The Red Pill: The Truth As To Why The Markets Will Rally

Discussion in 'Trading' started by ByLoSellHi, Apr 5, 2007.

  1. I can't say it better than Phil Davis. What a beautiful summary. Spot-on.

    Rally caps on everyone. Cash is kindling to start fires. You better own stock of companies with product or services that are, in themselves, inflationary, to outpace inflation and make bank.

    Here is the truthiness (condensed; click on the link to read it in its entirety):

    Options Trader: Thursday Outlook

    Posted on Apr 5th, 2007

    Phil Davis submits

    I’m very excited that Paulson and Bernanke have adopted my policy to inflate our nation out of debt and the market rally is proceeding exactly according to my 12/9 "Burn Dollars to Fight Gravity" scenario. You won’t care that gas is $4 per gallon when a hamburger at McDonalds costs $3 and minimum wage is $20, let’s just make sure we own a few stocks (and little cash) when inflation really starts to kick in.

    Oil SHOULD hold up into the weekend and it will be very bad for that sector if it doesn’t, but the barrel overhang at the NYMEX is severe and 5Mb stacked up this week along so someone better restart a refinery before we go right into glut mode. As I said last week though "VLO and BP had significant outages this week and VLO is up 10% while BP is up 5%. If your stock performed that much better when you had a refinery on fire would you invest in fire extinguishers or matches?"

    We have nat-gas inventories today and ZMan predicts a small build but, more importantly, he promises an industry review this weekend, which I’m very excited about!

    The dollar looks doomed as the Global economy seems to have decided they don’t actually need us anymore but the BOE had some mercy today and left their rates unchanged, perhaps giving us a bit of breathing room. Gold is testing $680 now, not on Iran news but on stagflation watch so we’d better hope we don’t see wage inflation in tomorrow’s jobs report. Actually hope is the wrong word - inflation is real, get used to it. We’d better get raises because gas prices aren’t coming down and that house we bought doesn’t look like it’s going to fund our retirement and now food prices are rising - thank goodness the government ignores food and energy or things could look ugly!

  2. Bylo -- it seems you just need to post this stuff to calm yourself.
  3. Not really.

    I'm calm.

    I think the author is making some very good points as to why and how the U.S. markets can rise in a slowing U.S. economy.
  4. Don't be ridicules; they are so wrong.

    If democrats win both house and congress; you bet the interest rate and taxes will skyrocketing.

    It made me wondering why American had chosen Bush and republican in 2000 when everything had seemed working great. Must be the Tax cut.

    I forget a quote that goes about how one person can be smart; but you easily fool a group of people with proper propaganda.
  5. nonam


    Jerry Olsen says....
    Look I've been on this earth for 65 years gonna be 66 on the 23rd of April. I've been in the markets for 30 years but over the last 10 I have seen and heard and done a lot of things. One thing I did learn was to look for "Tells" in the market signaling to me something underlying this market has a different feel to it then before. Ok let's kick the tires for a bit. We have crude oil heading for $70.00 very soon, Iran is at the forefront again creating angst in the whole world, Ben B clarified the Fed is hawkish on inflation and their bias is toward that end he said so in actual speaking terms last week. The housing debacle is getting worse so it seems, at least that's the perception out there, I think it's bottoming as we speak based on my own situation. And yes there are a myriad of "other" market noise out there weighting heavily on the streets thinking right now.

    So I ask everyone of you right now, why are we not crashing and burning by 1000-2000 points on the DJIA and 200-400 points on the NAZ etc etc etc? Why is it NOT happening? I mean folks we are all traders, we hear and read all this constant "negative" news stream every single day ad nausea, it just never stops right? So what the heck is going on huh? Well for one thing the recent quick sell off post Greenspans blurb, or maybe a better word for it would be belch, about a recession later this year making the markets correct world wide had nothing to do with the internals we were simply overbought for too long period.. The economy looks okay right now moving along at a moderate 2.5% GDP with very low interest rates so I do not see the R word as practical for the country. Jobs are still being created, personal spending and income we're up double as of last weeks reports, that does not signal recession to me. So what we have here is "The Tenacious Market" that refuses to quit. Being bullish for me is easy. I was born under that sign, and I live that way all my life good or bad times. The Bull Dog in me and this market makes me even more crazy than I usually am because the bearishness is rampant out there right now, what with investors sentiment at levels where good rallies start from, and CBOE P/C levels using the 21 day moving average is almost 1.17 at historically high levels of pessimism, and really why not?

    Everything looks like it's going to explode out there, War with Iran, Oil prices to 100 bucks barrel, rising rates again, heck you name it's lurking out there. But damn if the contrarian in me is saying we are going higher right now and probably starting this week. Look they could have sold off this market sending it reeling into the abyss, but for some reason it refuses to go away right here and now. I'll show you all the charts, I'll explain what I'm seeing on all the index charts, but more importantly it's the bullish percent charts on P&F, the supply and demand, that have me thinking we're going higher fast. There are a vast amount of shorts in the market right now that can and will light this candle like we've never seen before. On top of all this action is the real McCoy part of the year and that's beginning of the quarter mark up and buying time, plus we are heading into what I think is an underestimated earnings season that going to have surprise after surprise as we embark on those reports and with upside guidance. I love this market right now, and will not change one hair on my head until and unless they wipe the smile off my face.

    The TELLS in this market are as follows. The NYSE Bullish percent had a recent correction down from 74% in Feb to 62% at the bottom of this move and now folks this indicator, this big boy on the block is just a mere .64% away form a reversal back up. You remember me writing about the fact that the BP"s were not going down any more they were showing traction even though we made price lows on all the charts of the indexes? We'll now they're starting to move higher here with, and this will really get you to sit up and notice, the NDX BP leading the way? Once the laggard of all index BP's it's now the leader. IN fact the SPX BP is only 1.58% away from a reversal back up too. So if I'm right we are in for a surprise rally like you have never seen before. So hang on to your hats everyone!
  6. dhpar


    ok <b>ByLoSellHi</b>. I will stop mocking you as you are clearly on my team now. Well, at least till you change your mind tomorrow :D.

    Very good link - thanks!
  7. The blue pill is to sell
  8. I like this line best:

    "If your stock performed that much better when you had a refinery on fire would you invest in fire extinguishers or matches?"

    Sometimes my cynical mind runs off on a tangent thinking about the Nigerian rebels paid to kidnap such and such only to release them a few days later. I am not sure anyone (foreign oil workers) has ever been harmed by these rebels (or God forbid, killed!) Then there are the constant refinery fires ever since crude went over $50, taking British sailors in Iran, Iraq war etc.

    Yes, I think if I owned a refinery I would invest in matches!! :)

  9. Have you ever heard carry trade?
  10. Yes, and this is another reason for the markets to continue to rally.

    The power brokers will put pressure on the politicians, so that the carry trade never unwinds.

    If the stock markets correct from time to time, it won't be for lack of an effort to prevent it due to an unwinding of the carry trade.

    Central bank monetary controls, acting in collusion, are a convenient tool of commerce and financial markets.
    #10     Apr 5, 2007