Bullish Information

[friendly_jacek]

Re: Bullish Information

from The Speculative Investor (who lately is a permabear on equities and permabull on gold). I'm glad this agrees with my assessment. I hope Itupers shorting equities will consider this unbiased view and save themself some money (if one trades short term of course).

Alert #176, Mar-19 2008
The 10-day moving average of the equity put/call ratio hit a 10-year high of 0.97 on Monday. We suspect that this was actually an ALL-TIME high, but we don't know for sure because our put/call data doesn't go back further than 1997. Also, the single-day put/call reading achieved on Monday was one of the highest ever.

Monday's extraordinary put/call readings were obviously a response to the Bear Stearns collapse and the resulting "who's next?" fear. Interestingly, though, the Dow Industrials Index did not trade below its January low and actually ended the day with a small gain. The S&P500 Index did trade below January's intra-day low on Monday, but it didn't close below this level. Up until now the January lows have therefore held, meaning that the amount of fear in the market is way out of proportion to the price action.

The stock market reversed upward on Tuesday in similar fashion to the way it reversed upward on Tuesday of last week. Last week's reversal didn't stick, but the latest reversal looks a bit more convincing because it was accompanied by downward reversals in gold and gold stocks. There were also minor upward reversals in the US$ and the T-Bond yield.

It is too early to state with any confidence that Tuesday's reversals will have staying power, but the sentiment backdrop combined with the price action across all the markets has prompted us to upgrade our short-term US stock market outlook to "bullish". There's a significant risk that there will be one more test of the January low prior to the start of a multi-month counter-trend rebound (a rebound within a bear market), but the sentiment extremes registered over the past week indicate that a decisive break below the January lows probably won't happen anytime soon.

Note that the above-mentioned short-term bullish view will be proven wrong if the S&P500 Index CLOSES below Monday's intra-day low (1256).

Gold spiked upward and then reversed downward over the first two days of this week, and the gold-stock indices fell by enough on Tuesday to negate their recent upside breakouts. At this stage none of these moves look particularly significant on the charts, but short-term traders should have exited long positions on Tuesday just to be on the safe side.

We haven't yet seen anything resembling an upside blow-off in either the gold futures market or the gold-stock indices. Also, the average gold stock remains at a depressed level relative to gold bullion. Therefore, we seriously doubt that this week's downward reversals in gold-related investments have marked peaks of intermediate-term significance. The likely alternatives, in our opinion, are:

1. A multi-month rebound has begun in the broad stock market, in which case 2-3 months of consolidation are probably in store for gold and gold stocks prior to the resumptions of their intermediate-term upward trends.

2. The bounce from Monday's 'oversold' extreme in the broad stock market will be followed, within the coming month, by yet another test of the January low, in which case we could still get the sort of explosive upward move in gold-related investments that normally occurs prior to an intermediate-term peak.

Further to the above, we remain intermediate-term "bullish" and short-term "neutral" on gold.

[Jim Nickerson]

Re: Bullish Information Re: Market Bottom???

This is from investmentpostcards.com

[QUOTE-du Plessis]

Mike Burke & John Gray (IIAS): Bearish sentiment pointing to buy signal
“Advisors continued to express new pessimism regarding the market, and the bulls fell further to 30.9% this week. That extends last week’s dramatic drop to 31.1%, from the previous reading at 41.3%.

“There were also more bears at 44.7%, up from 43.3% and 36.2% the prior two weeks. The bears remain well above the level of the bulls.

“The advisors calling for a correction were 24.4%, down from 25.6% a week ago. This group is short term bearish but longer term bullish and wish to buy on weakness.
“The sentiment reading for the last two weeks are very positive for long term markets gains. The means we expect substantially higher index levels a year from now. To find comparable sentiment levels you have to look back to October 2002. That was the last time we had fewer bulls, with reading at 28.4% on October 11, 2002 and 31.0% the week before that. October 2002 was the middle of the bear market bottom that extended from that July through March 2003.”


Source: Mike Burke & John Gray, Investors Intelligence Advisors Sentiment, March 19, 2008.

David Fuller (Fullermoney): Stock market already discounts bearish news
“Just as a crescendo of bearish news stories tell us that the media is feeding on known fears, stock market action tells us the extent to which it has already been discounted. … consensus expectations are always worst at the bottom of the trend, not least because at that stage of the cycle everyone knows why the market fell; they have had ample time to sell; bear traders are talking their book, and potential buyers are hoping for even better bargains. The same process works in reverse near market peaks.

“Today’s Advisors Sentiment readings from Investors Intelligence tell us that Wall Street has either seen its lows or is quite close to them. There is a possibility that this could be wrong, in that we live in an uncertain world and no signal comes with a money back guarantee. However, if it were to be proved wrong, I suspect it would be due to factors that few people are talking about today. Meanwhile, II’s Advisors Sentiment Indicator has an enviable track record at market bottoms.

“The main uncertainty, as far as I am concerned, is the length of convalescence time required before meaningful gains are seen. I suspect it could vary considerably from sector to sector.”

Source: David Fuller, Fullermoney, March 19, 2008.
John Authers (Financial Times): Bear market rally?
“It has been a terrible week. Can the stock market now indulge in a brief bear market rally?

Wednesday’s Merrill Lynch survey of fund managers made clear that the preconditions are in place. More global fund managers are overweight in cash, compared to their benchmarks, than at any time since the survey started in 1998. Fund managers also believe that equities are undervalued by the biggest margin since the bear market bottomed in 2003, and that bonds are overvalued.

“So, there is a lot of cash on the sidelines, in the hands of managers who believe stocks are cheap, and the end of the quarter is close. Many may want to use that cash to buy stocks before the quarter is up.

“There is another reason to expect a rally: the bounce from Monday’s panic levels, as traders realised that Wall Street’s banks were not about to collapse one after another, has led to a rash of predictions that the bottom has been hit.

“There are also hopes that the authorities have at last found a ‘silver bullet’ to end the crisis. False hopes have been invested in several other putative silver bullets, but the news that Fannie Mae and Freddie Mac, the powerful US mortgage agencies, will be allowed to buy more mortgage-backed securities is as good a candidate as any.

“Does a bear market rally need a catalyst? Not necessarily. Tuesday’s surge was triggered by terrible results from two investment banks. Given how negative sentiment had become, the mere fact that they were not epochally disastrous was enough to trigger a rally. In the short term, the mere absence of bad news (which is not a given) might allow the markets to enjoy a bounce.”

Source: John Authers, Financial Times, March 19, 2008.

Richard Russell (Dow Theory Letters): Are stock markets at lows?
“Now check this out – today both the Dow and the Transports were trading well ABOVE their January lows. What, after all this horrendous news those two are still above their January lows? Makes me wonder if Bennie and the Feds could be winning the game.

“It’s really remarkable to note how many millions of words are being written about the ‘awful economy’ and the ‘recession’, but it’s also remarkable how little is being written about the market’s reaction to all the negative news. And from an investment standpoint, of course, what we’re interested in is not the news of the day – no, what we’re interested in is the market’s reaction to the news. Right now it seems that the analysts and the newspapers are so transfixed by the depressing news of the day that they fail to note the stock market’s action.”

Source: Richard Russell, Dow Theory Letters, March 18, 2008.

GaveKal: Fed and tape point to stock market rally
“In recent weeks, we have seen two of the oldest Wall Street adages – namely ‘don’t fight the Fed’ and ‘don’t fight the tape’ – in an open clash. And just as it looked like ‘don’t fight the tape’ was about to win, the Fed took out the heavy artillery and a) slashed rates further (-75bp yesterday) and b) announced a new policy whereby all non-junk-rated paper could be deposited at the Fed.

“We are now in a situation where both the Fed and the tape are pointing in the same direction. This should mean that, if nothing else, the markets rally hard over the coming weeks.”

Source: GaveKal – Checking the Boxes, March 19, 2008.

Bloomberg: Barton Biggs expects 1,000-point gain in Dow
“The decline in US stocks is ‘way overdone’ and the Dow Jones Industrial Average may rally 1,000 points, investor Barton Biggs said.

“‘We’re in a financial panic,’ Biggs said during a telephone interview with Bloomberg Television from New York. ‘We’re setting up for a really big rally. I don’t mean three or four hundred points on the Dow, I mean 1,000 points on the Dow. I don’t know if we’re going to get it next week or the week after. But this thing has gotten crazy and is overdone.’

“Biggs, a former Morgan Stanley strategist who now runs the $1.5 billion hedge fund Traxis Partners LLC, said stock markets from Germany to Hong Kong may bottom out soon after tumbling this year.

“‘We’re at a really crucial point,’ Biggs said. ‘This is a time to be buying stocks around the world and not to be selling them. Yeah, it’s scary. It’s always scary at bottoms. But I don’t believe the economy is collapsing,’ Biggs said. ‘This is not the end of the world.’”

Source: Brian Sullivan and Michael Patterson, Bloomberg, March 14, 2008.
[/QUOTE]

These are all or certainly the bulk of bullish remarks in the above link. There are probably an equal number of bearish ones.

[friendly_jacek]

Re: Bullish Information

Jim, good job on the timing of this immediate bottom. This type of the market with a lot of uncertainty and unknowns and investors oscillating between euphoria and fear is a prime example how sentiment trading can shine. Although I have to admit that it has been hard to figure out selling points based on sentiments alone in the last 4 months. Jim, what is your target in this rally?

[Jim Nickerson]

Re: Bullish Information

Jim, good job on the timing of this immediate bottom. This type of the market with a lot of uncertainty and unknowns and investors oscillating between euphoria and fear is a prime example how sentiment trading can shine. Although I have to admit that it has been hard to figure out selling points based on sentiments alone in the last 4 months. Jim, what is your target in this rally?

f_j,

If there is any benefit to this thread, I hope some beside you and me are able to find it to his/her advantage.

I don't have a target, maybe I should, but I don't. What I would like is to see this rally turn into something significant, and then ride it until I think it has probably reversed. I have no idea if that will happen and if it were to, when a reversal will be. I try to use some percentage of loss as a point at which I will, may, should consider closing a position. I don't generally enter a trade with the notion that it will be for only a fews days, the exception being if the position suddenly, definitively moves against my making a profit.

Unless the move were to go up enough to seriously affect sentiment which I think takes months generally, any exit before such an extreme might be reached will be based as I wrote above. Sorry I can't tell you where it might end, but you know that.

[Jim Nickerson]

Re: Bullish Information Re. Paul Kasriel perhaps bullish.

http://www.safehaven.com/article-9783.htm

Fairly long article in which Kasriel discusses issues of debt and savings in households which leads to his conclusion:

The upshot of all this is that in the next several years, the U.S. is likely to experience not only sluggish growth in homebuilding, but also very sluggish growth in the demand for home furnishings and other consumer discretionary goods and services. It very well could be that instead of U.S. corporations being the biggest buyers of U.S. corporate equities, U.S. households could become the biggest buyers. Similarly, instead of foreign central banks continuing to be big buyers of U.S. Treasury debt, U.S. households could take their place - i.e., after the yield on Treasury securities rises above the U.S. consumer inflation rate.

[Jim Nickerson]

Re: Bullish Information Re. High level of mutual fund cash

http://www.bloomberg.com/apps/news?p...gUE&refer=home

Mutual Funds Abandon Stock Market as Volatility Jumps (Update4)

By Eric Martin and Alexis Xydias
March 24 (Bloomberg) --

Mutual funds are selling stocks and hoarding cash just as trading surges to a record and prices grow more volatile than at any time since the Great Depression.
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Mutual fund managers who invest for pension accounts, insurance companies and individuals raised the cash they held to 4.9 percent of client assets this month, according to Merrill. The last time the level was higher was in March 2003, after the S&P 500 had lost almost half of its value from its 2000 peak.

[Jim Nickerson]

Re: Bullish Information Re: Mark Hulbert

http://www.marketwatch.com/news/stor...3AF29E27A87%7D

MARK HULBERT 3/25/08
Was that the bottom?
Commentary: Contrarians growing more confident that bottom has been seen

ANNANDALE, Va. (MarketWatch) --

Was the Dow's March 10 closing low of 11,740.15 the final low of the decline that began last fall?

That is the $64,000 question.



Contrarians, for their part, detect mounting evidence that it was. Though the Dow Jones Industrial Average is now more than 800 points higher than it was at that low, the mood among stock market timing investment newsletters remains almost as pessimistic now as it was then.

That suggests a stubbornly held bearishness among the editors of stock market timing newsletters. That in turns means that there is precisely the kind of wall of worry that strong rallies like to climb.

Consider 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 Monday night, the HSNSI stood at minus 22.5%.

That means that, on average, the editors of short-term market timing newsletters are recommending that their clients allocate 22.5% of their equity portfolios to going short. That's an aggressive bet that the stock market will fall.

That aggressively bearish bet is one of the reasons that contrarians are bullishly inclined right now. But it is not the only reason.

Another one: The HSNSI has barely budged during the nine-trading-session rally that has added the more than 800 points to the Dow. At the March 10 bottom, in fact, the HSNSI stood at minus 25.9%. In other words, despite the significant rally since then, the editor of the average market timing newsletter has increased his exposure (that is, reduced his allocation to going short) by just 3.4 percentage points.

To put that puny difference in perspective, consider what happened to the HSNSI in the wake of the stock market's rally off its January 22 low. In the initial eight days of that rally, which tacked nearly 800 points onto the Dow, the HSNSI jumped more than 22 percentage points.

That relatively quick jumping back on the bullish bandwagon was one of the reasons that, a little more than one month ago, I argued that the retest of the January lows was likely to fail. See Feb. 19 column

The editors of stock-market-timing newsletters have, on balance, reacted far differently this time around, and for that reason the rally would appear to be built on a markedly more solid sentiment foundation.

[friendly_jacek]

Re: Bullish Information Re. Paul Kasriel perhaps bullish.

http://www.safehaven.com/article-9783.htm

Fairly long article in which Kasriel discusses issues of debt and savings in households which leads to his conclusion:

I'm not sure what to make from the above, but how about the recent poll from Yahoo Finance (great tool from a contrarian point of view?):

With the stock market showing renewed strength is it safe to buy?
	Yes. We've bottomed. 25% Stocks will trade sideways. 31% No. This is a head-fake. 44% 130205 Votes to date

[Jim Nickerson]

Re: Bullish Information Re. Paul Kasriel perhaps bullish.

I'm not sure what to make from the above, but how about the recent poll from Yahoo Finance (great tool from a contrarian point of view?):

With the stock market showing renewed strength is it safe to buy?
	Yes. We've bottomed. 25% Stocks will trade sideways. 31% No. This is a head-fake. 44% 130205 Votes to date

All I took from Kasriel's piece is that he offered an opinion of what could contribute to an upward move of markets.

The yahoo poll means nothing to me unless one has data from other periods with which to compare the current levels of opinion. If you look at the II sentimental data from last week in a vacuum, at least to me it would be meaningless. Comparing it to previous extremes, it doesn't strike me as meaningless.

[Jim Nickerson]

Re: Bullish Information Re. Hulbert on gold

http://www.marketwatch.com/news/stor...A6D99E48255%7D

Golden correction
Commentary: Gold timers continue their retreat to cash, a good sign
By Mark Hulbert, MarketWatch
Last update: 12:01 a.m. EDT March 26, 2008

ANNANDALE, Va. (MarketWatch) -- The evidence continues to mount that gold's spectacular plunge in the past week was a mere correction in an ongoing bull market.


Just take what happened on Tuesday, when gold bullion jumped by more than $16 an ounce. Far from becoming more bullish, the average gold-timing newsletter tracked by the Hulbert Financial Digest reacted by becoming markedly more bearish.

That's a very good sign, according to contrarian analysis, because it suggests that there is a substantial wall of worry out there for the bull market to climb.

Consider the latest readings of the Hulbert Gold Newsletter Sentiment Index (HGNSI), which reflects the average recommended exposure to the gold market among a subset of short-term gold timing newsletters tracked by the Hulbert Financial Digest. The HGNSI ended the day Tuesday at 11.5%.

That represents a decline of 23 percentage points for the day alone. And it is 54 percentage points below where this sentiment index stood as recently as last Tuesday, one week ago.

In fact, the last time the HGNSI was as low as it is today was at the end of this past November, when gold bullion was trading for around $785 an ounce, or about $150 an ounce less than where it is today.

In other words, the past week's correction has so spooked investors that they are just as bearish today as they were when bullion was a whole lot lower.

Rapid retreats to the exits are not usually seen at major market tops. At such times, according to followers of contrarian analysis, the typical reaction is to treat any pullback as a buying opportunity. Far from believing that the decline is the beginning of the end, advisers tend to consider it to be the pause that refreshes.

Perhaps the best illustration of this contrarian pattern in recent times is what happened to sentiment among stock market timers at the top of the market in March 2000, just as the Internet bubble was bursting. In the wake of the market's first 10% decline off its all-time high, the average short-term stock market timer tracked by the Hulbert Financial Digest was more bullish than he was at the top.
Now that's stubborn bullishness.

And it's anything but what we're seeing now in the gold market.

[Jim Nickerson]

Re: Bullish Information Re: Hulbert Again

http://www.marketwatch.com/news/stor...t=MostReadHome

Here is a link to an article that zoog just mentioned on another thread.

MARK HULBERT
Dow 16K?
Commentary: Index could be at 16,000 by year end, Richard Band says

By Mark Hulbert, MarketWatch
Last update: 11:29 p.m. EDT March 27, 2008

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To be sure, Band wrote that on Tuesday night, and since then the Dow Jones Industrial Average has dropped 230 points.

Band continued: "We're in a critical stage for stocks right now, what technical analysts call the 'right shoulder' of a head-and-shoulders bottom. The left shoulder formed on March 10, when the Standard & Poor's 500 index touched its closing low for the year (so far) at 1273.37. The upside-down head came on March 17, when the index broke to a new low intraday but finished at 1276.60, slightly above the March 10 close. Now we're sliding down again to complete the right shoulder of the pattern. If all goes well, the S&P should remain comfortably above the two previous closing lows. Then we can rocket higher in April."

Band adds that when the right shoulder of a head-and-shoulders bottom is forming, "the biggest temptation for investors is to throw up their hands and say, 'This market will never go up. It's doomed.' Don't make that mistake. A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!"
Band is recommending several exchange-traded funds and one open-end mutual fund for subscribers who want to increase their equity exposure: The iShares Russell 1000 Growth Fund (IWF), EEM, and Selected American Shares (SLASX: Selected American Shares

I'm not putting this here to stick it in the craw of anyone who chooses to belittle those who rely upon technical analysis as part of their method of assessment of markets. The word "faith" in my opinion has no place in making market decisions. Hulbert's points of this guy's track record are worth considering. Band's record does not guarantee he will be correct on this call.

[Jim Nickerson]

Re: Bullish Information Re. Hulbert Recession Over?

http://www.marketwatch.com/news/stor...8F6D9641CBE%7D

Probably most people would give this a thread of its own, but what the hell, if people don't read this thread and as result miss something that might be important, so be it.

MARK HULBERT
Good and bad economic news
Commentary: TrimTabs says it's a recession, but may be ending

By Mark Hulbert, MarketWatch
Last update: 11:29 p.m. EDT April 1, 2008

ANNANDALE, Va. (MarketWatch) -- TrimTabs, the investment research firm in which Goldman Sachs Group Inc. in February became a minority shareholder, has both good and bad news about the U.S. economy.
See story about Goldman acquisition

Let's start with the bad news: Not only is the economy in a recession, according to TrimTabs, it has been in one for six months now. The only reason that this isn't more widely recognized is that it takes months, if not years, for the government to officially confirm that a recession has started.

Now the good economic news from TrimTabs: There is a distinct possibility that the economy has already emerged from the recession, or is about to.
TrimTabs bases this relatively cheerful assessment on an analysis of daily income tax withholdings from the U.S. Treasury. According to Madeline Schnapp, director of macroeconomic research at TrimTabs, withholdings during March were 4.1% higher than one year ago.

According to an econometric model that TrimTabs has devised based on the Treasury's withholding data, Schnapp is estimating that the U.S. economy added 48,000 jobs in March. That's not spectacular job growth, to be sure, but better than the diminution in total employment that TrimTabs believes occurred in previous months.

Schnapp hastened to add that we should not expect this job growth to show up in the employment numbers that will be released this Friday by the government's Bureau of Labor Statistics. That's because, she said, the bureau uses a "backward-looking methodology (that) usually misses economic turning points."

In fact, Schnapp is predicting that the bureau on Friday will report that the economy lost between 75,000 and 100,000 jobs in March. In effect, TrimTabs is warning investors not to be overly concerned about such numbers, should the bureau report them to be this bad.

The daily tax withholding data from the Treasury Department is not the only reason that Schnapp believes we should ignore the bureau's numbers.
Another is the TrimTabs Online Job Postings Index, which the firm describes as a "proprietary measure of online job availability." According to Schnapp, this index bottomed in early January and rose 1.2% in the past four weeks. She argued that "if the economy were collapsing, this indicator would be dropping like a rock, just like it did in 2000 and 2001."

Though the Hulbert Financial Digest does not track TrimTabs, it would appear to have navigated the market's gyrations in recent years quite well. When I last wrote about its jobs growth projections, in May 2005, the firm was aggressively bullish, recommending that clients be 200% long - fully margined, in other words. That was a good time to be bullish, as we may recall. See May 2005 column

The firm turned bearish Oct. 15, within shouting distance of the market's top. They remained bearish until March 23, when the firm turned neutral, and on March 31 it became moderately bullish, recommending an equity exposure level of 50%.

What would it take for the firm to recommend a higher exposure level?
Schnapp, in an interview, indicated that one factor that would likely lead her firm to become more bullish would be a marked increase in share buyback activity among U.S. corporations.

Even absent such a turn of events, however, Schnapp is willing to say that "once panicked investors realize that their fears of a deep and prolonged recession are not materializing, U.S. stock prices could shoot up very quickly."

[tree]

Re: Bullish Information

Sorry, but in my humble opinion, the "if you can't beat 'em, join 'em" philosophy is what's helped get us into the terrible mess we're in now. That's a race to the bottom, with a dead end. :eek:

[friendly_jacek]

Re: Bullish Information Re. Hulbert Recession Over?

http://www.marketwatch.com/news/stor...8F6D9641CBE%7D

Probably most people would give this a thread of its own, but what the hell, if people don't read this thread and as result miss something that might be important, so be it.

MARK HULBERT
Good and bad economic news
Commentary: TrimTabs says it's a recession, but may be ending

By Mark Hulbert, MarketWatch
Last update: 11:29 p.m. EDT April 1, 2008

Jim, don't give up, people read your sticky thread. I guess i's politically incorrect to admit so. As for the short lived recession theory, I love it. I felt for a long time this this 2007/2008 crisis is either 1990-style, short lived, "undeclared" recession (that was bad real estate wise), or a near recession episode like 1997-1998. Long term, big and protracted recession is unavoidable, but it will take a couple more years for the perfect storm to emerge and sink the US and global economies.

[Jim Nickerson]

Re: Bullish Information Re. Hulbert Recession Over?

Jim, don't give up, people read your sticky thread. I guess i's politically incorrect to admit so. As for the short lived recession theory, I love it. I felt for a long time this this 2007/2008 crisis is either 1990-style, short lived, "undeclared" recession (that was bad real estate wise), or a near recession episode like 1997-1998. Long term, big and protracted recession is unavoidable, but it will take a couple more years for the perfect storm to emerge and sink the US and global economies.

jacek,

Theories are one thing, data that are collected and analyzed by presumably credible sources are another. TrimTabs, for reasons that I cannot defend (I guess it is just exposure to I think Biederman on TV over the years when I used to watch it seemed to be credible) is credible. If data indicate something, then it's worth in my opinion paying attention to them--despite their going against some conventional wisdom.

It's my impression that the bearishness that exists on iTulip should bring forth some sort of comment such as Hulbert's report has got to be pure horseshit, and in fact I recognize TrimTabs could be totally wrong.