Bearish Information

[medved]

Re: Bearish Information - PRPFX rising wedge update

This strikes me as an interesting mutual fund. It has done well certainly for the last 5 years, and from the charts I can find, held up reasonably well from 2K top, and actually started up in early 2002 and never looked back. As of May 31, 07 has ~25% cash.

Does anyone including medved have any insights they wish to share?

We already discussed this fund a while ago: http://www.itulip.com/forums/showpos...3&postcount=17 , remember?

My perspective is, this fund is both safer (long-term) and more profitable, than $US cash. Even more so in the current situation, if you use some DD (like buying on dips).

Also, important point is, it uses some tax planning to minimize taxable gains.

(see http://permanentportfoliofunds.com/p...ent_123105.pdf page 2).

m.

[Jim Nickerson]

Re: Bearish Information - PRPFX rising wedge update

We already discussed this fund a while ago: http://www.itulip.com/forums/showpos...3&postcount=17 , remember?

My perspective is, this fund is both safer (long-term) and more profitable, than $US cash. Even more so in the current situation, if you use some DD (like buying on dips).

Also, important point is, it uses some tax planning to minimize taxable gains.

(see http://permanentportfoliofunds.com/p...ent_123105.pdf page 2).

m.

Thanks, I totally forgot.

[medved]

Re: Bearish Information - BEARX

BEARX mutual fund shows a strong break out of a symmetric triangle (in spite of gold drop). The next resistance level is around $6.25. I think, gold will creep back up a bit, so BEARX will get up to $6.25 soon. Probably, PPT will stop it there, so I plan to sell some above $6.20.

m.

[Jim Nickerson]

Re: Bearish Information Re. Richard Russell comment.

Russell noted today, 7/30/07,

One event has already occurred that I don't care for. Lowry's Selling Pressure Index has now rising [sic] again above their Buying Power Index. This has resulted in Lowry's issuing a sell signal. We can watch to see whether the two indices spread further apart, meaning that the situation is deteriorating further -- or not.

JN emphasis.

Russell not infrequently mentions results from data compiled by Lowry's Reports. I know nothing about what goes into compilation of the Selling Pressure and Buying Power Indices to which Russell refers. I surmise it is not trivial that Lowry's has issued a sell signal.

[Jim Nickerson]

Re: Bearish Information Re: Some technical bearish pictures

http://www.financialsense.com/Market/goldberg/main.html

Martin Goldberg notes:

Now with the market in a sharp correction, it is relevant to ask whether this correction is instead, an important top. There are two aspects to this market that suggest that it might be: 1-All time high trading volumes. 2-Important stocks have completed reversal patterns and now are in bear markets.

He presents his analyses on Regional Bank Holders, CFC, shows one mortgage insurance company's chart and mentions two others--the three MTG, PMI, RDN. I suggest going to http://bigcharts.marketwatch.com/int...x=53&draw.y=12 and look at those three symbols in a decade time frame. Bummers, all.

He also suggests how CSCO reacts next Tuesday could be important:

Excessively good or bad news could have a profound effect on the overall disposition of the stock market.

I think Goldberg is quite good when he presents the Thursday Market WrapUp on Financial Sense.

[medved]

Re: Bearish Information - BEARX

BEARX mutual fund shows a strong break out of a symmetric triangle (in spite of gold drop). The next resistance level is around $6.25. I think, gold will creep back up a bit, so BEARX will get up to $6.25 soon. Probably, PPT will stop it there, so I plan to sell some above $6.20.

m.

It happened today. BEARX hit $6.23. I guess, "stock market down"/"gold up" trend will slow down or reverse short-term (otherwise, what is PPT good for?). Keeping my fingers on the trigger (probably, will sell some on Monday).

m.

[Jim Nickerson]

Re: Bearish Information ere. Credit Crunch

http://www.comstockfunds.com/index.c...menugroup=Home

Liquidity Not There When it's Needed Most

8/9/07

All in all the credit crisis appears to be snowballing with no end in sight, and a bailout by the GSEs or the Fed will be extremely difficult to achieve. Even if the portfolio restraints on the GSEs are lifted they must follow the new restrictive guidelines just recently issued by the regulators. As for the Fed, even easier money would be no panacea now as the problem was too much debt in the first place, the housing situation is still worsening and the risks in the financial area are so widely spread. If injections by central banks were the remedy for excessive debt problems in ANY NATION there would NEVER be a credit crunch. In our view the risks to the stock market remain extremely high and far lower levels are likely.

Emphasis JN

[Jim Nickerson]

Re: Bearish Information Re. Ben the Commie.

http://www.financialsense.com/editor...2007/0810.html

BEN, THE COMMIE?
The Well-Timed Strategy for Week Ending August 17th
by Peter Navarro, Ph.D.
August 10 2007

Navarro's comments mirror those made on these fora in the last 48 hours by Finster, sorry I am too lazy to x-reference Finster's similar comment.

Clearly, what is happening now in California isn’t staying in California – but rather the Golden State of Foreclosures is now spreading its contagion around the world. So along comes Bernanke to bail out the worst offenders – acting more like Karl Marx than Adam Smith.

So here’s the real point: Bernanke’s move is unsustainable. The reason is that if he keeps injecting liquidity into the system and then lowers interest rates, this will merely put much additional downward pressure on the dollar and drive up interest rates on the long end of the yield curve where the true stimulus (or lack thereof) lies. Eventually, this blows up really big.

So I say to Ben “Man Up.” Let the markets take the licking they so richly deserve for such irresponsible behavior in the credit markets and after the dust settles, the economy and the markets will both be better for it. Greed is good. Too much greed should not be rewarded.

[Jim Nickerson]

Re: Bearish Information Re. Richard Russell comment.

http://dowtheoryletters.com/ [subscription]

8/11/07

CONCLUSION-- Neither the Dow nor the Transports closed at new lows today. Market oversold? We'll see. As of yesterday, 45.05% of the stocks on the NYSE were bullish. New lows picked up today. Lowry's Selling Pressure surged up 18 points yesterday to a new high for the move. Today Lowry's Selling Pressure closed up another 1 point to a new high. The sellers are still in there. My PTI remains bullish.

Quite a mixture, but my advice is load up on as much cash as possible. And if you're looking to buy a home -- hold off a while.

My guess -- this correction is not over yet, but the market never goes straight up or straight down.

The S&P closed right on its 200-day MA today, but the Dow closed above its 200-day MA.

[Jim Nickerson]

Re: Bearish Information Re. Short-covering Rally Friday

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

BEING STREET SMART
By Sy Harding
THE FED CAVED IN! WILL IT WORK? August 17, 2007.

All indications early Friday morning, prior to the stock market's open, were that the U.S.

But wait a minute. A discount rate cut is not an interest rate cut that spreads through the economy. It is just a cut in the rate that troubled banks pay at the Fed's 'discount window', when they need to borrow short-term money and can't get it in the open market.

However, it was no doubt designed to calm the public panic by creating the impression that the Fed was doing something, without it actually doing much. The Fed would still like to see the problems in the housing industry and economy work themselves out through normal market activity, not by throwing the economy back under an easy money policy, and risk heating the bubbles up all over again.

And it worked, for a day at least. Although still down more than 1% for the week, the Dow closed up 233 points Friday, ending the run of six down days in a row.

The Fed's action forced a lot of short-sellers (betting on the market's downside) to rush to the buy side to close out short-sale positions Friday. That most of the positive action was short-covering could be seen in the fact that the stocks and sectors that have the worst prospects and therefore the most short-selling, and therefore had declined the most and were the most oversold, such as the financial and retail sales sectors, and the small stocks of the Russell 2000, had the most buying, and were up the most in Friday's activity.

However, short covering rallies by short-term traders are not trend reversals. All I expect from the Fed's action is another short-term rally off the oversold condition before the downside resumes. After the excitement calms down, investors are liable to see that with its action the Fed is now admitting that things are even worse than it realized just a few days ago. There is a growing realization that global economies, which were supposedly so strong they would help keep the U.S. this move by the Fed does nothing to change the plunging housing market, the glut of unsold homes, the spread of those problems into the rest of the economy, the unreported losses already on the books of hedge funds, brokerage firms, and banks from the plunged value of mortgage-backed securities, or the reluctance of lenders to finance leveraged deals any more. The Fed's move only makes it easier for troubled banks to borrow money to survive.

Therefore, nothing has changed in my expectation that, short-term rallies notwithstanding, the stock market is in an ongoing correction, factoring in the 're-pricing of risk', and the slowing of the economy toward recession. At some point the Fed will begin actually cutting interest rates, and I still expect that will be in time to see a significant market bottom and buying opportunity, but not until the October/November time period.

Emphasis JN.

In the Bullish Information thread Friday evening I posted what I believe are rather positivie technical indications that a rally may be in the offing for the equity indices. Harding's comments tend to fundamentally negate much positiveness.

This is definitely a for-what-it's-worth contribution. I have not yet checked the sites I usually read for anything seemingly interesting that might represent bullishness.

Based on my own data collection, today 8/17/07 the NYSE had a 90% up day in both volume and points. Last summer during the decline there were three similar 90% up days following the low of the NYSE on 6/13/06. I was so convinced there would be a decline into the fall because of it being the 2nd year of the presidential cycle, that I totally rejected the +90% buy signal, and there were three of them from the low mentioned above until 7/19/07--just 19 market days. These +90% up days following on 90% down days constitute a buy signal if one wishes to acknowledge Paul Desmond's research on this indicator. If I recall, Desmond in Barron's rejected the validity of these buy signals because they followed so closely on several 90% down days. I believe he had some guideline that generally the 90% up days are good when about 30 days elapse from the previous 90% down day. Well, it turned out Desmond was very wrong, and I certainly was because of a preconceived notion of what I thought the markets should do.

I've noted somewhere here in the last couple of days, that the equity pull/call ratio had risen above 1.0 on 8/14,15,16. This is uncommon to rise that high, much less 3 days in a row. I personally interpret this datum to be a bullish sign on a contrary basis. I take it to denote significantly more fear than is normal for those trading equity options. Almost always this indicator shows a preponderance of bullishness, i.e. more calls than puts, thus a number below 1.0.

Based solely on these two indicators, I think the equity markets are in for a bullish run.

I welcome any dissents.

[Jim Nickerson]

Re: Bearish Information Re: Analysis of High numbers of New Lows

http://www.safehaven.com/article-8215.htm

Mike Burk 8/18/08

Technical market report for August 18,

The good news is:
· The Federal Reserve Bank cut its discount rate 0.5% to 5.75% on Friday

What is going on?
Technical analysis is the study of trading patterns as technicians we look for repeating patterns.

The current patterns are so extreme there are not enough examples to draw conclusions.

On Thursday there were 1132 new lows on the NYSE the 3rd highest number ever recorded and 33% of the total issues traded.

The records are:

Date	Total issues traded	New lows	Percent of total
10/20/1987	2076	1174	57%
8/31/1998	3571	1183	33%
8/16/2007	3453	1132	33%

In the late 1980's I found when ever there had been more than 200 new lows on the NYSE there was always a retest of the low. There are nearly twice as many issues traded now so it is probably safe to double that number. The 1132 new lows last Thursday makes a retest of Thursday's low likely.

On October 19, 1987 the Dow Jones Industrial Average (DJIA) closed at 1738.74; in two days it rallied 17% to close at 2027.85 then fell over the next 6 weeks to 1766.74 on December 4, 1987, 1.6% above the crash low. The crash low occurred 37 trading days after the all time high of 2722.42 reached on August 25, 1987.

On August 31, 1998 the DJIA closed at 7539.07, 19.3% off its all time high set 31 trading days earlier on 7/17/1998. It then rallied 8.2% over 16 trading days before retesting its low on October 1, 1998. The DJIA reached 7632.53 on October 1, 1998 1.2% above its August 31 low.

On August 16, 2007 the DJIA closed at 12,845.78, 8.2% off its all time high set 20 trading days earlier on 7/19/2007. At this point there is nothing to suggest last Thursday's low will hold as the low for this down leg.

The all time record for new lows on the NASDAQ was set on October 26, 1987 at 1534, 32% of the 4851 issues traded that day. On October 8, 1998 there were 1343 new lows or 28% of the 4849 issues traded on that day. The 480 new lows on the NASDAQ August 6, 2007 represented 15% of the 3182 issues traded and ranks 42 among the all time high number of new lows for that exchange.

The Federal Reserve Bank cut the discount rate by 0.5% on Friday and the Dollar Index dropped 3.1%. That will not be encouraging to foreign investors. On the weekend before the 1987 crash then Treasury Secretary James Brady gave a speech where he stated we would let the dollar fall to defend our balance of trade. I think that speech triggered the crash.

Evidence of a bottom will take time to develop and lows of last week are likely to be retested. The DJIA, S&P 500 and NASDAQ composite (OTC) all registered 10% intraday declines on Thursday from their highs last month. It appears 10% was a threshold that triggered some massive buy programs.

Conclusion

We are only 21 trading days from the all time high set for the DJIA on July 19 and number of new lows suggests this decline will be significant. There is probably further to go on the downside.

I expect the major indices to be lower on Friday August 24 than they were on Friday August 17.

This to me is further evidence of just how oversold the markets got last week in so many areas except the losses of the equity indices still have been minor.

[Jim Nickerson]

Re: Bearish Information Re. Low Volume Rally

http://stockcharts.com/commentary/ar...20070825m.html

Here are five commentaries two of which discuss the implications of the poor volume in the rally since 8/16/07.

Make sure you scroll down the page to see all the discussions. Two are by Swenlin and -John Murphy with whom I am familiar and three by guys I don't normally run across: Anderson, Bowley and Rhodes.

Rhodes puts forth the use of the 80-week simple moving average as an indicator which if broken to the downside on the $SPX could serve as a reasonable exit point from long equity poistions if one has them now. On 8/16/07, the SPX dropped to 1370.6, which was on or slightly below the 400 Day simple moving average. As of Friday, 8/24/07 that average was at 1375.78 and rising.

Overall this is a good, conscise technical analysis of where the equity markets are now. It was worth my time to read.

[Jim Nickerson]

Re: Bearish Information Re. Sy Harding

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

But my forecast of recent months has been that the Fed is behind the curve and we are headed into another recession. It's enough that the bursting of the real estate bubble and the debt/credit bubble are both still underway, and will be for some time. (The National Association of Realtors now projects that home sales will continue to decline the rest of this year, and another 8% next year).
Now two more supports seem to be collapsing from under the economy. It had been hoped that employment would remain strong, and that would allow consumers to continue to spend and provide support for the economy.
However, last week's unexpectedly dismal employment report, and this week's disappointing retail sales report have economists reversing course in increasing numbers, more of them also beginning to see a recession coming.
The puzzling part is that the stock market doesn't seem to care all that much. Yet there has never been a recession that was not accompanied by, or preceded by a stock market correction. So maybe I am wrong about a recession. At least that's what the stock market is saying.

Emphasis JN

Don't forget, EJ has called for a recession 4th qtr. this year.

[Jim Nickerson]

Re: Bearish Information Re. Mark Hulbert

http://www.marketwatch.com/news/stor...B02D15%7D&dist=

MARK HULBERT
When bad news is bad news
Commentary: Market's reaction to jobs report suggests U.S. is in a recession 9/12/07

Referencing research Hulbert wrote.

The researchers found that when the economy was in recession - as later determined by the National Bureau of Economic Research, the unofficial arbiter of when recessions begin and end - the stock market typically fell when the unemployment news was unexpectedly bad. But when the economy was in an NBER-declared expansion, more often than not the market rallied.

The reason the market reacts differently during recessions than during expansions, according to the researchers: When the economy is growing, the positive effect of a strong jobs report is more than outweighed by the negative effect of the interest-rate increases that such a report makes more probable.

Just the reverse is the case following a weaker-than-expected jobs report. Now the bad news of the jobs report is more than outweighed by the good news that the Fed will have less pressure on it to raise rates.

During recessions, in contrast, interest rate hikes are less of a threat. So a strong jobs report is taken at face value as good news, and a weaker-than-expected report is considered to be bad news.
The researchers' findings are summarized in the accompanying table.

	Economy expanding	Economy contracting
Job news unexpectedly good	Stock market likely to fall	Stock market likely to rise
Job news unexpectedly bad	Stock market likely to rise	Stock market likely to fall

Based on the patterns the researchers found in their study, we can use the stock market's behavior as a barometer of whether the economy is more likely to be expanding or contracting.

Why, you might ask, do we even need such a barometer? Don't we already know if we're in a recession?

Unfortunately, not. Recessions typically aren't declared to have started by the NBER until months later. In some cases, in fact, the recession is over before the NBER confirms that it had even started.
So such a barometer could be helpful.

What does all this mean for today? The market's plunge Friday in the face of unexpectedly bad job news is yet another straw in the wind that the economy may be a lot weaker than previously had been thought.
As with all conclusions based on a statistical analysis of the historical precedents, this one comes with no guarantees. But I for one would be more confident in the economy's health if the stock market had risen Friday rather than fallen.

This piece by Hulbert was apparently prompted by the jobs report Friday 9/7/07 when the market took a hit.

[bart]

Re: Bearish Information Re. Sy Harding

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

Emphasis JN

Don't forget, EJ has called for a recession 4th qtr. this year.

Sy Harding is incorrect.
There actually has been a recession when the stock market went up - the one in 1980: