Dow 11,000

[madcowdisease]

Well it seems the market is loving lower oil. At time of writing the DJIA is up 145 points. Pretty damn good day.

I used the strength to clear out some dogs today. I dumped AMTD early with a meager 4+% gain plus the dividend. I also finally dumped UNH. I couldn't take it anymore. I gave up most of my gains in this one since the beginning of the year and walked away with a pitiful 2-3% gain on UNH. I had to use the strength to reassess my strategy and still be in the black.

IMO this has been a tricky market so far this year. Up 100 points or more on at least 3 days that I can remember but also down huge on just as many or more occassions.

I need to step back and reflect and find it hard to do so with money on the line. I'm now only working with 35% of my cash in the market and they are pretty secure stocks. But, I thought the same about UNH back in 2005 and we all saw where that went.

What are all of your takes on the market now? We have an inverted yield curve and typically talks of recession follow this phenonmenon. It now seems the market realizes that the Fed will raise rates higher than thought in 2005, which I've been saying all along. And we have retreating oil, in the short-term at least. That and gold is all over the board the past week. It seems there is a lot of info to assess. That's why I'm stepping back and will conduct some searches.

Just wondering what you all have to opine in regards to the market now.

[the_menace]

Sell when the market is good, buy when the market is bad.

[Pierre]

Agreed...lots of program trading today...
I'm pretty much all cash now...my take...caution...
unless of course, Bernanke gives us a pleasant surprise, I doubt that however...
OT... we're certainly getting a lot of new and young investors lately on the board...

[Mad Girl Investor]

Im too much a novice to opine myself, just wanted to thank you for your input on many threads Ive read. Its great how you seasoned folks like to help out us "babes".

Cheers!

[oldboldpilot]

I totally agree with my compatriots. This is the time to be ultra conservative.
There is absloutely noting wrong with cash and to sit on the sidelines
watching how things evolve. Oil was a great driver in January but obviously
has ended it's run. The market is groping and this is a good time to take a
breather and reassess.

[Rick]

Madcow, I'd say walk away with your head high and the profit you did.

[optimus25]

Sell when the market is good, buy when the market is bad.

Nice and simple. I like that.

[optimus25]

Got lucky on some trades these past two weeks. Got in on the financials when they were weak. Got into VZ before the recent runup.

Laughed out loud as energy got flushed down the toilet.

Its all about perspectives. I was bearish earlier in the year as I saw the Dow take off then plunged. Too risky to play w/ the big boys I thought to myself.

Hard to find a grip on where the market is going. W. the new Fed chief Bman on board who knows where were headed. But rest assured that the headwinds are there:

-Rising rates (normally bad for stocks)
-Cooling home prices
-Reliance on oil

The doom and gloom camp is still strong out there. Good luck to all.

[madcowdisease]

Well, my position in SU is up today nicely. I'm in it for the longterm so I won't get too excited. Too bad I'm still below my cost basis. But I find it funny that simply b/c crude is up nearly all of the watch lists I have devoted to the oil patch are up 3-10%. Everything: oil service, oil and gas, alternative energy, oil sands, drillers, and some construction and engineering, all those watch lists are a nice bright green color today. Must be close to 100 stocks or more, glaring green. They will probably all be down tomorrow.

[madcowdisease]

I'm going to go ahead and be piggish for a few days.

With the most recent developments in the oilpatch, I am going to go overweight oil stocks. They've all had a sizeable move today, but this is just going to get more and more publicity this week. Look for oil to hit $63 by or before friday (likely higher not longer after). If I get a decent 5-8% increase in these stocks this week I'll be plenty happy.

Anyone care to opine on this strategy?

[madcowdisease]

I'm going to go ahead and be piggish for a few days.

With the most recent developments in the oilpatch, I am going to go overweight oil stocks. They've all had a sizeable move today, but this is just going to get more and more publicity this week. Look for oil to hit $63 by or before friday (likely higher not longer after). If I get a decent 5-8% increase in these stocks this week I'll be plenty happy.

Anyone care to opine on this strategy?

Whew... Good thing I couldn't get those penny oil orders filled yesterday. I'd be hurtin' today.

Anyway, what are everybody's sentiments about this market? It's up pretty well in the past week (nearly 200 points). I think it is beginning to form a top. I can't see any reason for this rally, at least any reason for it to be sustainable. We've got a completely inerted yield curve, high oil, and a lack of good news. This market seems to be forming a top IMO. I'll give it 'til next week then it'll be back around or below 11,000. Could be a good time to short.

[optimus25]

I'm going to go ahead and be piggish for a few days.

With the most recent developments in the oilpatch, I am going to go overweight oil stocks. They've all had a sizeable move today, but this is just going to get more and more publicity this week. Look for oil to hit $63 by or before friday (likely higher not longer after). If I get a decent 5-8% increase in these stocks this week I'll be plenty happy.

Anyone care to opine on this strategy?

Oil is always going to be the headliner in our current market environment. Notice how wall st feeds off of this mania. Alternative fuel, which have been around for decades, are trying to cash in on the craze. I don't know too much about the sector but I did do research on a couple of Chinese energy companies: Petrochina (PTR), CINOOC (CEO), and Sinopec (SHI), for a client and we got in on PTR and SHI. I don't know what's going on but we planned on holding these two stocks until July but they've runup so much that its looking a little toppy. I'd rather have him realize the gain then repurchase when oil gets weak again. Not sure if that'll happen soon but, hogs get slaughtered.

[optimus25]

Talk about hitting new highs. The market has some momentum here. I'd rather see consolidation before I start putting in new money to work. Pullbacks won't be so bad either...buying opportunities I tell ya.

[madcowdisease]

Talk about hitting new highs. The market has some momentum here. I'd rather see consolidation before I start putting in new money to work. Pullbacks won't be so bad either...buying opportunities I tell ya.

That's what I was referring to. When everyone is going nuts it's time to be cautious. When everyone panic sells it's time to buy. At this moment i'm waiting for a selloff any day now.

[madcowdisease]

Well, it's 10:05 and it looks like that sell-off is in progress. Down 81 points in the DJIA. 10 in the Naz. I'd wait for the market to go sub-11,000 before buying.

Any thoughts? Agree, disagree?

[optimus25]

Well, it's 10:05 and it looks like that sell-off is in progress. Down 81 points in the DJIA. 10 in the Naz. I'd wait for the market to go sub-11,000 before buying.

Any thoughts? Agree, disagree?

I agree with you on this one. I think the Dow's gonna make a comeback though off of its Intraday lows then see more downside weakness.

I won't be buying until I see more weakness.

[madcowdisease]

I agree with you on this one. I think the Dow's gonna make a comeback though off of its Intraday lows then see more downside weakness.

I won't be buying until I see more weakness.

Seems you're right and I spoke too soon. The dow is flirting with positive territory today. Oh well, an entry point can't be far off.

btw, care to offer up anything you're eyeing for when that "correction" occurs? I'd like to pick up a financial and get in more energy plays. I'm thinking any of the oil sands under $5 and maybe MTU or BBD. I've had luck with BBD in the past, but it has run up as of late. MTU seems to be trapped between 13 and 14. And I don't know if Japan may be cooling or if it has more room in its recovery. I would like a financial but don't want to commit, or rather lock up, funds in American banks with this inverted yield curve. I wasted time with 1/5 of my portfolio in UNH for 4 months and only came away with 2% to show for it. I won't let that happen by investing in an American bank with the current climate.

What d'ya say?

[optimus25]

Seems you're right and I spoke too soon. The dow is flirting with positive territory today. Oh well, an entry point can't be far off.

btw, care to offer up anything you're eyeing for when that "correction" occurs? I'd like to pick up a financial and get in more energy plays. I'm thinking any of the oil sands under $5 and maybe MTU or BBD. I've had luck with BBD in the past, but it has run up as of late. MTU seems to be trapped between 13 and 14. And I don't know if Japan may be cooling or if it has more room in its recovery. I would like a financial but don't want to commit, or rather lock up, funds in American banks with this inverted yield curve. I wasted time with 1/5 of my portfolio in UNH for 4 months and only came away with 2% to show for it. I won't let that happen by investing in an American bank with the current climate.

What d'ya say?

If you had asked me the same question last month I would have given you a couple of stocks in mind as short term plays:

BAC & WM

Both up $2 respectively since they nosedived a couple of weeks ago...bought a couple hundred shares of each for one of my retired client's account. That's not a lot of money but its still a gain...and if you factor in the 4.5% yield...you get the picture.

I see $2-5 upside when the market gets whiff of the fed stopping rate hikes. I'd place my safe money on financials for the next year or so but I think there will be more explosive stocks in the year to come.

I'm not seeing a lot of strong trends because I haven't had a chance to digest all of the market movements of late...its IRA season and I'm busy as hell trying to get new money into mutual funds for my clients.

[optimus25]

Can't fault the bulls from trying to rally us from the early horrible intraday lows....ouch! Back where we started at the close.

Don't you hate it when we do a one step forward and two step back?

[madcowdisease]

Oil at the forefront bigtime today. Though no supply interuptions the suicide bombers in Saudi scared the pants off everyone. Oil up over $2. Go oil patch!

[optimus25]

I hear ya on that. Wall St. moves on any type of news regarding oil. Its gonna be an interesting couple of months until the high driving season of summer. I can see more strength in energy both on the upside and downside...in other words, a lot of money making volatility. I'd stay short term trading on energy.

[madcowdisease]

I'd stay short term trading on energy.

Am I corect in assuming the above means you're day trading small and micro cap energy plays or does this mean something else?

I really don't have a theory right now. I'm mostly cash and sitting on a few penny plays waiting for a big move. I've thought of picking up solid commodity plays but am waiting for them to come in a little. Gold, copper, hell even zinc if I could get a feel for the money flows. Right now it looks like oil may be cooling so I don't know what to buy. Guess that's why I'm mostly cash.

[madcowdisease]

Only a few more points to go and it's sub-11,000.

Got any recommendations or anything on your radar for when it finally drops below 11?

[soundlanguage]

Am I corect in assuming the above means you're day trading small and micro cap energy plays or does this mean something else?

I really don't have a theory right now. I'm mostly cash and sitting on a few penny plays waiting for a big move. I've thought of picking up solid commodity plays but am waiting for them to come in a little. Gold, copper, hell even zinc if I could get a feel for the money flows. Right now it looks like oil may be cooling so I don't know what to buy. Guess that's why I'm mostly cash.


The market looks moody this week so I've cashed out too, although i'm eyeing that DWOG wondering if that will sink further (trying to get itself delisted?!) or is just teasing buyers... thinking China related commodities will be strong for long term, oil up for summer as usual but that's a long way off yet. Interesting IPO's coming up in next week or two though, (ALXA, WEN) if you can get in there early ....

[optimus25]

Only a few more points to go and it's sub-11,000.

Got any recommendations or anything on your radar for when it finally drops below 11?

Sorry MCD. I don't get to keep up with this forum as much as I use to.

Its a little scary at the moment. I think we're at a slight crossroads. Investors, institutionals, hedge funds, all looking like they don't know where to go.

I'll be long financials. But I don't buy simply when the market breaks resistance or levels. Its safer to buy based on stock price targets etc. But when the market does breakdown, my price targets are hit then I buy.

[madcowdisease]

Sorry MCD. I don't get to keep up with this forum as much as I use to.

Its a little scary at the moment. I think we're at a slight crossroads. Investors, institutionals, hedge funds, all looking like they don't know where to go.

I'll be long financials. But I don't buy simply when the market breaks resistance or levels. Its safer to buy based on stock price targets etc. But when the market does breakdown, my price targets are hit then I buy.

I hear ya. I'm staying mostly cash 'til I can get a bearing on what the maket is going to do much like soundlanguage above. I've looked at financials but with inflation, an inverted yield curve, and the Fed I don't feel too comfortable with them. I have RY but am thinking of letting it go. I've had one too many stocks of mine turn south after a decent gain.

If you're long the banks, which banks, and why if you don't mind answering? Also, if you possess greater acumen than I in dissecting financials do you have any foreign banks you can recommend? I've been thinking of revisiting BBD, and I like the thought of MTU, but what is the story with Japan? Good, bad, indifferent?

Thanks in advance.

[madcowdisease]

With the market being down pretty big today I gave ERTS a good hard look but couldn't get my limit order filled. What is everyones take on this stock at this current price. Seems in time it'll be back up, but right now is below 50 and 200 day MA.

[madcowdisease]

Don't want to toot my own horn but I called this most recent rally in the broader market indices. I put the majority of my money to work a few weeks ago when the Dow dipped below 11,000. I'm sitting on a few decent gains b/t 5-10% and am beginning to trim some stocks.

I did get my ERTS order filled a couple weeks ago under $51 and am sitting pretty with this most recent upgrade. I have a limit order set for upper $55 and if it goes through I will book the gains, wait for the pulback, and then buy back my shares of ERTS again since I believe in the year long story behind this one.

[optimus25]

I hear ya. I'm staying mostly cash 'til I can get a bearing on what the maket is going to do much like soundlanguage above. I've looked at financials but with inflation, an inverted yield curve, and the Fed I don't feel too comfortable with them. I have RY but am thinking of letting it go. I've had one too many stocks of mine turn south after a decent gain.

If you're long the banks, which banks, and why if you don't mind answering? Also, if you possess greater acumen than I in dissecting financials do you have any foreign banks you can recommend? I've been thinking of revisiting BBD, and I like the thought of MTU, but what is the story with Japan? Good, bad, indifferent?

Thanks in advance.

Hey Madcow.

Didn't see that you replied to my reply.

As far as dissecting financials, there is only so much that you can look at. I am long on banks and some financials as I think they will be strong in the next couple of years. I see it as playing defense if the stock market decides to tank or trade sideways. Dividend is the place to be especially if you are in a high tax bracket.

A couple of names that I like:
BAC - They are the gorilla in banking
ASO - Possible takeover target
C - Retail investors coming back into the market.
ING - One of the biggest and best international financial services companies that I like. I'd been recommending the stock to people when it was trading in the low 20's. I like the intangibles on this company especially with their increasing marketing clout in the United States. I work for a subsidiary of the company and find that they have a great growth strategy in the U.S.

And just to throw it out there, I also like ACAS because of their high dividend yield as well as S&P raising their star status to 5 stars.

[loslobos71]

I like JPM because of its 8% yield and its a good company overall, I actually own MER but want to sell fairly soon and get into a high yield stock.

[madcowdisease]

Hey Madcow.

Didn't see that you replied to my reply.

As far as dissecting financials, there is only so much that you can look at. I am long on banks and some financials as I think they will be strong in the next couple of years. I see it as playing defense if the stock market decides to tank or trade sideways. Dividend is the place to be especially if you are in a high tax bracket.

A couple of names that I like:
BAC - They are the gorilla in banking
ASO - Possible takeover target
C - Retail investors coming back into the market.
ING - One of the biggest and best international financial services companies that I like. I'd been recommending the stock to people when it was trading in the low 20's. I like the intangibles on this company especially with their increasing marketing clout in the United States. I work for a subsidiary of the company and find that they have a great growth strategy in the U.S.

And just to throw it out there, I also like ACAS because of their high dividend yield as well as S&P raising their star status to 5 stars.

Good stuff Optimus. I'll check those out. Btw, how about this rally? Time for it to come down or what? I sure wasn't expecting a 300 point run when I said it'd go higher. I'm cashed out for the most part and waiting for the pullback.

Just took a quick glance at your picks. Those are some nice yields. I'm assuming you buy longer term rather than trade in and out like most everyone on these boards? I definately agree on the appeal of the dividend. You can't go wrong getting paid to sit on a stock.

[optimus25]

Good stuff Optimus. I'll check those out. Btw, how about this rally? Time for it to come down or what? I sure wasn't expecting a 300 point run when I said it'd go higher. I'm cashed out for the most part and waiting for the pullback.

Just took a quick glance at your picks. Those are some nice yields. I'm assuming you buy longer term rather than trade in and out like most everyone on these boards? I definately agree on the appeal of the dividend. You can't go wrong getting paid to sit on a stock.

I'm growing increasingly bearish as this rally wears on. I felt the same way when I first got on this forum...debating with many of the bulls about the headwinds that the stock market is facing. Its definitely a stock pickers market.

I am a long term investor and like to emphasize to my clients the merits of being long term. Most people don't have the time to go over all the data that the market, economists, politicians, Maria Barteromo's of the investing world etc. bombard us each day. Its been difficult to really be objective. I have gotten lucky on some of the international adr's like PTR, SHI, TTM. Started recommending these stocks last year (around June) and have cashed out early this year on some nice gains.

Currently I'm sitting on cash as well. Its going to be an interesting year.

I'm starting to feel that there are going to be opportunities in the fixed income arena as bonds catch up to rising rates. I just read about an ETF hedge against a weakening dollar FXE. Check it out.

Been in the market for 7 years now at my ripe age of 28, lol....and still learning new things everyday. Good luck MCD. Good luck all.

[madcowdisease]

I'm growing increasingly bearish as this rally wears on. I felt the same way when I first got on this forum...debating with many of the bulls about the headwinds that the stock market is facing. Its definitely a stock pickers market.

I am a long term investor and like to emphasize to my clients the merits of being long term. Most people don't have the time to go over all the data that the market, economists, politicians, Maria Barteromo's of the investing world etc. bombard us each day. Its been difficult to really be objective. I have gotten lucky on some of the international adr's like PTR, SHI, TTM. Started recommending these stocks last year (around June) and have cashed out early this year on some nice gains.

Currently I'm sitting on cash as well. Its going to be an interesting year.

I'm starting to feel that there are going to be opportunities in the fixed income arena as bonds catch up to rising rates. I just read about an ETF hedge against a weakening dollar FXE. Check it out.

Been in the market for 7 years now at my ripe age of 28, lol....and still learning new things everyday. Good luck MCD. Good luck all.

I hear ya on the bearishness. But with a slide like today where anyone with half a brain knew the FOMC would raise and most likely continue to raise I have to put some money to work. If it goes under 11,000 then I might go all in but with todays decline I started picking away since everything I had my eyes on went down too.

btw, I checked out those 3 stocks above. Nice picks, especially the Tata Motors. It goes without saying you like China and India eh? Good choice. I like Brazil myself. You just have to watch the political situation down there.

[optimus25]

Contrarian strategy? I don't feel too comfortable buying into this weakness just yet. If we consolidate at these levels then I think we have a nice platform for appreciation. If we see volatility, I'd be assuming some distribution days ahead.

Looking to buy on major weakness though. Just not on the first day.

[madcowdisease]

Contrarian strategy? I don't feel too comfortable buying into this weakness just yet. If we consolidate at these levels then I think we have a nice platform for appreciation. If we see volatility, I'd be assuming some distribution days ahead.

Looking to buy on major weakness though. Just not on the first day.

Just started picking away. I took two new positions today and each was about a third of the number of shares I want. i feel safe staggering my buys on the way down. If it tanks I'll just buy more, if it goes up I have a gain.

[madcowdisease]

How does everybody feel about today? After what I feel was an overreaction as stated in the posts above, and CNBC has decided this morning that they concur, we are getting a bit of a rally. My fear is that the indices won't eclipse yesterdays highs and this will start a downtrend. If we get up 100 points today in the DJIA I think we're fine if not we're going lower short term. Any thoughts?

[aj14]

[QUOTE=optimus25] I just read about an ETF hedge against a weakening dollar FXE. Check it out. QUOTE]

FXE is the Euro. Won't help you hedge the USD completely. I've traded it for a couple of months now. Sometimes not so liquid, but does a good job of mirroring the underlying currency.

[aj14]

How does everybody feel about today? After what I feel was an overreaction as stated in the posts above, and CNBC has decided this morning that they concur, we are getting a bit of a rally. My fear is that the indices won't eclipse yesterdays highs and this will start a downtrend. If we get up 100 points today in the DJIA I think we're fine if not we're going lower short term. Any thoughts?

Lots of lemmings in the market, who have NO responsibility for the money they invest. In a down tape they'll rely on the "performed in line with the sector/benchmark/blah,blah,blah." So they continue to put money in the market with no regard for the increasing risk. Leaves the market in a position where it can continue to drift higher, even though the deteriorating fundamentals would suggest we could slip off a cliff at any moment. If i told you that oil would be up 300% in three years, interest rates were up 500% in 18 months, we were at war with the world, and the administration in power just had to clean house, would you believe that the market would be making new highs??? Me neither, but it is...and there is no end in sight.

[madcowdisease]

It appears with the Dow's failure to eclipse yesterday or any of the previous days highs today that we're officially in a downtrend. I'll be holding off on taking any new positions until it hits technical bottom.

The Nasdaq on the other hand is harder to diagnose. The 5 day chart on the Naz looks good especially with this rebound but it seems counterintuitive that the DJIA and the Naz would trade inverse of eachother. Anybody want to opine?

See here:

http://finance.yahoo.com/q/bc?t=5d&s=%5EIXIC&l=on&z=m&q=l&c=&c=%5EDJI

[NATHAN LLOYD]

I like that word opine. I'll just rant...LOL. Buy on Tuesday around 12-2 and sell on Wed around 10-11. Just sit on cash the rest of the time.

[optimus25]

Dow and Nasdaq moving inverse?

I'm seeing sector rotation. Money flow...from one to another. Energy has been on fire. Still liking the international energy plays in China. I don't like them at these prices though. Waiting for a pull back to the 50 day before I make a purchase. Rally too overextended for me to invest new money. And boy am I sitting on cash.

[madcowdisease]

Seems you're right and I spoke too soon. The dow is flirting with positive territory today. Oh well, an entry point can't be far off.

btw, care to offer up anything you're eyeing for when that "correction" occurs? I'd like to pick up a financial and get in more energy plays. I'm thinking any of the oil sands under $5 and maybe MTU or BBD. I've had luck with BBD in the past, but it has run up as of late. MTU seems to be trapped between 13 and 14. And I don't know if Japan may be cooling or if it has more room in its recovery. I would like a financial but don't want to commit, or rather lock up, funds in American banks with this inverted yield curve. I wasted time with 1/5 of my portfolio in UNH for 4 months and only came away with 2% to show for it. I won't let that happen by investing in an American bank with the current climate.

What d'ya say?

MTU had a big move today. I shouldn't have overanalyzed Japan and just bought on weakness. Got upgraded today by GS and the reulting move is obvious. Hindsight is always 20/20, I'll catch the next one.

[madcowdisease]

Yet another "the fed is almost done" rally. I'm selling off in to this strength. She'll be back down soon enough.

[madcowdisease]

Yet another "the fed is almost done" rally. I'm selling off in to this strength. She'll be back down soon enough.

Right again ;)

What is everyone's take on today's rally? Up 144 points at the time of writing. Seems a little excessive to me.

[tekbubble]

Oil and fear are weighing this market down. Without them, we hit 20,000 by year end.

[madcowdisease]

Oil and fear are weighing this market down. Without them, we hit 20,000 by year end.

That's a pretty ballsy prediction. I understand the economy is rockin' and corporations are having record profits with double-digit earnings growth and everything. But on a purely elemental basis none of that means jack because stocks go up due to the fundamental rule of economics: supply and demand. So, my question to you is, where does all the money come from that is supposed to drive this market up 2-fold? Back in the late 90s it was all the trading on margin, but I don't see that happening again. Consequently, as much as I'd like to believe you I can't get past the basic fact that there isn't enough money to drive it up that high (IMO). What say you?

BTW, anyone know what happened to Optimus?

[tekbubble]

Sorry, I meant to say 12,000.

[tekbubble]

Although... one of the best long-term forecaster in the business is far more ballsier that 20,000 by the end of this year. He's predicting 14,000-15,000 by the end of this year, and 35,000-40,000 by 2008!

http://www.hsdent.com/dow.html
http://en.wikipedia.org/wiki/Harry_Dent

The Dow Channel of Growth

By 2008, I see the Dow headed to a high of 35,000 to 41,000. Sound outrageous? Perhaps it does, but it is based on a standard projection using the Dow's rate of growth that began in late 1982.

Since 1982, we have enjoyed nearly twenty years of continual prosperity that has been marred by only a few brief corrections. The Dow and the S&P 500 have increased at an average annual rate of 17%. When shown on a ratio graph instead of numerical graph like the chart below, this rate of growth appears as a channel that clearly projects a peak of around 41,000 by late 2008. This is even higher than the projected high of 35,000 that I forecast in my 1998 book The Roaring 2000s.

And, of course, I see the NASDAQ growing at an even faster rate than the Dow and the S&P. Based on the NASDAQ channel of growth we should see it hit 30,000 plus by 2008.

Look closer at this chart and you'll notice that the economy has been transitioning from the lower side of the Dow channel towards the higher side since 1994. This is a "valuation boom" similar to what occurred in the middle of the last long-term bull market, from the mid-1950's to the early 1960's. The shift in the Dow from the lower side of the channel of growth to the upper side illustrates why the stock market gains have been so extraordinary in the last five years, averaging closer to 27% per year. The Dow has yet to hit the upper end, but we are about to reach the zenith. This means we may have to settle for a return of 15% to 18% average annual gains, but even that rate will double your wealth every 4 to 4 1/2 years!

There are two reasons I have shifted towards this more bullish channel since 1998. The first was the very strong rebound from the late 1998 correction. The second and more important reason is that the projection of a 41,000 Dow in 2008 coincides with a long-term Dow channel, shown below, that extends from 1901 to 2040 and beyond.

This long-term channel of growth forecasts a 41,000 Dow in 2008, a dramatic low between 2020 and 2023 when the Dow could drop to as low as 10,000, and a dramatic high of over 250,000 after 2040, when the next generation's spending peak will be in full force.

[optimus25]

That's a pretty ballsy prediction. I understand the economy is rockin' and corporations are having record profits with double-digit earnings growth and everything. But on a purely elemental basis none of that means jack because stocks go up due to the fundamental rule of economics: supply and demand. So, my question to you is, where does all the money come from that is supposed to drive this market up 2-fold? Back in the late 90s it was all the trading on margin, but I don't see that happening again. Consequently, as much as I'd like to believe you I can't get past the basic fact that there isn't enough money to drive it up that high (IMO). What say you?

BTW, anyone know what happened to Optimus?

Been in and out. Barely got through this tax deadline in one piece. Been trading for my clients and handling a lot of paperwork to set up new accounts. I'm a one man crew. Now that its over, I still have a hangover. Going on vacation this week with my wife to wine country northern California. Can't wait to get back to the market action. Its gonna get interesting.

[optimus25]

If the Dow is gonna break 12,000 and head to prices unseen its gonna have to do this at the cost of dropping home prices. I speculate that the home speculators are gonna be looking for a place to put there money. That's gotta be the stock market. I'm still expecting some volatility and I am extremely bearish in the near term. Sorry bulls. I gotta call it like I see it. We need to have some consolidation before I change my view.

[madcowdisease]

Good to see you back Optimus. I sent you a PM a long time ago; did you get it?

[optimus25]

I haven't logged on in a while and didn't see the PM until you mentioned it today.

[madcowdisease]

Seems another Fed-is-almost-done-rally has been halted in its tacks today :roll:. When will they learn?

[madcowdisease]

Anyone else see today as an odd day in the market? 90% of the 100s of stocks I watch are red. Oil, Alt Energy, Gold, Minerals, and Financials mostly red. Pharma and Defense are predominantly green signaling a capital protectionist posture but then Real Estate, Tech and Semiconductors are doing OK. Seems contradictory dare I say, irrational.

It is about time for some of the hot sectors to cool a bit and maybe time to get in to some of the more defensive plays. I'm staying away from gold, silver and ethanol for sure. I will dabble in oil, particularly oil sands. But now I'm starting to eye some bullet proof stocks because this economy can't keep chugging at this pace. We've got record high oil and a Fed that has no choice but to keep tightening with raw costs increasing what seems like everyday. When earnings season is over attention will shift to all the negative exogenous factors affecting the economy and finally this rally will subside. PG looks good after the ridiculous selloff.

[tekbubble]

Anyone else see today as an odd day in the market?

Odd?

I'm getting killed. Guess the summer doldrums are here?

[optimus25]

I think people are bracing the Fed Meeting this month and are taking profits on some of the industries that have outperformed of late. I'm still waiting for a near term correction to take the Dow below $11,000 but not so sure if that is coming.

Money influx from real estate aren't factored in to this analysis.

[optimus25]

Summer is usually bad for the Techs. I'm going in long on the QQQQ's and Biotech/Healthcare in the next couple of months. I'm being a bit greedy but I think the selloff in Biotech will turn around in the next couple of months.

[madcowdisease]

Summer is usually bad for the Techs. I'm going in long on the QQQQ's and Biotech/Healthcare in the next couple of months. I'm being a bit greedy but I think the selloff in Biotech will turn around in the next couple of months.

Exactly! Eventually the cyclicals have to come in and then the seculars will see all the cash inflows.

[madcowdisease]

Get ready for an interesting week. We'll have to see what the Fed says regading rate hikes. If they do what the bond traders think and raise, then pause, this market could rally. But, if they hint they won't pause it could tank and yet another Fed-is-almost-done-rally will prove unwaranted. Of course everyone will wait for the FOMC minutes to make their major move to sell if it's the later.

My money is on oil going higher around Memorial Day and the Fed taking interest rates higher without a pause as tensions become increasingly strained with Tehran. Of course the caveat applies that I could be wrong since it appears Iran is "sending a letter" to Bush. More important than what it says is how the idiots on Wall St. react to such an occurance.

[optimus25]

Get ready for an interesting week. We'll have to see what the Fed says regading rate hikes. If they do what the bond traders think and raise, then pause, this market could rally. But, if they hint they won't pause it could tank and yet another Fed-is-almost-done-rally will prove unwaranted. Of course everyone will wait for the FOMC minutes to make their major move to sell if it's the later.

My money is on oil going higher around Memorial Day and the Fed taking interest rates higher without a pause as tensions become increasingly strained with Tehran. Of course the caveat applies that I could be wrong since it appears Iran is "sending a letter" to Bush. More important than what it says is how the idiots on Wall St. react to such an occurance.

Wow, technicals all breaking down today. 50 day Moving Average has been penetrated. DOW below 11,000 soon? Nasdaq bleeding, S&P bleeding. I hate to be right but my gut was sensing this near term correction. On the flip side, I think we will have a chance to buy long term soon.

[optimus25]

I hate to be a bear but I found this article in my companies' research report. I found it to be interesting and put things into perspective. Though I use historical data as a reference, I don't rely on it 100%.

Correction Coming?

Stock market rallies don’t last for forever, but instead at some point begin to lose steam and eventually experience what is known as a “market correction,” usually defined as -10% or more. When examining the S&P 500 and its history of both rallies and corrections, we find that since 1945 the average rally has lasted 344 calendar days and has averaged about 37%. We also find that the average correction has been about 17%, while lasting on average 148 days. Today, we know that the current market rally has lasted 1154 calendar days beginning on 3/11/2003 and has increased by approximately 65% (Source: Ned Davis Research 5/8/06).

What some investors may find surprising is that this current rally is now the third longest in the S&P 500’s history without a correction of 10% or more. Explaining this occurrence to some extent can be the bottoming of the bear market in 2002, the consistent earnings growth of the S&P 500 over this 3-year period, and the benign interest rate environment. Naturally, with rallies also comes greater valuation risk and this current market is no exception. One thing that history has shown is that the longer the rallies last, the greater the correction that eventually followed. Consider for example that the three longest market rallies in the S&P 500 have had corrections that have averaged a negative 22%, 5% more than the average of all market corrections since 1945. These corrections have occurred during every decade including 2000, yet so far since 2003 we have yet to witness a correction in the S&P 500 of 10% or more. Being prepared for this inevitable event is becoming increasingly important given the length of the current rally, and the likelihood for a more sustainable correction. Portfolio diversification will once again be a key component to long-term success, especially in an environment where the asset classes with higher risk profiles continue to post higher returns.

[optimus25]

BTW, the article I posted above was released May 11, 2006. Impeccible timing.

[madcowdisease]

I hate to be right but my gut was sensing this near term correction. On the flip side, I think we will have a chance to buy long term soon.

I hate to be right too, but the difference between you and me is that I was calling for this "correction" at the turn of the year and was loaded with positions in healthcare. Instead we got a series of rallies which inspired the creation of this thread. I didn't think these rallies were warranted yet eventually got sucked in to believing they were (to some extent) and switched out of healthcare.

Well, I enjoyed a nice ride over the past 6-8 weeks but have given back half my gains in just a week with the belief it'll stabilize soon. It seems every day there's another selloff which can only be described as panic. I'm not going to be so arrogant as to pick the bottom but it can't be far off.

When it does bottom I think we'll have one last rally, which won't eclipse the highs already set this year, but will allow me to get my money back and will usher in one of two things. The first and more ominous would be a bear market and the second, which I'd be just happy with, would be a range bound market like we had in all of 2005 where I did just fine. The later btw is what I thought we'd get for much of 2006 until these psuedo-rallies set in and took over.

As a side note, what is with the volatility this year? I've noted in other posts that in 2005 we only had 3 days where the Dow swung 100 points or more. It seems like we've had a 100 point day every week in 2006 and today is no different. There is extreme volatility present which has me wanting to get out all together.

Which brings me to my last question: What long-term buys were you citing in your above statement? The only thing keeping me in is the hope of a bargain.

[sportsmadness80]

Everyone does not need to get overly excited. The last analyst I heard on FOX news said the last time the DOW plunged it would go as low as 9,000. Well he predicted wrong and if everyone would start thinking positive here maybe it will get contagious. Lets send all the pessimists on a cruise ship journey to Alaska only to strike an iceberg then that way only movers and shakers can rationally pick up the pieces and press on. :D

[optimus25]

Everyone does not need to get overly excited. The last analyst I heard on FOX news said the last time the DOW plunged it would go as low as 9,000. Well he predicted wrong and if everyone would start thinking positive here maybe it will get contagious. Lets send all the pessimists on a cruise ship journey to Alaska only to strike an iceberg then that way only movers and shakers can rationally pick up the pieces and press on. :D

I like your golden rule of paying yourself first. That's the biggest fundamental idea in saving and investing.

I have been a pessimist because of the data. I am a big bull but we can't always expect the market to go up without speedbumps along the way. I prefer the speedbumps as they create consolidation at higher and higher prices. Without these little corrections, we set ourselves up for a repeat of 1999-2001. This is the reality. I've only been in the game for 7 years and have read two book cases on investing as well as experience in my own trading and becoming a stock broker in 2003. Most great traders can make money in any type of market. With that said, inflation is a real threat, the market is reacting to another rate increase. I think that in the near term, if and when the Fed announces a pause or stop, the markets will have a strong rally.

I welcome more drops...because that will allow me to buy stocks at cheaper prices.

[optimus25]

Madcow. I like the financials. Cramer gave his blessing on BAC, which I have been pushing since it was in the low 40's. Those who bought at that price is looking at 20% annualized. Positioning yourself in such a strong company for the long term will help your portfolio. I also like Citigroup and Washington Mutual.

Here are some possible near term buy targets:
BAC - $44-46
C - $44-45
WM - $42-44

Aside from the financials, I'm doing research on some Healthcare/Biotechs and possible other industries. As long as the earnings the past three quarters are double digits and ROE is greater than 15%. I'm on the lookout and will send you a list mcd. No promises as I get busy at times.

[madcowdisease]

Much appreciated. I was all about healthcare in January and suffered because of it. It seems I may have been a bit early. Check out Tenet Healthcare. This low-dollar #, which ppl just love, had a nice move today. Stocks of the same ilk might be good short-term trades.

Btw, who added the poll to my thread?

[optimus25]

Much appreciated. I was all about healthcare in January and suffered because of it. It seems I may have been a bit early. Check out Tenet Healthcare. This low-dollar #, which ppl just love, had a nice move today. Stocks of the same ilk might be good short-term trades.

Btw, who added the poll to my thread?

How about that Madcow. You and I were in agreement with the drop. And as the dow is currently at another triple digit drop, were getting precariously close to 11,000 on the downside. I don't think the selling has enough legs to blast us below the 11,000 support, but you never know. I see buying opportunities soon. Possible Dow 10,900? What do you think. Every selloff has a minor retracement...even during bear markets.

[optimus25]

Madcow. I like the financials. Cramer gave his blessing on BAC, which I have been pushing since it was in the low 40's. Those who bought at that price is looking at 20% annualized. Positioning yourself in such a strong company for the long term will help your portfolio. I also like Citigroup and Washington Mutual.

Here are some possible near term buy targets:
BAC - $44-46
C - $44-45
WM - $42-44

Aside from the financials, I'm doing research on some Healthcare/Biotechs and possible other industries. As long as the earnings the past three quarters are double digits and ROE is greater than 15%. I'm on the lookout and will send you a list mcd. No promises as I get busy at times.

MCD. My list just gotted KO'd. I was researching the past three days, looking at IBD's from the past 5 issues trying to get a read on weakened leaders. My stock list have gotten schelacked. Back to the drawing board. All the market leaders in Oil and Commodities highlighted my list and these have been leading the decline. Oh well.

[optimus25]

Of course the financials are doing okay. I'm not sure if any of the financials I highlighted above are going to hit those buy targets.

[optimus25]

Logged in to give my two cents = dow down 100 points.
Huge reversal = dow only down 30 points. Volatility is making me a little nausious on this monday's rollercoaster ride.

[madcowdisease]

You're posts are making me laugh today Optimus. I can definately empathize with what I perceive you are going through today. That's why I cashed out. I don't know if you have money in the market but I will tell you it is great being all cash right now. The confusion and not being able to pin the tail on the market is nerve racking. I watch hundreds, if not a thousand stocks and I found maybe a dozen that were green (or black) while the rest were big time red. Down 3-10%.

When you say the financials are OK, you mean relatively speaking, correct? 'Cause not many are up but they are down only fraction of a percent to 1% compard the the massive bleeding elsewhere. The only green I've found is some healthcare, some tech, and a few of the financials.

I did a little charting of the DJIA and it seems your prediction has some gravitas behind it. The low on 4/17 was 11,039 and we got as low as 11,040 today. So last months support is holding up. I personally think we go lower and imo it is welcomed. The series of rallies we had in nearly every sector this year was unwarranted. This thread records the myriad pseudo-rallies we had due to thoughts the FOMC was done boosting rates. I'd like to see the market act rationally, which means going considerably lower, and then we start the flatlining where it will be a picker's market rather than everything up or everything down which irritates me because good stocks get taken down due to a bad tape and poor stocks go up in a good tape.

Lastly, there are a boat load of bargains out there today. I can't believe SU dipped below $73 today. If it goes to $70, after that quarter they just reported, I'm backin' up the truck.

[optimus25]

Funny how all of a sudden everyone on CNBC is a "bear" talkin about how this could be 1987 redux. What rhetoric!?

Is the party over? Near term supports have been takin out on all the indexes I'm sure.

Great to see people have the same views as I do. There's nothing wrong with drops like these as long as we have some nice consolidation. If we continue to drop, and drop, and drop, and kill every last shred of optimism, then we'll have a nice market to buy into.

[optimus25]

When you say the financials are OK, you mean relatively speaking, correct? 'Cause not many are up but they are down only fraction of a percent to 1% compard the the massive bleeding elsewhere. The only green I've found is some healthcare, some tech, and a few of the financials.

Yes, relatively speaking. I'd like some of the financials to pull back so that I can buy. I'll keep an eye out on SU.

[Will]

I did some buying of ANF today near its low. It may keep dropping, but the fundies are looking downright 'Buffet-esque'

[sportsmadness80]

Well you had to know it was going to be one of those days again when reading that Walmart is selling its outlets in Korea to a Korean franchise. I think Walmart like others have spread themselves a little thin. The company said its retail sales there were not spectacula:| r.

[optimus25]

I did some buying of ANF today near its low. It may keep dropping, but the fundies are looking downright 'Buffet-esque'

S&P Analysts have a $80 12/mo target on the stock. With the company's planned new store openings in the Reuhl and Hollister brand, I foresee nice upside in the stock.

[madcowdisease]

I did some buying of ANF today near its low. It may keep dropping, but the fundies are looking downright 'Buffet-esque'

You made a good purchase with that one. Beside what Optimus said regarding their Ruehl brand there is more growth in the pipeline. What you have with Ruehl is a 3 store division just starting out, similar to what Hollister was 5 years ago.

Ruehl is targeted at the post-college demographic and it has the 30% higher price points to match yet similar costs as Hollister and A&F. They also have leather goods such as women's bags and the leather quality rivals that of Coach and some of your higher end designers like Prada. As a bonus everytime I go in to Ruehl it has its share of pretentious teens in there as well, despite them not being the target market. Once the kids find out it's Abercrombie they'll be buying Ruehl as well and you can expect Hollister-like growth with this ANF division.

Also, know that Mike Jeffries is great at what he does. ANF has quality management and Jeffries wants to secure his legacy. ANF has more in the pipeline despite what you see so growth is nowhere near slowing.

[madcowdisease]

Is anyone buying this bounce?

Gold and oil stocks are up sharply. I felt they were depressed a bit and this bounce doesn't surprise me but I will not be a buyer until I see more conviction out of Iran. From what i understand this bounce in crude is because of the airing of the hurricane report, yet this report is nothing new. We already knew it would be an above average year for hurricane activity. So why the run-up in crude considering we haven't seen any storms brewing as well? Crude will be back down shortly so if you really want in there will be a better entry soon once the frenzy wears off.

[sportsmadness80]

Bernanke got hung out to dry today by congress for his comments to a CNBC reporter. http://fool.exler.ru/sm/vis.gif

[tekbubble]

He even had to admit talking to her was a mistake.

[optimus25]

Is anyone buying this bounce?

Gold and oil stocks are up sharply. I felt they were depressed a bit and this bounce doesn't surprise me but I will not be a buyer until I see more conviction out of Iran. From what i understand this bounce in crude is because of the airing of the hurricane report, yet this report is nothing new. We already knew it would be an above average year for hurricane activity. So why the run-up in crude considering we haven't seen any storms brewing as well? Crude will be back down shortly so if you really want in there will be a better entry soon once the frenzy wears off.

My bet is in the oversold vs. overbought market theory...actually I just thought about this today, an epiphany of sorts. With all the institutional guys selling like crazy as well as hedge funds probably shorting the commodities and the previous year's market leaders ie. Energy/Oil Stocks I expected a covering/buying rally in the near term...it happened to be today. I won't have conviction to buy until I know for sure that we are consolidating at these levels, otherwise any rally buys can be construed as kamikaze buys. Of course I had to take a nibble at IFN, made a quick buck on that one...too tempting not to buy yesterday.

[madcowdisease]

Bernanke got hung out to dry today by congress for his comments to a CNBC reporter. http://fool.exler.ru/sm/vis.gif

Got a link to this conversation?

My bet is in the oversold vs. overbought market theory...actually I just thought about this today, an epiphany of sorts. With all the institutional guys selling like crazy as well as hedge funds probably shorting the commodities and the previous year's market leaders ie. Energy/Oil Stocks I expected a covering/buying rally in the near term...it happened to be today. I won't have conviction to buy until I know for sure that we are consolidating at these levels, otherwise any rally buys can be construed as kamikaze buys. Of course I had to take a nibble at IFN, made a quick buck on that one...too tempting not to buy yesterday.

I posted the same sentiments elsewhere. I think this rally is a sucker's rally as it will all be back down again soon. This is just a little bounce and those that bought higher will be selling as the stocks reach their entry prices so they can make their money back. I know I've done the same so multiply this by the thousands of share holders out there and you have some heavy downward pressure.

[optimus25]

Great minds do think alike. It was nice to see a little green today though. Can't believe it fizzled that bad at the close though. Surprised me.

[madcowdisease]

Well the DJIA took out April 17th's support. Think she's going doooown? I sure hope so. I'd like to get all the risk outta this market so I can get back to work at pre-2006 levels in all the major indices.

Also, I gotta give credit where credit is due...

Gold and oil stocks are up sharply. I felt they were depressed a bit and this bounce doesn't surprise me but I will not be a buyer until I see more conviction out of Iran. From what i understand this bounce in crude is because of the airing of the hurricane report, yet this report is nothing new. We already knew it would be an above average year for hurricane activity. So why the run-up in crude considering we haven't seen any storms brewing as well? Crude will be back down shortly so if you really want in there will be a better entry soon once the frenzy wears off.

Had to toot my own horn 'cause I nailed this one to the minute. I sent Nathan Lloyd a PM telling him to short thr oil patch, since he's a shorting machine lately, as the inventory would show a build and Monday and Tuesday's bounce in oil was predicated on what we all were previously aware of. That meant the slightest hint of lowered demand and oil was going down. I still think oil, barring any news out of Iran, goes to the lower $60s if not $58 where real support is over the next few weeks.

[optimus25]

Well the DJIA took out April 17th's support. Think she's going doooown? I sure hope so. I'd like to get all the risk outta this market so I can get back to work at pre-2006 levels in all the major indices.

I hear ya! Even though I expected the drop, I still get sick seeing it. I'm finally gonna get to play some golf since I'm not doing anything in the market at the moment.

[madcowdisease]

I hear ya! Even though I expected the drop, I still get sick seeing it. I'm finally gonna get to play some golf since I'm not doing anything in the market at the moment.

Good for you man. I've noticed you're on here at a higher frequency than in the past. For awhile there you would pop in once every 7-10 days but you attributed that to being extremely busy with clients. So inference tells me you're not so busy at the moment eh? Me neither, at least not in the market. It's kinda nice. I have been hitting up the gym more often and have discovered making money at a real job can be quite liberating when I don't have anxiety over what's happening to your funds in a crappy market as I discovered Friday May 12th when I came home to most of my positions down 5-7%. Truly that was Black Friday.

[optimus25]

Good for you man. I've noticed you're on here at a higher frequency than in the past. For awhile there you would pop in once every 7-10 days but you attributed that to being extremely busy with clients. So inference tells me you're not so busy at the moment eh? Me neither, at least not in the market. It's kinda nice. I have been hitting up the gym more often and have discovered making money at a real job can be quite liberating when I don't have anxiety over what's happening to your funds in a crappy market as I discovered Friday May 12th when I came home to most of my positions down 5-7%. Truly that was Black Friday.

Being busy was one of the reasons I stopped visiting this site. The other reason was, I just got bored of the site. I liked comin on the site and giving advice from a Financial Planner's perspective, but found that most people were just interested in making a quick buck on pennies. After Deepinwonder stopped visiting the site, probably because of posters like booyahoo, I also lost the interest to come on. I popped in every now and then to give my two cents when I found a post that pique my interest.

Regarding the first reason, I had collected a handful of new clients. It is usually labor intensive to get the account up and running, then to create and investment proposal, then to implement the investments. So, a chunk of my time was better spent with my profession.

I'm back for now since the market is in a grey area. The only thing I would be doing at this point is to build long term positions in mutual funds and in long term stocks. It might be counterintuitive, with more rate hikes, but I also like short term treasury.

[madcowdisease]

Sucker's bounce. The minute Bernanke opened his mouth the market gave all the past two week's gains back. I remain firm in my conviction; I will not buy until the DJIA takes out 11,000.

[englishman26]

That's absolutely the right strategy madcow. 11,000 is the base and we have to get to there before the selling stops.

This is a wild though! Fun really! I mean - remember the days when we would get 10-20 point gains or losses every day for months on end. Seems like every day is 100-200 points in either direction. There's money to be made in this market but it be like fishing for sharks!

[NATHAN LLOYD]

I'm all cash too. LOL. I just got done with an all day test. I missed all these shorting opportunities. We're going into a recession pretty fast. I don't see 11000 as a stopping point. GM still has to go down into the teens.

[optimus25]

Sucker's bounce. The minute Bernanke opened his mouth the market gave all the past two week's gains back. I remain firm in my conviction; I will not buy until the DJIA takes out 11,000.

Hey MCD, doesn't stop some of us from making money on the volatility. I've been trading IFN and have made some quick bucks on 2-3 dollar moves. Its at $46 right now and I'm gonna wait and see what happens tomorrow. Its been fun.

[NATHAN LLOYD]

I agree ride 'em up or down to make money.

[NATHAN LLOYD]

Will we see 10k? I'd bet on it.

[tekbubble]

Will we see 10k? I'd bet on it.

I'll take that bet, and then some. I bet we hit 12k by May 2007. Easy.

[madcowdisease]

That's absolutely the right strategy madcow. 11,000 is the base and we have to get to there before the selling stops.

This is a wild though! Fun really! I mean - remember the days when we would get 10-20 point gains or losses every day for months on end. Seems like every day is 100-200 points in either direction. There's money to be made in this market but it be like fishing for sharks!

Yes! I do remember that. Most of 2005 was exactly what you're describing, flat. I did quite well too. I'm not so sure I like all this volatility.

Hey MCD, doesn't stop some of us from making money on the volatility. I've been trading IFN and have made some quick bucks on 2-3 dollar moves. Its at $46 right now and I'm gonna wait and see what happens tomorrow. Its been fun.

I know some of you like this up and down market but I liked the virtually flat market of yesteryear better. I feel this bull is on its last legs and those messing with the market right now are a step away from getting burned. If I had a margin account I might short but I'm not going long until this market takes a serious hit to the downside.

PS: Englishman, I didn't mean to imply 11,000 is the floor for this market. I just feel that once it breaks resistence we'll see this thing really get moving lower. Once all the sellers are shaken out, and that may be 10,000, then we can buy with impunity.

[optimus25]

Don't get me wrong, but I love this type of market action as it shakes out a lot of investors and cause a lot of pessimissm that some stocks that have strong fundamentals become "dirt" cheap. I've seen it happen. But buying stocks now is like playin w/ fire, catching a falling knife, etc. Its crazy fun and stressful at the same time.

I see more weakness and I see some long term buying opportunities in those weakness...the difficult part is being patient. I'm itchin to buy but I still feel its the wrong time.

[madcowdisease]

Agreed. I'm waiting for SU to become irresistably cheap to take up another position in it. I still think I can get it at $70 if we get the right comments from the FOMC in a couple weeks.

BTW, what are your thoughts on PG? I thought this was a bullet-proof stock but lately it has been hammered down to a price where I bought it last year. Obviously I sold once I got the news, and the resulting bounce, the Gillette merer was complete, but this low and with the Fed looming it looks mighty attractive.

Lastly, right now the DJIA is below support of 11,039 I believe. We need this thing to stay down and close lower.

[optimus25]

All tides lift or drop all boats. PG may be a solid company but they will still feel the pain. For some reason, companies with higher dividend yields seem to be holding up pretty well...

WM, BAC, C, ACAS, DUK, DOW

[madcowdisease]

All tides lift or drop all boats. PG may be a solid company but they will still feel the pain. For some reason, companies with higher dividend yields seem to be holding up pretty well...

WM, BAC, C, ACAS, DUK, DOW

Yea, they need those fat divvys to compete with the bonds and yields of bank accounts as the Fed takes us higher. Another good one is MO.

[optimus25]

MO? If I wasn't against smoking I'd made a killing on this stock. I've been watching it for over 6 years now. No regrets though.

[optimus25]

Hey MCD, you're gonna have to start a new thread titled "Dow 10,000?"

Ouch, just got burned this morning. We should see a minor bounce in the next couple of days. If not, the bottom should fall out with another triple digit loss.

[madcowdisease]

MO? If I wasn't against smoking I'd made a killing on this stock. I've been watching it for over 6 years now. No regrets though.

I'm not for smoking. In fact, one of the only things I am allergic to is cigarette smoke. I don't even get poison ivy yet a crowded bar will have me congested with red, watery eyes. It has ruined my ability to "go out" in your typical bar scene. Oh well, at least I'm not spending tons of money trying to be social. But with a fat dividend and the potential for a breakup MO could be marketing child sex slaves and I'd buy the stock. Afterall, the shares we buy are on the secondary market and Altria doesn't see any of that money after the initial offering (or a secondary).

Hey MCD, you're gonna have to start a new thread titled "Dow 10,000?"

Ouch, just got burned this morning. We should see a minor bounce in the next couple of days. If not, the bottom should fall out with another triple digit loss.

The thing is I started this thread back when the DJIA crossed in to 11,000 territory questioning the merit of such a move up given what was transpiring with oil and the FOMC. Some how the poll was added, don't know by whom, which now implies, to those that haven't followed along the whole time, that I think the bottom is 11,000. At least you know what I've been saying since this threads inception.

I was smiling ear to ear when I saw the Dow down triple-digits just before lunch time (bitter-sweet vindication). We need this market to go lower. The unwarranted pseudo-rallies that inspired this thread must be shaken out before the market can resume any semblence of rational behavior. I'll start staggering buys for positions ~10,500 and be a bull again when she sees 10,200. 'Til then I'll just watch and occasionally opine on how the FOMC will eventually bring this market down.

[sportsmadness80]

Until this country gets an educated Fed Chairman, I'm sitting this one out as conservative as can be. I dont have alot of money to throw around now. Can we send Bush and Bernanke to the Bermuda Triangle. That way we will no longer breed fear into progress. :wink:

[Thierry Martin]

The thing is I started this thread back when the DJIA crossed in to 11,000 territory questioning the merit of such a move up given what was transpiring with oil and the FOMC. Some how the poll was added, don't know by whom, which now implies, to those that haven't followed along the whole time, that I think the bottom is 11,000. At least you know what I've been saying since this threads inception.

I put the poll on, and I just took it off. Let me know if you want a poll for Dow 10,000!

[madcowdisease]

Until this country gets an educated Fed Chairman, I'm sitting this one out as conservative as can be. I dont have alot of money to throw around now. Can we send Bush and Bernanke to the Bermuda Triangle. That way we will no longer breed fear into progress. :wink:

I think Bernanke knows quite well what he is doing. I've been saying it for over 3 months now; with the high cost of energy we will have inflation. More specifically it was in a post to BOOYAHOO where I tried to educate him on the importance of the PPI and the resultant CPI.

Unless you want your paycheck to buy even less than it buys now you will be all for Bernanke increasing the cost of money (e.g. raising rates). Personally, I'd rather not end up like Brazil 15 or 20 years ago where we must immediately cash our checks, exchange it for a more stable foreign currency, and then buy whatever we can before the prices go up all within a 24 hour period. Obviously this is an exaggeration, but you get the point. Bernanke and the FOMC are doing what they are doing for the greater good of our economy.

I put the poll on, and I just took it off. Let me know if you want a poll for Dow 10,000!

Thanks Thierry, I suppose it has served its purpose with the DJIA now under 11,000. At last!

[optimus25]

Thanks Thierry, I suppose it has served its purpose with the DJIA now under 11,000. At last!

Vindication is yours monsieur.

[madcowdisease]

This is great, we finally got the selloff in oil that we needed. All the speculative sectors such as ethanol, gold, copper, silver, and the rest of the metals, and even emerging markets sold off a month ago. Yet oil, the old stalwart hung in there in what I said was without warrant.

Now we have it, the last of the speculative sectors is selling. This is step one in forming a bottom. You can decide if it's going to be another run up in the bull market or just a bounce.

[madcowdisease]

Figured I resurrect this old thread with a question I've had floating around in my head.

How do you feel about the negative savings rate we recently experienced in this country. My thoughts are with rising inflation causing a devaluation in the dollar, rising interest rates causing a decline in housing and therefore home equity, and rising oil taking more money out of every American's pocket shouldn't we expect to see the consumer stretched thin?

But I wouldn't bet on Mr. American to stop buying material goods so that he can socially grade himself based on how much or what he consumes; the average American is, afterall, full of pretension.

So what this leaves us is the taking on of more debt via credit, yet we compound the issue with most card co.s increasing their APRs as well.

You can probably tell where this is going, Mr. American doesn't understand the time-value of money and therefore will tap into his savings as evidenced by the USA's negative savings rate.

I'm not worried about this per se but what happens when Mr. American taps his 401K or IRA for cash? Less capital is in the market and, in truth, that is all that drives the market higher, the increase in funds from the outside in or from one equity to another.

Consequently, it seems there could be another more latent, yet just as adverse effect, if the consumer is stretched. I'm not betting the consumer stops buying, he's much to pretentious for that, but I do think it's bad for stocks just the same because there could be a net outflow of capital as the consumer keeps spending.

[Svenwulf]

Yup!!!! Also people use their savings in ever more creative ways. One of my "outside" sources Cramer always pumps is a forclosure website. i know the speculative areas in my region, the places with the most arms, and the forclosure rates are getting close to double in just 6 months in those areas.

[optimus25]

Credit is king in our country. I've always been worried that the consumer is tapped out but they continue to show resiliency. I think the consumer will be tested this holiday season. We'll have to stay tuned as foreclosures are on the rise, credit card companies are being forced to raise their monthly minimums, and ARM's are getting adjusted this year through 2009. Savings rates are terrible.

[madcowdisease]

Credit is king in our country. I've always been worried that the consumer is tapped out but they continue to show resiliency. I think the consumer will be tested this holiday season. We'll have to stay tuned as foreclosures are on the rise, credit card companies are being forced to raise their monthly minimums, and ARM's are getting adjusted this year through 2009. Savings rates are terrible.

If foreclosures pickup too much I may be forced to buy an investment property from the bank ;)


I'm going to assume you two agree or at least understand my previous post?

[Svenwulf]

All i know, as counter intuitive as it sounds, you buy (at least residential) real estate when rates are high. low rates inflate home value. so you get more house for the dollar. plus rates should go back down if you buy near the crest. also, and prolly wrongly, i think real estate lets you take advantage of inflation- the more time passes, the more dollars it takes to buy the same thing. and with more and more people, i just see this accelerating with re. jm newbie ass trying to ask questions..

[madcowdisease]

All i know, as counter intuitive as it sounds, you buy (at least residential) real estate when rates are high. low rates inflate home value. so you get more house for the dollar. plus rates should go back down if you buy near the crest. also, and prolly wrongly, i think real estate lets you take advantage of inflation- the more time passes, the more dollars it takes to buy the same thing. and with more and more people, i just see this accelerating with re. jm newbie ass trying to ask questions..

I've had much the same opinion. the trick is nailing the pinnacle of the rate cycle. If you get in to an ARM right at the top of the interest rate cycle you, as you said, have gotten your monies' worth since lowering rates will start the housing boom all over again and you get the increased equity plus lower rates.

[madcowdisease]

I hope you all are selling in to this rally now that the DJIA crossed in to 11,000 once again and we've had our umpteenth triple digit day this year.

[optimus25]

Good call on the sell into the rally. I've added positions on the weakness and sit on the gains. I did sell the IAU yesterday before the big drop today. Hope we see the gold ETF fall below $60...its been a fun trade.

[NATHAN LLOYD]

Good call on the sell into the rally. I've added positions on the weakness and sit on the gains. I did sell the IAU yesterday before the big drop today. Hope we see the gold ETF fall below $60...its been a fun trade.
Why has gold been decreasing in value? Bernanke is about to quit raising rates, which puts pressure on the dollar. I'm missing some valuable understanding about it. This thread is interesting and educational.

[madcowdisease]

Why has gold been decreasing in value? Bernanke is about to quit raising rates, which puts pressure on the dollar. I'm missing some valuable understanding about it. This thread is interesting and educational.

If you believe Bernanke is going to stop, not pause, that implies the economy is softening and inflation is no longer a concern and hence no need for gold as a hedge. This may be looking out extremely far but the market does tend to predict things 6 months ahead of time.

Personally, I think those that are selling gold for this reason are Ameri-centric. China just reported their economy is growing at 10% and it appears the other components of BRIC are still growing strong as evidenced by the comments fom CAT's management after they just reported. Consequently, there should still exist a demand for gold from overseas making it a reasonable buy at these levels (GG ~$27).

But, we do need to be observant of the fact other world banks (Japan and Europe specifically) are raising their rates along side The Fed as well . This gives traders mixed sentiment surrounding gold. Do you feel BRIC's growth, and associated inflation, supersedes that of America, Japan, and Europe so much so that gold is still needed as a hedge? If so buy it, but I need to do more research before I buy.

[NATHAN LLOYD]

I was like telling myself duh when I read the first paragraph. I have a better understanding of it now though. Thanks for the insight.

Gas was still up another $.10 today. I'm not sure Bernanke can stop with this and a core cpi of .3%. I see the stagflation coming that I read about. It's a confusing market.

[madcowdisease]

I was like telling myself duh when I read the first paragraph. I have a better understanding of it now though. Thanks for the insight.

Gas was still up another $.10 today. I'm not sure Bernanke can stop with this and a core cpi of .3%. I see the stagflation coming that I read about. It's a confusing market.

No problemo. Contradictory to what I said in the last two paragraphs, here's evidence growth is slowing across the board:

http://www.bloomberg.com/apps/news?pid=20602013&sid=auazqBYAnt60&refer=commodity_futures

I'm still trying to figure things out myself. It is evident we have data to support both sides; you pick which one you're on.

[optimus25]

Gold ETF IAU < $60. I think its a good buy below $60 but even better closer to $55.

[madcowdisease]

I always respected Markman's views. He offers a solid case against recession here:

http://articles.moneycentral.msn.com/Investing/SuperModels/ItsAPauseNotARecession.aspx

Opine away.

[Lou]

I always respected Markman's views. He offers a solid case against recession here:

http://articles.moneycentral.msn.com/Investing/SuperModels/ItsAPauseNotARecession.aspx

Opine away.


i like his choice of zimmer holdings, i love this play