Say it aint so? Rally may be in 7th or 8th inning??

Discussion in 'Trading' started by S2007S, Mar 5, 2013.

  1. S2007S


    Who are we to believe, cohen and buffet and the rest of the bulls on cnbc or this guy who says this rally is in the 7th or 8th inning, how do you trade that headline? Stay in it until the bottom of the 9th inning or do you sell now and miss out on 10% gains and buy after the 27% correction, what does one do in this situation?
    I figure with BUBBLE ben bernanke pumping the markets up were still in the top of the second, however this is a double header so this might go on for another 7 years. But after the next bubble bursts you will be able to buy the SPX under 1000 again! Just saying!

    Stock Rally May Be in 7th or 8th Inning: Druckenmiller

    Published: Tuesday, 5 Mar 2013 | 9:11 AM ET
    By: Matthew J. Belvedere
    Producer, CNBC's "Sqwuack Box"

    With blue-chip stocks near all-time highs, the party in the market can continue for a while longer, but it could end "very badly," Stanley Druckenmiller, founder of hedge fund Duquesne Capital, told CNBC on Tuesday.

    "If you're going to play [in stocks] — and I'm a professional investor without clients, and I'm playing in the game — for God's sake play in liquid instruments," he said in a "Squawk Box" interview. "There are plenty of public securities out there … that's where you should be playing. … [So] if you change your mind, and if the signs come that this game is coming to an end, you can get out."

    Druckenmiller added that the Federal Reserve's easy money policy is forcing investors into stocks: "They're great value only relative to zero interest rates. They're not great value on an absolute basis."

    "It's one thing to control short-term interest rates," he said. "It's another thing when you're taking 75 to 80 percent of the bond supply and holding that price down. … This is a big, big gamble to be manipulating the most important price in free markets, [interest rates]."

    Admitting he's mystified by fixed-income movements, Druckenmiller said "there's no reason that bonds should go down" with the Fed printing money. "Bonds are being subsidized by the same thing equities are. If you print enough money everything is subsidized," he said.

    Druckenmiller also called the Fed's bond-buying program — now in round three of quantitative easing — the biggest "wealth transfer" and "trickle-down" monetary policy.

    "Those purchases are cancelling market signals," he warned. "The bond market and the stock market have provided wonderful signals for many years as to potential problems."

    "Maybe we're in the 7th or 8th inning" of the stock market rally and it could end in one of two ways, Druckenmiller cautioned. "With a mal-investment bust like in 2007 and 2008. … Or it could end in monetizing the debt and off we go in inflation."

    He added: "I think a lot of people knew by early, mid-'08 that there was problem, but the reason they were hung, because they were [in] instruments they couldn't get out of." Druckenmiller reiterated that investors should put money in assets that they're able to sell, if needed.

    —By CNBC's Matthew J. Belvedere; Follow him on Twitter @Matt_SquawkCNBC
  2. S2007S


    All these articles ever since the dow broke records, some saying another long rally ahead others suggest it just wont last, should be interesting to see where the markets are in a few months from today's historical highs.

    Dow Breaks Record but Party Likely Won't Last

    Published: Tuesday, 5 Mar 2013 | 2:44 PM ET
    By: Jeff Cox Senior Writer

    No confetti, no party hats, no champagne—the new record high for the Dow industrials came and went Tuesday with a minimal amount of celebration as investors prepared for what's to come.

    That's because history strongly suggests that a bull market with so much gray in its beard not only will take a rest but also should have a seat. So those who missed the most recent leg of the rally can find another entry point.

    (Special Report: Dow Record: How We Got Here, Where We're Going)

    "We now believe we are at the first of three market pivot points this year and suspect a drop is now likely to unfold over the next several months," Piper Jaffray's Craig W. Johnson and Leah Williams said in a market analysis. "We suspect this pullback in the broader market will be tactical in nature and may represent the single-best buying opportunity this year."

    Discussing whether the Fed or earnings are driving the markets, with Jared Bernstein, Center on Budget and Policy Priorities, and CNBC's Jeff Cox.
    The Piper analysts anticipate a rollback in stocks approaching 10 percent as part of the full-year forecast of "a hop, a drop and a pop."

    The hop happened with the rise of more than 8 percent so far this year in both the Dow and Standard & Poor's 500. The drop is what is over the near-term horizon. The pop is what happens the rest of the way—a fairly strong rally after the pullback, then an easing through the rest of the way en route to a 2,000 price on the S&P by August 2014.

    So even though Piper anticipates a retreat now that the Dow has broken its 2007 shackles, it would be part of a long-term constructive view on the market.

    A market retreat could happen on any number of variables—the budget impasse in Washington, the re-emergence of the European sovereign debt crisis, or the simple breaching of technical points that have led some chart experts to see a "bearish rising-wedge" pattern that needs only a breakout to the downside to confirm.

    "When you're in a lofty market it doesn't take much to pull things back down a few percentage points," said Peter Costa, president of Empire Executions in New York. "We're going to be in a narrow trading range once we break through this."

    After some early-year strongly bullish indications, market sentiment has tempered recently.

    The latest American Association of Individual Investors survey showed the biggest drop in bullish views in nearly 2 1/2 years. Another survey, the Investors Intelligence reading on investor newsletters, found bullishness at a 2013 low.

    "We are still bullish on the market for the rest of the year, but don't expect the increase to come in a straight line, especially after the volatility we have seen over the last week," Bespoke Investment Group's Paul Hickey said in a report.

    Research from Bespoke turned up an interesting trend when it comes to jackrabbit starts such as the market has made this year.

    Such quick moves out of the gate—specifically, gains greater than 5 percent—often precede less positive returns than when the market gains less but is still positive. When the S&P 500 rises less than 5 percent in the first two months, the typical gain for the rest of the year is 10.9 percent, while a start greater than 5 percent usually sees the market adding just 4.2 percent the rest of the way.

    That adds up to a market primed for profit-taking.

    "We're just priced for perfection here," said Uri Landesman, president of Platinum Partners fund in New York. A downturn catalyst "will be just the likelihood that the news will be worse than people expect in the economy. If the Fed stops pumping in liquidity, at some point the stock market will cease to be the safe haven that it's been."

    Landesman said he thinks the market rally could continue for a bit until the S&P 500 breaks its own historical high of 1,565 before falling and not setting up an ideal buying opportunity until it drops "much lower."

    "This has been a four-year relatively uninterrupted rally. It's gone up so quickly that there are very few strong (technical) supports below," he said. "If people get negative it can really go down fairly quickly."
  3. Visaria


    Birinyi Says Buy Mining, Technology Shares as Bull Ages
    By Whitney Kisling - Mar 5, 2013

    Laszlo Birinyi, one of the first money managers to tell clients to buy before the bull market began in March 2009, said investors should buy commodity and technology shares as the rally enters its fifth year.

    “People are now starting to realize that it is a bull market,” Birinyi said in an interview on Bloomberg Radio’s “Surveillance” with Tom Keene and Michael McKee. “It’s not going to come back, you’ve missed the train, and the train still has a long way to go. But you better get on it.”

    The Dow Jones Industrial Average rose to its highest level ever today, erasing losses from the financial crisis after a four-year rally fueled by the fastest profit growth since the 1990s. While consumer staples and health-care shares have led the almost 8 percent advance for the Standard & Poor’s 500 Index in 2013, Birinyi said technology, materials and energy stocks are the best choices today.

    “Banks may have run their course,” said Birinyi, president of Birinyi Associates Inc. in Westport, Connecticut. “The strong economic stocks are where we’re starting to find ways to play the market.” Inc. (CRM), the largest maker of online customer- management software, is an example of a well-performing cyclical stock, he said. It’s gained 30 percent in the past 12 months, compared with a 13 percent advance in the S&P 500, as earnings exceeded analyst projections, Bloomberg data show.

    Birinyi earlier this year said the S&P 500 had a more than 50 percent chance of climbing past 1,600 this year. The index is within 3 percent of surpassing its 1,565.15 record set in October 2007 after closing at 1,525.20 yesterday.

    As the bull market starts its fifth year this week, extending beyond the average length of cycles since 1962, it is in the midst of its final stage, in which three past bull markets have gained 20 percent, according to Birinyi.

    “We think there’s that possibility here, and if not we still have a very good market,” he said. “We’re in the fourth leg, which is where you get some really good moves.”

    To contact the reporter on this story: Whitney Kisling in New York at

    To contact the editor responsible for this story: Michael P. Regan at
  4. You know what to do. You stay long as long as the trend is intact on the weekly chart or you have some other PA metric that convinces you to give it a hard look. It is better (even though difficult) to give some back then to prejudge the trend.

    I think it is probably late in the game. I think the entire economy is rotten to the core and only held up by free money. I truly believe our society is headed to hell in a handbasket and that those at the top are beyond incompetent. But I think a ton of crap that turns out to be dead wrong from a market perspective.

    Figure out a price action metric that makes sense to you and hold on tight till that metric breaks and convinces you to take a closer look. It ain't a ballgame where you look at the scoreboard and it tells you we are in the bottom of the 8th.
  5. the truth is this can run up more but the economy is toast and its all fed money. the market would love to see unemployment raise because that means more government spending and more fed money. the bad news is good news and good news is bad news.
  6. +1.... bad idea getting caught up in narratives.. sure.. free money all that.. i'd like to see how many of these guys are actually putting on short positions.. rather then just looking for confirming opinions relative to their view..
  7. Visaria


    There is no link between the overall stock market and the economy. If there ever was, it was broken when the Fed went on their money printing binge.

    Money flows are what drives markets and the Fed has been seriously increasing those money flows, hence the 100%+ increase in the market in the past 4 yrs.

    All the economic analysis done to predict the market is a waste of time and resources unless it is targeted towards money flows.
  8. Visaria


    Isn't it galling to know that all one had to do was stick their entire net worth into stocks a few years ago, go play golf everyday or whatever, no looking at trading screens, no paying brokers commissions, come back today and see their entire net worth doubled :mad:
  9. Especially that we knew this was going to happen but plain ole didn't want to believe this would happen.

    Even today there is so much negativity in the blogsphere.