Bearish Information

[Jim Nickerson]

Re: Bearish Information Is the bear market over?

Thank you Jim, I appreciate your insight. I enjoy reviewing your allocation as well as your bearish/bullish threads.



Regarding the above comment, you once told me that "volatility was wearing you down". I could not agree more.

You certainly have balls to trade this market (crowd cheering in the background).

I've not been trading for a while in here, Winch. I'll get around to updating how one ituliper is invested in a while. Mike Burk's, who posts Saturdays on safehaven.com, report today shows the lack of support that the rally from 11/20 has had with regard to some breadth indicators (report not there on safehaven as I write, but should be today). It isn't important whether his call for the market to be down next week turns out correct or not, but I think it's important that there are not significant volumes to support the recent upmoves.

Volatility has "decreased" if one can make that statement based on the absence of 300-point moves in the DJI for 9 days in a row (one day did go to 298.76). Breadth indicators I follow have been overbought and I think are subject to becoming oversold--though that doesn't have to happen for the equity markets to move higher from where they ended 12/12/08.

I remain ~50% positioned to gain from equity market strength, but I have no conviction that I shall make any money.

[LargoWinch]

Re: Bearish Information Is the bear market over?

I remain ~50% positioned to gain from equity market strength, but I have no conviction that I shall make any money.

That is why you are our warrior out there Jim!

A 50% long bet on selected equities? That is quite "gutsy" to say the least. I hope all will go well for you.

As for me, I keep adding to my cash position, (over 55% now - see my post soon under your thread) that despite my long investment horizon of 30+ years. I simply cannot find any value in this market...

[Slimprofits]

Re: Bearish Information

Wall Street Roulette

James M. Clash, 12.08.08

...analysts have trimmed their 2009 earnings estimates by a modest 7.5% so far for the S&P 500 as a whole, according to Thomson IBES. For their current projections to prove accurate, earnings will have to grow 15% next year to $91. That's down from the 24% gain analysts were expecting two months ago. It's before nonrecurring items, which knocked $12 off the net in the first nine months of 2008.

[..]

Even if the S&P 500's forward p/e ratio remains flat at ten times estimated 2009 earnings, that would bring it down 29% to 650.

[Jim Nickerson]

Re: Bearish Information DJI at 5665, SPX at 548

http://www.equitiesmagazine.com/arti...nners_1208.php

A Super Bear Is Upon Us. Michael Markowski December 2008?

Based on the historical data that I have been monitoring and my personal experience that I have had with the previous secular bear market, which ended in 1982, I believe that a new secular, or a “super,” bear market was born on Oct. 9, 2007.

To confirm my belief that we are indeed in a new secular bear, the Dow Jones Industrial Average would have to close below its Oct. 9, 2002 low of 7,286.27. I believe that the confirmation low will be breached during the fourth quarter of 2008 or the first quarter of 2009.

A super or secular bear is much different than your cyclical or garden variety bear because its birth is a signal that equities and mutual funds will have mediocre performance for between eight and 20 years.

This is because the minimum number of years has been eight for all secular bull and bear markets since 1802. Given the viciousness of this secular bear, I believe that the bottom for the major indices such as the S&P 500 and the Dow Jones 30 Industrials will be far below the lows that were reached in Oct. of 2008.

I am also predicting that at the S&P 500 will eventually get to at least 547.75, which is the equivalent of 65% off of its all-time peak, and that the Dow Jones Industrials will go to at least 5665, which is the equivalent of 60% off of its all-time peak. Since the stock market has now entered the rare secular bear phase, I am predicting that the all time record highs that were reached by the major indices including the Dow Jones Industrials and the S&P 500 on Oct. 9, 2007 will not be exceeded over the next 10 to 20 years.

Long article, and I have no idea whether or not this guy knows something or is just pushing his own interests.

[Jim Nickerson]

Re: Bearish Information

To try to keep some chronology in this thread, here are a couple of links that fit in well with bearishness.

Hellstan's thread "Worst is yet to come." 1/5/2008 and here is the link to the worthwhile comments. http://www.foreignpolicy.com/story/c...?story_id=4590


And from that same thread, predictions by Karl Denninger for 2009 date 12//31/08 http://market-ticker.org/archives/2008/12.html

[metalman]

Re: Bearish Information

To try to keep some chronology in this thread, here are a couple of links that fit in well with bearishness.

Hellstan's thread "Worst is yet to come." 1/5/2008 and here is the link to the worthwhile comments. http://www.foreignpolicy.com/story/c...?story_id=4590


And from that same thread, predictions by Karl Denninger for 2009 date 12//31/08 http://market-ticker.org/archives/2008/12.html

you've only now discovered karl? he's up your alley. his forum is all profanity and guys shitting all over each other. karl lords over it like his personal kingdom. dissenters are banned. his own lousy calls are edited out. in his self-made world, he is king! he is always right! except to nod at a few 'minor' errors to lend to the humble king's infallibility!

read thru this... decide for yourself.

too bad because he has some great folks there.

i baled tickerforum with this guy...

"You guys trash EJ, then he comes on here to defend himself, then you just give him shit because he doesn't day trade with his home equity the way you do. You would rather take "DOW 4000" Kunstler's side of things. Very well, I am going to take itulip's advice and opt for a graceful exit. Wisdom is vindicated by all her children, but so far I have only seen the loudmouth fool and his folly on this forum. Pearls before swine. Gentlemen, I bid you good night and good luck."

refuge of daily reckoning and tickerforum and yahoo and too many others to admit to :mad:

[Jim Nickerson]

Re: Bearish Information

you've only now discovered karl? he's up your alley. his forum is all profanity and guys shitting all over each other. karl lords over it like his personal kingdom. dissenters are banned. his own lousy calls are edited out. in his self-made world, he is king! he is always right! except to nod at a few 'minor' errors to lend to the humble king's infallibility!

read thru this... decide for yourself.

too bad because he has some great folks there.

i baled tickerforum with this guy...

"You guys trash EJ, then he comes on here to defend himself, then you just give him shit because he doesn't day trade with his home equity the way you do. You would rather take "DOW 4000" Kunstler's side of things. Very well, I am going to take itulip's advice and opt for a graceful exit. Wisdom is vindicated by all her children, but so far I have only seen the loudmouth fool and his folly on this forum. Pearls before swine. Gentlemen, I bid you good night and good luck."

refuge of daily reckoning and tickerforum and yahoo and too many others to admit to :mad:

I put up in my original post what I knew about Denninger. Personally, I was impressed with what he purports to have been his 2008 predictions, and as I wrote unless he went back and edited his original post, they were good calls.

metalman, I do not have the time to read any other forums, nor recently all the posts on this one.

Perhaps now that what Denninger wrote for his 2009 calls and is now archived in iTulip can be revisited next year and assessed for what was correct or that he missed.

[metalman]

Re: Bearish Information

I put up in my original post what I knew about Denninger. Personally, I was impressed with what he purports to have been his 2008 predictions, and as I wrote unless he went back and edited his original post, they were good calls.

metalman, I do not have the time to read any other forums, nor recently all the posts on this one.

Perhaps now that what Denninger wrote for his 2009 calls and is now archived in iTulip can be revisited next year and assessed for what was correct or that he missed.

but what does he say about the future? mostly it is revision of the past.

[Jim Nickerson]

Re: Bearish Information

but what does he say about the future? mostly it is revision of the past.

Did you not read the freaking post I made in Hellstan's thread? He made his predictions for 2009 on 12/31/08. Does that not qualify as saying something about the future?

[Jim Nickerson]

Re: Bearish Information Re. Hulbert, Bear market rally?

http://www.marketwatch.com:80/News/S...bki_e1W-T05Xgw

1/6/08 Too many editors have decided that bear market is over.

On Nov. 20, HSNSI closed at minus 18.9%, which meant at that time that the editor of the average short-term market timing newsletter was recommending that his clients allocate 18.9% of their equity portfolios to shorting stocks. As of Tuesday night, in contrast, the HSNSI stood at 43.5%, or 62.4 percentage points higher.

Such a big jump in just a month and a half strikes me as worrisome. If Nov. 20 really and truly marked the final low of the bear market, and sentiment adhered to contrarian theory, then the recent rally would have been met by disbelief and skepticism. This is not what we have actually seen. In fact, there has been an eagerness to jump on the bullish bandwagon.

To test whether this contrarian theory is supported by the data, I analyzed for this column how sentiment behaved following past bear market bottoms.




To do so, I relied on a list of such bottoms as compiled by Ned Davis Research, the institutional research firm: For them, a bull market requires one of three conditions to hold:

• At least a 30% rise in the Dow in 50 calendar days
• At least a 13% rise in the Dow in 155 calendar days
• At least a 30% reversal in the Value Line Geometric index.

Since there have been 47 calendar days since the November 20 low, I looked at where sentiment stood 47 days following each of these Ned Davis Research-defined bottoms.

I have data for the HSNSI for five such bottoms back to the early 1980s. Following none of those bottoms did the HSNSI jump as much as it has since Nov. 20. In fact, the average 47-day rise in this sentiment index following those five prior bottoms was just 23.8 percentage points, or a little more than a third of how much the HSNSI has actually risen since Nov. 20.

This doesn't guarantee that rally is doomed, needless to say. But it does raise the possibility that what we're experiencing is a bear-market rally instead of the beginning of a major new bull market.

To my ability to assess the situation some indicators are quite strange right now.

The AAII bull-bear poll posted for last week, showed a rather big jump in bears and decrease in bulls: 54.7 bears to 24.0 bulls, when the markets were nearing 20% of gains off the November 20 closing lows. I think it is rare to see more or nearly equal bearish sentiment after a significant recovery through last Friday as there was at the bottom in November: then 24.4% bulls, 57.1% bears which was then the lowest bull reading and highest bear reading since July 2008.

I think the data from the CBOE Equity put call numbers tonight are similarly rare.

At the bottom in November there were three consecutive days when the put/call ratio exceeded 1.0: 1.16, 1.05, 1.11, the last reading being for 11/21, the day after the closing low, but a day with a big intraday drop and recovery as I recall.

Tonight the Equity put call ratio was 1.07, a day after what so far has been the rally high from November lows.

Both these indicators at their current levels would suggest extremes of bearishness, which on a contrarian basis is bullish, or they suggest perhaps prescience if the market is in fact now going to correct its recent run up.

How do I think it will turn out? I have no freaking idea.

[metalman]

Re: Bearish Information Re. Hulbert, Bear market rally?

http://www.marketwatch.com:80/News/S...bki_e1W-T05Xgw

1/6/08 Too many editors have decided that bear market is over.




To my ability to assess the situation some indicators are quite strange right now.

The AAII bull-bear poll posted for last week, showed a rather big jump in bears and decrease in bulls: 54.7 bears to 24.0 bulls, when the markets were nearing 20% of gains off the November 20 closing lows. I think it is rare to see more or nearly equal bearish sentiment after a significant recovery through last Friday as there was at the bottom in November: then 24.4% bulls, 57.1% bears which was then the lowest bull reading and highest bear reading since July 2008.

I think the data from the CBOE Equity put call numbers tonight are similarly rare.

At the bottom in November there were three consecutive days when the put/call ratio exceeded 1.0: 1.16, 1.05, 1.11, the last reading being for 11/21, the day after the closing low, but a day with a big intraday drop and recovery as I recall.

Tonight the Equity put call ratio was 1.07, a day after what so far has been the rally high from November lows.

Both these indicators at their current levels would suggest extremes of bearishness, which on a contrarian basis is bullish, or they suggest perhaps prescience if the market is in fact now going to correct its recent run up.

How do I think it will turn out? I have no freaking idea.

Real DOW

Real DOW

Real DOW

[metalman]

Re: Bearish Information Re. Hulbert, Bear market rally?

http://www.marketwatch.com:80/News/S...bki_e1W-T05Xgw

1/6/08 Too many editors have decided that bear market is over.




To my ability to assess the situation some indicators are quite strange right now.

The AAII bull-bear poll posted for last week, showed a rather big jump in bears and decrease in bulls: 54.7 bears to 24.0 bulls, when the markets were nearing 20% of gains off the November 20 closing lows. I think it is rare to see more or nearly equal bearish sentiment after a significant recovery through last Friday as there was at the bottom in November: then 24.4% bulls, 57.1% bears which was then the lowest bull reading and highest bear reading since July 2008.

I think the data from the CBOE Equity put call numbers tonight are similarly rare.

At the bottom in November there were three consecutive days when the put/call ratio exceeded 1.0: 1.16, 1.05, 1.11, the last reading being for 11/21, the day after the closing low, but a day with a big intraday drop and recovery as I recall.

Tonight the Equity put call ratio was 1.07, a day after what so far has been the rally high from November lows.

Both these indicators at their current levels would suggest extremes of bearishness, which on a contrarian basis is bullish, or they suggest perhaps prescience if the market is in fact now going to correct its recent run up.

How do I think it will turn out? I have no freaking idea.

Real DOW

Real DOW

Real DOW

Real DOW

Real DOW

Real DOW

Real DOW

Real DOW

Real DOW

[Jim Nickerson]

Re: Bearish Information Re: Hulbert Key Reversal 1/15/09

http://www.marketwatch.com/news/stor...AA64552A56A%7D 1/16/09

No key reversal: Commentary: Only weak evidence that Thursday's reversal marked the low

.
.
But was Thursday [01/15/09] nevertheless a key reversal day?

One additional factor that some technicians look to in assessing whether a key reversal day has occurred is volume: The higher the volume, the more significant the reversal. This doesn't help us much in this case, however.
Though volume was somewhat higher on Thursday than in the days immediately prior, it was not as high as on other days in recent weeks, such as at the November low.

Sentiment is another factor that also helps us to determine whether the market is about to reverse course. Unfortunately, the sentiment picture currently does not provide strong support for the notion that the trend is about to reverse to the upside.

For a textbook illustration of how sentiment behaves at bear market bottoms, consider the Hulbert Stock Newsletter Sentiment Index (HSNSI) during the bottoming process that ended the 2000-2002 bear market. The HSNSI, of course, reflects the average recommended stock market exposure among a subset of short-term stock market timing newsletters tracked by the Hulbert Financial Digest.

That bear market hit its low on Oct. 9, 2002, when the Dow closed at 7,286. After an impressive rally, the market in the first months of 2003 set up a retest of that low, getting as close as 7,524 on March 11.
Significantly, the HSNSI on that day was 29.2 percentage points lower than where this sentiment index had stood at the Oct. 9 low.

Clearly, there was a lot more pessimism in March 2003 than there was in October 2002. And, sure enough, the October 2002 low ended up holding, and the market rallied strongly.

That was a successful retest.

The sentiment picture today is behaving a lot differently than during the October 2002-March 2003 period. Going into Thursday's session, the HSNSI was some 36 percentage points higher than where it stood at the November lows. In other words, unlike the March 2003 retest, when there was a lot more pessimism than at the first low, this time around there is a lot less pessimism.

On my interpretation of contrarian analysis, therefore, odds are that the bear market has more work to complete on the downside before the bottoming process is likely to be over.

Using some saved spread sheets with saved past daily data, off the 11/20-21 lows, through the highs, thus far, on 1/6/09 the DJI was up 22%, SPX up 27.37%, Nasdaq up 28.57%, NDX up 26.23%, RUT up 39.78%, $XVG up ~42%, BKX up 35.19%. The financials and small caps led that rally, which is what some pundits claim as the way it should be. That was a rally that lasted 30 market days.

If I recollect correctly, a lot of pundits had called for a "strong" rally off those November lows. The question now is whether or not the gains written above represent the extent of the rally. I think it was a very good rally.

I don't know whether it is over or not. I believe most if not everyone of the above indices broke their recent uptrends between last Tuesday and Thursday and all are at or below their 50 DMA's.

My opinion is unless these indices move up quite sharply in the next week, the rally if over. Whether the market moves down or sideways (if they haven't move up sharply) we'll wait to see. I also do not think the excess of the last twenty years have been corrected in 18 months or less.

[Jim Nickerson]

Re: Bearish Information Re: Satyajit Das

1/16/09 http://www.wilmott.com/blogs/satyajitdas/

2008 - Look back in Horror!

..

Fundamentals of value were largely irrelevant as the ‘great de-leveraging’ (surely the financial word of 2008) dominated. In recent years, cheap and abundant money (mainly borrowed) drove up the value of other assets. As the debt in the financial system was reduced, money became scarce and expensive triggering a sharp fall in asset prices. Anybody who had borrowed to purchase financial assets had to stump up margins or were forced to sell to reduce debt.

A shortage of buyers and lack of available liquidity meant that generally selling risky assets was nigh impossible. The marginal seller, usually distressed, and the cash rich buyer, increasingly scarce, set market prices. Central banks and governments, depending on the plan du jour to save the world, were “buyers of last resort”.

The process is far from complete. ..........
.
.

The best investment story of 2008 relates to a banker who had a modest shareholding in his employer – a storied investment bank. Upon being transferred to London, he sold the stock to finance a Range Rover. As business in London turned down, the banker was transferred to Dubai.

When selling his Range Rover, he suffered a loss of around 50% of the price he paid barely six month ago. The interesting thing was that the proceeds from the sale of the car (despite the 50% loss) would have allowed the banker to purchase five times the number of shares he sold to finance the car. 2008 is perhaps the only year on record in which a distressed price for a Range Rover outperformed equities.

What struck me most was Das thinks all this is not over.

[Jim Nickerson]

Re: Bearish Information Re. CarL Swenlin.

http://decisionpoint.com/TAC/TopAdvisors.html 1/16/09

Swenlin considers the turn back from the SPX high on 1/6/09 and its subsequent breaking the uptrend from 11/20/08 as a "Rally Failure."

If you care to check his table in the article, most of the industry groups have reverted to a "sell" since 1/7/09; however, according to his methods gold and the 30-year bond remain "bullish."