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Killer Bunny
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There's several months of support at these levels.

I think if it does break it will be nasty.

If it goes the other way we could see a big bounce in stocks and a sell off in gold. The other scenario would be another range trade up to the 8400/875 area, I agree.

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strange last hour, havn't had one of those crazy 200 point end of day rallies for a while <_<

I think the sector rotation suggest that a bottom might be in place, as the nasdaq, was relatively higher compared to last time (in nov) when we were at around these lows on the low in the intraday session. oil related stocks were lower then, even oil was higher, fertilizer stocks was much lower. I guess the things that are lower now are financials.

I have not looked to deep into it, but the rotation towards the things that really should be the core of the problem are relatively lower, while things that might not be directly involved in the mess such as fertilizer and oil are higher, even many china related stocks are much much higher, many stocks I bought when the dow was higher, that were trading at a 10-15 % gain now, even the dow was much lower now than when I bought the stocks, make me think that the worst might be over.

Edited by carseller
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It will also have been a long stop hunting exercise. Plus any aggressive new shorts get burned which probably accounts for the rapid turnaround.

Quite an interesting tussle going on at these major support levels. FWIW I'm keeping a short bias in case they have another go at it.

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Emerging market's likely are in a position that be compared to the US markets in 1988 and have many good years to come. The reason is that they are able to re-start credit growth. That will typically lead to an inflow of capital if our economies stagnate, and credit goes into non productive inflation hedge type assets. That would be my pick. The perception of an undervalued currency is likely to drive values from cheap to super expensive. China is probably my first choice. Some interesting companies are found here: http://www.usxchinaindex.com/

(look for very low PEG ratios)

Here is a prime example of a stock that have potential: http://finance.yahoo.com/q/ks?s=BIDU

There is different China funds. Another country I put faith in are Brazil and Russia, I think Russia are cheap, especially a company called Vimpelcom or VIP, I simply refuse to believe that the boom in Russia is over. Brazil are expensive, it's always expensive to buy growth stocks, it's not a value play, but more of a speculation, as with all emerging markets.

I am not optimistic for growth in the UK stock market. I think it might level out and go flat for 10 years, while emerging markets outperform. I also have a certain faith in fertilizer, and agricultural commodities.

Note the divergence on these Oil companies:

http://finance.yahoo.com/echarts?s=PBR#cha...ource=undefined

One thing you can notice is that you had this divergence between mid 2002 and 2003 as well.

I think COP is the value play here and a good way to play emerging market growth (look for as low price/sales as possible). PBR is a growth play, however I think the reason PBR is outperforming are all the funds that people pour money into that invest directly in PBR. I think it's likely that the oil price have a fair value around 90-100 dollars and are likely to head back into that range.

Another stock I like is the US railroad stocks. Inflation adjusted US railroad is selling at 10 times the 1921 price. There is a nuclear, electrification project that I think will arrive some time in the future. railroads tend to move with emerging markets, and gold. Current railroad pricing is like buying gold for around 550 dollars, oil gives an even greater discount.

I think it's very likely that our developed world oil consumption have peaked, while the developing world will consume more. Due to price insensitivity, I don't think we will limit our consumption very much before we hit 3-400 dollars. I think the developing world will increase even as the prices goes up, however I think they are more likely to settle for "green cars", motorbikes rather than cars, etc. I think there is a big potential on solar energy, I know it does not make sense, but I just love the growth numbers those companies throw out. Some Chinese companies are selling of P/E of 2-4 and PEG of less than 0,2. If oil rebound strongly those stocks are likely to perform extremely well.

Edited by carseller
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Came across this article.

Main themes are:

*Bear market started in 2000 - Greenspan simply bumped it via housing bubble (CS' view?)

* Long run P/E ratios and div yields nowhere near enough to call a bottom yet (US)

* Possible 40% further falls in US markets from here

* DOW 5000, SPX 500 before valuations are attractive

http://www.marketoracle.co.uk/Article8772.html

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Came across this article.

Main themes are:

*Bear market started in 2000 - Greenspan simply bumped it via housing bubble (CS' view?)

* Long run P/E ratios and div yields nowhere near enough to call a bottom yet (US)

* Possible 40% further falls in US markets from here

* DOW 5000, SPX 500 before valuations are attractive

http://www.marketoracle.co.uk/Article8772.html

I try to think more about individual stocks than the entire market. What I know is that I don't own a single stock with a P/E higher than 8. I found those stocks attractive based on price. I think stocks like Kraft Foods: http://finance.yahoo.com/q?s=kft trading at a P/E of 13, are reasonably priced. I think it becomes meaningless to demand the market as a whole to be trading at 6-8 times earning if the level of long term interest rates is in the order of 3-4 % . Like Kraft. If long term interest rates goes up from 3 % to 10 %, I think it's likely that inflation follows in a way, that means that Kraft can increase their dividend from todays 4 ,6 % (that is way better than 0 % in the bank) to 12 % if the long term rate is 10 %. Based on that Kraft is not overpriced, rather it's cheap as it pays 4,6 % vs 3 % on 10 year government bonds. I think the guy in the article don't have any skill in valuing a company. I think his argument series is wrong, especially argument 2.

Again: buy kraft at todays price, see long term interest rates go to 10 %, and kraft will yield more than that. That's a good investment. Where the stock price simply does not matter, as the dividend is the important thing provided you never intend to sell the stock. Back in 1971 the average holding time for a stock was 5 years.

On the housing bubble, I think it was china that pushed down US long term interest rates, more than greenspan, but he is to blame. greenspan is a notoriously bad forecaster. I think bonds are in a bear market, I can sense it from Pimco's Bill Gross, that's a very bad liar in trying to explain why pimco are putting up equity funds.

I think P/E's can stay elevated for a long time, just look at japan that started their printing series from 2001. In todays system I think it can take a very long time before the value comes back for the general market as corrections take time.

http://www.investmenttools.com/equities/fu...nings_yield.htm

This is the earnings yield, note the technical trend.

Look at soybeans, note the trend: http://www.investmenttools.com/images/wfut/soy/soycpi.gif

Or gold: http://www.investmenttools.com/futures/met..._about_gold.htm

What is likely is that inflation is going to go up, interest rates will go up, and stocks on the dow will go back up to around 11000, while the earnings yield through inflation just increase. And a company like kraft will yield much more than 4,6 % in the next bear market, even it's at a higher share price than today.

Edited by carseller
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I think this stock market is cheaper than the numers suggest.

I can take some numbers from the market during sept 1971 recession, right after nixon took the US of gold (something similar might happen now, therefore the numbers are relevant:

Proctor Gamble P/E 24,2 , div yield 2,1, price/book 4,6

the 2009 numbers: P/E 11,78, yield 3,2 % price/book 2,46

Back then gov bonds were yielding around 6 %, now it's 2,88 %

In strict valuation terms that suggest that todays price is around 1/4 of the price in 1971. Or cheap.

Another stock in sept 71 (utility)

American Electric Power: P/E 11, div yield 6,5 % price/book 1,4

2009: P/E 8,8 div yield 5,2 % price/book 1,16

another: Dupont: PE then: PE 24,5 ,yield 3,2 % price/book 2,8( now p/e 10,13, yield 7,3 %, price/book 3

Another GE PE 23,4, 2,3 % book 4,1 (now p/e 8,6, yield 10,8 %, price book 1,08)

Another Alcoa 10,7 , 4,0 % price/book 0,84 (now yield 9,1 % loss, price/book 0,51)

I think stocks now are almost as cheap as during the 1974 recession, and these measurements clearly show that the CPI measurements, that are used by some to justify that the stock market still is in the stratosphere, are simply using faulty measurements. I'm pretty confident that buying at these levels, in the US market is likely to prove good in the long term.

Edited by carseller
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Came across this article.

Main themes are:

*Bear market started in 2000 - Greenspan simply bumped it via housing bubble (CS' view?)

* Long run P/E ratios and div yields nowhere near enough to call a bottom yet (US)

* Possible 40% further falls in US markets from here

* DOW 5000, SPX 500 before valuations are attractive

http://www.marketoracle.co.uk/Article8772.html

the globe has avoided a deep recession twice in the past decade by creating excess liquidity that found a 'convenient' home in assets. We can't possilby pull it off a third time can we, even if we call it Q.E. this time around...

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the globe has avoided a deep recession twice in the past decade by creating excess liquidity that found a 'convenient' home in assets. We can't possilby pull it off a third time can we, even if we call it Q.E. this time around...

I can't get past the idea that this third wave (because the resistance is so strong, that it takes so much QE thrown at it), that we could be looking at hyperinflation. On the other hand, if we don't throw a lot at it, you get into a deflationary spiral that just get worse and worst, until UK'S AAA turns to crap, thus giving hyperinflation that way to. So if you print, you risk hyperinflation, but if you don't, it's a certainty. An even worse possibility is that China wait until we have an insane amount of stimulus in the system, and then revalue the yuan, as they are free to charge whatever they want for their goods. That's what I would do if I was China, just push hyperinflation in the west, through causing local short term pain on themselves as they sold less. I think we are so dependent that they could cause hyperinflation through just holding back supplies.

Edited by carseller
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Although I would note that India was absent from the CS list.

When Goldman Sachs produced the BRIC report, long term prospects for India were seen as particularly good due to favourable demographics, out of the BRIC nations.

Short term, surely emerging markets in general is the place to be when stock markets start to recover.

I admit that I don't know India. I really don't, other that inflation is slowing there to, and their growth will be lower. Lower growth, and lower inflation, and lower interest rates is good for stocks, when interest rates are coming from a relatively high base, as easy credit if the market will take it, coupled with low inflation and low growth (supports low inflation), is perfect for stocks, as lower borrowing costs and lower inflation increase corporate profits, and also increase the relative value of stocks, as seen in the 1980-s or 1920-s. I think it's similar in India to the dow jones in 1988.

Warren Buffet bought railroad and oil, remember he is a genius. I don't think India, look that different. It's "on trend" with these things, the ftse is certainly is not.

http://finance.yahoo.com/echarts?s=^BSESN#...ource=undefined

Meaning that you will have a further boom extending from what might seem like a high level.Another country that's very promising is the Philippines. Thailand to as stock's there are very cheap. The reason as mentioned, is that especially in Philippines, you have a slowdown in inflation, a property market that can react very well to lower interest rates, and most of all lot of room to lower interest rates. A stock like Apple have benefited as it's a high end item for consumers in emerging markets in the sense that they have a different relationship to brand names than those in the more developed word, typically the growth path apple have been on, since 2002, can last for decades, I think apple have a much stronger brand in Asia than in the West.

"MANILA (Xinhua) -- Philippine economy will remain resilient as steady overseas remittances, rising revenues from the services sector and increased government spending on infrastructures will cushion the impact of the global economic crisis, economists and government officials said."

Maybe they are going to blow up debt, and phony service sector economy as we did in the 80-90s

If we should feel that we have borrowed enough, and that cause a slowdown in inflation that perhaps turn to deflation, it's going to benefit those countries that have consumers that are happy to explore credit cards, rack up consumer credit, and take advantage of the slowdown in inflation our lack of spending cause....This again, will give very cheap credit, 0 % interest rates, similar to japan, for us, with a potential for carry trades directed toward these emerging economies, if quantitative easing were to be started.

Note that in China, the stimuli package is not borrowed in the way the US does as a 800 billion cash package. Just a small portion of the stimuli package maybe 20 %, is actually cash, as in selling treasuries, the rest is extended upon that base, through borrowing. The US don't have banks, that are willing to loan, in that way. Chinese companies have much more potential than any other, similar to japan in the eighties, to create inflated earnings through investing activities. To the investor it looks as the company are making lot of money, but in reality the companies are all investing in real estate, the stock market themselves, inflating earnings through investing activities, rather than selling actual goods or services.

Had the US banking system extended credit in the same way as the Chinese system (in the US M2 have really stalled, while in China it's at 18,8 % for january), the whole crisis had been over.

Edited by carseller
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I admit that I don't know India. I really don't, other that inflation is slowing there to, and their growth will be lower. Lower growth, and lower inflation, and lower interest rates is good for stocks, when interest rates are coming from a relatively high base, as easy credit if the market will take it, coupled with low inflation and low growth (supports low inflation), is perfect for stocks, as lower borrowing costs and lower inflation increase corporate profits, and also increase the relative value of stocks, as seen in the 1980-s or 1920-s. I think it's similar in India to the dow jones in 1988.

Warren Buffet bought railroad and oil, remember he is a genius. I don't think India, look that different. It's "on trend" with these things, the ftse is certainly is not.

http://finance.yahoo.com/echarts?s=^BSESN#...ource=undefined

I think of the BRIC nations, the prospects for India seem particularly good. Less developed than the others so greater scope for growth, things have improved rapidly in the last 10-20 years. Good demographics to support long term performance unlike China. Not too reliant on commodity prices like Russia and Brazil, but in turn this presents good buying opportunities particularly in Russia if you are willing to take the risk.

I agree that these are much better medium term options than FTSE/DOW.

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I think of the BRIC nations, the prospects for India seem particularly good. Less developed than the others so greater scope for growth, things have improved rapidly in the last 10-20 years. Good demographics to support long term performance unlike China. Not too reliant on commodity prices like Russia and Brazil, but in turn this presents good buying opportunities particularly in Russia if you are willing to take the risk.

I agree that these are much better medium term options than FTSE/DOW.

I have a Russian radio station I like to listen to because of the music. I'll just get the impression, from everything to the the news, the tone of their voice, everything, that their still is in a bull market, even I don't understand what they are saying. The tone of their voice reminds me of news transmissions, in my home country from the 1950-s, after the war. These kind of psychological judgment probably sounds a little insane, but I think there is something to it. They still have the future ahead of them. In our countries, it's all about the complete downfall of the baby boomer generation. I blame this generation on most of the problems we have today, and I think the right thing had been to cut them off, in the sense that all pensions had went away, that we had a big hyperinflation, and could start over again. I think hyperinflation would be the best course ahead. The promises to the baby boomers are made from the ruling boomers, and must be fullfilled by the next generations (it's similar to the War debt the weimar republic had after WW1). When this generation comes in charge, it's clear that the promises will not be kept.Many of the BRIC countries have the most important thing, human capital, factories, resources, and even skills in things that are productive, and most important they are not bogged down in debt and promises they can't keep. Bank shares in those countries have behaved similar to the best blue ship stocks of the west in this downturn. I read an article about a company in china, that made PC keyboards, the workers made around 1/3 dollar a day I think, and had it like if they lived in a prison. The big "companies", just blamed a company in Taiwan, that was delivering parts for them. I know about that. You have two big companies in Taiwan, that the big brand names put up against each other to get as low price as possible. Dell, HP, and the others, don't make or produce anything. It's just platform companies. All the factories, everything that's worth anything is in the "poor" countries. Think if the treasury market was to "blow" leaving china holding the bag, and china responded by confiscating all foreign property in China.

The problems in the west is the burden of to much debt, and terrible demographics because of the aging boomers that's basically more of a burden than a resource.

I think China are less risky than Russia. Russia need the oil income, so if Russia are going to avoid a default, the other emerging countries needs to turn, so oil turns, before they default, however, some of the russian companies are having incomes in dollar and debt in ruble, so it's not that big of a problem.

Edited by carseller
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I see the sh1t heads have started again: lies, crap and more crap: http://www.housepricecrash.co.uk/forum/ind...howtopic=101787 including the odd one or two on this thread. Boy, you're all so friggin' smart. I wish I was as smart as some of those. Jeez.

Let me remind:

Particularly SPY etf, if it falls on over 420m volume then the ABC down is likely to have started and this could take us well below the Nov 20th numbers.

Currently heading for 804 S&P. If it breaks 810 and close below. Then sell.

Gold - if it goes above 930 and closes above 920 on Friday, next stop 1000 and then just add zeros.

All extremely choppy but should play out to 740/50 within a couple or so weeks.

One pr1ck has even said I said Dow 15000 by now. :lol: Oh, how they all laugh. No doubt they're getting their own back, anonymosuly for being bullied themselves at school. How brave. Their mothers must be so proud.

Of course, no-one mentions gold, silver, PM stocks, house prices(!).

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One pr1ck has even said I said Dow 15000 by now. :lol: Oh, how they all laugh. No doubt they're getting their own back, anonymosuly for being bullied themselves at school. How brave. Their mothers must be so proud.

Of course, no-one mentions gold, silver, PM stocks, house prices(!).

http://www.housepricecrash.co.uk/forum/ind...t&p=1025567

Dow 15000, coming right up.
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http://stockcharts.com/charts/gallery.html?$COMPQ

Could someone take a look at the $COMPQ (Nasdaq) SPX ratio at the bottom of the weekly chart (2nd chart).

Whenever this ratio is overbought like this we have seen a big sell off. That is usually from a market "top" (intermediate or otherwise).

This ratio is overbought now but we're near a market low. So to correct the Nasdaq must fall quite significantly relative to the SPX, which suggest a general market sell off. A big one.

Am I reading this right? It seems very unlikely that the NASDAQ would sell off with the SPX rising strongly doesn't it? Are we in for some big falls as this ratio turns over? :blink:

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I don't think this is looking very good. I must say I have really suffered a blow of around 10 %. I think things might go all the way down to 4000-5000 on the dow is this goes on. Meaning the bubble from 1995, will go all the way back to where it started.

Unless goverment bonds starts to crack up, it's bound to happen.

Today stocks down, government bonds down, the dollar down, gold neutral. It's really not a common combination. The euro is really around support levels, if those break there really is no support before 0.8 to the dollar.

Only the extra geared hedges towards US government debt, not the usual hedges like railroad, but the typically even more typical hedges like fertilizer and emerging market bank shares and the like was all that did any good now.

Edited by carseller
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It s agood chart Kharma, however my take is that S&P has done more or less what it's going to do. If you look at the November 20/21 bars, the S&P is in there.

Tomorrow options expiration - heavy volatility.

Dow already at its lows (give or take).

NASD not going there.

Could be tomorrow sees the bottom/retest.

For the 1 millionth time, I said 15000 and turned it around when it went to 13000. There are some serious serial liars on this site.

Gold to pull back to 800/50

House prices to fall. :D

Edit for typo

Edited by Financial Planner
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Hey FP - good point on options expiry.

DJIA INDEX 7,347.00 -115.00 7,460.00 7,461.00 7,332.00 04:56

S&P 500 766.80 -12.60 779.10 779.60 764.60 05:02

SPX futures just 3% off Nov low this morning. DOW is getting seriously close to a 6xxx number.

What I'm thinking now is that it's going to have to advance around 5% just to get back in touch with the breakout at 804/5. It then still has that huge congestion area to get through. A P&F buy signal wouldn't be hit until 835 and then again at the top of the range at 875. I think it is going to need some seriously good news to get back up there. Market got that in Nov but where will it come from now I wonder? What can Geithner cook up? :blink:

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The pattern now if any is stronger dollar, weaker yen, higher gold, weaker treasuries, weaker stock market.

This resemble 1999, for the nasdaq. If this is the same for gold, and gold need what it needs to go high, and that's what in the cards, then you will probably see everything go down, except for gold, and treasury hedges.

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