SELL EVERYTHING!!! says Dow Theorist

[namrog]

It's one thing to help those unable to help themselves, e.g. the sick, disabled, genuinely disadvantaged and I'm all for way more of this happening, but I'm just getting damn sick of people who are irresponsible wanting others to make it all better for them.

Apologies for the rant.

Very well said Julia,, if taken within the context that I think you mean, and having said so , there are many levels to which this applies, and if such thing as a level playing field exists or ever existed, then isn't your bank guaranteed 6% or whatever your getting for your cash from a "government guaranteed bank" a case of others taking the responsibility i.e. taxpayers ? despite this not being your decision.., a case of others taking up the slack ?
Mind you, there'nothing stopping all of us doing the same thing...

My point being, that almost somewhere along the line, our finances are controlled by some other entity, like it or not. and most times by the government !!!!

By the way Julia, I agree with almost all else you say.

Local, what are those charts from or off ???

Most of the divergence that I see in those charts has already played out, and don't prove much at all, no offence meant, just my reading of it ...

 

[explod]

professor_frink
Moderator

Looking at these charts and if you believe in divergence
you have to SELL everything.


here's another great example of that happening in the DOW. This great divergence trade saw the DOW up near 1000 a few years later

One of the great problems with charts, particularly from different periods is that they do not reflect underlying fundamentals. It will be also noted that chart behaviour over time in different stock classes also behave differenty.

This is not directed at you prof., but when I looked at your time period it was just after the 2nd WW, industry was just moving again, I remember on the farm wool going through the roof because there was a large and growing market. I do think things may be vastly different today and the precarious way in which the great financial gurus are trying to print money to keep our heads up is failing and the market, which required the support of good business like in 1955 is just not there.

So you are correct, charts can be read in many ways but are particularly looked at by many in the way of the wish.

Its boring when the markets are closed.

 

[Julia]

if such thing as a level playing field exists or ever existed, then isn't your bank guaranteed 6% or whatever your getting for your cash from a "government guaranteed bank" a case of others taking the responsibility i.e. taxpayers ? despite this not being your decision.., a case of others taking up the slack ?
Mind you, there'nothing stopping all of us doing the same thing...

I hardly think a comparison between someone diverting shares to cash can be compared with people who borrowed on their homes with a high LVR to buy shares, then further took out a margin loan on the shares bought with that borrowed money, then finally failed to put in place any protective mechanism for a market turn down.
These are the people now asking for a taxpayer funded compensation of their losses.

And to suggest there was ever any likelihood of the government guarantee actually being called on is laughable. It was simply put in place as a purely political measure (and sensibly at the time) to avoid panic withdrawing of bank funds. Our banks at all times are overseen quite diligently by APRA, and the government knew very well there was no financial reason to offer the guarantee.

 

[billv]

if the markets, housing, commodities and even the banks aren't safe places any more where does one put his hard earnt? Where is it safe? A slab of physical gold under the bed or in your 23kg safe at home isn't safe

Gold under the bed and a loaded shotgun sounds good

It's not pretty out there and IMHO current share prices haven't adjusted for the amount of risk visible in the horizon.

The risk of government defaults is currently small but is increasing. The problem is with government deficits worldwide which are at record high levels and are becoming unsustainable. Everyone says let's spend now to keep our economies afloat and better times will come next year.

But the fact is that they've been doing this for 2 years in a row and now entered a 3rd year. They can't be doing this forever. They're staying above water with borrowed money. At the same time bad debt from the private sector is slowly passing over to governments who chose not to let their banking institutions lose money.

If this continues the debt situation of some countries will get to levels of no return.

http://www.abc.net.au/sundayprofile/stories/2906914.htm?site=sydney

 

[local]

Namrog
This is SPX and DJI

Some years ago I had this little program called Echart where you could backtest any of indicators.
For the period I backtested quite few stocks absolutely most came out losses.
This is TA.

 

[Wysiwyg]

The risk of government defaults is currently small but is increasing. The problem is with government deficits worldwide which are at record high levels and are becoming unsustainable.

Well .... where IS all the money going to or has it disappeared into thin air? Surely the borrower 'and' lender aren't both in debt?

 

[billv]

Well .... where IS all the money going to or has it disappeared into thin air? Surely the borrower 'and' lender aren't both in debt?

Good question, someone must be printing paper.
I'm sure the US are and perhaps it's time for the ECB to start the printing press going as well...

Actually, I don't know if I understood your question correctly.

Maybe the example of Greece will clear things up.
In the past the Greek Gov. issued their own bonds which were bought by German superannuation funds, insurance companies etc.
These bonds are now maturing but as they mature they are being replaced by EU and IMF backed loans or will be even bought by the ECB.
So just like the subprime loans we now have a situation where bad loans are moving from being a problem of the private sector and are becoming a problem of the public sector.
http://www.nytimes.com/interactive/2010/05/02/weekinreview/02marsh.html

 

[namrog]

I hardly think a comparison between someone diverting shares to cash can be compared with people who borrowed on their homes with a high LVR to buy shares, then further took out a margin loan on the shares bought with that borrowed money, then finally failed to put in place any protective mechanism for a market turn down.

Fair enough, in hindsight it was a silly statement to make...one extreme example to another possibly...

Local, yes I know what it is , and agree that hard to severe divergence for want of better words usually lead to a reversal of direction, but not always, and in my humble oppinion the divergence in your charts is mild enough at this stage to hold off on a decision , thats only my oppinion though, and will probably be proven wrong...

 

[professor_frink]

One of the great problems with charts, particularly from different periods is that they do not reflect underlying fundamentals. It will be also noted that chart behaviour over time in different stock classes also behave differenty.

This is not directed at you prof., but when I looked at your time period it was just after the 2nd WW, industry was just moving again, I remember on the farm wool going through the roof because there was a large and growing market. I do think things may be vastly different today and the precarious way in which the great financial gurus are trying to print money to keep our heads up is failing and the market, which required the support of good business like in 1955 is just not there.

So you are correct, charts can be read in many ways but are particularly looked at by many in the way of the wish.

Its boring when the markets are closed.

Can't disagree with you there explod. Times are very different.

The only reason I posted it up was that someone said that "if you believe in divergence you have to sell everything", and I wanted to show that if you believed in divergence you would have sold in the early 60's just before the market went on a good rally. The divergence follower would have also sold in the early 90's when the DOW was at 2500. Divergence on a monthly chart that has an upward bias isn't going to give very many good signals. By the time you get a confirmed divergence the market has already taken a dump and is ready to reverse. One would literally need the next great depression to arrive to have made the right decision in selling out.

I'll leave the discussion about whether that's happening now to the economists of the forum

 

[billv]

No one will bail out America as EU did for Greece

If you think its safe out there, think again

The European Union has put forth its rescue plan. The U.S. stock markets have stabilized. And the protests in Greece have receded from the headlines. All's well, right?

No, not even close.

The United States racked up an all-time monthly federal budget deficit for April, $82.7 billion in red ink, which was four times higher than the monthly amount for April of 2009. What's even scarier is that the feds usually rack up surpluses in April as people file their tax returns.
Read more below

http://www.sun-sentinel.com/news/op...eral-deficit--us-gree20100524,0,4637768.story

 

[baby_swallow]

Here's from ZeroHedge.com

I Know What Keeps Obama Awake at Night IISubmitted by madhedgefundtrader on 05/24/2010 08:06 -0500

While Obama spent the weekend shorting through contradictory primary results, trying to figure out what next to say about the Gulf oil spill, and basking in the afterglow of his Senate win on financial reform, a potential nightmare is giving him sleepless nights.

The $887 billion stimulus wad has now been mostly spent or committed, delivering us with a couple of quarters of decent growth. The effect was no doubt help by the Fed’s ZIRP strategy and massive housing subsidies. The “V” is in. Once the effects of this spendfest wear off, we slip back into a deep recession, setting up the classic “W.” Unemployment stays stick in the high nines, and around 18% when you throw in discouraged job seekers, jobless college graduates, and those with expired unemployment benefits, and the underemployed. This afflicted Franklin D. Roosevelt in the thirties.

So Congress passes another $1 trillion reflationary budget. Everybody gets wonderful new mass transit upgrades, alternative energy infrastructure, smart grids, and bridges to nowhere. But with $2 trillion in extra spending packed into two years, inflation really takes off. The bond market collapses, as China and Japan boycott the Treasury auctions. The dollar tanks big time, gold breaks $2,300, and silver explodes to $50. Ben Bernanke has no choice but to engineer an interest rate spike to dampen inflationary fires and rescue the dollar, taking the Fed funds rate up to a Volkeresque 18%. %. The stock market crashes, taking the S&P well below the 666 low we saw in March. Housing, having never recovered, drops by half again, wiping out more bank equity, and forcing the Treasury to launch TARP II.

The bad news accelerates into the 2012 election year. Obama is burned in effigy; Sarah Palin is elected president on a “Tea Party” platform, and immediately sets to undoing all of his work. Republicans, reinvigorated by new leadership, and energized by a failing economy, retake both houses of congress. National health care is shut down as a wasteful socialist mistake, boondoggle subsidies for alternative energy are eliminated, and the savings are used to justify huge tax cuts for high income earners. We invade Iran, and crude hits $500.

If you’re over 50, and all of this sounds vaguely familiar, it’s because we’ve been through it all before. Remember Jimmy Carter? Remember the “misery index,” the unemployment rate plus the inflation rate, which hit 30, and catapulted Ronald Reagan into an eight year presidency? A replay is not exactly a low probability scenario. This is why virtually every category of risk asset has melted down in the last two weeks. It’s also why the investing public is gun shy, favoring bonds over stocks by a ten to one margin. Are the equity markets pricing in these possibilities? Not a chance.

The risk of economic Armageddon is still out there. Personally, I give it a 50:50 chance. Batten the hatches, and please pass the Xanax.

To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on the “Today’s Radio Show” menu tab on the left on my home page.

 

[explod]

Looks like we should increase our fences higher and putting in even more spuds. And do not forget the baked beans before they run out. Now this is creating a new uptrend maybe.

Reading Jason Hommell this morning, Gods angry too and interest rates are supposed to be zero according to the Bible. He says 6%'s a sin and this codger Zerohedge is saying 18%

Someone wake me up please

 

[irish joe]

Suggest all the bears read a bit of commonsense from independent economist, Adam Carr. He wries a regular column in business spectator.

The world is not ending. Some economies around the world have some issues but at the end of the day, even in those economies there are good companies making good profits. The old maxim, markets are not economies and economies are not markets

Japan has been a basket case for how long??? how many of you out there drive a nissan or toyota. Up to 50% of their sales are outside japan and in Nissans case an enormouse profit coming from JV in china.

Who has japanese technology in their home somewhere? GO On all of you do.

Equally, look at pharmaceuticals companies or better still have a look in your medicine cabinet. How many of these companies are domiciled in so called basket case economies.

At home our economy is starting to fire and company earnings will again suprise on the upside.

If anyone is considering selling anything in the top 100 I'll gladly buy them.Have any of you teddies thought about the fact that when you sell something someone is actually buying it on the other side. Do you ever wonder why?At these prices the yield alone is comparable to what i can get in cash and I am happy to take a 3-5yr view on growth so don't see much downside.

No doubt some volatility still ahead but "be greedy when others are fearful" and start building a quality portfolio. AND Don't go down to the woods today...

 

[kincella]

seems obvious with the figures quoted here.....over a trillion dollars hoarded in cash....larger than the market capitalisation of the entire stockmarket....

Australia's four major banks hold total deposits from businesses, households, governments and other banks of $938.4 billion, up 11.9 per cent from a year ago.

This is money that could be pumped into the market but is being held back.

The Commonwealth Bank of Australia has the largest amount of deposits on its books with at least $276.03bn -- more than the sum of all deposits in Australian banks before the financial crisis.

Total deposits in all Australian banks now top $1.26 trillion.

To put that in context, it is a figure larger than the market capitalisation of the entire stockmarket.
http://www.theaustralian.com.au/bus...around-the-world/story-e6frg8zx-1225889998927

 

[Garpal Gumnut]

The large amount of portfolios and managers in Cash has been noted by the press at last.

This could in part account for tech/a's low volumes in the xao thread. Rather than a lack of supply leading to higher prices, it may be a lack of demand which will drive prices down in to the double dip, and then a recovery.

gg

 

[SmellyTerror]

OK I'll bite, why SELL everything rather than

a) short or

b) hedge

I mean I remember a number of people on these very boards about a year ago saying something along the lines of "I've just missed out on the best shorting market for 20 years because I didn't have the balls." Why does a "professional" commentator saying SELL rather than SHORT?


Cheers
Sir O

Came to say this. Leaving redundant.

But not brief. Never brief...

I can understand that most people can't/won't trade some conditions, and that's fine, but if you're predicting a massive crash, if you're making a call that big - not some vague "oh it'll keep going down for a while yet" sorta call, but a monster "WE'RE DOOMED" announcement - then surely you must have enough confidence to trade short. Surely!

Unless it's your **** talking, and you know it.

Re: True Values - maybe people are over-reacting with companies vs economies, Greece vs Australia. But I can't go down the exchange, politely explain that, actually, you guys are all over-reacting, and can I sell my shares for 50% extra, please? I can't see that working.

Being right doesn't make you any money if everyone else keeps being wrong.

...and I don't think the situation *is* being under-estimated in general at the moment. I don't go as far as the "buy tinned food" folk, but I think a solid slump is unwinding, this last week aside (I'll consider bulling it at 4000 or 4500, whichever comes first . People are ready to respond to bad news, and there is plenty of it coming along to oblige. There's no much crap that's been fairly blatantly swept under the carpet now... Elephant in the room? Yeah, there he is, standing in the corner with a rug on his head.

Hell, here's some simple fundamental analysis: management is important, right? Well global recovery has been bankrolled / driven by governments. That means that we're actually at the mercy of politicians right now.

...has anyone ever gone broke betting that pollies will do stupid ****?

 

[basilio]

It's all a bit interesting... we do know that the financial system runs on confidence. While we believe our money is safe in the bank it generally stays that way. If lots of us decide the bank isn't a safe place (or the stock market, or the housing market ) and lot's of us try to get out there will be a crash. Banks can't stay solvent with mass exits, neither can stock markets.

Trouble is the economic system as a whole uses this reality to hide it's own creative accounting. For example banks simply create more credit with multiple key strokes. Companies create more shares with similar activities. These are supposed to be new wealth that has magically appeared. If we decide to take the first view that we must have confidence in the system if the system is to work then we swallow our doubts and believe these new assets are real, solid, valuable.

But they might not be and that is the problem that is facing us. We havn't had the courage to question our economic masters on the reality of all their fake story telling. While we were making a dollar on the deal the smart idea seemed to be to shut up and take the dollars. Even when every fibre of our being told us this was a giant con.

Let's look at some obvious examples. The huge property spiral and subsequent bust in America was largely based on poor quality or even totally corrupt housing loans. On the way through the banks made profits on the transactions and then flipped the loans to someone else to take the fall. (Pension funds, local councils etc)

On the stock market itself we see multiple companies like Firepower, Storm, Bancock and Brown, ABC learning, property developers and many others who managed to make big bucks through deception.

The problem now seems to be that there are just too many crooked deals in the whole economic/financial system to enable the process to stay solvent. There are more crooked deals than good one. It will be this reality that will firstly severely weaken the profitability of our economy and then destroy confidence in the financial institutions that unfortunately are critical in running the actual nuts and bolts of our industrial society

The theory should have been that the government protects the essential infrastructure of it's society ie the nuts and bolts banking system to ensure that our collective stability is maintained. But to do this it had to make sure this core banking system did not have excessive exposure to the giant crap game that our financial world has become. It's now just a matter of time.

 

[noirua]

Excellent publicity that should drag in a few thousand more subscribers - job done.