Bullish Information

[Guest]

Re: Bullish Information

Jim -

If oil corrects significantly down that could be the single biggest booster for the general stock market. A drop in oil prices to fifty would put a very hard floor under stocks, and possibly light a fire under them as well. If I saw oil prices collapse to $50 I'd sell a bunch of metal and buy stocks - a lot of them.

I have serious difficulty seeing oil drop below $60 USD again (call me a nut, but that's within our lifetimes!) Actually "in our lifetime" is hardly even a serious comment, as the dollar is vaporizing as we speak.

I would prepare to be shocked at where oil prices wind up in three to five years, and your cited author may be seriously disappointed at where prices are even at the end of this coming winter. Even the IEA is completely contradicting his call, so I'm not sure why he's overlooking the data the IEA refered to in recent months. If oil fundamentals look so weak, why has the IEA been badgering OPEC to provide a production boost for months now?

What I note is a very pervasive belief that if the US economy weakens we'll see a vast domino effect worldwide. The developing economies are closing in on an inflection point, where their economies will represent a larger GDP collectively than the US, and we should not assume their internal consumer markets are not developing at a rapid clip.

With growth rates of 6% - 12% collectively among them as they enter what's historically been a very powerful growth spot on the curve, similar to what occurred in industrialising by the now mature industrialised nations, it is potentially an out-dated America-centric hubris to imagine that the US is going into impose it's own economic recession on such a lrge chunk of global economies.

We should probably also note that Leeb and also John Mauldin in recent letters have doubts the US will encounter a severe recession here to begin with! I can only rely on their hints, but it does seem to me these two and others thinking the same thing are the real contrarians right now, no?

I put all that together with Mexico, Kuwait, UK, Norway, Alaska, Indonesia (and others I'm not even aware of probably) very well documented and sharp production declines, and persistent rumors circulating that Saudi deployed drilling rig numbers are soaring while production is showing no significant growth for the past 2-4 years relative to all the furious drilling going on - and I have to conclude that anyone making a prediction of $40 - $50 oil is makng a very audacious call indeed.

If oil prices remain very high next spring, this will give us a clue whether this author was closer to the mark, or whether the IEA's own recent calls have been instead. A correction is most certainly due, as the run-up since january has been shocking - but I'd be leery of making large fundamental changes to my strategic expectations for the next 2-3 years. As petroleum spot is wildly volatile, we can only get a read probably from the longer averages. Those long averages show no hint of an impending weakening, let alone collapse.

The other point to note is that Stephen Leeb is not calling for oil investments only. In this update he was really referring to "all inflation hedges" as being the area that was coming off deeply oversold readings and so being a good play for the next six months if one accepts the thesis the US is going to skirt recession.

For years now Leeb's main thesis has been that "deflation" is not going to be the main entree for this decade. The overwhelming main theme will be inflation, possibly getting very high, punctuated by periodic but short bouts of increasingly strong deflationary scares. And he's talking very specifically on a global, rather than just US scale.

He arrives at it from totally different reasons, but it's astonishing how closely his outlook overlaps exactly onto the iTulip theme. They are effectively identical calls with minor variations. Given the caliber of both sources, I find this extraordinarily clear endorsement for a specific decade long stance, and it's very close to what is described by E.J.

Finster may be summarising the "trend who's premise is false" also to a "T", as a subsection (I think) of the general iTulip theme? The biggest scam going on worldwide is the complacent belief that today's long rates are not due for some earthshaking change, which will tip the global bond market on it's ear as the US long bond begins a secular rise. It's got such a large global footprint now, it will tip global bond markets in a new trend along with it.

Leeb may be right or wrong - calling him "rarely been wrong" is merely facetious in any serious discussion - that's acknowledged. But we should note that Leeb won two Masters and a PHD in less than five years at Univ. Chicago, was rated as the #1 market timer by the major U.S. rating services covering periods of five years (Market Timer Digest and Hulbert Digest), and has honed his skills across 20 years of watching markets. This guy is not a lightweight.

Thanks for letting me post on your "bullish" pages! Inflation is beginning to quicken it's step. Mish is a very erudite guy, but he's barking up the wrong tree! Let's not even get into Prechter! :confused:

[friendly_jacek]

Re: Bullish Information

I came across this interesting interview and decided to share it here because it gives a lot of insight into the commercial traders optimism one can see on COT charts these days. It is interesting that I first saw it posted on a bearish blog:
http://bigpicture.typepad.com/commen....html#comments

I personally know nothing about Hyman but supposedly he was right every time economy took turns since late 1970s.
This confirms mu gut feelings that we are seeing a mid to late cycle slowdown rather than a total meltdown. We will have a total meltdow (Ka) but not until the baby boomers age a few more years (IMHO).

The rate cut is right on the schedule as per Mr Hyman's prediction!

[Jim Nickerson]

Re: Bullish Information Re. Richard Russell

http://dowtheoryletters.com/ Subscription

9/18/07

By now subscribers must know how much importance I accord to the actions of the Dow. After all, the D-J Industrial Average is composed to thirty giant corporations, most of which enjoy a huge foreign presence. The value of these thirty giant stocks makes up about 25% of the value of all the stocks in the US. In other words, the Dow is big time, it's powerful, it's international, and it's the trend-setter. The rest of the market can lag the Dow, the rest of the market may look rotten -- but I've never in half a century seen a bear market in which the Dow was holding above preceding support. And subscribers, since it's August 16 low close, the Dow has been doing anything but breaking down! In fact, it's been the strength of this market!

Which is why I've been saying that the rest of the stock market may look like a rusted-out 1930 Ford, but as long as the Dow holds above 12845.78 there's just NOT GOING TO BE ANY BEAR MARKET, AND THERE'S NOT GOING TO BE ANY RECESSION.

Emphasis is Russell's

Incidentally, today was another +90% up day for volume and points, the third since 8/16/07.

[Jim Nickerson]

Re: Bullish Information Re. Mark Hulbert

9/19/07
http://www.marketwatch.com/News/Stor...iteid=nwhnwhnr

MARK HULBERT
Still a lot of doubt
Commentary: Newsletter editors largely skeptical of market rally

Consider the latest reading of the Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average recommended stock market exposure among a subset of short-term market timing newsletters tracked by the Hulbert Financial Digest. As of Tuesday night, the HSNSI stood at just 17.4%.

That represents just a 3 percentage point increase for the day, which is surprisingly modest, given the 336-point rally in the Dow Jones Industrial Average There is no evidence of any rush to jump on the bullish bandwagon, in other words.

The current HSNSI level is markedly lower than where it stood in mid July, when the stock market made its first assault on the 14,000 level. The HSNSI that month got as high as 50.9%.

To be sure, even that 50.9% level did not represent excessive amounts of bullishness, as I pointed out after the stock market started correcting in late July. This was why contrarians did not believe that the correction was the beginning of a major bear market. See July 25 column

That conviction is held even more strongly today.

In reaction to the bullish conclusions of my contrarian analysis over the last couple of months, many of you have emailed to ask what sentiment would look like if the stock market were at a major top. My response: Not only would the absolute sentiment level be higher than where it is today, but that sentiment level would remain high in the wake of the first correction from that market top.

Consider how newsletter editors reacted in the first few weeks following the March 2000 market top, which came just as the Internet bubble was bursting. At the time, of course, no one new that it was the top of the market. But as we now know, the Nasdaq Composite's all-time high occurred on March 10 of that year, while the broad market hit its high two weeks later, on March 24.

Believe it or not, the average HSNSI level for the month of April 2000 was higher than in March. And, even more incredibly, the average HSNSI level in May was even higher still.

That is a textbook illustration of the stubborn bullishness that is typical at major market tops.

Someday, such stubborn bullishness will become the prevailing mood again. But it is no where close to being an accurate characterization of sentiment conditions today.

[Jim Nickerson]

Re: Bullish Information Re. Silver by Maund

September 19, 2007
Why Silver is Set to GO THROUGH THE ROOF..

Originally published September 7th, 2007
It was somewhat odd that despite the extraordinarily bullish COT profile for silver, as of last weekend, gold took center stage and has soared during this week as predicted, despite its COT profile not being as dramatically bullish as that for silver, but that's fine by us as it has afforded time to get this article up. Of course, the reason for silver's underperformance relative to gold so far this week is not hard to find - silver broke down below important support last month, whereas gold didn't, and now silver is having to battle the resulting negative sentiment and supply overhang.

The plunge last month provided the Commercials with the perfect opportunity to unload their short positions for a fat profit and by the truckload, which as already pointed out in the last Silver Market update, they were doing with a gusto, resulting in by far the lowest Commercial short position for at least a year, and as we shall see in this article, for a much longer period - at least 4 years. In a two week period they reduced their short position by nearly 20,000 contracts, equivalent to 100 million ounces of silver. This sort of indecent scramble for the exits by the Commercials from their short positions can only mean one thing - the price is about to turn and go up - BIG TIME.

Note this was written 12 days ago and silver hasn't moved that much.

[friendly_jacek]

Re: Bullish Information

I hear you about silver. I unloaded my gold but keep silver.

Regarding the bullish cause now, this is good analysis from http://fintrend.com/ftf/Articles/FED_rate_cuts.asp :
"Since 1970, the S&P 500 has risen by an average of 5.5% in the three months after the Fed’s first rate cut. Only twice in the nine instances (22% of the time) since 1970 did stocks lose ground, including an 18% fall after the first cut in 2001. The average gain after the nine cuts since 1970 over the next six months was 12.3% (Source: Barron’s). If we use these nine rate reduction cycles, the odds of a successful outcome over the next three months is roughly 88%."

[friendly_jacek]

Re: Bullish Information

Similar research from S. Leeb:

"We conducted a quick back-of-the-envelop calculation of the Two Tumbles and a Jump indicator using monthly prices on the Standard & Poor's 500 Index. A review of the action in stocks in the post WW II period shows that in the six and 12 months following two successive discount rate cuts the S&P 500 gained 7.8 and 17.1 percent, respectively. Adding in dividends would have bolstered these figures. The lone big downdraft following this trigger occurred in 2001, when the S&P surrendered more than 14 percent in the next 12 months.

If the S&P were to manage an increase equal to the historic average, we would be looking at the benchmark (which is now around 1525) heading towards 1800. A similar move would take the Dow Industrials from their current 13,800 to around 16,000.

We wouldn't use the Two Tumbles and a Jump indicator as a sole basis for making investment decisions, but the fireworks we've seen so far this week could just be the start of things to come."

[touchring]

Re: Bullish Information

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

I also find this unbelievable, especially when Abu Dhabi National is buying PrimeWest for C$4 Billion http://www.bloomberg.com/apps/news?p...jJU&refer=home

Why would an oil producer buy another oil producer if they expect oil prices to halve!?

Anyways, anyone here into Canadian oil trusts?

[Jim Nickerson]

Re: Bullish Information

I also find this unbelievable, especially when Abu Dhabi National is buying PrimeWest for C$4 Billion http://www.bloomberg.com/apps/news?p...jJU&refer=home

Why would an oil producer buy another oil producer if they expect oil prices to halve!?

Anyways, anyone here into Canadian oil trusts?

Probably no one would buy something where they expect price may drop 40-50% unless they are wrong and buy it not expecting price to drop. How many people bought within 5% of 2000 market tops?

I don't know what the price of oil will do.

[touchring]

Re: Bullish Information

Q: Do you like homebuilders such as Toll Brothers (TOL ) and D.R. Horton (DHI )? Do you see a housing bubble?
A: I do like them. Though they've had tremendous runs, they're still relatively cheap stocks. My favorite would be TOL, because it's relatively small, yet has a very strong niche in the high-end market, which I think is much less likely to be affected by rising rates than the overall homebuilding market.

And no, I don't see a housing bubble. I think that housing is a massive market. And there are certainly aspects of housing, such as homes in Long Island, New York apartments, and the like, that are certainly bubble-like in their prices. But no, I don't see anything nationwide that looks like a housing bubble. Even in New York, one characteristic of a bubble is missing, in that people are not buying homes or apartments simply to speculate.

http://www.businessweek.com/bwdaily/...8349_db006.htm

LOL, Stephen Leeb got this totally off! Anyone knows him, care ask him what he thinks and if his gold and oil projections need revising?

[friendly_jacek]

Re: Bullish Information

http://www.businessweek.com/bwdaily/...8349_db006.htm

LOL, Stephen Leeb got this totally off! Anyone knows him, care ask him what he thinks and if his gold and oil projections need revising?

Are you nuts, this is dated 2/2005. His predictions were for year 2005. Most of the facts he put in his "the oil factor" book (published in 2003) turned to be correct, except for some (minority) specific stock tips. I subscribe to his emails and he correctly advised not to sell during the heaviest selling in the mid August. I bought a lot of equity and commodities then and don't regret.

[Guest]

Re: Bullish Information

Friendly_Jacek -

You are absolutely correct pointing out S. Leeb advised NOT to sell in the August correction. He does that a lot, keeps a cool head and looks at the sensible pointers while everyone else is panicking. While people like Mish were constructing incredibly sophisticated models for collapse, Leeb was merely pointing out he's never seen a stock market collapse where the small caps did not lead the way down months beforehand.

So simplistic a line of reasoning none of the geniuses would condescend to acknowledge it?

I will note, in case no-one else here has pointed it out meanwhile, that iTulip forecast an all-assets-down KA this summer which has not occurred. Now it appears iTulip is acknowledging POOM is here barely a month later?

What happened to the Ka-Poom thesis, as we've evidently not had a significant Ka at all?

Wait a minute. What about all the faithful here who took the summer 'sell everything' caution literally and actually sold everything? Now we're supposed to pile back into everything because POOM is here? I'm personally down 18K USD for taking that advice in August.

Seems Leeb got this call right and iTulip did not? I've been a Leeb subscriber for five years. This summer I decided to take iTulip's word for it, and not Leebs, after having learned five years ago that Leeb was a voice to be trusted! :rolleyes:

Not by any means saying this community is not brilliant. But where is the acknowledgement of a badly missed call here? If Leeb misses a call he acknowledges it.

[Jim Nickerson]

Re: Bullish Information

Friendly_Jacek -

You are absolutely correct pointing out S. Leeb advised NOT to sell in the August correction. He does that a lot, keeps a cool head and looks at the sensible pointers while everyone else is panicking. While people like Mish were constructing incredibly sophisticated models for collapse, Leeb was merely pointing out he's never seen a stock market collapse where the small caps did not lead the way down months beforehand.

So simplistic a line of reasoning none of the geniuses would condescend to acknowledge it?

I will note, in case no-one else here has pointed it out meanwhile, that iTulip forecast an all-assets-down KA this summer which has not occurred. Now it appears iTulip is acknowledging POOM is here barely a month later?

What happened to the Ka-Poom thesis, as we've evidently not had a significant Ka at all?

Wait a minute. What about all the faithful here who took the summer 'sell everything' caution literally and actually sold everything? Now we're supposed to pile back into everything because POOM is here? I'm personally down 18K USD for taking that advice in August.

Seems Leeb got this call right and iTulip did not? I've been a Leeb subscriber for five years. This summer I decided to take iTulip's word for it, and not Leebs, after having learned five years ago that Leeb was a voice to be trusted! :rolleyes:

Not by any means saying this community is not brilliant. But where is the acknowledgement of a badly missed call here? If Leeb misses a call he acknowledges it.

Now, Lukester, don't go blaming iTulip for decisions for which you pulled the trigger.

And you should feel a bit less badly about the 18K you don't have, because I happily have it now.

It's possible that the Ka hasn't happened and that Poom is yet to follow, just as it is possible, that none of us will recognize either when or if they happen.

[touchring]

Re: Bullish Information

Stocks can go up and down 20% by the week. Real estate can take years to make the same fluctuations stocks do in a month. Only wizards can predict stock trends with pintpoint accuracy, like in 2001, who can predict that year?

My question is: does his real estate will appreciate view still stands, and we are only seeing a temporary correction, or what?

Are you nuts, this is dated 2/2005. His predictions were for year 2005. Most of the facts he put in his "the oil factor" book (published in 2003) turned to be correct, except for some (minority) specific stock tips. I subscribe to his emails and he correctly advised not to sell during the heaviest selling in the mid August. I bought a lot of equity and commodities then and don't regret.

[Jim Nickerson]

Re: Bullish Information re. SPX Buy Signal-Swenlin

New Buy Signal 9/21/07 http://www.decisionpoint.com/ChartSp...21_newbuy.html
by Carl Swenlin

Ever since the market hit its correction lows in August I have written three articles, each emphasizing that the odds favored a retest of those lows (see Chart Spotlight on our website). As it turns out, we haven't had any decline that I would classify as a retest, and the market has broken out of a triangle formation on high volume. When the breakout happened, it eliminated any reasonable possibility of a retest, in my opinion. Sometimes the low odds take it.

One thing I have been cautioning about is to not get too bearish, because many of our key indicators had remained bullish. Another thing I should mention is that we should never get too invested in a forecast. I have watched as many of my bearish colleagues, after being proven wrong by the market, are still tying to justify their being bearish rather than trying to get aligned with the market. The market will eventually prove them right because, because, because . . . Maybe they will be right sooner than we think, but for now the market looks as if it will be moving higher for a while.

My bullish stance is due to our S&P 500 timing model having switched from neutral to a buy on September 13, three trading days prior to the Fed-induced market breakout. Also, prior to the breakout, about half of the market and sector indexes that we track with our primary timing model were also on buy signals. On the day of the breakout, the other half switched to buy signals.

The chart below shows the two components needed to generate a buy signal -- the Percent Buy Index (PBI) crossed above its 32-EMA, AND the PMO (Price Momentum Oscillator) was above its 10-EMA. Note that the PBI is only at 59%, but it is trending up, which is most important.


Bottom Line: The long-awaited retest did not materialize, and. in my opinion, the market has begun another leg upward that should challenge and exceed all-time highs for the S&P 500 Index.