Recession Looms From Accross The Pond

[Realistbear]

http://www.telegraph.co.uk/money/main.jhtm...14/cnwall14.xml

Bearish Wall Street analysts predict a fall of up to 20pc

By Ambrose Evans-Pritchard

(Filed: 14/08/2006)

A clutch of Wall Street's top technical analysts have turned starkly bearish on the US equity markets, predicting a fall of up to 20pc in main indices over coming months.

The chartists are issuing ominous warnings about the Dow Jones industrials and the broader S&P 500 index, despite their relative resilience through the May-June global rout and through the monetary tightening of the US Federal Reserve.

Louise Yamada Technical Research Advisers warned that the market was exhibiting all the signs of a slow-motion breakdown. "This is not a healthy rally," said managing director Ronald Daino. "We're seeing 'black holes' where stocks are hammered on slightly disappointing earnings...../

Ralph Acampora, managing director of Knight Capital Group and one of America's most revered technical gurus, said he expected a nasty slide of up to 25pc in the main markets over the second half.

Comstock Partners in Atlanta cautioned against jumping back into the markets for a relief rally following the Federal Reserve's pause. "In the last 53 years there have been 12 periods where then Fed has engaged in a series of rate increases. In 10 the S&P 500 declined after the final rate increase."

Fund managers are holding a lot of cash these days. IMO, the rally we are seeing this summer is unconvincing as none of the problems that triggered the May correction have gone away. Now it seems the technical analysts are siding with those who prefer to look at the fundamentals (fundamentalists ). The great unwinding of the world assett bubbles is in its early phase and the massive run ups in the price of oil and other essential commodities cannot be absorbed without consquences. The strain has to show up somewhere and if inflation is being artificially contained it will all hatch out in a market bust. I think the US is about to begin sneezing.

Edited August 14, 2006 by Realistbear

[Realistbear]

I think we may have just been given a 30-90 day warning?

http://business.timesonline.co.uk/article/...2309746,00.html

Now, a decision by the Fed to wait for incoming data before deciding whether to continue tightening, taken alone, is hardly earth-shaking. But the reasons underlying the Fed’s move mean that the lives of many Americans,

and by extension many workers and consumers in other countries, are about to change......

Until now, Americans have been able to cash out the rising value of their homes, and use the proceeds to fund a life of low savings and high living. That has created high levels of demand for all sorts of domestic goods, and kept millions of Chinese, Central Americans and other foreigners happily at work turning out the stuff Americans have been buying in such quantities that the US trade deficit has reached record levels.

If the Fed is right that the more normal housing market will combine with high petrol prices to discourage consumers from visiting the malls as often as they have in the past, and from loading their SUVs with furniture from Ikea, flat-screen television sets from Korea and trainers from China, America’s sneeze will give the world a bit of a cold. Not even the locust-like descent on Prada shops by America’s version of Britain’s chavs can sustain consumer spending at current levels.

The "R" word seems to be more prominent lately. Recession.

[gasket37]

I think we may have just been given a 30-90 day warning?

http://business.timesonline.co.uk/article/...2309746,00.html

without wishing to derail this thread, isn't the first paragraph from that article prejudical to a fair trial?

"IF we needed any reminding that our world can change with nerve-rattling speed, we got it last week when the security services uncovered a plot by Islamofascists to slaughter innocent air travellers."

[Realistbear]

without wishing to derail this thread, isn't the first paragraph from that article prejudical to a fair trial?

"IF we needed any reminding that our world can change with nerve-rattling speed, we got it last week when the security services uncovered a plot by Islamofascists to slaughter innocent air travellers."

News does travel fast and heads-up warnings are few. Seems that you have to pick a position and stick with it, even if you are months ahead of the curve. This stuff coming out of Wall Street recently seems to show a remarkably bearish consensus but with little actual selling in the market. Might be summertime volatility and thin trading by speculative investors not in it for the long term. I remain bearish on stocks after about April of this year and still believe the correction begun in May has not unwound yet. What is significant is the technicals starting to align with the fundamentals. My bottom line is that oil must eventually have an impact that will not be positive and time is running out for companies to absorb the cost for much longer.

Edited August 14, 2006 by Realistbear

[oracle]

News does travel fast and heads-up warnings are few. Seems that you have to pick a position and stick with it, even if you are months ahead of the curve. This stuff coming out of Wall Street recently seems to show a remarkably bearish consensus but with little actual selling in the market. Might be summertime volatility and thin trading by speculative investors not in it for the long term. I remain bearish on stocks after about April of this year and still believe the correction begun in May has not unwound yet. What is significant is the technicals starting to align with the fundamentals. My bottom line is that oil must eventually have an impact that will not be positive and time is running out for companies to absorb the cost for much longer.

I too am temporarily bearish on stocks....on the FTSE prediction thread at the beginning of the year I said 5300,with a drop to 4800 on the cards,I've stuck to that.

Now some other TA's are saying 20% drop is feasible.

20% off 5800 is around 4800!!!!........eureka!!!!

..also ties in nicely with fibonacci 61.8% retracement from low to high.(3200-6100)

these guys really are sharp!!!!

[needle]

I think we may have just been given a 30-90 day warning?

I think Bubb has hinted at this for a lot longer than 90 days....