Bullish Information

[bart]

Re: Bullish Information

I cannot and will not argue with your data if it predicts a recession.

Drat... where Finster when he's needed... ;)

Here's the actual chart and the credit mostly belongs with Paul Kasriel of Northern Trust - a major straight shooter in my book.

[jk]

Re: Bullish Information

bart,
can anything be said quantitatively about the depth of the predicted recession from your chart? or do you see it as just a yes/no prediction? i.e. 1980-82 was brutal, the worst since the 30's, and both of the curves were substantially below zero. 2000 was quite mild, and one of the curves was not far below zero. can we conclude that at this moment the chart predicts a MILD recession?

[bart]

Re: Bullish Information

bart,
can anything be said quantitatively about the depth of the predicted recession from your chart? or do you see it as just a yes/no prediction? i.e. 1980-82 was brutal, the worst since the 30's, and both of the curves were substantially below zero. 2000 was quite mild, and one of the curves was not far below zero. can we conclude that at this moment the chart predicts a MILD recession?

Interesting concept jk.

It was only designed as a yes/no guide, and the various correlations you noted with depth of the recessions and how far below zero the two indicators went wasn't something I'd noticed until you mentioned it.

The only thing I should point out is that since CPI is involved, and without any adjustments, that blue line is actually off the bottom of the chart (about -6.5%) when shadowstats.com adjustments are taken into account... and it has been negative for well over a year... and there is no historical parallel for that pattern.

That said, the closest parallel is indeed 2002 with 1970 and 1990 not far behind. A bit more than a mild recession is what I'm expecting... and the depth of it will be determined significantly more by what other central banks do than normal.

For what its worth, the ECB is showing an inverted yield curve again the last three weeks, and it was inverted for a few weeks in March 2007 too. There's also this - Overheating sees house price downturn in Europe.
Nothing like "interesting" times...

[Jim Nickerson]

Re: Bullish Information Re. Insider Buying

Bullish on the inside
Commentary: Corporate insiders' buying bodes well for the stock market

8/31/07 http://www.marketwatch.com/news/stor...C5CE4B3C57A%7D

This is why insiders have been carefully watched in recent weeks to see how they would react to the stock market correction that began on July 19.

The verdict? The insiders dramatically cut back the pace of the selling that had prevailed earlier in the summer, according to the Vickers Weekly Insider Report, a service that keeps track of the insider trades that are reported to the Securities and Exchange Commission. In the week ending July 13, for example, insiders of companies whose shares are listed on the NYSE and the AMEX sold 3.66 shares for every one that they bought. By the week ending Aug. 17, the comparable insider sell-to-buy ratio had fallen to 0.92.

Not only is such a dramatic decline itself bullish, it also is quite positive that the sell-to-buy ratio actually fell to below 1. That means that insiders were buying more shares than they were selling, which is quite rare.

In fact, the last time that the insider sell-to-buy ratio for listed companies was as low as it was in mid August occurred in October 2002, almost precisely when this bull market started.

David Coleman, editor of the Vickers Weekly Insider Report, concludes that these developments amount to a "strong sign that the (stock market's) sell-off and panic are overdone ... All insider sentiment signs suggest that a turn higher is due."

Emphasis JN

[friendly_jacek]

Re: Bullish Information

The story on insider's buying was also published in Barron.
Every indicator I checked indicates that smart money are buying now or at least in August. Buffett told CNBC mid-August that "the worsening credit and housing markets may present some "real" investment opportunities."

[Jim Nickerson]

Re: Bullish Information

The story on insider's buying was also published in Barron.
Every indicator I checked indicates that smart money are buying now or at least in August. Buffett told CNBC mid-August that "the worsening credit and housing markets may present some "real" investment opportunities."

What indicators are there regarding what "smart money" was buying in August? Nobody polled me--joke.

There is nothing particularly prescient about Buffet's statement. There are always some good buying opportunities if one has cash, knows where to look, and has the agressiveness to buy when other's may be capitulating.

[Jim Nickerson]

Re: Bullish Information Re: Bullishness by the numbers-Hulbert

http://www.marketwatch.com/news/stor...708FCC88717%7D

Mark Hulbert 9/5/07

On three of the past dozen trading sessions, stock market volume triggered a bullish technical signal known as a "Nine To One Up Day."
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A "Nine To One Up Day" occurs when this ratio is 90% or higher. According to Martin Zweig, who helped to develop this indicator several decades ago, such a huge imbalance of up volume over down volume "is a significant sign of positive momentum. In other words, when daily up volume leads down volume by a ratio of 9-to-1 or more, that tends to be an important signal for stocks." The quotation comes from Zweig's 1986 book, "Winning on Wall Street."

I am familiar with Zweig's research because, until the mid 1990s when he discontinued them, he used to publish two investment newsletters. Both letters were ahead of the stock market averages at the time they were discontinued, according to the Hulbert Financial Digest.

Paul Desmond is another newsletter editor who has done extensive research on the significance of trading sessions with big imbalances of upside or downside volume. He is the editor of Lowry On Demand Investor, another newsletter that the Hulbert Financial Digest tracks.

How bullish are 9-to-1 up days? Zweig in his book argues that, "Every bull market in history, and many good intermediate advances, have been launched with a buying stampede that included one or more 9-to-1 up days."

A 9-to-1 up day was turned in on Aug. 17, Aug. 29 and Aug. 31.

These second and third 9-to-1 up days add greatly to the bullish significance of the first, according to Zweig. That's because a single 9-to-1 up day, by itself, has not always been a bullish event. In his 1986 book, Zweig therefore argued that it would be better to focus on occasions in which two such days occur relatively close to each other. Zweig used a three-month window.

Zweig called these "double 9-to-1 signals." And with what happened Friday, we actually have a "triple" 9-to-1 signal.

To be sure, the volume story is not uniformly this bullish. For example, there have been several 9-to-1 down days since the market correction began on July 19. According to Zweig, a 9-to-1 down day in the proximity of two 9-to-1 up days implies "not as much (upward) thrust" as do two 9-to-1 up days that are unaccompanied by a 9-to-1 down day.

Nevertheless, Zweig wrote that the stock market's average return is still above-average following double 9-to-1 days that are accompanied by 9-to-1 down days. "The record (for such days still) provides great comfort to the bulls," as he put it in his book.

This comfort is confirmed by statistical tests conducted by David Aronson, an adjunct professor of finance at Baruch College. Aronson is the author of "Evidence-Based Technical Analysis," in which he discusses how to use the "scientific method and statistical inference" in judging investment strategies.

Aronson, along with the students in a class he teaches at Baruch, tested the statistical basis for Zweig's confidence in double 9-to-1 signals. They did not differentiate between such signals that were accompanied by intervening 9-to-1 down days and signals that were not.

Aronson told me that he and his "class used data from the beginning 1942 through fall of 2006, and we looked at what happens in the stock market in the 60-trading-day period following a Zweig double 9-to-1 signal, versus what happens the rest of the time. In those 60-trading-day windows, the S&P 500 index produced an average annualized return of over 22%, on the assumption that an investor entered the market on the close the day after a double 9-to-1 signal was triggered and held until the end of the 60th trading day later. In the non-signal periods, in contrast, the return averaged 4.5% annualized. The difference between these two average returns is statistically significant." Aronson told me that these calculations do not include dividends.

The last time a double 9-to-1 signal was triggered was on March 21. An investor who bought the S&P 500 at the close on March 22 and held for 60 trading days realized an annualized gain of 31%.

Until this time it proves to be different, I continue to think it is worth paying attention to this indicator. To push this a bit further, Desmond's work also involves 90% up in points also. 8/17 and 8/29 were =
+90% up days in volume and points.

[Jim Nickerson]

Re: Bullish Information Re. Aden Sisters

http://www.marketwatch.com/news/stor...6972911230B%7D

Peter Brimelow 9/6/07
Adens see global growth overcoming subprime repercussions

The Adens' latest letter arrived Wednesday morning. Like everyone else, they're breathing hard after August's agonies.

Their bottom line: Inflation is now inevitable but in the short run, there's still money to be made in stocks.
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The Adens are still confident about commodities. About gold they say: "Once it closes and stays above $696, the April high, gold will show great strength and the last resistance will then be the May 2006 high at $722. Once these barriers are surpassed, gold could then test the 1980 record high near $850."

The Adens' summary: "Basically, it's come down to a tug of war between subprime repercussions versus booming global growth. Assuming the subprime problems do not become massively widespread, global growth will probably come out the winner."

[Jim Nickerson]

Re: Bullish Information Re: Barron's Market Watch

These are selected exerpts chosen by the section editor.

http://online.barrons.com/article/market_watch.html Subscription

Why This Isn't 1987 Redux
The McClellan Financial Report
P.O. Box 39779, Lakewood, Wash. 98496
Sept. 4: Forecasting a crash is a whole lot more exciting and gets a whole lot more attention than forecasting a non-crash. This is why the Nascar race highlights on ESPN's SportsCenter feature crashes rather than coverage of the driver who finishes lap 23 three-tenths of a second faster than lap 22. People are naturally attracted to the gory spectacle, whether vehicular or financial. But...we are not seeing a repeat of the 1987 crash 20 years later. Breadth data are telling us we've already seen damage sufficient for a big correction, and are already seeing the upside initiate suitabl[y] for an uptrend.

In August, the Fed did a "stealth" rate cut on fed funds. Without changing the target rate, it pushed enough money into the system to drop the effective rate to below 5% for several days, similar to after 9/11...[We expect] a minor top Sept. 13, and a bottom Sept. 20; then further upside lies ahead. We have probably seen this year's normal September weakness a month early.

Emphasis JN

There Is No Bernanke Put
Investment Commentary by Advisors Capital Management
115 W. Century Rd., Paramus, N.J. 07652
Sept. 4.: Looking back at previous financial crises is illuminating. We've had several in recent decades, including the stock-market meltdown in 1987, collapse of the Mexican peso in 1994, currency collapse and financial turmoil in several Asian economies in 1997, the failure of Long Term Capital Management and Russia in 1998, and 9/11 in 2001. Each produced turmoil in global capital markets. Each precipitated forecasts of recession or worse. However, not one of these episodes caused a recession!...It seems safe to conclude that U.S. and global economic systems are sufficiently resilient and flexible to absorb a bout of financial turmoil without necessarily suffering significant economic downturn.

Emphasis JN

[Jim Nickerson]

Re: Bullish Information Re. Mark Hulbert, Barron's, 9/5/07

http://online.barrons.com/article/SB...clusives_right Subscription



The Best Market Timers Remain Bullish

NOW WHAT?

I focus, as I have in prior columns, on a select group of top stock-market timing newsletters. Specifically, my group included the 10 services with the best risk-adjusted market-timing returns over the last decade, according to the Hulbert Financial Digest.
..
By the way, I went through a similar exercise just over a year ago for Barron's Online. I found at that time that there were no bears among the top market timers, and that the average recommended equity exposure among them was 84%. Since then, needless to say, the stock market has handsomely acquitted these top timers' bullishness: the Dow Jones Industrial Average is 20% higher today than then.
..
The bottom line? None of these nine top timers are bearish. The average equity allocation among all nine is 92%. This is higher than where this average stood a year ago, as well as where it was in early May.

This 92% average is good news for the stock market in its own right, of course. But it's particularly bullish relative to the average forecast of the 10 -stock-market timing newsletters with the very worst risk-adjusted performances over the last decade. The average recommended equity exposure among these worst performers right now is 0%.

In other words, the worst market timers are quite bearish right now, while the best timers are quite bullish. Rarely are we presented with a contrast this stark.

There are no guarantees. But to bet on a new bear market right now, you have to bet against the timers with the best long-term records and with those whose records have been awful.

Emphasis JN

[Jim Nickerson]

Re: Bullish Information Re. Richard Russell

9/11/07 http://dowtheoryletters.com/ Subscription

CONCLUSION -- Today the Dow closed 463 points ABOVE its key August 16 close, while Transports closed 102 points above their key August 16 close. As I see it, the evidence is piling up that August 16 was THE low and that the secondary trend of the market is UP, UP, UP. The market may mill around for a while, backing and filling or it may push higher. I don't know, but with the primary and secondary trends bullish, stocks should work generally higher. And the more skepticism, the more pessimism, the more threats of a catastrophe, the better.

[Guest]

Re: Bullish Information

Jim - Permission to post a bullish update here?

[Jim Nickerson]

Re: Bullish Information

I started this with hope of attracting individual opinions, one's own or reference to technical indications of bullishness, or links to articles that support the bullish case in any general or specific asset class.

I find such a compartmented starting place beneficial, and I would hope others would too, while freely posting supporting information here.

It seems that I am making most of the posts, which was not my intention. I assume others run across pertinet posts on the web or have their own opinions, and to benefit us all, it would be nice to see links to good articles or expression of individuals' opinions.

Were I first starting to read this thread, I would read it from the bottom to top as the earlier posts will be the most dated.

edit: 12/28/06. For 10 days I have tracked the number of "views" to this Bullish thread vs. those to the Bearish thread. Bulls 220 vs. Bears 398 views.

Lukester,

Above is the first post in this thread. It has always been open to anyone's post. Personally I welcome anyone putting anything here, anytime that supports a bullish argument or opinion. Jump in and have at it anytime.

[Guest]

Re: Bullish Information

Jim -

I'm posting this under your latest comment to re-orient the posts to the left hand margin (having a tough time finding the most recent ones all the way over to the right with all the laddering).

"Rarely been Wrong" Stephen Leeb is stating flatly the likelihood of a recession is still lower than many estimations, and consequently all sorts of inflation hedge plays after this market washout in equities are "best buys".

This guy is not shy about making an unqualified market call.


______________



Market Forecast
September 14, 2007


Below is the most recent Stephen Leeb Market Forecast update.

Watching and waiting. It seems everyone is awaiting the outcome of meetings these days before deciding what to do with their investments. First up was yesterday's OPEC confab in Vienna. For months now we've heard various oil ministers in the cartel indicate that they felt there was no need to raise output, despite the calls for just such a move from many oil-consuming nations.

The one country notably silent on the matter heading into the meeting was Saudi Arabia, and they had other ideas.
The cartel's decision to raise production by 1.4 million barrels a day is far less than it seems on the surface. To begin with, OPEC members were already producing somewhere in the area of a 900,000 to one million barrels a day above their stated quota. And the Saudis are the only producer with any meaningful spare capacity-every other OPEC member state is essentially already producing as much as they can at this time. So in actuality, the true addition to the market will likely be less than the promised 500,000 barrels of crude a day, and perhaps a lot less.

Moreover, even if the full 500,000 barrels comes on stream, the increase won't take effect until November. And it's still nowhere near what needs to be added just to keep pace with expected demand growth in the fourth quarter according to the International Energy Agency's (IEA) projections. That's the likely reason why oil actually rose following OPEC's decision, with prices climbing to a record high.

The Saudis may have been inclined to step up the cartel's daily output as a quid pro quo to the U.S. for finally aiding Iraq's fellow Sunni Arabs, not out of a desire to see crude prices decline. With oil priced in U.S. dollars, the weakening greenback means the Saudis are paying more these days for goods from Europe and Asia. So they have a good incentive to maintain prices near $80 a barrel rather than see it slip.

The other get-together everyone is waiting on is the Federal Reserve's Open Market Committee regularly scheduled assembly next week to discuss interest rate policy. A week ago many handicappers were still asking the question: would they or wouldn't they cut rates? But after last week's employment report, which showed payrolls contracting by 4,000 in the face of expectations for growth of 92,000, along with downward revisions for the prior two months, the question quickly became merely one of how much will the central bankers cut rates?

Our guess is this go 'round the Fed will lower the fed funds rate by 25 basis points (1/4 point) along with a possible additional cut in the discount rate. Keep in mind that the economic numbers coming in are still strong. Moreover, the payroll numbers should be viewed skeptically, since they're subject to notoriously wide revisions. A better read can be had by looking at initial claims for unemployment insurance, which come out weekly and aren’t subject to big revisions. These jobless claims remain far below what's typically seen at the outset of a recession, bolstering our outlook.

If the economy skirts a recession, as we believe it will, worldwide growth running at 5 percent or better and the Federal Reserve cutting interest rates, stocks can advance with inflation plays proving to be big winners in the coming months.

Until Next Time,
Stephen Leeb Market Forecast

[Jim Nickerson]

Re: Bullish Information

Market Forecast
September 14, 2007


Below is the most recent Stephen Leeb Market Forecast update.

Watching and waiting. It seems everyone is awaiting the outcome of meetings these days before deciding what to do with their investments. First up was yesterday's OPEC confab in Vienna. For months now we've heard various oil ministers in the cartel indicate that they felt there was no need to raise output, despite the calls for just such a move from many oil-consuming nations.

The one country notably silent on the matter heading into the meeting was Saudi Arabia, and they had other ideas.

The cartel's decision to raise production by 1.4 million barrels a day is far less than it seems on the surface. To begin with, OPEC members were already producing somewhere in the area of a 900,000 to one million barrels a day above their stated quota. And the Saudis are the only producer with any meaningful spare capacity-every other OPEC member state is essentially already producing as much as they can at this time. So in actuality, the true addition to the market will likely be less than the promised 500,000 barrels of crude a day, and perhaps a lot less.

Moreover, even if the full 500,000 barrels comes on stream, the increase won't take effect until November. And it's still nowhere near what needs to be added just to keep pace with expected demand growth in the fourth quarter according to the International Energy Agency's (IEA) projections. That's the likely reason why oil actually rose following OPEC's decision, with prices climbing to a record high.

The Saudis may have been inclined to step up the cartel's daily output as a quid pro quo to the U.S. for finally aiding Iraq's fellow Sunni Arabs, not out of a desire to see crude prices decline. With oil priced in U.S. dollars, the weakening greenback means the Saudis are paying more these days for goods from Europe and Asia. So they have a good incentive to maintain prices near $80 a barrel rather than see it slip.

The other get-together everyone is waiting on is the Federal Reserve's Open Market Committee regularly scheduled assembly next week to discuss interest rate policy. A week ago many handicappers were still asking the question: would they or wouldn't they cut rates? But after last week's employment report, which showed payrolls contracting by 4,000 in the face of expectations for growth of 92,000, along with downward revisions for the prior two months, the question quickly became merely one of how much will the central bankers cut rates?

Our guess is this go 'round the Fed will lower the fed funds rate by 25 basis points (1/4 point) along with a possible additional cut in the discount rate. Keep in mind that the economic numbers coming in are still strong. Moreover, the payroll numbers should be viewed skeptically, since they're subject to notoriously wide revisions. A better read can be had by looking at initial claims for unemployment insurance, which come out weekly and aren’t subject to big revisions. These jobless claims remain far below what's typically seen at the outset of a recession, bolstering our outlook.

If the economy skirts a recession, as we believe it will, worldwide growth running at 5 percent or better and the Federal Reserve cutting interest rates, stocks can advance with inflation plays proving to be big winners in the coming months.

Until Next Time,
Stephen Leeb Market Forecast

From Barron's dated Monday 9/17/07 Subscription required


http://online.barrons.com/article/SB...cle-outset-box
Where Is Oil Headed? A Contrarian Says $45

Interview With Mike Rothman, Senior Managing Director, ISI Group
By SANDRA WARD

So if you were the "foaming at the mouth" bull back in 2000, what would you call yourself now?

It is very hard for me to say that I am a bear when I think oil is going to land at $45 to $50; historically, oil prices eventually settling at $45 to $50 is quite high. But compared to what the market is pricing and compared to probably most of my contemporaries, my forecast makes me a bear. We recommend underweighting the sector right now.

I'd say nearly a 50% price drop is bearish.

The concern is about the magnitude and speed and timing of the unwind given a precipitous drop in prices. It will be painful for companies. I have seen this movie before. There are a huge number of similarities between '99 up to now and the '73-'80 cycle.
Thanks, Mike.

Emphasis JN

This guy Rothman sees oil dropping.