Big picture call for a bottom

[bmaber]

The blind spot with short term traders is they are looking at the whole thing too close. hours not days. and no trending system predict turns well, it just assumes business as usual.
Look at this chart, you will begin to see why this is the bottom.
no fibs, no oscillators, no trend lines just the big picture.

http://dshort.com/charts/bears/four-bears-extended-large.gif

If you look at this graph, from here, this is a recession like all big modern recessions, or the world has ended. If this is right, we are already up 18% from the bottom. Since I see no more soup kitchens than usual -- and only a couple of traders and brokers committed suicide (no more than 87) -- I don't think the end of the world is coming. This is simply not 1929. the world is a bigger place than 1929, the US economy is too important, the GDP is too high, the financial system is too strong to be 1929. Boeing, Prudential, Apple, Merck, IBM and FedEx are nothing like the half baked railroad stocks America bet on in 1929. I know it is dangerous to call a bottom, but honestly, if the S & P breaks below 800 the next support level is 450. Do you really think American companies are worth half today's prices?

Again today we are above S & P 900, and above the 50day MA. If we don't get big pull back I think things look very good for two solid years of steady pull up.

 

[N Rothschild]

i am fairly confident we will follow a trend much like 1929, breif rally then sell off into new lows. the worlds financial systems took what was almost a knock out blow..you don't just recover from that after 1 year coz the worlds printing presses were running round the clock. And if you look at history, the great depresion didnt start with the 1929 crash, it wasnt untill the 30's. so no you wont be seeing soup kitchens..yet

 

[counter_violent]

The blind spot with short term traders is they are looking at the whole thing too close. hours not days. and no trending system predict turns well, it just assumes business as usual.
Look at this chart, you will begin to see why this is the bottom.
no fibs, no oscillators, no trend lines just the big picture.

http://dshort.com/charts/bears/four-bears-extended-large.gif

If you look at this graph, from here, this is a recession like all big modern recessions, or the world has ended. If this is right, we are already up 18% from the bottom. Since I see no more soup kitchens than usual -- and only a couple of traders and brokers committed suicide (no more than 87) -- I don't think the end of the world is coming. This is simply not 1929. the world is a bigger place than 1929, the US economy is too important, the GDP is too high, the financial system to strong to be 1929. Boeing, Prudential, Apple, Merck, IBM and FedEx are nothing like the half baked railroad stocks America bet on in 1929. I know it is dangerous to call a bottom, but honestly, if the S & P breaks below 800 the next support level is 450. Do you really thing American companies are worth half today's prices?

Again today we are above S & P 900, and above the 50day MA. If we don't get big pull back I think things look very good for two solid years of steady pull up.

Good luck...i'll take the other side

:clap:Happy new year:clap:

 

[N Rothschild]

also the half baked rail road stocks you refer to. they are the Boeing, Prudential, Apple, Merck, IBM and FedEx of their time..just cause they appear that way in this day and age doesn't means thats what they were in their day

 

[bmaber]

wow I am out gunned by some top traders.

i am fairly confident we will follow a trend much like 1929, breif rally then sell off into new lows. the worlds financial systems took what was almost a knock out blow..you don't just recover from that after 1 year coz the worlds printing presses were running round the clock. And if you look at history, the great depresion didnt start with the 1929 crash, it wasnt untill the 30's. so no you wont be seeing soup kitchens..yet

I would be a fool to not notice your credentials. Two top traders telling me I am wrong. Trust me I know nothing about investing, but I find it hard to see any problem. But part of why I put my neck out in these blogs is to learn. I will be short along with you guys if the S & P heads south of 800, but I just don't see it. So lets see if you can make a fool of me and my optimism. Plus grab some of my money.

I go to Costco and see people drop $1,000 without blinking, my neighbor drives an H2 hummer and does not mind the $300 a month in gas bills, down the street they are gobbling up $250,000 vacant lots for new homes. This just does not look like the brink. If you are right, and this is 1929 again, then the Dow is headed for 89% drop -- a value of 2000. By my Math I could buy Caterpillar a Dow stock for 1.5 years earnings. What investment banker is not going to take a run at that?

Here is a quote from the year 2001 by Fidelity's Peter Lynch on both television and in the Wall Street Journal.

"Betting against America was a bad bet in the past. It'll be a bad bet in the future.

Through war and peace, prosperity and recession, bull and bear, the message remains rock solid: "In the last 50 years, we have had many periods of economic prosperity and many periods of uncertainty. Despite nine recessions, three wars, two Presidents shot (one died and one survived), one President resigned, one impeached, and the Cuban Missile crisis ... stocks have been a great place to be."
Blue-chip stock funds

But we're in a bear market, you say. A recession. War's going on. Lay-offs rising. Confidence dropping. Earnings warnings all over. And many large-cap growth funds are already down more than 40 percent since early 2000 - and you're telling us that stock funds are a great place to be?

Yes. History says yes. Statistics say yes. Go contrarian. Go against the conventional fear-saturated wisdom!

The investor who bought U.S. blue chips just after Pearl Harbor and held them until the end of 1945 would've earned more than 25 percent annually."

So Peter Lynch, Warren Buffet, Art Hogan and me, stand here firmly looking for a bottom, if I am wrong I will eat humble pie and learn a lesson. I don't see a sharp V up, I see this a U shaped slow recovery, with higher highs and higher lows all the way up for two years. For now I am long -- with some strategic stops in place -- just in case.

 

[johnlvs2run]

Warren Buffet can afford to buy stock, and what else would he do?

It's not like he's going to stuff what he has in a sock.

Even if the market does go below 2000, he's better off owning companies than losing it all in banks that keep failing.

 

[nine]

There are a bunch of rookie mistakes here:
- predicting the market direction (oh god, here we go again)
- looking at old charts and seeing correlations (magical thinking)
- thinking that just because the US has recovered in the past it will happen again (check out debt levels and real US production vs consumption).

A trader trades what comes, takes the losses, and takes the profits. I don't know what tomorrow will bring let alone 2009. And anyone who thinks it has to end it 2010 has been listening to too many economists. It will end when it ends ... and it will be months later or maybe years that I'll know it ended. In the mean time I'll just adapt and trade.

Happy New Year everyone.

 

[counter_violent]

General post

Hmmm what do I see !

Eventually a new era of transparency where truth must come first before any significant confidence and investment returns to the market place.

Accountants and number manipulators have had their day. No longer will they be tolerated at the helm of business with their fanciful / creative / nonsensical crap.

Everyone has been conning everyone and worse everyone has been conning themselves, tulip mania all over again.

Assets, wtf does that mean exactly ? Take a house for example. Is it an asset ? Well no it's somewhere to live and a very expensive liability actually, maintainance / heating / lighting /etc etc. Then add in some borrowing against this "asset " to buy more "non assets" like cars and all manner of other depreciating crap and pretty soon it all comes crashing down just as fast as it ballooned up.

One business in your backyard....Alberta oil tar sands....hmmm....all that investment wasted on extraction infrastructure and expansion....I hear the break even figure is circa $60-100 per barrel.....and where is oil now....$40 per barrel......and so will follow more major layoffs of high pay high skill jobs....follow on again and house prices take another hit as re-possessions kick in....follow on again...banks take another hit....and so it goes on.

Spiral up spiral down...tulip mania....all of it is inevitable.
People the world over are amidst the biggest reality check ever seen and it's going to be extremely painful and very long lasting.

Forget the idea that this is a US or western world problem and that the good ol US can sort it out....it's bollox.....we are in a whole world problem that is far far greater than anything seen in 1929.

Ageing population just adds to the problem...ideally i'm sure they would like to retire.....ha ha ...no chance of that happening....where exactly can they get a safe and decent return / pension ? That assumes they have some money in the first place.The majority do not.

Long / short .....who cares...just don't marry any positions.

 

[nine]

It is fun to consider historical stats though. Consider these ones for a counter argument:

- US indebtedness now vs 1929 (think higher)
- historically reasonable PEs (especially at the end of a drop (think 10 or less))
- PE before the drop ... and how come its about the same now after a 40% drop ... and how does it compare to the historical end points?


Oh, yes, I forgot the baby boomers until I just saw CV's second post. Consider that their expenditure cycle is just rolling off and was due to end this cycle in 2009/10 and no up expenditure cycle existed for 4-6 years.

I am a trader.

I don't know what will happen. I am interested but not attached.

Adapt and trade. Rinse and repeat.

 

[N Rothschild]

Well, if your a day trader you trade what you see..if your a swing/position trader you really need to take a side and put your money where your mouth is! for instance in Jan i will be loading the boat for some position trades, which i will let run most of 2009...long commodities mainly gold and oil and short the dow/s&p

 

[N Rothschild]

I would be a fool to not notice your credentials. Two top traders telling me I am wrong. Trust me I know nothing about investing, but I find it hard to see any problem. But part of why I put my neck out in these blogs is to learn. I will be short along with you guys if the S & P heads south of 800, but I just don't see it. So lets see if you can make a fool of me and my optimism. Plus grab some of my money.

I go to Costco and see people drop $1,000 without blinking, my neighbor drives an H2 hummer and does not mind the $300 a month in gas bills, down the street they are gobbling up $250,000 vacant lots for new homes. This just does not look like the brink. If you are right, and this is 1929 again, then the Dow is headed for 89% drop -- a value of 2000. By my Math I could buy Caterpillar a Dow stock for 1.5 years earnings. What investment banker is not going to take a run at that?

Here is a quote from the year 2001 by Fidelity's Peter Lynch on both television and in the Wall Street Journal.

"Betting against America was a bad bet in the past. It'll be a bad bet in the future.

Through war and peace, prosperity and recession, bull and bear, the message remains rock solid: "In the last 50 years, we have had many periods of economic prosperity and many periods of uncertainty. Despite nine recessions, three wars, two Presidents shot (one died and one survived), one President resigned, one impeached, and the Cuban Missile crisis ... stocks have been a great place to be."
Blue-chip stock funds

But we're in a bear market, you say. A recession. War's going on. Lay-offs rising. Confidence dropping. Earnings warnings all over. And many large-cap growth funds are already down more than 40 percent since early 2000 - and you're telling us that stock funds are a great place to be?

Yes. History says yes. Statistics say yes. Go contrarian. Go against the conventional fear-saturated wisdom!

The investor who bought U.S. blue chips just after Pearl Harbor and held them until the end of 1945 would've earned more than 25 percent annually."

So Peter Lynch, Warren Buffet, Art Hogan and me, stand here firmly looking for a bottom, if I am wrong I will eat humble pie and learn a lesson. I don't see a sharp V up, I see this a U shaped slow recovery, with higher highs and higher lows all the way up for two years. For now I am long -- with some strategic stops in place -- just in case.

you may be right, we may be wrong. But thats how the markets work if there was no-one taking the other side it wouldnt really work would it

 

[bhavin]

Bottom, hmmm....
I think the worst is yet to come. when we have a 100 year old company closing - woolworth, and Jap carmakers making a first ever loss in history, says it all!!!!

One right wing politician once said, rivers of blood in London streets, it is frightening as when the recession gets deep, the poor immigrants will be made scapegoat

lets hope we see some sense and collectively come out of it!

 

[bmaber]

Car sales in a slump is a positive sign

Bottom, hmmm....
I think the worst is yet to come. when we have a 100 year old company closing - woolworth, and Jap carmakers making a first ever loss in history, says it all!!!!

One right wing politician once said, rivers of blood in London streets, it is frightening as when the recession gets deep, the poor immigrants will be made scapegoat

lets hope we see some sense and collectively come out of it!

The Losses for the Japan auto industry are really part of my point. The US to me is not a county -- it is 50 countries, have a look at this map, it renames each US state to a nation with a similar GDP.
http://strangemaps.files.wordpress.com/2007/06/350816052_0a392a0d28_o1.jpg

That is why I am careful not to lump the USA in with normal size nations like Canada and the UK. Just like I think of the US dollar and the Euro as fundamentally different form other currencies. American consumers stop buying and all the world grinds to a a halt. Almost all the money in the world is in the G8 nations but by far it is in the USA. That why no one will sell car in volume until the American consumer agrees to buy them.

Woolworth is at the same point the Hudson's Bay company of Canada or Sears in the USA. A 100 year old dinosaur that can't touch Wal-Mart. Want to see a retailer with a great business model? Plot Family Dollar Stores (FDO) -- the stock is up 60% in this down market, as the big department stores shutdown. Who really wants to go to Macy's in this economy and buy a $80 designer dress shirt? Discount stores rule. I can go in a "dollar store" buy a CAT 5 network cable for $1 compare that to Specialty store at $20. The ironic thing about Woolworth is they invented the idea of the 5 and dime store, they were the dollar store of their time. Someplace management lost the crusade for value and some boys from Arkansas kicked their butt.

As for Blood, Baron Rothschild, the quintessential banking opportunist, is said to have advised that the best time to buy is when there is "blood in the streets." I agree. An investor who embraces this axiom casts aside the bears and turns bullish in times of maximum pessimism.

Historically the US markets turn half way through the downturn. Strong rebounds happen at absolute lowest consumer confidence. here is a great example:

Satisfaction With the United States
Wow that is a bad mood -- almost the worst in history. Great news for swing traders.

The market anticipates the turn around and begins to do odd things. For example bad news get shrugged off -- 1/2 million unemployed, huge hedge fund fraud and Gaza gets bombed -- what happens? a rally! that is bottoming behavior.

 

[N Rothschild]

baron Rothschild? which one..

 

[bmaber]

baron Rothschild? which one..

According to a quick check on the web
Nathan Rothschild is said to have coined the phrase, "Buy when there's blood in the streets and sell to the sound of trumpets." in 1815, at the time of Napoleon's hundred-day gamble that ended in his defeat at Waterloo.

 

[N Rothschild]

yes i know who it was it was just that entire sentance was a cut and paste and i was wondering if you actually knew who you were quoting

 

[Atilla]

Interesting thread guys. Here is my 2cents worth.

Just like to qualify trade what you see and not the news or fundamentals etc but here is dipping your toe in FA.

Current situations fundamental difference from the recessions in the last 100 years imo is demand. In the past people in advanced economies had little or nothing and were relatively poor. Two world wars also made sure of what they did have got totally destroyed. Admittedly there is some poverty but the haves make sure they keep their monies and fat cat advantages and have nots stay where they are.

Coupled with lack of demand, we don't have purchasing power but excessive levels of debt never seen before. This is what I called extreme capitalism - buying **** you don't need with money you don't have. Some people call it consumerism.

The geopolitical situ is changing too. It is becoming increasingly difficult to start wars and devide countries. Nations and peoples are aware of imperialism and how it all hangs together.

The microchip revolution is reaching end of its evolution process. Technology gap has spread and narrowed. Bright ideas and inventions don't last and run of abnormal profits much shorter than before.

Advanced economies have moved away from a manufacturing base to a service based industries. Global giants like IBM, Boing, GM, Cisco, AT&T will not be able to reign in super profits as before. Microsoft even? There is reluctance for pace of change for the sake of it.

Advanced economies have aging popullations and impending pension crises developing and reaching full maturity in the next 20 years.

All the above are seismic paradigm shifts in determining production and output.

WHAT IS WORST - merely from our perspective is India, China and Russia are waking up to capitalism. In these countries there is mass demand and popullation sizes. However, as we don't have a manufacturing base that is able to compete most of the initial supply of production will be fullfilled locally. Not only do these countries supply the world they can easily supply them selves at cheaper costs (less transport, language and export / import barriers to trade).

So as well as lack of deman, debt and market we have considerable competition.

IMHO we are well and trully stuffed for the next century unless we come up with some new lifestyle choices.


To further qualify these fundamentals, it was essentially, the housing and war machinary rebuild programmes that got us out of the 1929 recession.

Then post war re-building.

Then the post war baby boomers.

Then the micro chip techno revolution.

Raegan and Thatcher years of market liberalisation and manufacturing decimations was the icing on the cake. Selling nationalised industries for peanuts and borrowing like there is no tomorrow. Steam has run out.

The future is likely to be very bleak with global climate changes and shortages of water.

I can't see any way out of this period without a WWIII sadly to say. Wars that will create destruction facilitating the rebuilding of countries and thus economies and world trade.


In summary, I have two FA signals for a bottom. They are WWIII and Climate Change


Enjoy all that you do whilst it lasts... :cheesy:

 

[bmaber]

yes i know who it was it was just that entire sentance was a cut and paste and i was wondering if you actually knew who you were quoting

lol, I like your style

 

[nine]

Interesting exposition Atilla.

One thing that 1929 taught was that the low cost exporter to the world suffered worst (USA). So, China, is likely to suffer badly in this one.

FWIW, 2009 could be an up year for the markets without changing an extreme bearish situation. Then you could head down for 4-10 years. Personally I look for a down 2009 but I will trade (swing and day) based on what actually happens.

Adapt or die.

 

[bmaber]

Interesting thread guys. Here is my 2cents worth.

Just like to qualify trade what you see and not the news or fundamentals etc but here is dipping your toe in FA.

Current situations fundamental difference from the recessions in the last 100 years imo is demand. In the past people in advanced economies had little or nothing and were relatively poor. Two world wars also made sure of what they did have got totally destroyed. Admittedly there is some poverty but the haves make sure they keep their monies and fat cat advantages and have nots stay where they are.

Coupled with lack of demand, we don't have purchasing power but excessive levels of debt never seen before. This is what I called extreme capitalism - buying **** you don't need with money you don't have. Some people call it consumerism.

The geopolitical situ is changing too. It is becoming increasingly difficult to start wars and devide countries. Nations and peoples are aware of imperialism and how it all hangs together.

The microchip revolution is reaching end of its evolution process. Technology gap has spread and narrowed. Bright ideas and inventions don't last and run of abnormal profits much shorter than before.

Advanced economies have moved away from a manufacturing base to a service based industries. Global giants like IBM, Boing, GM, Cisco, AT&T will not be able to reign in super profits as before. Microsoft even? There is reluctance for pace of change for the sake of it.

Advanced economies have aging popullations and impending pension crises developing and reaching full maturity in the next 20 years.

All the above are seismic paradigm shifts in determining production and output.

WHAT IS WORST - merely from our perspective is India, China and Russia are waking up to capitalism. In these countries there is mass demand and popullation sizes. However, as we don't have a manufacturing base that is able to compete most of the initial supply of production will be fullfilled locally. Not only do these countries supply the world they can easily supply them selves at cheaper costs (less transport, language and export / import barriers to trade).

So as well as lack of deman, debt and market we have considerable competition.

IMHO we are well and trully stuffed for the next century unless we come up with some new lifestyle choices.


To further qualify these fundamentals, it was essentially, the housing and war machinary rebuild programmes that got us out of the 1929 recession.

Then post war re-building.

Then the post war baby boomers.

Then the micro chip techno revolution.

Raegan and Thatcher years of market liberalisation and manufacturing decimations was the icing on the cake. Selling nationalised industries for peanuts and borrowing like there is no tomorrow. Steam has run out.

The future is likely to be very bleak with global climate changes and shortages of water.

I can't see any way out of this period without a WWIII sadly to say. Wars that will create destruction facilitating the rebuilding of countries and thus economies and world trade.


In summary, I have two FA signals for a bottom. They are WWIII and Climate Change


Enjoy all that you do whilst it lasts... :cheesy:

K,


well let see . . .
Demand, is always there, because people are not all about logic. If consumers were all about logic, no one would pay Hallmark for a $5 card, and perfume and makeup sales would hit the floor, Diamonds would not signal your engaged, and Germany would need to cut the price of their cars and old men would not spend a fortune on hookers and cigars.

2008 for the first time in 20 years we have a year of global cooling, scientists scratch their heads, and no doubt WWIII would fix the economy, but there is no one left with missiles and warheads who is right now far too busy worrying about their at home economy to be much interested in saber rattling. Except Korea, who I would strongly advise to keep his 5 nukes parked if Kim Jong-Il does not want to turn his country into a sheet of glow in the dark glass. Talk about a country no one wants to stand up for.

lets go back to your history lesson, here is mine:
In 1953 they told my dad to build an A bomb shelter, to be safe, head for the hills they yelled!
in 1963 the nifty fifty stocks tumbled and they shot JFK, society was doomed, head for the hills we are doomed.
in 1973 Americans lined up for gas and we were told there was no more gas and there never would be again - we had to keep our Christmas lights off to save America. -- head for the hills.
in 1983 Regan was president and oil was selling for its all time low inflation adjusted price, run for the hills
1989 the US banks collapsed, they lost all their money in bad Latin American debts, head for the hills
in 1993 Value investing was dead, Warren Buffet was called an idiot, and the new information super highway tech era was starting - clearly everything we knew about stock valuation was unimportant compared to the the high tech marvel -- the Pets.com sock puppet.
in 2001 the dot com bubble was burst, the twin towers were knocked down by Saudi rich kid with a religious bent searching for a Muslim utopia state based on life in 1900 desert culture. George Bush bent on revenge missed his target by a few thousand miles and hit Iraq. Blame it on WMD's they never found. We all found out the "leader of the free world" is an idiot, an idiot with over 4000 atomic warheads. Head for the hills.
During this time Allen Greenspan was Harolded as the greatest fed chairman in history because he undid every law that kept banks from going overboard -- result banks went overboard, -- 2008 we found out just how overboard. 30% of US mortgages went Tapioca, and investors around the world got burned on sub prime debt. While the US citizens walk from freshly renovated houses, paid for by Europe and Asia. The stock Market drops about 50% in a year. Americans use Chinese investment to put themselves 10% more in debt now its 12 trillion. Smart investors scoop up great stocks in companies with strong balance sheets for pennies on the dollar. Crisis ends. bottom fishing swing traders make a bundle.