Friday, October 30, 2009
From NFTRH6, dated November 1, 2008:
Armageddon '08 Concluding?
The major media has done its job. After burying its collective head in the sand for years as Wall Street perpetrated a moral hazard of epic proportions upon Main Street America and much of the rest of the world, the media have now scared the public so thoroughly with daily stories about debt, derivatives, evaporating liquidity and now, even deflation itself. The public, as usual eats it up and creates the counter-party for what comes next.
I am growing as tired of posting macroeconomic charts as you may be of looking at them (my first love after all is technical analysis of stocks and markets), but they remain important as we look for the all important turning point from deflation overload to phase one of the reflation – with all the good and bad that it will bring.
To review, my stance has been a simple progression: Deflation impulse (2002) begets inflationary policy, which brings on an inflation-fueled boom and the ‘global casino’ environment born of moral hazard and built upon misperceptions and greed. This is corrected but good with another, more severe deflation impulse, which begets reflation policy, which brings on another more severe inflation problem as we ride the cycles to von Mises’ Crack Up Boom and the law of diminishing returns.
[LIBOR 1 mo. chart omitted]
Libor has eased significantly. The 3 month Libor is similar. The chart is self-explanatory. Now let’s look at M2 and MZM courtesy of the St. Louis Fed.
[M2 graph omitted]
M2 has been in launch mode throughout the crisis, but its zero maturity cousin, MZM has failed to launch. Last week we noted a little hitch upward in MZM.
[MZM graph omitted]
This week the little hitch has grown bigger and has in fact risen to new highs. It is not an earth shattering move but it is now hinting that funny munny is beginning to dribble to where policy makers want it to go. The flat line that has encompassed all of 2008 can be looked at as a consolidation before heading higher (into uncharted inflationary waters).
In a feat of historically curious timing, NFTRH was launched into the teeth of the worst deflation scare since the great depression. This was really a positive because I consider it a gift to have an opportunity to stick to my guns (fundamental beliefs) and either succeed or fail under the most trying of circumstances and while macro indicators are not conclusive that true structural deflation will be averted, they continue to head in that direction.
The first six issues of NFTRH will be posted here (at such time as they become sufficiently dated) as samples so readers can review how the letter handled historically bad events. Dear subscribers, THANK YOU for sticking with NFTRH through this event, which may – MAY – be about to conclude. Later in today’s report and in anticipation of a more normalized environment, I am actually going to get back to charting and reviewing an individual stock. Going forward macro conditions will be analyzed in a more normal, albeit likely bearish, environment.
Thursday, October 29, 2009
I never claimed to be an easy going bear. In fact, if I have one weakness in my approach to markets, it is that I tend to be a really cranky bear. I tend to get an edge to me and not be quite as nice a person as is normally the case (I think).
So baggage notwithstanding, what kind of bald faced trend following, bull humping is that in those quotes below? Maybe we should ask these fly boys how much money they made their clients in 2008.
Oh yes, Grantham and Hussman went bullish last year. I get the 'former bears turn bullish' angle. That was fine early in the trend. But I'll bet that Jeff and Billy here were bullish right on through, '07, '08, '09...
I remain short and will try to be smarter than my enemy. Picking up quality gold miners and 2x gold UGL to neuter the effects of the rally on my short positions has worked well. If I have to cover shorts in ignominy, I'll do so - again. But there will always be another chance because what these people are sellin' the public may be buyin', but not I.
Meanwhile, I think I'll stay short a while longer and see if that bull tout comes to regret his words. Of course he won't. They never do. They make excuses, just like the town manager that bankrupted Springfield, MA because Wall Street reps sold him CDO's he did not understand. Just like all the excuse makers when suddenly, their conventional wisdom goes right down the drain.
Dollar drops on GDP? Are you kidding me? And these people have the nerve to pretend there is something healthy going on here? They are vampires folks, plain and simple. Cheering a stock rally that depends on devaluation of the currency. No long term view, no nuthin'. Pigs. If there was anything whatsoever healthy going on here, would the dollar not be rising in anticipation of higher short term interest rates?
I remain short, but screw you bully, both accounts are green today as they were slightly down yesterday. A market neutral stance, long stuff I favor and short stuff that I think stinks. It's working so far.
Anyway, back to Bloomberg. Get a load of what the 2nd guy had to say in the last two sentences. Oh my, that is too funny.
“The fourth quarter will be the Waterloo of the bears,” said E. William Stone, who oversees $102 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “We are in economic recovery both in the U.S. and globally, so you will eventually see revenue growth because you are seeing the recovery hold.”
“The stock rally is not over yet,” said Jeffrey Kleintop, who helps oversee about $247 billion as chief market strategist at LPL Financial in Boston. “The stock market can celebrate. This news is an important confidence boost, in particular to individual investors.”
Wednesday, October 28, 2009
So I think I am going to add some 2X long gold nitro w/ UGL on the odd chance that this was a smash down in the face of the need to sell treasuries by Uncle Sam.
Edit (3:12) Okay UGL, you are on a short leash for a gap fill and gold bug shakeout.
What's it mean? Beats me, but if I were a bull I would make this mess prove itself before venturing into these markets. Dat could be a divergence that smart bears are looking for.
The user name is as always 'nftrh2' and the password is the one that was mailed out on Sunday.
It is time to evaluate whether this correction is a 'healthy' one to clear the dead wood, or something worse. Adam checks in with his view.
"NOW HEAR THIS!" blares the VIX... "Greedy bulls have had their fun, held sway for a good long while, morphed Hope '09 into Full Tout '09, got Wall Street to bonus season and generally reenacted the wonderful 50% rally in hope off of the 1929 crash. You know the one, after which the real depression descended. Happy days are not here again and it is unfortunate that most casino patrons will come to that realization after I begin to rise in earnest. I have not decided yet whether to give the bulls one more run at the highs, but I will decide before too long. This megaphone through which I give you my warning is a reversal pattern after all."
Okay, that is what the VIX says. What I say is that it feels so much like a false dawn that it is alarming how people seem to have gone about their business as we head for the tepid recovery that policy makers, media and Wall Street seem to be touting. At best we will suffer from the law of diminishing returns under a new and intense cycle of inflation. At worst, we go down again and induce yet more panicked inflationary policy.
This is going to sound overly sensitive in a 'he's giving us more information than we need to know' sort of way, but we took our kids to see the movie Kit Kittredge pre-crash and with everything I knew was directly ahead, it was too much for your blogger who sat there with his eyes welling up through half of it (I tend to do that over some really corny things too :-)). How about the depression backdrop in Cinderella Man? Intense, man.
The other night I watched The Crash of 1929 on PBS. It was made in 1990, and indeed was intended to warn of the possibility back then that it could happen again. Well, how did that work out for the bears? I have no doubt that with each recession (like 1990), a new round of Great Depression lore gets whooped up, each time providing the 'lever' for new and heroic inflation policy.
But still, it feels like another hard down is coming and a lot of the data I look at supports that idea. It feels like Indian Summer, just like the one due here in New England imminently. There is a lot of noise out there right now from the respective touts pitching their respective wares in their respective sectors and asset classes. I expect it to all fade away as the VIX trumpets the onset of stage 2, the GSR rampages higher and Uncle Buck, pissed off like never before, stages a furious short covering rally.
VIX: "That is all!"
Tuesday, October 27, 2009
Of course it follows that he would use the relative calm of a point & figure chart to cut through the noise. Check it out.
All other market bearish positions remain.
The main point of the email was to ask some questions, but I do like to hear that the letter's perspective is helping people keep same. Or sane (myself included) :-)
By the way - thank you for your valuable service. I would have probably panicked while the US$ declined. Your level headed letters help me to keep things in perspective. I was a month to month subscriber who has recently changed my subscription to a yearly one. I find your service to be invaluable.
We come toward the end of another report that cannot tell you exactly when things are going to change, even as I remain confident that the dynamics of change are falling into place.
The USD remains at the center of the show as a nation (and literally a world of assets) depend on its continued devaluation to keep the party going. My playbook generally calls for the deflationists to once again get a chance to claim the high ground, from which they will once again lecture the great unwashed masses of ‘greedy’ inflationists.
At that time, deflationist hubris in full swing, NFTRH will look to revert back to its more comfortable (than the current holding pattern) mode of buying misperceptions and fear, in the form of quality gold mining and exploration enterprises, hopefully being burped up yet again by scorned inflation traders.
As for the USD [weekly] chart, we have a would-be bullish falling wedge down to support and we have some serious ‘Banana Republic’ / ‘death of the dollar’ stuff going around in the media. The set up is there for change. The set up is there for the less committed of the commodity and stock bulls to be washed away.
But on the bigger picture, there is also a set up taking shape that shows the USD having lost critical long-term support in the 78-80 range. This level will need to be watched closely during any dollar rally that may spring here in the coming weeks. If that level holds as resistance, the next leg down could well happen in the global race to the bottom in currencies, led by Uncle Buck. But if an enraged USD ever surmounts that level and holds, there is going to be hell to pay to the deflationists before any thoughts of recovery.
Monday, October 26, 2009
Now come to find out, Otto has presented his thoughts on one of the big silver bugz. When it comes to always bullish silver guys, I usually just lump them together as a merry but crazy band carrying on a fine tradition post-Hunt brothers. But Otto looks at one of the leaders in a bit more detail and no like what he sees.
All I will say is that when silver drops for real, it resembles something more like lead than gold. That is usually around the time that the silver bugs start railing about evil government forces at work... or is it alien forces. I dunno.
I will say that I saw a rational and well thought out silver article last week by a gentleman named Roland Watson. He is usually a very sane and measured voice in the world of silver trading. He'd better watch out or he is going to give the silver bugs a bad name.
Hey people, all I am saying is to think for yourselves. Use trusted information and opinion sources but for crying out loud, use your own god given b/s detector. I know most readers of this blog already do so but still, given the huge herds out there waiting to be sheared, I thought I'd bring it up again.
There's a 60 minute chart of SLV showing a gap and some support. Let's see what happens. Nice impulse tankage today I must say.
I have a few silver coins hanging around to barter with for bread in case of the elusive hyperinflation, but I am no sincere believer in the poor man's gold.
"The junk bond fund we have followed for the last several months, HYG, is another indicator that says ‘bears, be careful’. In fact, it occurs to me that if I had had the chance this week to do the work I have done thus far on #56, I would not be as short as I currently am."
It was in a way a bit comical. I was half way through the report and due to the indicators and analysis I was dredging up (much more than just the junk bond indicator) I thought to myself 'rut roh Gary, your bear positions may not do so well to start the week'. Surer than sh*t, what do we have here?
Hope... a spunky little bugger.
But this is strange because both email addresses in question are definitely in the distro list. Please be sure that 'gt-@-biiwii.com' (remove dashes) is getting through your spam settings.
Okay, piggy is up in pre. Let's get ready for another fun week of hubri-matic fun in Full Tout '09!
Sunday, October 25, 2009
Friday, October 23, 2009
Epic (NFTRH5 excerpt dated Oct. 25th, 2008)
Throughout Greenspan’s inflation bull market (RIP 2003-2007) I was very bearish, fully aware of the impending credit and derivatives disaster that the Maestro claims not to have seen coming. Long time readers know my writing included a comparison of the entire USA to the former poster child for corporate criminal excess, Enron (Amron: http://www.safehaven.com/article-2785.htm ).
But the theme was one of playing the cards dealt and despite my bearish bias, the cards being dealt by Greenspan showed ‘bull’ (I mean that in the literal as well as figurative sense). Inflating the money supply at the first sign of systemic problems was his modus operandi and he was celebrated as the great and wise overseer of the long but ultimately doomed party in paper goods. The operating theme from the outset (defined here as the beginning of my public life) has been one of inflation policy that begets the appearance of a sound economy and sound markets but in reality, is anything but. Enter Armageddon ’08.
It is ironic that while I was bearish from 2003 to 2007 I made healthy profits each year as a trader, roughly doubling the broad bull market’s gains each year. This is because I was not fundamentally attached, even to the gold stocks much of the time (due to their rising costs and status as an underperforming sector in the latter half of the ‘inflation bull’). More ironic however is that now, in the midst of a crisis I knew was coming I have endured severe paper losses as an investor (in accounts I allow to be exposed to risk).
The most recent target for HUI is 150 and it came within .27 of that on Friday before turning up and leading gold higher. But this could simply be a pause to build a bit of hope before the next dunk. As I will show later in this report, the broad market is in danger of new lows (into capitulation) which could suck the precious metals stocks down yet again. But with each hard down I become more bullish. As an investor. I realize that ‘investor’ can be another way of saying ‘bag holder’, but that is not the feeling I have right now. I hold this precious bag tightly because nobody else wants it and the nuggets in there are literally being given away, so I continue to pick up these discarded nuggets with each decline.
The title of this opening segment of NFTRH is ‘Epic’, and that is what I expect the gains to be in the gold sector over the next 1-3 years. With producing miners finally achieving the coveted ‘value’ label and junior and exploration gold stocks selling in some cases below cash on hand with properties being looked at by the market as liabilities (in that they need to be funded), folks, you know what we have here don’t you? Mania. Downside bearish mania (along with margin and redemption related forced selling).
There is a good chance that this is the play that people wait a lifetime for, but after the fact will bemoan their inaction due to fear. But the public and its policy leaders who all kept their heads buried deep in the sand during the cyclical bull market have now done the predictable 180, worshipping fear much as they worshipped greed just a short while ago in what now seems like a different life. Mania is mania and it works both ways. Smart people will fade mania.
I suppose it is up to the people who rightly saw this mess as over valued and/or a disaster in waiting to move in and pick up the pieces. John Hussman and Warren Buffett are doing so http://www.hussman.net/wmc/wmc081020.htm as is Jeremy Grantham http://moneynews.newsmax.com/streettalk/jeremy_grantham/2008/10/20/142249.html I believe the gold sector holds the best and nearest term potential gains, but real contrarian and value investors are now becoming interested in many markets. For those with patience, this stance could indeed be epic.
Without further delay, on to macroeconomics and technical analysis that support the bullish view of gold stocks and, now that we are well into the gold bug killer correction, the metal itself, along with a look at commodities and the stock market…
Today however, I would like to highlight one post of his called Declining Empire, Banana Republic, or Failed State? The reason has not so much to do with Mr. Panzner's introduction as it does the media content he highlights. There is an awful lot of talk about Bananas going on in a media that is all too aware of the declining dollar as we pathetically cling to a devaluation of our currency and our future, for short term hope and greed.
The dollar, which we will look at in detail this weekend in NFTRH, lost our 'big picture' support at 78-80, our 'not overly compelling' short term support at 76 and now heads lower... with the major media on the job. There is final support below and wise people should beware the potential dangers in being on the same side of the boat as the mainstream media. Just like in the fear and loathing days of late 2008/early 2009 with the MSM leading the charge.
Thursday, October 22, 2009
User name is nftrh2 and password is the same as before.
Check it out.
Yet I am going to recommend Conquer the Crash (and this free 8 lesson edition) because it is a book I read in 2002 and it is directly responsible for activating me to become a more aware market participant and is in part the reason there is a Biiwii.com as its influence can be seen in a lot of the stuff I have written publicly over the last several years. For example, I did not even know what a T-bill was in 2001. By 2003 I had all spare cash in T-bill funds and guess what, in the panic of 2008 the Fidelity treasury money market fund that holds some of my cash was closed to new investors due, I assume, to panicked demand. I was shocked to find out in 2002 that regular money market funds were not safe.
Prechter's CtC has given me a comfort level for years because as a 'gold guy', if I can pass the Prechter sleep test, I can stand up to anything. A nice combination of being a gold true believer and Prechterian caution has kept me well in the game and in a mentally strong position for many years.
From EWI: A free "Conquer the Crash Collection" from Prechter's New York Times best-selling book. This valuable resource includes 8 lessons on topics critical to your financial survival, including: what you should do with your pension plan, what you should do if you own a business, calling in loans and paying off debt, whether you should trust the government to protect you -- and much more. Learn more about this exciting resource, and get your free access here.
It is free. EWI does not bug you, and I recommend it highly. Those who are already Club EWI members, just click and go get it if you do not already have the book.
I would still say consider taking your profits in silver if you've got 'em. But then again I am a chicken, much preferring gold.
Wednesday, October 21, 2009
Can a whole lot of bad policy float a cyclical bull market? Well, it did in 2003 and it can do so again. Except of course this time any new bull will be attended by exponentially higher moral hazards making Greenspan look quaint by comparison.
Okay, back to Full Tout '09.
Tuesday, October 20, 2009
So yeh, maybe the GSR is not consolidating in bullish fashion. Maybe the bear market ended and maybe pigs fly.
Have a great day.
Here is the URL: http://www.biiwii.com/nftrhupdates/update.htm
User name is nftrh2 and the password is the same one used for the archive, emailed out last weekend.
I will likely use this as a secondary updating method, with the emailed pre or post market updates remaining the primary communication method. But this provides more flexibility for me in the event something really funky, interesting or actionable should happen during market hours and in the event that I do not have access to the email address book.
A great little stock that became very exciting after being held for months on end as it hung around the .06 buy-in level.
Monday, October 19, 2009
Now, the market owes me nothing and I have a strong mindset resulting from what has been a great year since going all in with the gold miners last October/November. I dumped some short funds last week for 6-8% losses. Big deal, I am still participating (and even bought three gold and uranium exploration stocks today with good looking charts and took another nice profit on old friend FTEK) and really enjoying the circus atmosphere as the public buys stocks now that it thinks it is safe to do so.
I have no clue if the short funds will pay off this time or will need to be sold once again in ignominy. But I tell you I am going to keep shorting this mess at appropriate times as long as its risk vs. reward sucks. Which it does.
Sunday, October 18, 2009
"As for gold, I parrot once again ‘the metal is not about price, it is about long run value’ as global casino patrons are finding out. People fretting about the nominal ‘price’ of gold will be flushed if the headline number goes to our potential ( potential, an important word) target of 650 http://biiwii.blogspot.com/2008/09/gold-big-picture.html in the hue of that flashing red DEFLATION sign. Gold was flocked into along with USD in the acute phase of the panic. These panickers are now being punished. It is the way this market works. You own it for long term value or you pay the price for short term emotion.
Meanwhile, things are setting up nicely for a contrary play where the entire world is so gripped by credit and economic contraction, and freshly printed funny munny, rather than blasting out full force from monetary policy spigots, just oozes with the viscosity of prerefined crude oil and the media still work Armageddon ’08 into the terrified public’s consciousness in a would be run up to the great(est) depression. Funny thing is, a majority of the new depression mongers were just months ago blissfully aboard the great inflation trade. This is the way markets work. Always have, always will I suppose. We may indeed get a depression, but with the pile of ‘money’ being willed into existence, any reduction in the viscosity of the goop dripping out of the spigot is likely to signal it will be an inflationary one. Watch all sectors closely going forward."
Thursday, October 15, 2009
7 Lessons From the Bull Market
You’ve probably read a spate of articles on the lessons of the financial crisis, the Great Recession and the devastating bear market. Now, for something entirely different, I’d like to discuss the lessons of this bull market.
Yes, I know some of you think that the recent merrymaking is nothing more than a bear-market rally and that more pain is on the way. You may be right. The nation -- indeed, the world -- still faces plenty of economic challenges. And the stock-market selloff on October 1 in response to a weaker-than-expected report on manufacturing activity is certainly worrisome.
But when stocks suddenly reverse course in an atmosphere of pervasive gloom and ascend nearly 60% without pause for seven months, I have to assume that a lot of investors were caught napping, their money best kept -- so they thought -- beneath their mattresses. Let’s face it: Whatever you call it, missing a rally of this magnitude (and an even bigger advance in foreign stocks) is a serious error of omission.
So it’s worth examining the lessons of the stock market’s amazing recovery. They could come in handy the next time we’re in the midst of a bear market that appears unlikely ever to end but (barring the collapse of our basic way of life) surely will.
Lesson 1. The stock market turns up when pessimism is rampant. Around the time stocks bottomed last March, fear and even panic were pervasive. The Conference Board’s index of consumer confidence for February, announced late that month, hit a record low. Retail sales were in the pits, home sales were awful and first-time claims for unemployment insurance were near their peak.
Investors? They were fearful, to say the least. A survey by AAII (formerly the American Association of Individual Investors) found that an unusually higher percentage -- 70% -- were bearish on the future. As my colleague Bob Frick notes in his terrific story about how emotions lead us astray when it comes to financial decisions (see "Be a Better Investor"), the greatest monthly outflow from stock funds in the past two years occurred last February.
Another way to get a sense of the mourning in America last winter is to examine media coverage. A nearly perfect contrarian indicator, the cover story in the March 9 issue of Time was a special report on the economy headlined “Holding On for Dear Life.” The cover of BusinessWeek’s March 16 issue was titled “When Will the Bull Be Back?” The subtitle: “Most signs point to more stock market pain. But opportunities are emerging for very, very long-term investors” (emphasis BusinessWeek’s). As it turns out, shareholders have endured little pain since March 9. And I wonder whether seven months qualify as “very, very long-term.”
Lesson 2. A bear market associated with a recession almost always ends in the middle of the economic downturn. The stock market is what the pros call a discounting mechanism. This means that stock prices tend to anticipate the future. Looking back at 11 significant declines starting with the one at the end of World War II, the only time this rule failed was early in this decade: The 2000–02 bear market didn’t end until 11 months after the conclusion of the 2001 recession.
The U.S. economy contracted 6.4% in the first quarter of 2009 and 0.7% in the second quarter. But thanks to various Federal Reserve Board policies and Uncle Sam’s assorted stimulus programs, including “cash for clunkers” incentives for new-car purchases and tax breaks for first-time homeowners, the economy almost certainly grew in the third quarter (see Lesson 4 for more). On average, economists believe that real (that is, inflation-adjusted) gross domestic product jumped 3.0% in the July–September period, and they see expansion of 2.4% in the fourth quarter -- not exactly ripsnorting growth, but growth nonetheless.
Lesson 3. Don’t obsess over earnings; they always lag the stock market. I’ll let Jim Stack, a money manager in Whitefish, Mont., who also edits the InvesTech Research Market Analyst newsletter, explain: “No matter how many times it is said, and everyone says they know it, for some reason lousy earnings always become an emotional block for investors in a new bull market. In the huge bull market of the 1990s, the stock market climbed for over a year (throughout 1991) before corporate earnings even hit bottom! One of the most valuable historical lessons is to completely ignore earnings and forecasts in the first six to 12 months of a new bull market.” Incidentally, Stack, who had warned of a coming bear market in July 2007, a mere three months before the peak, called the market’s March bottom almost to a T.
Lesson 4. Don’t underestimate the power of government intervention. Remember all the talk about how we were on the verge of another Great Depression? Well, we’ve come nowhere near it.
For instance, the U.S. unemployment rate is now at 9.8%; in the 1930s, the jobless rate topped out at about 25%. Much of the credit goes to the aggressive steps taken by the Bush and Obama administrations, Congress, and the Federal Reserve Board. The list of actions is endless: enactment of a $787-billion economic-stimulus program; the rescues of AIG (AIG
And let’s not forget what policymakers did not do: raise taxes or initiate overly protectionist measures to defend U.S. industries. In short, policymakers learned well the lessons of the Great Depression. (Of course, the long-term implications of their actions, particularly regarding their potential to fuel inflation, are another matter.)
Lesson 5. The worst are often first -- at least at the outset. Stocks of companies that are small and weak, which often have had the stuffing beaten out of them during the down period, typically lead the way at the start of the bull market. Investors' dash to such trash has been particularly noticeable during this rebound, as Kiplinger columnist Steve Goldberg notes in a recent column.
Lesson 6. Once you decide to get in, don’t wait for a correction -- there’s no telling when it will come. With the market up significantly, you may be feeling more confident about stocks, but you’d like to see them come down a bit before you commit some money. History, however, shows that, on average, a correction -- defined as a drop of 10% -- comes 285 days after the start of a bull market, according to the Leuthold Group, a Minneapolis investment-research and money-management firm. In the case of the great bull market of the 1990s, which began in October 1990, the market rose 249% over 1,724 days before experiencing a correction.
Lesson 7. Pay attention when bears who had it right turn bullish. Several longtime pessimists -- including Jim Stack, the newsletter editor, hedge-fund manager Douglas Kass, and Jeremy Grantham, co-founder of GMO, a Boston-based investment manager -- began turning positive on stocks in late winter of 2009. This, of course, guarantees nothing (and it’s worth noting that other longtime bears, such as economist Nouriel Roubini and David Tice, of what is now called the Federated Prudent Bear fund, remained downbeat throughout the recovery).
But when well-regarded professionals start singing a different tune, you should try to find out why. Kass, for example, made his call in early March on the basis of favorable valuations, extremely negative investor sentiment and his expectation that the economy would stabilize in early 2010. (Kass withdrew his bullish call on September 29, saying the market had reached the target price he had established in March.) Stack, among other things, cited horrible investor- and consumer-sentiment figures as contrarian indicators.
Wednesday, October 14, 2009
I just thought this view was really funny. Hooray, Dow 10K!
Ho hum and in a matter of fact style I got rid of my shorts but increased my calls on volatility w/ VIX calls out to January. At least there, I can control manageable losses at 100% as insurance against the gold exploration and GLD stuff I hold.
"Sentiment among American investors slid 5.9 percent to 43.5. Readings below 50 indicate that users expect stocks to decline in the next six months.
The survey followed the S&P 500’s first two-week decline since July, spurred by manufacturing that expanded less than anticipated and unemployment that climbed to a 26-year high. Disappointing housing and durable-goods reports also heightened speculation that the biggest rally in equities since the 1930s has outpaced the prospects for an economic rebound."I have some bearish positions that will probably need to be covered today. This is not really unexpected and I will continue to poke this pig going forward. This will end, and more and more it looks, unfortunately, like the 1930's model. Momentum, fueled by dumb money, ends when it ends. Dumb money missed the bottom, missed the meat of the rally and is pouring in now that it is seemingly okay to invest in stocks again. How do you think that's going to work out beyond the blow off?
Tuesday, October 13, 2009
This is not a tout on NFTRH's predictive abilities because I do not predict. There were other possibilities noted all along the way. But the above has been prominent among them. Anyway, let's see how this evolves. The dollar has no more room to decline without major consequences, which could include gold and silver going to and through targets and broad stock markets - feasting off the crippling of the currency - taking another lurch upward in Full Tout '09.