2009 = 1939 : Then a 34% plunge

[icm63]

Re: 2009 = 1939 : Then a 34% plunge

Why would they raise rates: read the pdf ( as referenced)

Interestratehike.pdf

Then relise that: USA is a b*tch for China/Japan !

[goadam1]

Re: 2009 = 1939 : Then a 34% plunge

YES, and how can it not, unless the FED spends another $1.2 T...

Does the fed want GOLD at $5000 once by XMAS 09..

I bet the FED wants to POP the gold rally, just to show whos the big ugly beast in the room.

Central Banks dont like gold rallies !

They certainly want you to be afraid they will raise them sooner than later.

[Jim Nickerson]

Re: 2009 = 1939 : Then a 34% plunge

Why would they raise rates: read the pdf ( as referenced)

[ATTACH]2542[/ATTACH]

Then relise that: USA is a b*tch for China/Japan !

Ian, I watched the video your linked above and read the PDF by Kee. I mostly gathered the impression that Kee is pushing his business: Stock Traders Daily.

When I began to read guys like Paul Kasriel, and I'm not even bothering to follow him right now, and Rosenberg, Gross at Pimco start to suggest that interest rate rises are on the table in some near number of months, then I'll start to worry about interest rate rises. Until then, in my opinion no one is about to raise interest rates in the US--FOMC or the market.

Rosenberg has been continually harping on what he sees as a secular change in the behavior of the American consumer (though I remain unconvinced that even the recession so far has cured profligacy among the average, ignorant, unwashed American consumer). He suggests that Americans will save more, put more into bonds, less into stocks.

I don't read anyone who I consider reasonably intelligent that is exceptionally bullish on the US now, despite whatever incipient, probably short-lived recovery there may have been up until now. There seems likely to be another leg down in the US recovery. I think generally Hussman, Rosenberg, Jeremy Grantham (noted on these fora today with some reference) all say this thing is not over.

I surmise that you are worried, or don't like the fact that equities have gone up, while bond yields have not. Rosenberg has recently noted that conundrum too, but has only noted it; he has not posited how he thinks it will resolve except he continually beats on the fact the equities are way over valued. Is the disconnect due to low interest rates, or overvalued equities? I think interest rates are where they more likely should be with all that is yet to be unwound in the financial markets. Equities need to come back to earth, and the question is when will they do that? Personally I think it is unlikely to happen by the end of this month, but I of course do not know.

If one believes that more grief lies ahead for the US with regard to its debt and further deleveraging, hidden shit in banks' accounting, more downside to the housing market, more bankruptcies, etc., etc. then it seems to me the risk between either equities continuing to rise or bond yields continuing to rise is to the equities stopping at some point from this sprint on which they have been. If and when there is another down move to equities, then whatever causes it will least likely be that interest rates have risen. All the shit that exists now, once it continues to unravel is more likely to send people into buying bonds rather than fleeing from them or demanding higher rates.

How are the laggards, about which I worry as being the harbinger to the end of the equities run up, performing? RUT small caps is at top of the list today, followed by regional banks, transports, financials, bank index. Not out of the woods by a long shot, but for a moment the under performance is lessened though a lot of further action of small caps, banks, financials is needed if the equities rally is to continue for some more months.

[icm63]

Re: 2009 = 1939 : Then a 34% plunge

Jim.

Kee has made some big calls in the last couple of years, so far mostly winners..

1) 2008 drop
2) March 09 rally (well he called it in Feb 09)..

His latest call is

LONG: TBT (from $47), SKF (from $25), (he just sold GLD after getting in at $96)...

[ThePythonicCow]

Re: 2009 = 1939 : Then a 34% plunge

(he just sold GLD after getting in at $96)...

My two favorite analysts, Captain Hook (TreasureChests.info) and Howard Katz (the One Handed Economist) are discussing this as well. I won't comment directly on what they are saying on their paid side, but I will say what I'm doing. I'll be selling my gold mining stocks today. I probably won't sell any gold metal, as I am still underweight and buying more when it feels low, not selling at interim tops.

[Jim Nickerson]

Re: 2009 = 1939 : Then a 34% plunge

I added IYR to my tracking list. IYR is DJUS Real Estate Index fund. Banks, regional banks, financials and RUT were the significant laggards today.




Next chart is a comparison of gains from March 09, 2009 to October 14, 2009. 10/14/09 was chosen for data end because the $BKX, $KRE, $RUT had their highs then from the March low of SPX. IYR recovery high was on 9/22/09, $KRX recovery high was on 8/10/09.



The next comparative chart is from 10/14/09 through today's close.



If anyone looking closely at these gets confused as to what is what, the symbols for the indices and ETF's are in box at the bottom of the last two charts and are in the same order as the histograms.

[Jim Nickerson]

Re: 2009 = 1939 : Then a 34% plunge

Here are comments from today by David Rosenberg discussing "the unusual backdrop: bond prices up, equity prices up, oil prices up, and gold prices up;" the first two having comprised ICM63's concerns in starting this thread.

12/4/09

NOT NORMAL

The U.S. 10-year Treasury note yield gapped above the 50-day moving average yesterday. In the past six months we have been in a most unusual backdrop: bond prices up, equity prices up, oil prices up and gold prices up. Looking back at the historical record, this is what you call a 1-in-15 event. In other words, not normal, and something has to give.

In the past, it has been Mr. Bond, shaken and stirred, that has been the arbiter of realigning the asset mix. In the context of a 27-year secular bull market in Treasuries, which is ongoing by the way, there has been many spasm that led to price reversals in other asset classes (1987, 1994, 2000, 2007 … and perhaps in the last few trading days as bond yields have ratcheted higher amid the vast amount of supply that is hitting the market). The odd man out here is clearly the bond, but if yields head back up to 4% (about 50% of the rally in the 10-year note has just been retraced in this recent spasm in yield), expect a countertrend rally in the U.S. dollar over the near-term and a giveback in all these risky assets that all of sudden become 90% correlated with the greenback.

As for the vast amount of supply we mentioned above, well, the U.S. Treasury is going to auction — get this — $105 billion in Treasury bills and notes next week. Talk about choking on the wishbone. This fiscal largesse may come at a pretty big cost and aside from a countertrend rally in the U.S. dollar (as Mr. Trichet is pushing for) a further yield spasm in the Treasury market at a time when the economy is still struggling (ISM services back below 50 — that is not good) could well be enough to upset the equity market apple cart; just as investors are closing their books as the year draws to a close. Buying some protection, especially now that it is cheap, may not be a bad idea.

[JN emphasis]

Below are the changes today reflecting a decent pickup in some of the leaders off the March 2009 lows, which recently have been lagging the large cap indices. Today from a fairly close survey of charts, I believe it is correct that DJI, SPX, Nasdaq, NDX, $TRAN, NYA, WLSH all hit new intraday recovery highs, but none held them to the closing. The banks, financials, regional banks, RUT and $XVG (Value Line Geometric) are really not so close to making new highs, so I interpret this as a continuing negative (among all the myriad of other negatives) for further equity appreciation.




I don't know how many people who look at charts, using whatever indicators they wish, can assess them while truly suppressing whatever knowledge they have about the concomitant fundamental atmosphere, but I do think Carl Swenlin tries; I will also add that he is not always correct when he conjectures on outcomes, not uncommon amongst prognosticators.

Here are his today's comments from his biweekly posting on decisionpoint.com

Next is a monthly chart of the S&P 500, and it contains some very bullish evidence. [FYI anyone interested in what is a PMO, it is similar to an MACD, though for Swenlin it is a proprietary indicator, for me (and probably him too) it has no magic qualities.] The monthly PMO (Price Momentum Oscillator) is rising off a very oversold reading (lowest since 1932), and it has crossed up through its 10-month moving average. There are only four other deeply oversold PMO bottoms since 1929, and all were associated with new bull markets. Four data points in 90 years is a thoroughly inadequate statistical base from which to draw conclusions, but, understanding how the PMO works, I think the bull market is likely to continue for at least a year and could easily challenge previous all-time highs. Be advised, however, the positive long-term picture does not eliminate the possibility of substantial corrections along the way, but a smoothly rising monthly PMO presents a solidly positive long-term technical picture.

If interested the accompanying chart and further comments are at http://www.decisionpoint.com/ChartSp...204_cspot.html

[raja]

Re: 2009 = 1939 : Then a 34% plunge

All the shit that exists now, once it continues to unravel is more likely to send people into buying bonds rather than fleeing from them or demanding higher rates.

Jim,

All this "shit", as you put it, has got to come down sooner or later, and if it comes down with any suddenness, the easiest, quickest and safest place for large numbers of people to protect their wealth is in Treasuries. A true emergency like the stock market crashing trumps slow inflation caused by QE (the latter being negative for Treasuries).

Even if the world starts to abandon the dollar in a rapid but not catastrophic way, I would think that people would still invest part of their assets in short-term Treasuries, hoping to ride the interest rates up by constantly reinvesting.

But the latter strategy would not work in a hyperinflation, since the rise in Treasury interest rates couldn't keep up with the inflation rate. In that scenario, I suggest going long PM and chickens (preferably well-dressed) :eek: :eek: