Pfft....
Well, they got us again today, didn't they? Market started off with a nice tumble, flitted around for most of the day, then surged at the end. This gets old.
I am surprised I missed this before, but here's a fascinating angle on the Russell 2000 from a Fibonacci perspective. Using Fibonacci extensions, you can see the predicted high on the Russell based on prior high/low extremes (the high being in 2000 and the low being in 2002). This week, the Russell ($RUT) touched this line almost perfectly, within less than one point of the predicted level. Worth noting.
Yesterday was a chart heavy day, so today just a couple for your consideration. Fluor (FLR):
And General Dynamics (GD):
Have a good weekend, everyone.
30 comments:
Thanks for asking; the book comes out in February; here's a link to Amazon:
http://tinyurl.com/yk2nyp
Tim,
When r u gonna make the call to the bullpen to bring in the lefty?
I'm all warmed up. Even Pedro & Johan Santana need a break every now & then.
(p.s. -- keep your chin up. This is STILL the best chart blog on the web.)
Worth noting that there was very high volume on IWR (ishares Russell 2000) December puts on the CBOE. Perhaps a sign of a fall to come?
I remember a year ago in October, BEFORE all of this recession talk.
October was horrible. Then it recovered and we had a decent rally through November.
Then in December, there was a HUGE amount of inflation talk, and my portfolio once again started to sink pretty badly. Then around Christmas it was "profit taking." Either way, December was bad.
Then January came around and things picked up nicely. February was great. March was so-so, and then I cashed out all my longs in April while I sat in cash, watching the market decline in May/June/July.
Since then, my head's been spinning. What was bad news is now good news. Economic slowdown? Great!! Buy more stock! Recession? What's that? We'll just print more money and float the markets higher and higher. Pullbacks? Pffft!! Those are only necessary in the OLD markets. This is the "new economy", just like 1995-2000.
So here I wait, another November, another December, but a different story. Now that we're PAST the 4-year cycle and well into the 2nd longest bull market EVER (on the heels of the LONGEST bull market ever, no less), who the hell knows what will happen next???
My favorite is Coca-Cola (KO). It's been growing at a maximum of 8% for the last decade, but for some reason, the market is now applying a FORWARD (yes, FORWARD) P/E multiple of more than 18.
Yeah, that makes good sense.
Like I said two months ago, I'm afraid we're back in 1995 again. Get ready for the major indices to double in the next 5 years without a pullback.
This is insanity. This is a game for the big boys, plain and simple.
-TonyB
tony B double in the next 5 years???
i hope that was a joke.....
as PB said about the santa clause rally I dont know how there could be one to begin with when the indices have gone straight up for 3 months......just doesnt make sense, i could see if the markets were down 1-3% on the year or even up 2-4% that a santa clause rally would be perfect, but with the markets up double digits in just 3 months i just dont understand.
Trader 2006.
Will you believe these pathetic chumps? Still calling for a top, still waiting for a fall, all while the market has had one of the best 5 month run ever. And keeping on talking of shorting, hoping for a crash, even after throwing in the towel.
To tell you the truth if it wasnt for the housing market and ARMS resetting in 2006 2007 and beyond i would be very bullish on this market, every day im pulling up articles of recession and a slowdown in this economy yet the dow breaks records everyday. The thought of Trillions worth of ARMS resetting in 2007 gives me chills...how any bull can view this a positive is beyond me.
I think fundamentals at this point should be thrown out the window. Today with starts and permits dropping the dow still managed to rise, why?? because this could indicate a cut in rates by early 2007. Rates are still at historical lows yet any cut would be bullish from here on in. I dont think there is anything that could stop this bull, every person on cnbc is more bullish than the next...feels like we have entered a stage where nothing can go wrong, where buying on any dip is a guaranteed profit. Nothing goes straight up forever, many are talking about DOW 13,000, many on other forums are talking nasdaq 3000, 4000 5000 etc..do many think this run is a run straight to the blue skies without any sort of pullback, i dont know but it seems that way....
TRADER 2006
Some good new bull bear ratios have come out:
the Consensus and MarketVane polls are very overbought and showing high levels of bullish sentiment. The Consensus poll hit 74% bulls, the highest reading since early 2006. Over the last 10 years, readings of 74% or above have been fairly rare. The MarketVane poll rose to 73% last week, also the highest reading since early 2006. Readings above 70% have been rare for this poll over the last 10 years.
Taking the two polls together gives us a very high bullish reading of 146%. This level of optimism towards the market is pretty rare and has only been exceeded in January, 2006, January, 2004, March, 1998, July/August, 1997, and January, 1997, looking all the way back to 1990.
Humm! I am the stonedinvestor. I am VERY good at calling general market directions purly from instinct. CNBC yesterday was such a freeakin' joke this prattle about new highs with the DOW up 13 it's just ridiculous it lures in the stupid who will get hurt. Those of you betting against the market I feel will be rewarded throughout the next two weeks. That being said I let my newly found negativity stop me from making a good earnings trade on ADSK- so we must always be on the lookout for short quick gains when you can find them. My problem is despite investing & researching the market every day for 20 or so years I have never had the GUTS to short. It's a mindset I have trouble getting my arms around- it would be like betting on an NFL team to lose. And then spending the rest of the game " cheering " for losing. How did you all get the courage to start shorting stocks? ~ Ben
The only reason fundamentals don't matter in these markets is the fact that the markets aren't driven by fundamentals. I think at one time they were (maybe prior to 20 years ago), but not any more.
The markets are driven by liquidity now, and have been since 1990. As I keep reminding people, until the easy money stops flowing into the system, then stocks will continue to rise. Don't bother looking at earnings multiples or sector growth, just focus on the supply/demand side of the equation (i.e., read the charts for oversold conditions and look at the short ratio).
Until something drastic happens, or another investment vehicle comes along that's more attractive than equities, then the markets will continue to just keep going up. There's a hell of a lot of money out there, and it's got to go somewhere. Bonds, CDs, money markets, commodities, etc. are all just a waste of time right now for the big players.
My biggest problem has been trying to overcome the fact that I still kept believing that fundamentals DID matter. But as I said, they don't matter any more. Nowadays, a market P/E of 20+ is "just right" for an economy heading into a recession. In past history, any multiple even approaching 20 would be a clear signal that the bull market was over. Anything below 10 was a buying opportunity. Now, anything under 20 is a buying opportunity.
Go figure.
-TonyB
Ben,
I don't see why you need the courage to short. Most of my trades are shorts and I never feel nervous in general. On the contrary, I'm nervous when I go long because often the stocks I buy would suddenly drop, leaving me stranded.
Maybe going through some bearish charts every day might help? I think most stocks come down after they go up. Not so in reverse. This makes me even more inclined to short.
Guys, this market has always been driven by fundamentals. Stop being so friggin' cynical.
In fact, during the current earnings season, the reason why the market has been so strong is based on earnings.
P/E ratios keep going lower & the market keeps going higher. The index hasn't been this cheap since the beginning of '95.
Take a look at the CME's, GOOG's, ICE's...they're the one that are growing earnings the fastest, & they're the ones whose stox are being rewarded the most.
Does anyone find it just slightly odd that the market bottom and subsequent huge rally started just a couple of days after Henry Paulson was sworn in as Secretary of the Treasury? Kinda odd don't you think???
Doug
[quote]
Now, about liquidity. If creating easy money is the answer to every economic problem...well, why work, or save, or anything? The answer is, there is a definite cost of just creating money. It is inflation and eventually much worse, an economic collapse.
[/quote]
Not exactly. The "master plan" of Bernanke is to continue the flow of easy money and run the printing presses, therefore floating the indices until the economy recovers and until they can sustain themselves on the fundamentals alone.
I suspect then, at that time, the "plan" will be to drain the liquidity back out of the system, slowly but surely, keeping the growth stifled at the peak of the economic cycle, but also preventing a recession at the trough of the cycle.
In theory, it should work. But in theory, communism also should work.
-TonyB
Oh, and as you've noted, "why save anything?"
As you can tell from the economic conditions today, people AREN'T saving anything. The simple fact is they're spending much more than they're making.
The USA is very much a debtor nation, both collectively and individually. That's *NOT* a good recipe for economic growth and prosperity.
-TonyB
wheres wuss ?
he is holdin his short johnson, thats where he is . rotflmao !!!!! wussy.
to see what is driving this market higher, look no further than FCX's take-over/merger announcement with Phelps Dodge. Fundamentally this market stinks, but when corp's are buying each other out at breakneck speed, who really wants to part with their shares? This also helps explain the low volume. It's really the institutions adding to positions to leverage on take-overs. Once this runs it's course, we'll have massive co's who will make downturns even more volatile/severe.
Still waiting for a pull-back to 11,900 -12,000 (at the least)
Also, volvosan! You see this blog digressing into fundamentals, yet after stating that, you jump right into a fundamental discussion. Glad to see you keep things straight! :)
- Mr. G
You are short this great market man i would hate to feel this much pain. I am long and margined to the max tech stocks as they are poised to quadruple by next year. Long live the late 90s baby.
5:17pm anon poster ... please put down the crack pipe!
Give me a break with all the Real Estate non-sense, I think we'll see that real-estate prices will go higher starting as early as Jan 2007. All the talking heads will be proved wrong. I have been buying home-builders recently, and will buy more if they drop.
Also please don't keep talking about ARMs resetting, it is just a "myth". There is very few people affected by ARMs resetting, even they have multiple options to get over it. So many easy credit options available these days.
"Cosmo Cramer"
yeah, ok buddy!
the only "real-estate" prices going up will be those in bankruptcy court!
You really think we have repealed the laws of human greed and stupidity? That's why we have cycles, feast followed by famine!
Things are different this time ... so much so that we are able to create bubbles every 5-6 years now!
MAN-OH-MAN! I love this market! If you see any red anywhere, just buy it! No matter what the news, the red soon turns to green!
This is just wonderful. The hidden hand of capitalism at work. Kudlow is right, this IS the greatest story never told! The Fed WILL ALWAYS AND FOREVER BAIL-OUT THE MARKETS. BEARS are now an endangered species! S/one pls call WWF!
Turkey's will now also be stuffed with call options!
in prophet charts > java charts,
in the indicies section, the volume for the $INDU and $SPX are exactly the same... when you flip back and forth between the two daily charts with the volume showing, it doesnt change...
any ideas?
amazing, asian markets get a selloff and we open to the downside but quickly power up to the upside, its just getting old now, when you see the DOW trading flat like it is today it means its taking alot to keep it up, that is my opinion, its been doing this for weeks and weeks....we might get that late day surge like we hate seen about 239482 times before....these markets are sooo over bought yet they still trade higher, WE DIDNT SEE THIS ON THE DOWNSIDE, we would get oversold bounces....we dont even see any overbought drops and its driving me crazy.....the nasdaq is up nice after its early morning selloff. If the dow jumps up over 40 or 50 expect the nasdaq to jump up 20 points...
I hope to see the DOW drop off a cliff.....
Trader 2006.
You posters that just say buy because its going up and you posters that say any kind of fundamentals support this market and you posters that say the dja is only 600points above the previous rally high so there is plenty of upside- you are all desparately clutching at anything to try and back this rally up and see reasons to keep it going. You miss the point - markets dont continuously rally when growth is healthy and it is - 2% last quarter?, thats pretty ok, lets face it the 5.6% growth in the 1st quarter was never going to be sustainable in the light of other economic factors, so the drop is perfectly reasonable. So why is it rallying when growth has and is clearly there? Greed, that is all, pure and simple. Nothing wrong with that, except that the rest of us bears cant see that as a reason to join in and buy. Greed always turns to fear eventually and we tend to think that time could happen at any moment. If anything shakes confidence and pauses this rally, then its back to a zig-zag pattern - it may still be upwards or it may be down. But the point is, we can have a chance to sell the peaks. Im confident that time is very very near. That is what we want and that is what will happen. beleiving that indices can continuously compound upwards simply by comparing with a base line of dja 1000, 2000, 3000 is meaning less because you are looking at a nominal/low valuation points
VIXXXXXXXXXXXXXXX is under 10.00...
WTFFFFFFFFFFFFFFFFFFFFFFFFF...
is this it....
TRADER 2006.
dow should get a lift by late afternoon, nasdaq already doing well for the day,, if the dow closes up it will be 10 out of 11 days being up...
Trader 2006.
Rimm is insane with market being insane.
NEWS ALERT, the DOW is DOWN over 30 points IN THE RED, this late in the AFTERNOON!!! Have people gone crazy??? Stock indices can only GO UP!! Especially when news is bad! Doesn't everyone know that??
pb nice chart.....
as for todays market hahahahaha, as soon as you think everything is headed down they buy it back up, nasdaq was looking weak and than out of no where up 6 points...I thought the DOW would be off 40-50 points....i think i was asking for too much....
Trader 2006.
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