, or the end of the commodity bull will not show up in lower prices on the majority of things for a long time, (see #1)

    5. The level of drunken consumerism experienced over the last 5 years will not be seen again for at least a decade.

    6. No drunken consumerism, no more record earnings. The debts created have not been wiped away, only redistibuted for now.

    7. And for the most important piece, stock trad3r has returned to the board with his perma-bull rantings, always a bad sign for further economic problems.

    I for one won't argue a corrective rally that may even trend for several weeks, however, the parameters that created the last bull are broken. If you're looking for a resumption of the bull with new highs, you need to rethink the underlying fundamentals. We are in a sideways, rangebound market for a long time AT BEST.
     
  6. Answers interjecte below with @.

    03-22-08 12:26 PM



    --------------------------------------------------------------------------------
    Quote from increasenow:

    dudes...come on...read this...

    HISTORY Begins on March 17: "Reversal" Starts:
    ***DOW/SP bounces off a 3 month double bottom
    @Double bottom was created by 75BP cuts
    ***Oil/Gold/Euro 'bubble' burst, now in Bearish slide
    @Your point?
    ***market has accepted FEd will always act and rescue
    @Fed cuts are producing smaller shorter rallies. If Fed cuts could support the market they would have done so in 2000-2 when you had very narrow breadth of stocks with High P/E's and a concept i.e. as the theoretical valuation was all there was, cutting rates should have helped then if they ever could.
    ***worst of credit mess behind, market has accepted this
    @Maybe the "market" as represented by CNBC viewers has accepted this, but it seems the real market that moves funds around has not. Treasury bills yields are at the lowest level since the 1950s. First faster frothy wave of a Tsunami, bigger more destructive second wave is multipler effect from banks calling loans and halting lending and housing multiplier effect going into reverse - like operating leverage reversing.
    ***cash moves from commodities in huge dump back into stocks
    @How?, they are selling commodities because they are being MARGIN CALLED.
    ***upcoming earnings will point to brighter future as bottom is behind...
    @Earnings are way too high and all the positive surprises are it seems caused by one analyst lowballing his estimate to bring concensus down. LEH, MS GS FDX 'beat' their estimates but ACTUALLY reported HUGE declines in earnings.
    ***market will see improving economic numbers and not so good numbers will be shrugged off
    @2 years too early on this. Housing is illiquid so takes literally years to grind down from a bubble high

    honestly...prove me wrong...what makes the DOW/SP go lower (break final support) than this 3 month double bottom and what makes Oil/Gold/Euro find current standing support and retrace upward?...the dollar truly is strengthening...REMEMBER MARCH 17..."REVERSAL DAY" for DOW/SP and Oil/Gold/Euro/USD...go ahead and prove this wrong...I'm open to any logical and researched thought...
    --------------------------------------------------------------------------------




    Honestly, I really don't believe that you actually have any money on the line. Granted, there may well be a ST suckers rally as the propaganda machine is saying the problem is over* and the vacum is above with some people still bidding so in the absence of bad news the line of least resistance is up. We are actually in something of a dead zone as Joe 401k has taken losses that are too big to take so he is not redeeming (Accredited investor in Hedge funds will be blocked form doing so) - if it goes significantly lower he will and there will be a cascade.

    * Banks didn't fail in 1929, they failed 1930 onwards.
     
  7. Guess its time to get short...thanks Stock!
     
  8. If you believe this then go long with 100% of your portfolio.
     
  9. the most worrisome:

    A) US household debt now at 140% of after tax revenue. Not only a record, but actually parabolic compared to historical averages.

    B) US consumers can no longer use their homes as an ATM, which is what has driven the economy since 2003 in the first place.

    C) most banks have negative balance sheets if all bad loans were written down. They are too leveraged.

    I would like instigator of this thread to please give some fundamental reasons for sustained growth. All he gave were reasons why he sees a bottom. None of these are economic factors in growth. It is NOT going to be the consumer for quite awhile, and exports are way to small as a % of GDP to have much impact.

    Where is the growth going to come from?

    Possibilities could be a mega war, or new tech breakthroughs in green technology/ energy efficiencies. The latter could be much larger than the tech boom of the 90's, but it will take quite some time. I see nothing else out there.

    Jay

    PS, I am not arguing that we cloud not have a rally for awhile, but we are not even close to coming out of this mess based on any rational economic analysis. I am in agreement with Roach that we probably see sideways for awhile, unless some more nasty news comes out (like British banks failing, which is possible). Then we go DOWN. This is going to be a long recession. Not sure how deep, but long. I have been trading through many such times since the 80's, and these are the worst fundamentals I have seen by far.
     
    #10     Mar 22, 2008