# The Case for The End Of The Bear



## MichaelD (21 March 2008)

(For entertainment purposes only of course)

1. Lateline Business had a news story tonight explaining short selling using scooters as an example ("if you think the price of scooters will fall, you borrow a scooter from your mate, sell it, wait for the price of scooters to fall, then buy it back and give it back to your mate, pocketing the profit" - WHAT THE?!).

2. The pervasiveness of news stories and forum postings predicting the market will go to 4700, 3000, 2000, whatever number. For sure.

3. Bad news causing stock price rises (Merrill Lynch writes off 2 billion dollars or so, price rises).

4. The continued inability of the XAO to get below 5200-ish despite trying really, really hard.

5. Not a bullish market story in sight in the popular media.

6. My long term trend following system (and I venture to say most long term trend following systems) approaching maximum drawdown and maximum run of losses.


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## Whiskers (21 March 2008)

BEAR!... where? 

Heck, a bull has ta have a bit of a spell now and then. He's just recuperating a bit before he gets back in the paddock. :


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## refined silver (21 March 2008)

I remember reading an article on an Indian guy who was considered the worlds leading authority on OTC derivatives. He'd written the most advanced textbooks on the stuff, taught on it, and been involved in the business. 

When asked what innings (baseball not cricket) we were in of the credit crisis, he replied we were about half way through the national anthem at the beginning of the game!!


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## brty (21 March 2008)

Hi,

I tend to agree that all the bearish sentiment is way overdone. Both in this forum and in the media, it's as if this is the end of the capitalist system.

Merely mentioning that I am long something has tended to have people feel sorry for me, if not suggesting that I have lost my marbles (never mind the fact they are in profit).

It is usually when so many are convinced that the market can only go one way that the direction changes, I don't think this time will be any different.

bye

brty


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## sardines (21 March 2008)

perhaps the famed/mythical Plunge Protection Team can really pull one off against the bears and assign them back to their caves for another winter hibernation!

...now that'd be something.


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## wayneL (21 March 2008)

Let me ask the bulls one question.

Based on likely forward earnings and approaching economic conditions, do think a new high in the XAO is justified?


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## MichaelD (21 March 2008)

wayneL said:


> Based on likely forward earnings and approaching economic conditions, do think a new high in the XAO is justified?




I put it to you that yes it is, since all negativity has long been priced in (bad news now makes prices go up), leaving only one way for the markets to logically go - up. Prices go up when all those that wanted to sell already have, and I have the view that we have got to that point.

I'll add another few points to the bull case;

7. What looks all around the world like a blow-off bottom on world markets the day before Easter.

8. The US market defying this with a strong up day the day before Easter, unusual for long holidays.

9. The Fed cutting rates less than expected and prices still went up.


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## Rainmaker2000 (21 March 2008)

It's all just names...bull/bear......its to early to say we are in a bear...its just been a massive three months of falls.....

I wrote a thread in November asking whether we were on cusp of major correction.....I was wrong, November or December were not that good but not a major correction

My point is its just been three months....from my perspective, almost all my stocks posted improved results in February, with the economy still going pretty well, should we really care what the Wall Street head honchoes are on about?


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## Timmy (21 March 2008)

MichaelD said:


> I put it to you that yes it is, since all negativity has long been priced in (bad news now makes prices go up), leaving only one way for the markets to logically go - up. Prices go up when all those that wanted to sell already have, and I have the view that we have got to that point.
> 
> I'll add another few points to the bull case;
> 
> ...




Michael, I really like the process you have gone through on this post and the opening post...really useful to me thank-you.


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## wayneL (21 March 2008)

MichaelD said:


> I put it to you that yes it is, since all negativity has long been priced in (bad news now makes prices go up), leaving only one way for the markets to logically go - up. Prices go up when all those that wanted to sell already have, and I have the view that we have got to that point.
> 
> I'll add another few points to the bull case;
> 
> ...




Those are all reasonable technical points, but didn't answer my question.

To you see *earnings* as we head into a probable recession *justifying* a new high? Will the fundamentals support it?


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## insider (21 March 2008)

MichaelD said:


> I put it to you that yes it is, since all negativity has long been priced in (bad news now makes prices go up), leaving only one way for the markets to logically go - up. Prices go up when all those that wanted to sell already have, and I have the view that we have got to that point.
> 
> I'll add another few points to the bull case;
> 
> ...




I don't think you can call the end of a bear market based on three trading days. You forgot to mention the sharp fall which followed the rate cut. If it were so well received then I think a few days of straight green would be on the cards. Typical bear market periods last at least 18 months so we might have another year to go.

However the things you've discussed here are very useful indicators and all contribute to a more positive case. One thing which should be agreed is that currently this is a "traders and insiders market". So regardless you should be doing fine.

My position is bearish and has been since August/September


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## reece55 (21 March 2008)

I still think people don't realise the far reaching impact of what is happening in the US...... And Wayne's comments about earnings is a very relevant one... The stock market is a forward looking beast, not backward. Yes, earnings are OK so far for those local entities, but they weren't that great from Company's with international exposure, particularly US$ exposure. Look at ALL as an example - in local currency terms, their results were up, but after factoring in the strong AUD, it was a flat year. Then think about the cost of funding impact, as many entities are loaded up with debt on acquisitions (take TPI as an example). But finally, Thursday was the first time in a long time that people took cover from commodities - take FMG as a perfect example. Whilst I think the bull story is still impact in the 5 year horizon, at least in the next 2 I see much flatter increases or churning in the hard commods, whilst it is clearly evident already that cost pressure are huge - look at PetroChina's result as an example where there cost inflation is out of control. This will result in one thing - lower increases in profit and reductions in valuation due to a reduction in underlying growth assumptions. And don't look at the PE for this answer, resource company's should be on a DCF valuation (and I swear, if I see another valuation with a 9% discount rate, I am going to lose it...... If the risk free interest rate is 7.25%, that means the risk premium is only 1.75%????? Some Uranium entities were using such valuations, at the moment that kind of a spread doesn't even allow for a BBB entity where you actually have security, let alone equity!!!)...

My view is that even if you consider this to be a bottom (and I don't think it is), we still need that good 6 months worth of range bound trading to transfer weak hands to strong so we can start rising again. But realistically, the macro conditions we are faced with doesn't inspire me in the least bit. This market is guilty until proven innocent in my view......

Cheers, just my


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## Timmy (21 March 2008)

reece55 said:


> My view is that even if you consider this to be a bottom (and I don't think it is), we still need that good 6 months worth of range bound trading to transfer weak hands to strong so we can start rising again.




Good point - when I read Michael's topic it was 'case for the end of the bear" - I didn't read that as saying it was therefore a case for a new bull run - there being up. down, and sideways.  Sideways is my vote!


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## rederob (21 March 2008)

I am a devout bear.
Perhaps wayne and I have that in common.
This bear has many steps ahead, which take the markets backward.
Fed rates will be cut, cut and cut in coming months.
If you think the opposite, then please advance a case.
The re-setting of subprime interest rates will continue into the next 6 months, forcing more and more foreclosures.
US consumers are leveraged into debt.
Worse, US speculators are more leveraged.
The prick with the pin has only just got into the room of balloons, and he's inviting friends: A mate or two from the UK have Rocked in.
Subprime has opened Pandora's box, and whatever hope there is is lost in the US.
US consumerism will wayne (wane Wayne - lol) over the year and stifle Asian growth via exports.
In turn leading to a laggard of a global economy.
In the interim the plethora of leveraged debt and hedge instruments will further unravel and add to the subprime meltdown.
Although the Dali Lama has put China in a political spin, from which it will recover, the Yogi Bear has befriended Boo Boo Bernanke to his detriment.
No bull, I'm smarter than the average bear.


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## cuttlefish (21 March 2008)

reece55 said:
			
		

> My view is that even if you consider this to be a bottom (and I don't think it is), we still need that good 6 months worth of range bound trading to transfer weak hands to strong so we can start rising again.




Yeah this is a good point and a necessary process.

Still getting my thoughts around the current situation, but I'm thinking that if inflation appears it could be choppy times.  In that environment I still see the resource sector as performing well and also see more value available at the moment in the medium term in the resource sector than other sectors because an inflationary environment will have a few effects:  

It will mean yields will have to compare well to other assets and be at a level where they are factoring in inflation.  (so basically a reverse of the house/bond price rise situation of the late 90's).  

It will also mean growth will have to be assessed in real terms - if commodity prices rise in line with inflation then the resource sector is better able to deliver real growth.  

In the other sectors I'd expect inflation to create choppy conditions.  So mixed market for quite a while to come imo, though in Australia possibly brought back into the bull by another resurgence in the resources sector as China and India continue to grow, decoupled from a declining America. If this panned out and there was a resurgence in the resources sector then it will over time bring the other sectors along for the ride again.  

A long time before recovery in the residential property development and funding sector as input costs rise, high interest rates dampen demand meaning new construction limited. But property investment with unencumbered capital might still not be a silly thing because although property price growth might not be good in real terms it will still also likely grow and thus be better than cash or bonds. Also yields through rental growth would improve due to lack of new construction creating tightness in vacancies, and due to wage inflation. (so growth in both prices and yields, but probably negative 'real' growth in prices but positive 'real' growth in yields).

A lot of the manufacturing and engineering firms, and the banking sector as well, that thrived off the property sector will suffer in the short term due to the rising input costs and reduced demand, but will over time redirect their energy to construction and development (and funding) activities in the mining sector.  

(one possible future scenario out of a milion of them anyway lol).


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## cuttlefish (21 March 2008)

MichaelD said:
			
		

> (For entertainment purposes only of course)




Oh and I forgot to add Michael that this is a lot of trouble to go to just to prop up those open long positions from Thursday lol


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## GreatPig (21 March 2008)

MichaelD said:


> bad news now makes prices go up



And good news often makes them go down.

How many times has a company reported an increase in profits only to see its price plummet on the news?

Depends though whether you define good and bad relative to market expectations or actual company performance.

GP


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## DB008 (21 March 2008)

l still think that there is a while to go before it's all sorted out.
1 or 2 good days on the Dow doesn't mean that it's all fixed. When will people learn this?!?!?


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## MichaelD (21 March 2008)

Fair points all made. Perhaps a more precise definition of what I'm getting at is that there is a fair case to be made that we have more-or-less reached bottom, not for fundamental reasons, not for any reason in particular other than everyone expects the market to keep going down and yet it simply isn't.

Personally, I've been bullish ever since the London tabloids splashed "CRASH" all over their front pages in January (not just since my trades on Thursday .

I will, however, happily recant my view if the market pushes solidly through support.


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## Sean K (21 March 2008)

DB008 said:


> l still think that there is a while to go before it's all sorted out.
> 1 or 2 good days on the Dow doesn't mean that it's all fixed. When will people learn this?!?!?



Yes, yes, yes. Really, lowering interest rates again and again is just adding to the time and/or severity of the problem. The short term fixes have been put in, time for those who don't deserve it, to pass it on to those who do.


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## prawn_86 (21 March 2008)

From a psychology view i think you are close to the mark Michael. Although i think another few months is left to run down/sideways.

6 months to a year ago everyone couldnt even concieve a crash/correction/bear market like what is happening now. All the taxi drivers thought the index would keep on pushing record highs forever.

Now a vast majority of people are starting to move over to the bear camp. 

So imo, in another few months, pretty much everyone will be in the bear camp, and that will be the time to start accumulating to go long 

When taxi drivers start saying things along the lines of "will we ever see a record high again?", "i think the market will fall for X more yrs" etc etc, that is when you know the big guys will be building up their positions off of all the amatuers


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## IFocus (21 March 2008)

MichaelD said:


> I put it to you that yes it is, since all negativity has long been priced in (bad news now makes prices go up), leaving only one way for the markets to logically go - up. Prices go up when all those that wanted to sell already have, and I have the view that we have got to that point.
> 
> I'll add another few points to the bull case;
> 
> ...




Michael thanks for the thread, the current market is pricing risk for the main trend and news for short term IMHO.

Until banks / financial institution's etc can work out who is holding the baby (massive risk) 

Until the global market can work out how deep the US recession will go (massive risk) 

Until global markets can work out how China will deal with its inflation after the Olympics (massive risk) 

Then we will remain in a bear market will sharp retracements, note we haven't had a decent sharp retracement yet.....

One last point, as a systems man whats the average life for a bear market?


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## dhukka (21 March 2008)

rederob said:


> I am a devout bear.
> Perhaps wayne and I have that in common.
> This bear has many steps ahead, which take the markets backward.
> Fed rates will be cut, cut and cut in coming months.
> ...




Great summary. To that I would add Waynes point on earnings. If you believe that earnings are the mothers milk of stock prices over the long term, the US stockmarket is still deluding itself. 

Also from a long term investment standpoint, exceptional long term returns come after deep bear markets such as the one that ended in 1982. If the US market has bottomed, investors can most probably expect poor returns over the next few years


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## dhukka (21 March 2008)

IFocus said:


> Michael thanks for the thread, the current market is pricing risk for the main trend and news for short term IMHO.
> 
> Until banks / financial institution's etc can work out who is holding the baby (massive risk)
> 
> ...




18 months


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## Kauri (21 March 2008)

As a general rule I don't trust the indicies on triple-witching day, and when it falls before a 4 day weekend...    I personally would wait until the market re-opens and see how things settle in...   
Cheers
........Kauri


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## cuttlefish (21 March 2008)

prawn_86 said:


> When taxi drivers start saying things along the lines of  ...




Gee taxi drivers get a bad wrap on these forums. I've met quite a few interesting cab drivers in my time - particularly owner drivers who are often semi-retired and pretty laid back.  Met one or two that weren't short of a quid as well.  I'm not idealising things here - there's plenty that I've been tempted to get straight back out of the cab after getting in - but the generalisation irks me sometimes. Its a bit like the 'Mums and Dads' - I mean Kerry Packer, Rupert Murdoch and Warren Buffet as far as I know are all 'Dad's'.

Anyway sorry for straying off topic.  I agree with the view that in the short term we could be entering a correction in a longer term bear - pariticularly for the US who I see as going no way but down over the longer term. In Australia I think we could decouple from the US because I believe China and India will continue to grow in spite of America fading and Australia is in a strong position to benefit from continued Asian growth.


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## MRC & Co (21 March 2008)

Since the IR cut, I have been a very short term bull.  Only looking for a bounce on the momentum.  So far, so good. 

Great graph Dhukka!  Definately need a bottom and a rise in earnings before getting in as an investor. 

What are the dates for the main economic data coming out Wayne?


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## AnDy62 (22 March 2008)

Interesting thread peeps. With some of the stories going around, you would think you should sell everything- house included, stock up on food and live in a cave somewhere while the world self-destructs. This is silly. Australia has a strong economy yeah? The ASX stands for *Australian* Stock Exchange right? Now, I'm not that stupid to think we are immune from global financial markets but as long as Australian companies have a strong consumer base (and not too much intl exposure) they will make money.

Now doomsayers, the market has dropped over 20% - even though Australian companies are making money- America has dropped far less whilst it is the source of these problemos.Ok, so the nasty sentiment has spread to China.. China is about to crash!!!! So it might have a few short term problems... wow... never heard of inflation before?. But is there any fundamental reason China's GDP per capita can't rise from 1/7 of Australia's long term?

But fear breeds fear and irrationality.. sell sell sell! I'll just be laughing and buying, I'm in the mkt for another 50 years plus... (hopefully lol).. Cheers. Oh and btw I'm not an angry individual who is saying this because I've been burnt. I've been mainly in gold/cash... but I will taking full advantage in the coming months.

Btw feel free to laugh at me if the market does dive to 2000 or whatever people are predicting. Happy Easter


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## ShareIt (22 March 2008)

The bottom process takes months and perhaps a year! 

In no way will it happen in a couple weeks and especially not a few days...  It is great to see that we have a nice small bull run in a bear market, but the primary trend of the market is south and all those people going long are trading against the trend, which usually ends up looking nasty...

It's great to see the Fed doing their thing cutting rates, but my opinion is that they are making the same mistakes that got them here in the first place.... I do think that a "less than expected" cut was the right thing because they also need to preserve their dollar and find other ways to get out of this mess (which they have started to do with cash injections) and this is why the market rallied.... when will this bear end??? I believe it is safe to start investing again when the 200 day moving average looks to be moving north again, and that could take some time.


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## wayneL (22 March 2008)

Re earnings and other factors:


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## ithatheekret (22 March 2008)

I still believe that until a reshuffle of the indexes here , which may have started organically with the takeovers and mergers sequences and poison pills , that its a sellers market from 5400 to 5800 , until the indexes show the reratings .

Resources still look good to me , but the liquidation phase must continue in other areas , which will effect resource positions . China , more so its industry is trying not to pass on inflation they export ...... it's bad for business , ergo the strike/ban on RIO and BHP ores . Sticks and stones stuff , but effective enough to shake the stocks prices ..... check a dollar >>>>

Good protest but margins will fix that problem , soon I would imagine . Wages in the Peoples Republic are on the rise , one I whole heartedly applaud . I don't care a hoot if I have to pay a little more , if someone else gets better quality living and deserves it .

Costs will have to be past one to us , we'll just have to wear it until the cycle ends . This will effect consumer discretionary spending limits and we'll see the backsides of some retailers and takeover there too .

Quite a few companies are mimmicking Icarus . Many don't belong in the present indexes .


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## wayneL (23 March 2008)

wayneL said:


> Re earnings and other factors:




Compare yesterday's Marketwatch  to today's/\ => \/

The ramping begins.


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## dhukka (23 March 2008)

wayneL said:


> Re earnings and other factors:




Good old S&P late to the party as usual. The summary should read "revenue *will* fall *at least* 20% to 30% this year.


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## theasxgorilla (24 March 2008)

dhukka said:


> Good old S&P late to the party as usual. The summary should read "revenue *will* fall *at least* 20% to 30% this year.




"Another elephant in the room"???  You think they only lowered long enough to provide the Bear Sterns bail-out funds at silly low rates and they'll hike again to address inflation?


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## dhukka (24 March 2008)

theasxgorilla said:


> "Another elephant in the room"???  You think they only lowered long enough to provide the Bear Sterns bail-out funds at silly low rates and they'll hike again to address inflation?




Is this question for me or wayne? Personally I doubt very much whether the Fed will begin raising rates anytime soon. For that to happen there would have to be a sharp improvement in credit market and economic conditions and that aint gonna happen anytime soon. The underlying problem for much of this mess, housing, is still in the sh!tter. Bernanke doesn't want to go to ZIRP but as long as the risk of systemic financial meltdown remains, and skittish markets start pricing in more cuts, Bernanke will come to the party. 

Back in early January, when the Fed funds rate was still at *4.25%* I said that it will go to the *2's*. I reckon the odds now are that we will see *1's* before they are done cutting.


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## joshua_ (24 March 2008)

> *Are we there yet?*
> 
> Michael West (business.theage.com.au)
> 
> ...



http://business.theage.com.au/are-we-there-yet/20080324-218g.html


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## nizar (24 March 2008)

dhukka said:


> Is this question for me or wayne? Personally I doubt very much whether the Fed will begin raising rates anytime soon. For that to happen there would have to be a sharp improvement in credit market and economic conditions and that aint gonna happen anytime soon. The underlying problem for much of this mess, housing, is still in the sh!tter. Bernanke doesn't want to go to ZIRP but as long as the risk of systemic financial meltdown remains, and skittish markets start pricing in more cuts, Bernanke will come to the party.
> 
> Back in early January, when the Fed funds rate was still at *4.25%* I said that it will go to the *2's*. I reckon the odds now are that we will see *1's* before they are done cutting.




As for rates hitting 1% in the US, what sort of a timeframe are you suggesting?
Sometime in 2009?


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## tech/a (24 March 2008)

Think it will work this time for a little while --- around a month.
So I'm up for the end of the bear run for around a month.
From tommorow.

Why.
Decreasing Gold price
Decreasing Oil Price
Increasing US$
Blow off range bars on many ,many charts.

But thats about it---on with the bear show.


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## dhukka (24 March 2008)

nizar said:


> As for rates hitting 1% in the US, what sort of a timeframe are you suggesting?
> Sometime in 2009?




When I say *1's* I mean anywhere in the 1's, so that could be 1.00%, 1.25%, 1.5% OR 1.75%. We could be in the 1's by the next Fed meeting (April 30) if the markets get themselves all worked up again in the next 5 weeks.


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## juw177 (25 March 2008)

tech/a said:


> Blow off range bars on many ,many charts.




You mean downbars with large range?


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## wayneL (26 March 2008)

Some good comment from Adam Warner regarding the upage of the last few days. Goes along with by bull/bear cognitive bias hypothesis/observation.



> Never Another Down Day
> 
> So let's say the market got plowed on Expiration week. All sorts of howls would go up either accusing options traders or manipulating prices down, or absolving them from blame, but highlighting the artificiality of the decline. Even as it continued the day after expiration as traders scrambled to adjust.
> 
> ...


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## Bushman (31 March 2008)

At least one American 'financial newsletter' is calling for the Dow to be trading at 16,000 points by year end. That would be some rally. Link attached:

http://www.marketwatch.com/news/sto...-1954-4FD6-979A-F6100F2E910F}&dist=TNMostRead


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## Timmy (31 March 2008)

Bushman said:


> At least one American 'financial newsletter' is calling for the Dow to be trading at 16,000 points by year end. That would be some rally. Link attached:
> 
> http://www.marketwatch.com/news/sto...-1954-4FD6-979A-F6100F2E910F}&dist=TNMostRead




This guy knows how to party!  Where can I get some of whatever he is smoking?


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## wayneL (2 April 2008)

Today's SP500 is a breakout on so many different levels, that I'm going bullish for the short to medium term. (N.B. not a standard technical break, but by my form of analysis).

The perception is that the credit crunch has been de-crunched. I don't think that's quite true, but the risk of cascading cross default has been minimized. For that, the Fed is probably to be congratulated.

The Fed still gets the raspberry for actions since 2001 however. 

I still think that longer term (1-3 years) there will be more pain to come in the real economy and in the SM, but the evidence will need to come in real economy terms to affect sentiment in the SM. (earnings, employment etc)

The euphoria from a perceived Fed victory will carry us up for a bit. I think that's pretty obvious now.

FWIW

(I reserve the right to change my view with my underwear )


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## Porper (2 April 2008)

wayneL said:


> Today's SP500 is a breakout on so many different levels, that I'm going bullish for the short to medium term.




Wayne, are you going crazy.The Bear of all Bears and you are bullish, can't believe it 

On a more serious note, there is quite a lot of talk about the bottom being in, so the usual self fulfilling prophecy may kick into gear for a reasonable prolonged  bounce.

I agree however that we have not seen a bottom.Falls of this magnitude can't be recovered as if nothing has happened............surely.

Having said that, this count from quite a while ago is still valid...just, so we could in theory power up into the wave 5.Like most people, I don't know, so just trading short term moves at the moment.


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## Aussiejeff (2 April 2008)

wayneL said:


> Today's SP500 is a breakout on so many different levels, that I'm going bullish for the short to medium term. (N.B. not a standard technical break, but by my form of analysis).
> 
> The perception is that the credit crunch has been de-crunched. I don't think that's quite true, but the risk of cascading cross default has been minimized. For that, the Fed is probably to be congratulated.
> 
> ...




I think you have summed this **BOING** (as opposed to a mere *bounce*) up nicely, wayneL.

Waves of euophoric sentiment washing over the mass media this morning... I can smell the incense now... 


AJ


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## Aussiejeff (2 April 2008)

Hahaha! Oh NOW I get it.

It's *APRIL FOOL'S DAY* in the US TODAY!! 

(*puts helmet on in preparation for flung dung...!*)

LOL


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## wayneL (2 April 2008)

Aussiejeff said:


> Hahaha! Oh NOW I get it.
> 
> It's *APRIL FOOL'S DAY* in the US TODAY!!
> 
> ...




I would maybe delete the apostrophe in April Fool's.

April Fools? Perhaps those who believe in the early recovery. :


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## Whiskers (2 April 2008)

wayneL said:


> The Fed still gets the raspberry for actions since 2001 however.




Yes, quite so. Shame that some people have to wait for a potential problem to become a real problem and smack them in the face before the do something about it. 

I guess it's welcome back to the Bull's, at least for awhile. 



Porper said:


> Wayne, are you going crazy.The Bear of all Bears and you are bullish, can't believe it
> 
> On a more serious note, there is quite a lot of talk about the bottom being in, so the usual self fulfilling prophecy may kick into gear for a reasonable prolonged  bounce.
> 
> Having said that, this count from quite a while ago is still valid...just, so we could in theory power up into the wave 5.Like most people, I don't know, so just trading short term moves at the moment.




Porper, I'm not an EW expert, but I like your proposition. 



> I agree however that we have not seen a bottom.Falls of this magnitude can't be recovered as if nothing has happened............surely.




She'll be right mate. The lows were over-done out of frustration that the US were asleep at the wheel. I think they have woken up for a bit, as some 'analysts' are saying to implement the most substantial changes in the US system and economy since the great depression.


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## MichaelD (2 April 2008)

And yet another compelling argument FOR the End of the Bear Case

10. WayneL has gone bullish and nobody believes it.


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## josjes (2 April 2008)

Dow Jones Transportation Index performs spectacularly the last 4 months, giving higher high, and higher low. For those familiar with Dow Theory, Transportation leads the way, since July last year high it's been leading the down trend and its last low is January 18, and Dow followed with lower low bear market. 
But it is giving the strongest signal that there is a serious bear market reversal underway. For Transport to continue to give a bear confirmation it needs to crash 20-22% from its present level. That is a very serious crash, but under current circumstances, it doesn't have high probability, I reckon.


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## MichaelD (3 April 2008)

One more:

11. Those pesky long trades I'm in at the moment keep on signalling more and more pyramids and I really, really don't want to put on the trades (but I am 'cause my plan says so). In other words - the charts look terrible, I feel like the trades are no-hopers going into them, but somehow despite everything they keep going up.


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## wayneL (3 April 2008)

MichaelD said:


> One more:
> 
> 11. Those pesky long trades I'm in at the moment keep on signalling more and more pyramids and I really, really don't want to put on the trades (but I am 'cause my plan says so). In other words - the charts look terrible, I feel like the trades are no-hopers going into them, but somehow despite everything they keep going up.



I remember one guru or another say that the best trades often feel the worst when you put them on.


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## wayneL (3 April 2008)

wayneL said:


> Today's SP500 is a breakout on so many different levels, that I'm going bullish for the short to medium term. (N.B. not a standard technical break, but by my form of analysis).
> 
> The perception is that the credit crunch has been de-crunched. I don't think that's quite true, but the risk of cascading cross default has been minimized. For that, the Fed is probably to be congratulated.
> 
> ...



Could it be time for an underwear change?

US jobless claims up.


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## Aussiejeff (4 April 2008)

wayneL said:


> Could it be time for an underwear change?
> 
> US jobless claims up.




Nah! No worries mate! Stuff yer underdaks full of el-cheapo Super-Absorbent M3 Bills (yer can get 'em from yer local PPT Shoppe) and dream on.... guaranteed no leakage! LOL


AJ


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## osmosis (4 April 2008)

George Soros does not think its the "End of the Bear"

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aD1AWZE7bzfQ


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## wayneL (4 April 2008)

wayneL][QUOTE=wayneL said:


> I still think that longer term (1-3 years) there will be more pain to come in the real economy and in the SM,* but the evidence will need to come in real economy terms to affect sentiment in the SM. (earnings, employment etc)
> *
> The euphoria from a perceived Fed victory will carry us up for a bit. I think that's pretty obvious now.
> 
> ...



Could it be time for an underwear change?

US jobless claims up.[/QUOTE]
US NFP up 80,000.

I'm going to stock up on extra underwear. Still won't be surprised to see a bit for uppage from here... before reality bites.


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## Wysiwyg (7 April 2008)

MichaelD said:


> (For entertainment purposes only of course)
> 
> 1. Lateline Business had a news story tonight explaining short selling using scooters as an example ("if you think the price of scooters will fall, you borrow a scooter from your mate, sell it, wait for the price of scooters to fall, then buy it back and give it back to your mate, pocketing the profit" - WHAT THE?!).
> 
> ...




I don`t know how reliable these so-called economic clocks are but this one shows we are at 1 to 2 o`clock with rising interest rates, falling shares and i don`t know if Opes Prime comes in as the first corporate failure.
Chip me if you will, but it surely is a long way back to 7 o`clock.

i must have had dial denial for a while


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## MichaelD (8 April 2008)

12. A sudden increase in recent times of the number of newbies posting about their plans for stock market domination despite;
a. No money
b. No plan
c. No trading experience

i.e. the dumb money is coming back into the markets.


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## nioka (8 April 2008)

According to the way I see it we are now at 8 & 9 having bypassed 7. But then I never stopped being bullish, all I did was change paddocks.


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## Whiskers (8 April 2008)

MichaelD said:


> 12. A sudden increase in recent times of the number of newbies posting about their plans for stock market domination despite;
> a. No money
> b. No plan
> c. No trading experience
> ...






Well, I guess it's as good a sign as any!


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## Whiskers (8 April 2008)

MichaelD said:


> 12. A sudden increase in recent times of the number of newbies posting about their plans for stock market domination despite;
> a. No money
> b. No plan
> c. No trading experience
> ...






> WASHINGTON (Reuters) - The International Monetary Fund agreed on Monday to put the IMF's finances on sounder footing by selling some of its gold and investing the profits in government and corporate bonds, *and possibly equities.*
> 
> http://www.reuters.com/article/ousiv/idUSN0729582320080408




Well... maybe not so dumb money.


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## Kauri (8 April 2008)

MichaelD said:


> 12. A sudden increase in recent times of the number of newbies posting about their plans for stock market domination despite;
> a. No money
> b. No plan
> c. No trading experience
> ...




 and maybe the dumber money stayed *in* the market.. feeling safe because although they were showing paper losses, it wasn't real money, and anyway they would get it all back and then some.... later.... 

 maybe the smarter money is now coming back..and maybe not of course..    after all it takes a lot to lift the market, a lot more than the combined efforts of the dumbos... 

 as a footballer said  "I may be dumb but I can lift heavy weights.."   

  Cheers
............Kauri


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## josjes (19 April 2008)

Well now we have a very strong evidence of the case for the end of bear share market. At least according to the revered and widely respected 100 years Dow Theory.

According to Dow Theory:
http://www.investopedia.com/terms/d/dowtheory.asp

A theory which says the market is in an upward trend if one of its averages (industrial or transportation) advances above a previous important high, it is accompanied or followed by a similar advance in the other.

The theory also says that when both averages dip below previous important lows, it's regarded as an indicator of a downward trend. 

Dow set a higher high than its February high, whilst Transport also make a higher high. This is an indication that traders/investors should from now on have confidence that market will not visit the low of March and advance (albeit with probably choppy sideways direction) from here.


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## rederob (19 April 2008)

The bear is barely into his cave, and hibernation is next.
I guess the makets will bear\bare out the accuracy of any comments to date.
But bear markets don't end soon.
They take a bit of time to wear down (dumb-down).
As poor an indicator as many make it out, the pe will be my guide.
US earnings will have occasional upside surprises, but mostr earnings are derived from consumers.  Us consumers are laden with debt, and the bubble that some thought had burst was just a precursor of things to come.
I remain nicely cashed up, with good equity exposure to oil\energy\gold, and some flea ridden dogs that I hold to remind me of the pitfalls of the markets: Go Macmin!


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## 2020hindsight (19 April 2008)

MichaelD said:


> 12. A sudden increase in recent times of the number of newbies posting about their plans for stock market domination despite;
> a. No money
> b. No plan
> c. No trading experience
> ...



Didn't Joe Kennedy say that "when the bell-hops are talking about buying shares, it's time to get out." 

Michael, presumably they are the type of dumb money you're referring to, (?)
so is it time to stay out - or to get back in 

Heck I'm dumb enough to get back in  
(PS Iron ore can only go one way if you ask me, - 
but that's just my theory, and it ain't cast in steel ok?.)


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## Whiskers (19 April 2008)

josjes said:


> Dow set a higher high than its February high, whilst Transport also make a higher high. This is an indication that traders/investors should from now on have confidence that market will not visit the low of March and advance (albeit with probably choppy sideways direction) from here.




Yes, a more orthodox Bull indicator.

But, if the trend continues sideways between the Nov high and Feb low, for a year or so, (as I expect) will history really call this a Bear market, just a little correction or a plateau?


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## MichaelD (29 April 2008)

13. Buffet is preaching doom and gloom but his wallet is buying.

(and an update on 11, 11b - those long trades just keep on signalling more and more pyramids)


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