Tuesday, January 5, 2010

Rosy consensus v Rosie Consensus

Belief in the Tooth Fairy

Some excellent obsservations from Mr Rosenberg including that the stock market has managed to become a classic lagging indicator and is rallying on predctions of S and P earnings of $80 when we got $56 last year on a Jan 2009 estimate of $77. What R doesn't include are the "surprise" earnings from banks which I reckon will push us up to S and P 1250 this quarter and Dow 12000. I see GS and WFC are already rallying on the hope.

Posted by bellwether @ 05:41 PM (1128 views)
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6 thoughts on “Rosy consensus v Rosie Consensus

  • Hi Bellwether Happy new year.

    This bull just wont die will it!! ok : mine of Nov 8th : “So the S&P top was 1575, the low 666. That gives a move down of 909 points and (so far) we have retraced to 1103. Thats 48%. If that fails to hold, the next target would be 1120 and then if that doesn’t hold 61.8% is 1228.”

    Nov 17th : “You will see from his analysis that the top may be in and if not there will be one more move up. I favour the latter….” re the mom and pop suck in….. This could cause it to go to the level after 1120″

    I would generally agree this bull move doesnt look done … just yet….

    However it would be great to see an overthrow of the wedge pattern to finish this off. Where would that take us? Well it should move up very quickly to exhaust the move. I really dont think we will get to the 1228 level but who knows! Lots of people more clever than i have been caught out more than once shorting on the way up.

    i dont know if you follow the commitment of traders but this might be of interest: http://emini-watch.com/category/commitment-of-traders/

    As for Byron Wien’s list that is actually posted here on the http://www.housepricecrash.co.uk/newsblog/2010/01/blog-byron-wiens-ten-surprises-for-27153.php item below.

    Incidentally FTSE hit 5500 and change today, breaching the top of the triangle – overthrow. A pullback and then a move up would make this look right as a completion pattern.

    As for the point of yr post – i.e. P/E – yes earnings of $56 “should” put the S&P where?

    i like the 9th commandment… “When all the experts and forecasts agree, something else is going to happen”

    Finally i like : “Yet none of this matters as buy programs take equities ever higher, with moral hazard the ultimate backstop until such time as the ability to finance an infinite stock market rally courtesy of trillions in new bond issuance comes to an end: that is the only “fundamental” that is relevant now and for the foreseeable future.”

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  • Hi Techie and happy new year too. Rosenbergs comments are always sobering in a good way. I await Albert Edwards next missive! Still loving the bear stuff and still absolutely bearish at a personal level. Learning to seperate that from trading however and still more long than short. Market still looks like a train but I think this earnings season will deliver the top, led by banks making it on freee $. After that I see only downside, and will wait for the drop or else become what I think if as stable.

    70% of my savings are in $ or $ stocks swapped at or about $1.67 a few months back. Feel no anxiety about this and see £ testing March 09 lows before year out. Hope hubris doesn’t now catch up with me!

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  • hey b/w – i think the currencies have been an easier call of late and have saved me from my forays into the dark side of the equity markets!

    i had a “discussion” about the fact that i would be astonished that the Euro wasnt at or near to (at least) an interim top, with someone who shall remain nameless telling me that the dollar was going to collapse as the Fed was flooding the market with dollars.

    Re GBP on Dec 17:
    “I actually re-sold some more GBP v $ last night, the move to the 1.64s looked like a suck in against a downward sloping top of a chanel. Around 80 – 100 basis lower this am.”

    and on Dec 22nd

    “my conservative target co-incides with his 159.20 (i have a low print at 159.22 today mid price – i paid 159.30. this is very close to the bottom of a trend channel but we may get a bit of an overthrow down tomorrow. Either way i think its a good place to take some profits.”

    i just missed the low in the 1.5800s (looking for 1.5815) for the last 5% of the position before the swing rally.

    As things stand im not 100% confident whether we have had the completion of the move back up to 1.6240 or if that’s just part of that move, probably before new lows to complete the H&S and before a bit more substantial move back. ( I wish i could honestly say i sold some more at the 1.62s but i didnt) – its now just under 1.60.

    If we break 1.6240 now then i can see it up to the 1.64s – the next few days will be key to see if the move continues down. The main reason i am not more aggressive on the $ short side as yet is because i was hoping to get to Euros 1.45 / 1.46 before selling that again.

    I also support your overall bullishness on the dollar, although i think calling for a test of the march lows is a brave call (not that i disagree with that or for that matter £/Euro parity, its just I dont think it will get there in a straight line).

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  • my favourite “waver” 🙂 [i hope flash is asleep] has posted the following – which is interesting : http://danericselliottwaves.blogspot.com/

    He says:

    “The rally is probably at a stage very soon on having to “keep on keepin on”. The DOW cannot dilly-dally much longer sideways in a weakened state or it will be testing its rising bear trend line. I still consider this is a Minute [v], if you will, to peak. A final surge in prices will allow a lot of indexes to hit targets. Like oil above $82 and the dollar in a wave 2 low retrace. Gold retrace peak, etc.

    We are going to have to see if the market can muster a big up day and sustain it. I don’t think it can. In my opinion, any bullish final spasm higher will be “the end”. I am looking for a big reversal…..

    If the market decides it wants to go to very higher targets of 1180+ [B/w he is talking about Willshire here not S&Ps] , then we will be entering the “third of a third” very soon indeed and will sustain a big up day, not just a bullish open. That is the dilemna for a lot of wavers right now. I don’t worry about it, I got my eyes peeled on the triangle target.”

    Finally there is a nice picture here (posted as one of the comments) – i did say a few days ago that it would be good to have an overlay of the S&Ps on a sentiment chart. – take a look!

    http://4.bp.blogspot.com/_nSTO-vZpSgc/S0E6jYfnLZI/AAAAAAAAHiM/CkZpXKNXC88/s1600-h/sentiment+surveys.png

    Good night!

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  • … oh and because im such a helpful chap the sources for those sentiment indexes are:

    http://www.market-harmonics.com/free-charts/sentiment/investors_intelligence.htm

    and

    http://www.aaii.com/sentimentsurvey/ (current) and http://www.aaii.com/sentimentsurvey/sent_results.cfm (previous)

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  • Cheers Techie, read that on a survey related to the snp the ratio of bears to bulls is lower than at any time since 1987 !

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