Bearish Information

[Jim Nickerson]

Re: Bearish Information Re. Richard Russell

10/15/07 Though Russell continues to espouse the coming of the thrid phase of the bull market in effect since 1981, he reviewed today some of the bearish arguments and wrote, "Moreover, the bears point to lagging breadth, a dearth of new highs, sub-par volume, and the fact that Lowry's Buying Power Index, which usually leads the major averages in bull markets, is now scraping along near a six-month low. Furthermore, Lowry's Selling Pressure is not only dominating the Buying Power, but as of Friday's close the Selling Pressure Index was a full 95 points above the Buying Power Index. Thus, according to the bearish argument, all we're seeing now is some kind of a low-volume blow-off preparatory to a final stock market top."

I don't have any real knowledge about Lowry's Buying Power Index and Selling Pressure Index with regard to extremes in their ranges, but every so often Russell notes the numbers, and I take it that Selling Pressure being "95 points" above Buying Power Index is not good, and that was Friday so presumably it would be worse after today--Monday. Later in his comments, "I've been warning that the Dow (and the rest of the market) were moving into correction mode." He pointed out in the DJI the RSI divergence at the last DJI high, the rolling over of the MACD and the MACD histogram going below zero today for the first time since the third week in August.

If there has been one persistent occurrence in the rally since 8/16, it has been the lack of volume in the NYSE and Nasdaq but not as poor in the latter.

[Jim Nickerson]

Re: Bearish Information Re. Season gold chart over 26 years

This is an interesting chart of the average seasonal behavior of gold futures from http://www.decisionpoint.com/TAC/ORD.html in an article by Tim Ord. 10/18/07

[GRG55]

Re: Bearish Information Re. Season gold chart over 26 years

This is an interesting chart of the average seasonal behavior of gold futures from http://www.decisionpoint.com/TAC/ORD.html in an article by Tim Ord. 10/18/07

Something doesn't look right on this chart. Dec ends just over 97 and Jan begins at 100? Clearly I don't understand something about how this chart was prepared, as it seems to imply (to me) a gap up as each year rolls over?

[GRG55]

Re: Bearish Information Re. Global Politics Pakistan style

This isn't a direct financial item, but certainly every investor should be keeping an eye on this. I sense from this vantage (outside looking in) that the US & European political establishment and media are still preoccupied with the Islamic-bomb-to-be in Iran. Although the regime may be odious, Iran is a stable country compared to Pakistan. And Pakistan already has the bomb.
From the Associated Press:

Suicide Bomb Attack on Bhutto Kills 126
By MATTHEW PENNINGTON and PAISLEY DODDS,
AP
Posted: 2007-10-18 20:59:52
Filed Under: World News
KARACHI, Pakistan (Oct. 18) - A suicide bombing in a crowd welcoming former Prime Minister Benazir Bhutto killed at least 126 people Thursday night, shattering her celebratory procession through Pakistan's biggest city after eight years in exile.

Link to article:
http://news.aol.com/story/ar/_a/suic...18071509990001

[GRG55]

Re: Bearish Information Re. Cheyne Financial halts payment

Why do I get the feeling that there won't be a 1987 style crash as everyone seems to be worried about, but instead maybe a slow, grind 'em down wipe out of wealth...

From the FT:
Cheyne Finance halts payment

By James Mackintosh and Paul J Davies
Published: October 17 2007 21:10 | Last updated: October 17 2007 21:10

Cheyne Finance has become the first structured investment vehicle to stop repaying its short-term debt after the administrator of the troubled fund won court backing to declare it in breach of insolvency tests...


Every man for himself???
...The hold on repayments of the SIV’s commercial paper will hit short-term debt markets just as they had begun to show some signs of recovery from the ravages of the summer credit squeeze...

...The administrator won backing from the High Court in a sealed judgment on Wednesday, said people present at the hearing.
However, the court’s interpretation of the insolvency test – using a balance sheet measure, in spite of the SIV’s cash pile – could prove controversial, as many SIVs would be insolvent if a similar measure was applied...

This really has the flavour of a slow motion train wreck, with the authorities running around throwing the points (switches) after the derailment's already occurred.
...Two SIV-lites struggling to restructure have turned to Barclays for support, although Golden Key, set up by Swiss-run hedge fund Avendis, is in dispute with the bank about whether it has to repay a loan it drew down, reported to be worth $250m. Mainsail II, an SIV-lite run by London hedge fund Solent, had a rescue plan backed by Barclays turned down by investors...

Link to article:
http://www.ft.com/cms/s/0/6e6e2f26-7...nclick_check=1

[raja]

Re: Bearish Information Re. Season gold chart over 26 years

This is an interesting chart of the average seasonal behavior of gold futures from http://www.decisionpoint.com/TAC/ORD.html in an article by Tim Ord. 10/18/07

Compare with this year:

au0365nyb.gif

The current rise is there, but the large Jan/Feb rise is not.

[bart]

Re: Bearish Information Re. Season gold chart over 26 years

Compare with this year:

[ATTACH]87[/ATTACH]

The current rise is there, but the large Jan/Feb rise is not.

Or with this:

[GRG55]

Re: Bearish Information Re. S&P Lowers Ratings on RMBS Paper

Does anyone think these ratings are any more believable than the last ones from these boyz?

S&P Lowers Ratings on 1,413 U.S. RMBS Classes Backed by Subprime Mortgage Loans from the 4Q 2005 - 4Q 2006

1.1% of Downgrades Impact 'AAA' Rated Securities

NEW YORK, Oct. 19 /PRNewswire/ --Standard & Poor's Ratings Servicesannounced today that it has downgraded 1,413 of U.S. residential mortgage-backed securities (RMBS) backed by first-lien subprime mortgage loans thatwere issued from the beginning of the fourth quarter of 2005 through thefourth quarter of 2006. These downgraded securities had an original parvalue of $22.02 billion, which represents 4% of the $554.4 billion of U.S.RMBS backed by first-lien subprime mortgage loans rated by S&P during thisperiod. These actions, combined with downgrades previously announced byS&P, impact a total of 1,671 securities of U.S. RMBS backed by first-liensubprime mortgage loans issued during this period, representing $24.8billion, or 4.5% of the $554.4 billion mentioned above. S&P also affirmedits ratings on securities representing $531.6 billion original par value ofU.S. RMBS backed by first- lien subprime mortgage loans from this sameperiod. Of the 1,413 securities downgraded today, approximately 47% were ratedin the 'BBB' category and below. Fifteen 'AAA' rated securities weredowngraded, accounting for roughly 0.01% of all downgraded securities and1.1% of the total dollar amount downgraded. No 'AAA' rating was loweredbelow 'AA'. We took these rating actions at this time because, based on the mostrecent data, we expect further delinquencies and losses on the underlyingmortgage loans; the consequent reduction of credit support from current andprojected losses; and continued declines in home values. While cumulative losses to date remain low, they have increased sinceour July 2007 review and we expect them to increase further. Based on themost recent data from September 2007, cumulative losses for the period haveincreased from 29 bps to 69 bps -- a 138% increase since our July 2007review. The September 2007 data shows increasing levels of overalldelinquencies and serious delinquencies. Seriously delinquent loans includeloans that are either: delinquent by more than 90 days, in foreclosure, orfor which the real estate is possessed by the servicer. For all U.S. RMBSbacked by first-lien subprime mortgage loans issued during this period,overall delinquencies averaged 21.43%, and serious delinquencies averaged14.17%. This is in contrast with the downgraded transactions, for whichoverall delinquencies averaged 15.73% and serious delinquencies averaged23.33%. We expect that the downgraded securities will be particularlyvulnerable to increased losses because, on average, 60%-70% of the loansbacking them are subject to some type of payment adjustment in the nearfuture. Most of these are 2/1 adjustable-rate mortgages already in theiradjustable-rate stage and already past their first, and typically largestpayment reset. Despite some industry claims of increased accommodations tosubprime borrowers, we expect losses to increase for borrowers who haveexperienced (1) rising loan payments due to resetting terms of theiradjustable-rate loans, and (2) principal amortization that occurs after theinterest-only period ends for adjustable- and fixed-rate loans. Standard & Poor's expects that the U.S. housing market will continue toexperience price decreases. We project that property values will decline11% on average from peak to trough and will begin to recover in late 2008,with the peak having occurred in the spring of 2006. This continued declinein home prices will apply additional stress to these securities. As part of this review, we assumed losses for defaulted loans thatclosed during the second half of 2005 at a level of 40%, and for those thatclosed during 2006 at a level of 45%. During our July 2007 review weassumed losses for defaulted loans that closed in 2006 of 40%. We have nowincreased this assumption based on the most recent data and projecteddeclines in home values. Standard & Poor's has completed its global review of all rated asset-backed commercial paper (ABCP) conduits with exposure to these transactionsand confirms that the ratings on those ABCP conduits are not adverselyaffected by these rating actions. Standard & Poor's has also completed a global review of the exposure ofits rated structured investment vehicle (SIV) and SIV-lite structures withregard to exposure to these fourth-quarter 2005 through fourth-quarter 2006vintage U.S. RMBS classes. This review shows that there is exposure toeight tranches of these affected U.S. RMBS classes in two SIV-litestructures. In addition, there is no exposure to these U.S. RMBS classes inany SIV. However, exposure to the affected U.S. RMBS classes will not, inand of itself, result in any adverse rating actions with regard to the SIVand SIV-lite structures. Standard & Poor's is also conducting a review of its ratedcollateralized debt obligation (CDO) transactions with exposure to thedowngraded RMBS classes, and will take action on the affected CDO classratings where appropriate within the next several days.

[raja]

Re: Bearish Information Re. Season gold chart over 26 years

Or with this:

Bart,

Your chart seems to indicate that gold takes a dramatic dive at the end of every December. Am I reading this right?

This would suggest that every December is the time to sell, and rebuy in January . . . .

[bart]

Re: Bearish Information Re. Season gold chart over 26 years

Bart,

Your chart seems to indicate that gold takes a dramatic dive at the end of every December. Am I reading this right?

This would suggest that every December is the time to sell, and rebuy in January . . . .

That's an incorrect interpretation. The chart depicts only seasonal variations within a single average year.

It was constructed by taking the gold price on January 1st and assigning it a 0% gain value. Then a daily calculation is made for every day of the year, showing whether the gold price has increased or decreased when compared against the price on January 1st.

That's done for every year and then an average is computed across each year for the same day... and I hope that made sense.

[GRG55]

Re: Bearish Information Re. G7 Meeting Oct 19/20 '07

Summary from the shrimpfest...

G-7 Says Global Growth Will Slow After `Market' Rout

By Simon Kennedy and Kevin Carmichael
Oct. 20 (Bloomberg) -- Group of Seven finance ministers and central bankers said the credit-market rout will slow economic growth and strengthened calls for China to let its currency appreciate.

``Recent financial market turbulence, high oil prices and weakness in the U.S. housing sector will likely moderate'' the global expansion, officials said in a statement after meeting in Washington yesterday. ``Our overall economic fundamentals continue to be strong and emerging markets are providing critical impetus.''

Policy makers met for the first time since a collapse in demand for assets backed by U.S. subprime mortgages sparked a surge in international borrowing costs. They told investors to address ``shortcomings'' in risk management and called for rules to guide the international investments of government-run funds, seeking to head off a protectionist reaction.

The group also urged an ``accelerated appreciation'' of the Chinese yuan as Europe and Canada joined the U.S. in complaining it remains undervalued and threatens their trade balances...

Link to article:
http://www.bloomberg.com/apps/news?p...&refer=economy

[rj1]

Re: Bearish Information

A Peter Schiff email. Kinda says "I'm right and you're wrong suckers" to Neil Cavuto and Ben Stein regarding Merrill Lynch from his prediction in August.

Dear Investor, Today Merrill Lynch announced a massive 8 billion dollar loss, and S&P downgraded their debt. This is just the beginning, as trillions of dollars that Wall Street loaned to American homeowners will never be repaid. Watch this video clip from Fox News "Cavuto on Business" that originally aired Aug 17, 2007. The exchange is amazing in view of what has just happened. See how I tried to explain to a panel of delusional "experts" why earnings in the financial sector were about to turn into losses. Ben Stein even recommended Merrill Lynch as his favorite stock and lost his cool as I tried to enlighten him and Fox viewers regarding what was about to happen. You just have to see the exchange for yourself to believe it! http://www.youtube.com/watch?v=6XtQoZAqjc8 On a similar line, this video (originally aired on Dec 29, 2006) of a similar exchange I had on Fox "Bulls & Bears" regarding the impending collapse in the housing/mortgage market must also be seen to be believed. http://www.youtube.com/watch?v=yoZV5jt9puc It is important that the public understand just how bad the advice main stream "experts" are peddling. Please forward this email, or the YouTube links to as many people in your contact list as possible and ask them to forward the email to their contacts as well, and so on. Let's get the word out and hold these clowns accountable for their lousy forecasts. Sincerely, Peter Schiff President and Chief Global Strategist Euro Pacific Capital

[friendly_jacek]

Re: Bearish Information

So, what is Peter Schiff's advice now re: investment opportunities? Short banking?

[Jim Nickerson]

Re: Bearish Information Re. Equity Markets Top?

See my post from which this is supposedly quoted. On 10/1/07 Mike Burk made what so far seems to be a good call for the tops in the Nasdaq, DJI and SPX http://www.safehaven.com/article-8527.htm

I was then and am now bearish on the major indices. One thing that would curtail that bearishness is if the RUT were to yet achieve new highs. Such highs would have to surpass the 855.77 on 7/13/07. Currently the RUT is ~6.9% from its intraday high back around the above date. That high was 856.48 if my spreadsheet is correct.

In the referenced post, and these words are not the quote of that post, I discussed Sy Harding's comments on "seasonal timing."

I checked the SPX MACD this evening and it is still declining and its histogram has been increasingly negative. http://bigcharts.marketwatch.com/int...x=39&draw.y=14

If you put the above chart in a two month time frame, you can see that Friday's intraday lows did not break the two recent intraday lows of 10/22 and 10/24. If one has bullish hopes going into Monday 11/5/07, then that is at least a straw of hope, and if the market were to turn up in the next several days, the RSI would present a buy signal which I would expect would also be confirmed by the MACD histogram moving above the zero line.

[GRG55]

Re: Bearish Information Re: Global food crisis looms...

Well here's a real cheery way to start the week...

Global food crisis looms as climate change and fuel shortages bite
Soaring crop prices and demand for biofuels raise fears of political instability