The Biggest Rally In Stocks Since 1998 Is Coming

Discussion in 'Trading' started by ByLoSellHi, May 19, 2008.

  1. The United States is still the safe haven of world capital, even with a beaten down dollar.

    As the commodity bubble unwinds, which it will do in very short order, the massive amounts of profits will have to find a new home, joining the frustrated $3.5 trillion in U.S. money market accounts, which are yielding negative real returns due to high core inflation.

    Petrodollars, euro dollars, American dollars and extremely low yielding treasury money will have to find a new home.

    Now, with currencies such as the Brazilian Real, Euro, Australian Dollar, Gulf State dollars, and even lowly Asian currencies as the Japanese Yen and Chinese Yuan being able to buy more U.S. assets than ever, coupled with profit taking from the commodity bubble, and with real estate still in free fall, the only place for capital rotation is equity markets.

    Even with economic headwinds and less than stellar growth in the U.S., it is statistically more likely than not that stocks will run, and run big.

    After all, the stock markets are very forward looking.

    Bulls rejoice as we break through resistance levels of August 2007 within the next 8 to 12 weeks.
  2. empee


    I've been thinking something similar. If the market can hold up here with $125 oil one of two things:

    a) its primed and ready to go

    b) the market will top when oil breaks
  3. PaulRon


    I do believe you are a successful trader from your history but think you are completely off base on this call.

    The commodity bull market that has been going on since 1999 still has at least another decade to run. Remember typical bull markets in equities and commodities last 20-25 years.

    The problems facing the US dollar are insurmountable. I'm sure you've heard the usual, 10 trillion national debt, 400 billion a year trade deficit, etc.

    Inflation is starting to run rampant and is not properly reflected in government statistics. If it was computed in the same way as it was during the last bout of staglation in late 70s early 80s, 2007's inflation numbers sit at 10.4%. Unfortunately, the US economy will not be able to withstand a rapid increase in rates to solve this inflation problem because the US has no savings. Debt during that period was financed through 30 year government bonds and were held by americans. Currently, the majority of debt is in short term T-bills held by foreigners. It's still amazing bond rates have held up as good as they have, even though the real rates of return are now mostly negative.
  4. NazSpaz


    I personally believe the only reason we haven't tanked yet is that it is an election year and the fed is doing a brilliant job of propping up a crippled economy to look good until after the election in November.

    I think then no matter which canditate/party wins, the real economy will step forward and the downward pressure will continue.
  5. PaulRon


    I personally believe that some people in the US don't... have maps and our education in iraq and everywhere like suchas so we can help our future.
  6. I looked at a stock called YRCW today, which I own (average share purchase price of $14.18), and noticed something nothing less than phenomenal.

    After hitting a low of around $10.90 earlier this year, it has run to nearly $20, and I believe will head much higher.

    Consider this: YRCW is a trucking company. In fact, it's the largest LTL trucking company in the U.S. (it just opened a large terminal in China).

    Diesel fuel is at an all-time high, and YRCW had the balls to double its share price and market cap in the last 4 months.

    If that does not tell you that hard core investors are CLAMORING to establish early positions in equities, especially those poised to run in the event of falling commodity prices and input prices, I don't what does.

    There is palpable fear that if money is not rotated into beaten down, but relatively inflexible companies NOW, the price of entry later may be much, much greater - and much, much greater very soon.

    Look at VLO - a non-integrated refiner that's been on a 10 trading day tear while crude oil, its most costly input, is at an all time high.

    The proof is all around.
  7. Commodity related stocks have been a huge contributor in the recent rally. If there is a bursting commodity bubble about to happen (or correction), these stocks will probably go down bringing the indicies with them, or at the very least offsetting gains in other sectors. What sector (if any)? Who knows.
  8. PaulRon


    Might want to read what the CEO of that company that you seem completely married to is saying...

    "..."I think just about everyone has given up on the idea of a U.S. recovery in the second half of the year," Bill Zollars, chief executive of YRC Worldwide Inc (YRCW.O: Quote, Profile, Research), told Reuters..."
  9. Lowering expectations, that's all.

    Wal-Mart, Target, Best Buy, Kroger, Costco et al. are not about to tell YRCW they don't need their services anymore.

    For all the talk of railways being the transport mode of choice, and Buffet's big play on them, trucks carry goods and produce and things to big concrete boxes, where people buy them - trains don't and can't.

    And YRCW has pricing power now, and will boost margins dramatically when diesel falls.

    But let's not get sidetracked by individual stocks, for the world is awash is CASH, and it's desperately seeking a new home.
    #10     May 20, 2008