Monday In The Markets Might Get Interesting -- Forget I R

[Realistbear]

http://business.timesonline.co.uk/article/...2313278,00.html

The third view might be called fatalistic

realism

. It accepts the second proposition that, on current policies, a recession is coming, but insists that it is absolutely necessary and its says that the Fed, far from pressing on the economic accelerator, should keep its foot on the brake.

Inflation is already out of the box, in the view of a growing number of economists, shared in some parts of the Fed. The central bank’s favoured measure of inflation is the GDP deflator for personal consumption expenditures. If that sounds a bit technical, focus simply on the number. After stripping out the volatile food and energy components, it was running at 2.9 per cent in the second quarter of 2006, approximately unchanged from the 3 per cent rate of the first quarter. This is way too high for the proper comfort of even the most tolerant central banker and the indications are that it will go higher, even as the economy slows.

Since a return to an inflationary mindset is probably the single most alarming thing that worries policymakers, the Fed should, on this view, keep pushing interest rates higher. A recession may well simply be unavoidable.

In the 1990s, Norman Lamont, Britain’s most underrated Chancellor, was flayed on the altar of public opinion for saying that rising unemployment was a price “well worth paying” to squeeze inflation out of the system.

It was anathema, of course, but economically gold-plated — and the difficult decisions made at that time helped Britain eventually to enjoy its longest period of sustained growth in the past couple of centuries.

For the Fed, and the world, a recession may be the price that now needs to be paid to avert a longer-term catastrophe.

I like this view--being a realist. It is okay to be a contrarian but there are times when it is not good to go against the flow. Buying a house now might be contrarian but its also ill advised. Selling gold would be contrarian and, IMO, well advised. I like to try to read the fundamentals and believe we have had our bull run on stocks and now its time to correct. The cycle moves on. Time to get back in again when people are still selling but closer to the end of the down cycle is the key--that's the true contrarian skill. IMO, of course

Edited August 16, 2006 by Realistbear

[Sledgehead]

I'm still not quite sure I fully understand your OI indicator, Sledgey, other than it seems to very closely resemble VIX:

http://bigcharts.marketwatch.com/charts/bi...&mocktick=1

I guess seeing as it is options dervived some correlation should be expected. The oi chart I 've been using is simply a measure of money betting stocks will fall against money betting stocks will rise.

Anyway, US CPI data today will be big. Markets could go 100pts+ either way again IMHO.

US o'bought last night and UKs o'sold this am will make calling the direction for ftse especially difficult. The OI I use & the VIX are all more neutral than I'd like to make firm judgements.

Currently ftse falling is occuring with US outside hours price holding up. If the US joined in ....

Meanwhile oil has, after some quick falls, gone sideways for a day or so.

RB, this is a PERFECT contrarian signal. Professional fund managers are lousy at predicting the market (as the II bull/bear sentiment chart shows), and the fact that 80% of fund managers underperform the market should tell you everything you need to know about how to interpret this.

RB doesn't seem to know the meaning of either "trend" or "contrarian". Hey, ho ....

Edited August 16, 2006 by Sledgehead

[Realistbear]

I guess seeing as it is options dervived some correlation should be expected. The oi chart I 've been using is simply a measure of money betting stocks will fall against money betting stocks will rise.

US o'bought last night and UKs o'sold this am will make calling the direction for ftse especially difficult. The OI I use & the VIX are all more neutral than I'd like to make firm judgements.

Currently ftse falling is occuring with US outside hours price holding up. If the US joined in ....

Meanwhile oil has, after some quick falls, gone sideways for a day or so.

RB doesn't seem to know the meaning of either "trend" or "contrarian". Hey, ho ....

http://webster.com/cgi-bin/dictionary?book...amp;x=0&y=0

contrarian

Main Entry: con·trar·i·an

Pronunciation: k&n-'trer-E-&n, kän-

Function: noun

: a person who takes a contrary position or attitude; specifically : an investor who buys shares of stock when most others are selling and sells when others are buying

I began selling when most were buying. I now believe its time to stay out of the market despite the recent strong rallies. Thus, a contrarian to those who think the opposite. Buying or holding US$ could be said to be contrarian when most are saying its time to sell. I wonder what Warren is doing with US$ now? Last time I read his stuff he was more denominated in US$ than he was last year. Hey ho!

BTW the market may not have cared for the miraculous CPI numbers and faltering employment stats today on the FTSE:

FTSE 100 (FSI:^FTSE) Edit

Index Value: 5,853.60

Trade Time: 10:45AM

Change: Down 44.30 (0.75%)

Prev Close: 5,897.90

Open: 5,897.90

Day's Range: 5,848.70 - 5,902.50

52wk Range: 5,130.90 - 6,137.10

Are you still fully invested?

Edited August 16, 2006 by Realistbear

[Van]

If you are asking me, then no, I'm never FULLY 100% invested. Always have some cash available. I am as fully invested as care to be at this stage though.. except that am also quite heavily short on the market overall to hedge my portfolio.

So take you pick,

+ yes, fully invested

+ as fully invested as I care to be, still lots of spare cash

+ Heavily hedged, but still fully invested

Portfolio well up today.

Off to try to short TSCO.. (fancy bit of a challenge.. I'm way cleverer than that Buffett fella).

Edited August 16, 2006 by Van

[Sledgehead]

http://webster.com/cgi-bin/dictionary?book...amp;x=0&y=0

contrarian

Main Entry: con·trar·i·an

Pronunciation: k&n-'trer-E-&n, kän-

Function: noun

: a person who takes a contrary position or attitude; specifically : an investor who buys shares of stock when most others are selling and sells when others are buying

I began selling when most were buying. I now believe its time to stay out of the market despite the recent strong rallies. Thus, a contrarian to those who think the opposite.

...

Look, I'm not into taking anyone's retrospective word for things wrt markets. All I see is you telling everyone to sell when everyone else had sold. Remember this quote of yours?

You have to know when its time .... IF you failed to go to cash in time you might want to cut your losses and sell - thread "Black Monday Is Here"

Are you still fully invested?

Where did you get that impression? I am a trader luvvie.

Edited August 16, 2006 by Sledgehead

[Realistbear]

Look, I'm not into taking anyone's retrospective word for things wrt markets. All I see is you telling everyone to sell when everyone else had sold. Remember this quote of yours?

You have to know when its time .... IF you failed to go to cash in time you might want to cut your losses and sell - thread "Black Monday Is Here"

Where did you get that impression? I am a trader luvvie.

What kind of "trader"-self-employed or working for a public entity? Do you have a view as a trader? What persepctive:-Contrarian and if so, to what, Bull, Bear? Stocks? Bonds? International? "Trader" is a little vague.

From hindsight, the period when stocks were tanking, "Black Monday" may still prove to be correct as signal to get out of the market if you are a short or medium term investor. Don't foget we are still almost 300 down from the black days recently past and possibly coming back sooner than many expected:

http://biz.yahoo.com/ibd/060814/corner.html

Remember that investors should always sell when a stock falls 7% to 8% below its buy point. Waiting until a stock slices its 200-day or when the 200-day and 50-day lines cross is advised only for long-term holders sitting on big gains. For these investors, such sell signs should prompt one to bank profits.

FTSE 100 (FSI:^FTSE) Edit

Index Value: 5,855.90

Trade Time: 11:15AM

Change: Down 42.00 (0.71%)

Prev Close: 5,897.90

Open: 5,897.90

Day's Range: 5,848.70 - 5,902.50

52wk Range: 5,130.90 - 6,137.10

Edited August 16, 2006 by Realistbear

[Guest Alright Jack]

...And the invisible hand strikes YET AGAIN in the market. I like how when the FTSE looks like having a bad hair day more often than not a miracle occurs. How much money must they create to keep performing these miracles?

[Van]

FTSE brushing 5,900 again. If it weren't for BP's problems knocking 8-10% off it's market cap, we'd could well be looking at 6,000.

Bears going to get squeezed today, I fancy.

[Sledgehead]

What kind of "trader"-self-employed or working for a public entity?

private

Do you have a view as a trader?

No. I trade waht I see. Views wrt the market are like principles. An expensive luxury.

What persepctive:-Contrarian and if so, to what, Bull, Bear? Stocks? Bonds? International? "Trader" is a little vague.

I am not "contrarian" to bull or bear or stocks or bonds or international (whatever that is). You cannot use the word in that fashion.

A contrarian is merely that: somebody who acts in a manner contrary to the prevailing fad. I use metrics to assess what the majority are doing and act in a contrary manner.

From hindsight, the period when stocks were tanking, "Black Monday" may still prove to be correct as signal to get out of the market if you are a short or medium term investor. Don't foget we are still almost 300 down from the black days recently past

Black? What was black about ftse 6130?

And you didn't issue your "get out now" instruction then, you did it after the index had tanked 10%!

http://biz.yahoo.com/ibd/060814/corner.html

Remember that investors should always sell when a stock falls 7% to 8% below its buy point. Waiting until a stock slices its 200-day or when the 200-day and 50-day lines cross is advised only for long-term holders sitting on big gains. For these investors, such sell signs should prompt one to bank profits.

There are many ways of trading the market. Many. They all fall over without money management and discipline.

FTSE 100 (FSI:^FTSE) Edit

Index Value: 5,855.90

Trade Time: 11:15AM

Change: Down 42.00 (0.71%)

Prev Close: 5,897.90

Open: 5,897.90

Day's Range: 5,848.70 - 5,902.50

52wk Range: 5,130.90 - 6,137.10

This is interesting. From the telegraph, over half of fund managers are bearish. If they really mean that, that means they have taken measures to hedge their portfolios.

Now imagine the market falls. How do they feel? Quite simply, fine. They need do nothing as their predictions are playing out as they expected and their portfolio is outperforming the market - a rare occasion!

Now imagine the market rises, just a little. How do they feel? Quite simply, PANICKED. They are no longer tracking the market but underperforming as their hedges lose them money with each tick up in the index. Consequence: they start to wind down those hedges and buy stock to realign their portfolio with its investment goals. Consequence: market spikes up. That could nevr happen, surely?....

.....By the way: that ftse loss you posted was erased in less than half an hour today on release of some pretty much in-line with expectation CPI inflation data in the US. Geddit?

The severity of the rebound surprised even little me - sold the rise 10pts too quick. But there.

All I'm saying is, it never costs too much to be contrary.

I look at markets this way: we none of us know how bent the fundamentals are, and when they reach us they are always out of date. So what have we to go on? My view is that markets are like the weather. The further out you look, the less likely it is you will be right. Yet the prevailing wisdom still seems to be that "nobody knows what will happen tomorrow". How can that be true, when they are all willing to pontificate about next quarter or next year.Why? Simply this: they know we will have forgotten what they told us by then, so they feel free to say what they HOPE.

So, no, I don't have a fixed view of where the market is headed, and even if I did, it would not be helpful to voice it. The only time I comment is when I can see people panicking at the worst possible moment. Think about it: have I ever criticised your bear hyperbole other than at such times?

[Van]

Well said, Sledge. A key trading rule is that you must NOT have alleigence to any side. The successful trader is always flexible. If a position is going against you, sell out, or better still reverse and take the other side. The stubborn trader who takes the intellectual high ground is doomed to fail miserably.

e.g. I sold my Puts as soon as the CPI data came out and then half an hour later was able to buy them back 30pts higher. Fighting the markets is not clever nor profitable.

BTW, the best quote I ever heard on the subject on contrary opinion was from Peter Lynch, who said that:

"The true contrarian is not someone who buys when others are selling, it's the one who buys when no one else is even interested."

Something to think about, perhaps, for those who fancy themselves a bit as a natural contrarian.

Are you buying Ford? or Intel? or Captial Radio? All those would qualify as contrarian stocks now imho.

[oracle]

This looks like a suckers rally to me.

Just because theres a ceasefire(IMO it's temporary),in lebanon oil down $6 in three days and stocks go up.

The technicals for oil still look good,it's certainly in range-trading mode.

The good thing about this is that most sheeple aren't giving the oil price too much thought now,they've got used to it being high,which means prices should head even higher.

This has a habit of happening when people least expect it.

[Van]

Bears got their asses kicked today - Dow at 11,320!

[Sledgehead]

This looks like a suckers rally to me.

If you are a stock bear, maybe you can reach that conclusion irrespective of what things actually LOOK like. Chart flipping might help you decide otherwise:

Edited August 16, 2006 by Sledgehead