Bearish Information

[rabot10]

Re: Bearish Information

WDCRob -

One thing you have to hand to Schiff is that he's been absolutely unwavering in his positions (I mean where he puts his own money - almost ALL of it, from what I could gather) for the past ten years.

There's something very interesting about this guy's investing style. He's head of a large brokerage, but he does not trade his positions at all as far as I know. He's held the same basket of gold stocks (very little bullion) for a decade and berates his clients for selling anything during the worst corrections. He does not seem to even remind them to take profits on the upswings.

No trading, no dollar cost averaging, little analysis of whether "the markets" are headed up or down. He just holds them, and the guy is doing very well indeed from those positions over time.

Sorry Peter what did U say U R doing with your own money?

[Guest]

Re: Bearish Information

Rick -

Greets from the "left coast" to the "right coast" for ya. Have a wonderful new year, and may we all survive the flying gobs of falling humpty dumpty doo-doo in 2008.

Hoist a pint of prime Florida ale (gator urine?) for me willya? (Wish we wuz n NY, then we could really celebrate). Oh ya, and I can't be Mr. Schiff 'cause no matter how hard I'm rummaging around in my pockets fer silver en gold dollarz I can't seem to scare up 15 million USD.

Wouldn't mind renting his crib in Connecticut though. Here's a toast to Peter (and Metalman too, who's a chip off the old block in his own right). Yes, our Peter may go around "trawling" for new ideas wherever (like around here f'rinstance), but don't they all? ('cept EJ of course).

Like I said already - Greets from the "left coast" to the "right coast" for ya. I know who you remind me of, that guy in the Paul Theroux novel - "Mosquito Coast" - dragging his family off to the middle of nowhere in search of adventure! Poor family, following a nut like you around!

[Jim Nickerson]

Re: Bearish Information Re. Some technical stuff.

Carl Swenlin. Retest Still In Progress 1/4/08
http://www.decisionpoint.com/ChartSp...80104_top.html


Swenlin's first chart seems to have been put into his article before the market closed Friday. It showed SPX at 1415.75, and the actual close was at 1411.63, a close which penetrated a 400 DMA (which has been support since May 2003) as well as the trendline he shows. He discusses how he see the significance of the Rydex S&P Equal Weighted ETF too, and it closed below both the Nov. and August lows.

If you are wondering if the 9-Month Cycle has made a low, so am I. I have tentatively identified the trough as being in mid-December, but, since prices have fallen below the mid-December level, I'll have to rethink that after things have shaken out. This is not a satisfying conclusion, but this is often the way it is -- cycle projections are good for a longer-term estimate, but it is hard to nail down the exact trough until after the fact.

Bottom Line: It is not impossible for the market to complete a successful retest and for the bull market to continue, but the technicals are worse than they have been since the last bear market ended, and it is difficult to be optimistic at this point.

Emphasis JN.

[Jim Nickerson]

Re: Bearish Information Re. Nickerson's observations.

							% VGY OFF	10 DAY	10 DAY	10 DAY NY	AVG	10 DAY NAS	CBOE EQUITY
	SPX	DJI	NASDAQ	NDX	RUT	VGY	19DAY EMA	NY ADV-DEC	NAS ADV-DEC	ADV/DEC	NY & NAS	ADV/DEC	P/C RATIO
03/05/07	1374.12	12050.410	2340.68	1712.94	760.06	451.58	-4.01%	-5979	-6304	0.70	0.68	0.66	0.93	3/6/07
07/27/07	1458.95	13265.470	2562.24	1956.19	777.83	469.10	-5.08%	-10939	-8341	0.50	0.54	0.57	0.85, 0.88	7/26, 8/01
08/03/07	1433.06	13181.910	2511.25	1918.56	755.42	456.92	-5.43%	-8760	-8118	0.58	0.58	0.58	0.84	8/6/07
08/15/07	1406.70	12861.470	2458.83	1864.92	751.54	445.14	-5.20%	-6584	-4326	0.60	0.66	0.72	1.05	08/15/07
08/16/07	1411.27	12845.780	2451.07	1846.09	768.83	447.66	-4.21%	-8333	-5082	0.81	0.85	0.89	1.02	08/16/07
11/20/07	1439.70	13010.140	2596.81	2029.94	749.33	435.00	-4.41%	-8573	-6734	0.59	0.61	0.63	0.98	11/16/07
11/21/07	1416.77	12799.040	2562.15	2006.38	740.30	428.95	-5.20%	-7376	-6103	0.63	0.65	0.66	0.82	11/21/07
11/23/07	1440.70	12980.880	2596.60	2028.90	755.03	436.75	-3.14%	-5151	-4432	0.73	0.74	0.74	0.54	11/23/07
11/26/07	1407.22	12743.440	2540.99	1989.36	735.07	427.38	-4.72%	-5383	-4908	0.72	0.72	0.72	0.70	11/26/07
01/04/08	1411.63	12800.180	2504.65	1963.52	721.60	414.97	-5.51%	-355	-2790	0.98	0.90	0.83	0.69	01/04/08

The data above were selected for one of the following reasons:
1. The underlined index values were "correction" lows during 2006,
2. The 19-day EMA of the Value Line Geometric was off the index value by 5% or more,
3. There were major lows in the 10-day sum of advances minus declines for the NYSE and Nasdaq.

What strikes me about these data as pertinent to where the market was on the close Friday 1/4/2008 is that even though the Russell 2000 (RUT) and the Value Line Geometric (VGY or $XVY on stockcharts.com) are at new lows for over a year, the advance decline data, both sums and ratios, are not indicative of the market being significantly oversold when compared to recent (1-year) corrective lows.

Additionally, the Equity put/call ratios recently reflect little "fear" amongst small investors with the latest reading of 0.69 on Friday at a time that at least two broad indices were at their lowest point in over a year.

As beauty may be in the eye of the beholder, I am relatively sure someone else may see a different interpretation to these data, but my impression is the best bet is that the markets have a way to go to the downside before there is consideration for any upside action.

[Jim Nickerson]

Re: Bearish Information Re. Pre-crash Scenario--Hussman

http://hussmanfunds.com/wmc/wmc080107.htm 01/07/08

John Hussman: Minding the Hinges on Pandora's Box

Still, I am emphatic that investors should evaluate their risk exposures and tolerances now, in order to allow for substantial further market weakness. Market conditions presently feature a Pandora's Box of rich valuations, vulnerable profit margins, rising default risk, rapidly deteriorating market internals, failing support levels, and accumulating evidence of oncoming recession. As I noted in my December 17 comment, “there is one particular scenario that would be ominous in my view. That would be if we see a relatively uninterrupted series of declines that breaks cleanly through the August and November lows, followed by a one-day advance of 200-400 Dow points. That's a script that markets tend to follow pre-crash. Though it's not a strong expectation or forecast, it's something worth monitoring, because we've started to see the pattern of abrupt jumps and declines at 10-minute intervals that is often a hallmark of nervous markets.”

Among various stock indices, the Value Line Composite and the equal-weighted S&P 500 indices broke cleanly through the August and November lows last week. Several capitalization-weighted indices held just above those lows on a daily closing basis, but on the basis of weekly closing values (which we generally ascribe more weight), even the S&P 500 and Dow Industrials broke their prior lows.

The stock market is oversold short-term, which invites the potential for a spectacular “clearing rally” of the typical variety – fast, furious, and prone to failure. While such an upward spike might be embraced as some sort of message that the market has “fully discounted” negative conditions and mark a successful “test” of prior lows, the data suggest that underlying market and economic conditions are rapidly deteriorating. In that context, a spectacular short-term rally (particularly a one-day barn burner) could provide a setup for concerted selling. As usual, I have no intention of encouraging investors to depart from well constructed investment plans, but investors should recognize that a 30% market decline is only a standard run-of-the-mill bear. It's a good idea to evaluate your investment portfolio to ensure you could tolerate that outcome, should it occur, without abandoning your discipline.

Red Emphasis JN

For whatever reason, Hussman did not mention that the RUT on Friday also took out its August, November and December lows.

[Jim Nickerson]

Re: Bearish Information Re. Hussman's Crash Alert!

Despite my wish not to be redundant, I am copying part of a post I made in another thread, which there certainly might be missed by those who are looking for bearish comments.

The other post.

Hussman wrote originally on 12/17/07 http://hussmanfunds.com/wmc/wmc071217.htm

Quote:

Originally Posted by Hussman I'm back to the more typical position of having no specific short-term views. That said, there is one particular scenario that would be ominous in my view. That would be if we see a relatively uninterrupted series of declines that breaks cleanly through the August and November lows, followed by a one-day advance of 200-400 Dow points. That's a script that markets tend to follow pre-crash. Though it's not a strong expectation or forecast, it's something worth monitoring, because we've started to see the pattern of abrupt jumps and declines at 10-minute intervals that is often a hallmark of nervous markets.

Note Hussman's comments were written on 12/17/07, then from 12/26/07 we have witnessed an "uninterrupted series of declines that breaks cleanly through the August and November lows." Without starting a debate about what "cleanly" absolutely means, the intraday low on the DJI on 1/9/07 took out the 8/16/07 intraday low by 16 points, and the closing low day before yesterday definitely took out the August and November closing lows.

Since 2:16PM ET yesterday (1/9/08) until 3:10PM ET today, the DJI went up 428.96 dollars. That covers a bit over the length on one trading day and occurred in the course of two trading days. [edit:7:30PM CT, I believe it is correct that from the intraday low yesterday 1/9/08 to the intraday high today 1/10/08 the DJI gained 499.76. I had and continue to have some trouble with the 2 day charts with one minute intervals in seeing the reported lows for yesterday which I believe was 12431.53. The reported intraday high today was 12931.29. From that high to the close today the DJI lost 78.20 dollars.]


Whether or not over the next few days, or today's decline from the intraday highs and several more days, we see a crash is going to be interesting to watch. My thinking about the odds of anyone actually calling a crash is that the odds must be small, but then I watched Marty Zweig do it on Wall Street Week in 1987, only to then watch utterly dumbfounded on Monday after his Friday night call as it occurred.

[Chris Coles]

Re: Bearish Information Re. Hussman's Crash Alert!

Despite my wish not to be redundant, I am copying part of a post I made in another thread, which there certainly might be missed by those who are looking for bearish comments.

Hussman wrote originally on 12/17/07 http://hussmanfunds.com/wmc/wmc071217.htm

Quote:

Originally Posted by Hussman I'm back to the more typical position of having no specific short-term views. That said, there is one particular scenario that would be ominous in my view. That would be if we see a relatively uninterrupted series of declines that breaks cleanly through the August and November lows, followed by a one-day advance of 200-400 Dow points. That's a script that markets tend to follow pre-crash. Though it's not a strong expectation or forecast, it's something worth monitoring, because we've started to see the pattern of abrupt jumps and declines at 10-minute intervals that is often a hallmark of nervous markets.

Note Hussman's comments were written on 12/17/07, then from 12/26/07 we have witnessed an "uninterrupted series of declines that breaks cleanly through the August and November lows." Without starting a debate about what "cleanly" absolutely means, the intraday low on the DJI on 1/9/07 took out the 8/16/07 intraday low by 16 points, and the closing low day before yesterday definitely took out the August and November closing lows.

Since 2:16PM ET yesterday (1/9/08) until 3:10PM ET today, the DJI went up 428.96 dollars. That covers a bit over the length on one trading day and occurred in the course of two trading days. [edit:7:30PM CT, I believe it is correct that from the intraday low yesterday 1/9/08 to the intraday high today 1/10/08 the DJI gained 499.76. I had and continue to have some trouble with the 2 day charts with one minute intervals in seeing the reported lows for yesterday which I believe was 12431.53. The reported intraday high today was 12931.29. From that high to the close today the DJI lost 78.20 dollars.]


Whether or not over the next few days, or today's decline from the intraday highs and several more days, we see a crash is going to be interesting to watch. My thinking about the odds of anyone actually calling a crash is that the odds must be small, but then I watched Marty Zweig do it on Wall Street Week in 1987, only to then watch utterly dumbfounded on Monday after his Friday night call as it occurred.

Jim,

What is much more important is that you have shown the courage to make such a forecast.

Chris.

[Jim Nickerson]

Re: Bearish Information Re. Hussman's Crash Alert!

Jim,

What is much more important is that you have shown the courage to make such a forecast.

Chris.

I think what is important is that there are some smart people out there in the investment world, and the problem is to try to find them if they make themselves known. When anyone says anything about market direction, it seems to me one question is whether or not is that person credible or just a crank?

I have made no forecast. Hussman laid out his opinion. I consider Hussman probably knows enough not to be just shooting off his mouth. I also fully recognize he could be wrong, but so far, it seems he may not be.

I am not courageous. I am always scared. But if one has a credible source that outlines a "roadmap" of events, the only question as I see it is whether one should prepare to follow it. I have prepared. If it unfolds further I may make a little money. I may get tricked and lose some of my assets.

[Jim Nickerson]

Re: Bearish Information Re. Richard Russell

As quoted by Prieur de Plessis http://www.safehaven.com/article-9218.htm

Richard Russell (Dow Theory Letters): Primary stock market trend has turned down

"The operative thesis for investors at this time is that the primary trend has turned down. A bear market is in progress. What does this mean? I've outlined this many times before, but here goes again - the position I favor here is cash and gold, a lot of gold. You can buy GLD, you can buy gold coins, and you can also buy GDX, which represents a list of gold mining shares. The important thing is to have a good position in all things golden.

"I don't know how far this bear market is fated to carry. Nor do I know how long it will last. My advice - be prepared for the worst and hope for the best. To hope costs you nothing, but to be unprepared can cost you much, maybe more than you can imagine at what probably is this early phase of the bear market.

"Through over half a century of experience, I've learned to respect bear markets. I don't trade them, I don't fade them, I don't short them - I stay out of them. I've learned to stay on the sidelines."
Source: Richard Russell, Dow Theory Letters, January 9 & 11, 2008.

[Jim Nickerson]

Re: Bearish Information Re. European Recession

P. de Plessis http://www.safehaven.com/article-9218.htm

Quoting a GaveKal source dated 1/10/08

GaveKal: Europe is heading for a recession

"Last month, we again made the case for a European recession, citing three reasons why we expect Europe to face even bigger economic problems in this coming year than the US, namely:

1. Cyclical timing is not currently in Europe's favor: Given that the ECB began tightening in December 2005 and the standard 18-month lag for monetary policy, conditions in Europe should continue to deteriorate this year.
2. Europe's real estate market is even more precarious the US's: Both prices and quantities have gotten much more out of hand in much of Europe than they ever did in the US.
3. Currency movements do not bode well for European exports: With the euro having risen so sharply against the USD, RMB and yen, the narrowing of the US trade deficit should come at the expense of European exports.

"Today, it seems the cracks are finally starting to show in Europe. France just posted a record trade deficit of -€4.8 billion, as exports dropped by -1.8% in November. And with sales to the US and Asia declining, the French Finance Minister is promising to push for a weaker Euro at next month's Group of Seven meeting. And she may get support from her German counterpart, as German exports also dropped -0.5% MoM in November, while industrial production fell -0.9% MoM.

"What is perhaps even more telling is the fact that European retail sales have already started to falter. In Germany, for example, retail sales fell -3.2% YoY in November, and then Christmas shopping failed to match last year's levels. And this comes while the Euro is still extremely strong and labor markets are still relatively tight (German unemployment fell from 8.6% in November to 8.4% in December - this may be high by US standards, but it represents Germany's lowest reading since 1993.

"We are now evermore convinced that Europe is heading for recession. And to make matters worse, Europe does not excel at making the necessary adjustments at such transition points in the business cycle.

"All in all, we see troubling times ahead for European markets."

Source: GaveKal - Checking the Boxes, January 10, 2008.

[Jim Nickerson]

Re: Bearish Information Re. Prieur de Plessis

http://www.safehaven.com/article-9181.htm

1/9/08 This article was written the 8th before the big volatility in the US markets Wed-Fri.

It is a nice article in that de Plessis disscusses and shows some long-term charts on the DJI and NYA and highlights what I would call some secular technical changes.

In the Bio accompanying the article it notes a relationship with John Mauldin, in whose articles I first became aware of de Plessis.

The SafeHaven website's archive now lists three articles by de Plessis, two of which are weekly reviews and having read them, I believe they are quite good. I hope he will continue to contribute there as it is a place I regularly check for things suiting my interests.

He links to his website http://investmentpostcards.wordpress.com/ which shows the same article as just posted on safehaven.com. He has a section down on the right "Recent Posts."

[Jim Nickerson]

Re: Bearish Information Re. Chartist SELLS Everything.

Almost, except positions in the portfolio recommended for traders.

1/15/08 Dan Sullivan, The Chartist, subscription, http://www.thechartist.com

Hotline message issued Monday.

Long term investors who are acting in sync with our real money accounts, The Actual Cash Account and the Aggressive Account are now advised to close out all positions, moving to 100% cash or equivalent.
Traders are advised to maintain current positions while strictly adhering to the mental stops.
Traders should be aware that Arcelor Mittal(MT) closed below its mental stop today and should now be sold.
Traders note: We raised our mental stop on Apple (AAPL), which was recommended on two occasions to 150, Baxter International (BAX) to 55.90 and Goldcorp (GG) to 30.05

I have attempted to track the positions recommended and bot on 10/9/07. I am sure my figures are not exact. My figures show the loss in the actual cash account was ~12% and in the Aggressive Cash Account ~15%. Total dollar amount about a million or 1.1M.

Sullivan was correct in being bullish in the market since early April, 2003. Then he missed with his call for continued bullishness in October, 2007.

[Jim Nickerson]

Re: Bearish Information Re. Hulbert on Sullivan

See the note above too.

MARK HULBERT
A long-time bull throws in the towel
Commentary: Dan Sullivan's model stock portfolio is now 100% in cash

By Mark Hulbert, MarketWatch
Last update: 3:32 p.m. EST Jan. 17, 2008

http://www.marketwatch.com/news/stor...289224E9620%7D

Sullivan, therefore, has seen lots of different kinds of market environments, which is why we should place more than the usual weight on what his intuition tells him. And right now, as he said in an interview Thursday afternoon, his "gut feeling" is that we're in a bear market that we will need to let "run its course."

That's Sullivan's way of saying that the decline he now expects is not likely to be a small one, either in terms of duration or magnitude of losses.
As recently as the publication date of the last issue of Sullivan's newsletter, which was in early January, he was still bullish on the stock market's primary trend. What changed in the interim?

Sullivan mentioned two major factors. The first is technical: In recent days, all of the major market averages convincingly broke below their August lows.

The second is the breakdown of the industry groups that were previously leading the market. Sullivan believes that each bull market is dominated by groups with exceptional relative strength, and that the bull market's end is often signaled when those groups lose that strength. As recently as early January, Sullivan had argued that these market leaders were still bucking the downdraft. He says that they are doing so no longer.

As a result, Sullivan has liquidated his two model stock portfolios and gone completely to cash. The last time he was in an all-cash position was in early April 2003, nearly five years ago.

The safest place to be, for now, he said, is "cash or the equivalent."

For the record: Sullivan's newsletter is in 4th place among the services the Hulbert Financial Digest has tracked over the last 25 years.

[Jim Nickerson]

Re: Bearish Information Re. Sy Harding

ARE WE IN A BEAR MARKET? Jan. 18, 2008.

http://www.decisionpoint.com/TAC/HARDING.html

One of the most reliable 'contrary' sentiment indicators is the poll of its members by the American Association of Individual Investors. When its bearish percentage gets above 50% the market is usually nearing a correction low. Extreme readings above 55% bearish are quite rare. In fact, since 1987, AAII bearish sentiment exceeded 55% only in the fall of 1990, in October, 1992, and in February, 2003.

Let's look at those three previous occasions.
In 1990, the Dow declined another 5% after the reading first exceeded 55% bearish. But three months later it was up 1%, six months later it was up 15%, and a year later it was up 17%.

In 1992, investor bearishness reached 56% on October 16. One month later the Dow was up 1%. Three months later it was up 3%, a year later it was up 14%.

In 2003, sentiment reached 57.9% bearish on February 20. One month later the Dow was up 3%. Three months later it was up 6.2%, six months later it was up 17.6%, and a year later it was up 33%.

Yes, in every case the extreme of bearishness above 55% marked an important bottom.


So it's interesting that the AAII investor sentiment poll reached 55.2% bearish three weeks ago, and jumped to an even more extreme 58.9% two weeks ago, before dropping a bit to 54.4% this week

Bearish investors are saying 'but this time is different, the housing industry has been in a mess for almost two years, banks have been in trouble since last summer, and the economy is headed into recession'


Well you know what? In the fall of 1990 when investor sentiment readings above 55% bearish marked an important market low, the 1989 housing bubble was bursting, the Resolution Trust Corp. had been created to deal with collapsing Savings & Loans, and banks, and fears of the slowing economy added to investor concerns. (It was not known until the following year, but the 1990-1991 recession had already begun in July, 1990 and didn't end until March, 1991).


I'm not saying this correction is over just because investors have already reached such a stage of extreme fear again. But the similarities are something nervous investors should keep in mind during their current sleepless nights.

Actually, this opinion is more bullish than bearish, but I put it here because of Harding's titling of it.

This observation by Harding points out one of a good number of indicators that are at or near remarkable lows that occur near equity market lows.

If there is a bounce in here, which I think personally there will, who knows if it will mark some important bottom? I think it wouldn't, that is to say there is ultimately more down side to the equity markets, but that is just my bearish opinion.

[Jim Nickerson]

Re: Bearish Information Re. Carl Swelin

Swenlin is one of the more reasonable people I run across who makes technical assessments. If you believe in "magic" as some see it, charting, this article is a good article.

http://www.decisionpoint.com/ChartSp...0118_bear.html

I put in some quotes from Swenlin for those not interested in seeing or learning about charts.

Bear Market Rules Apply
by Carl Swenlin
January 18, 2008

On January 8 the 50-EMA crossed down through the 200-EMA on the S&P 500 daily chart, generating a long-term sell signal and declaring that we are now in a bear market. This was confirmed this week when the weekly 17-EMA crossed down through the 43-EMA. Let me say that these signals are not 100% reliable, but there is a ton of additional supporting evidence, such as the decisive violation of the long-term rising trend line, and the violation of the double top neckline, seen on the chart below.

An important point is that this long-term sell signal is not so much an action signal as it is an information signal. What this means is that we need to begin interpreting charts and indicators in the context of a bear market template. For example:

* Oversold conditions should be viewed as extremely dangerous. Whereas in bull markets oversold lows usually present buying opportunities, in bear markets they can often resolve into more heavy selling.
* Overbought conditions in a bear market are most likely to signal that a trading top is at hand.

* While bear market rallies present great profit opportunities, long positions should be managed as short-term only.

And what might the market do next or intermediate term?

Bottom Line: Probability is very high that the bull market top arrived in October 2007 and that we are now in a bear market that will continue for another year or more, possibly until mid-2010. Until we have evidence to the contrary, remember that bear market rules apply. The next thing to expect is a reaction rally back toward the recently violated neckline support, which is now overhead resistence.

Emphasis JN

The broken "neck-line" resistance is at about 1375 on the SPX and the broken long-term trend line resistance is about 1425.