Bearish Information

[JoeSixpack]

Re: Bearish Information

dewa,

do you have a chart, link or some numbers ?

ty

[friendly_jacek]

Re: Bearish Information

Option traders purchase of puts have exceeded calls for the first time since 2001.Then, the market fell 34%.This is a signal that the Dow has reached its peak.

Total garbage. I monitor Chicago Board of Options Exchange (CBOE) P/C Ratio on daily basis. High P/C ratio is actually bullish (contrarian) and the last peak we had was in mid August 2007. Now we are in a neutral range of under 1.

BTW, Jim, any follow up from the chartist?

[Jim Nickerson]

Re: Bearish Information

Total garbage. I monitor Chicago Board of Options Exchange (CBOE) P/C Ratio on daily basis. High P/C ratio is actually bullish (contrarian) and the last peak we had was in mid August 2007. Now we are in a neutral range of under 1.

BTW, Jim, any follow up from the chartist?

Yep, it recommended 20 stocks in its Actual Cash Account and 25 in its NEW Agressive Account and advised 25% margin in the Aggressive Account. It has been years since Sullivan recommended buying anything on Margin--not at anytime since buys in April of 2003 has he done this, so it must be about 10 years--but that is just a poor recollection.

So what this means is he is going back to 100% long in regular account and 125% long in aggressive account--for those subscribers who wish to follow his advice.

I have to conclude Sullivan is still very bullish on this market.

[GRG55]

Re: Bearish Information: Re: Dow Theory Letters

Yep, it recommended 20 stocks in its Actual Cash Account and 25 in its NEW Agressive Account and advised 25% margin in the Aggressive Account. It has been years since Sullivan recommended buying anything on Margin--not at anytime since buys in April of 2003 has he done this, so it must be about 10 years--but that is just a poor recollection.

So what this means is he is going back to 100% long in regular account and 125% long in aggressive account--for those subscribers who wish to follow his advice.

I have to conclude Sullivan is still very bullish on this market.

He's not the only one. Below an excerpt from veteran market observer Richard Russell's comments on Monday, Oct 8. He's been writing about this "3rd wave" view of his since just after the August low (and recommended subscribers go long the DJIA). He is still wary of the potential for a set-back before year-end, however. (Jim: you might have to change this to a bullish thread after all...)

"Below I show a monthly chart of the Dow going back to 1982 when the greatest bull market in history began. The blue line is a 34-month moving average. The big 2000-2002 decline you see on the chart is, as I see it, the correction that separates the second phase of the bull market from the third phase. We're at the beginning of the third phase now. The public is still basically on the sidelines. The big money is waiting to get the year 2007 out of the way and they're also waiting to get the fourth quarter of 2007 out of the way. And finally, they want to get the subprime mess out of the way, and they want to be assured that the banking system is intact and "ready to go."

I think all that will occur next year. Gold just rose to a 27-year high. The Dow has been rising to new record highs. Last week the S&P Composite and the NYSE Composite (surprise) rose to a record high, thereby confounding the skeptics and confirming the Dow. Last Friday the lagging Transports surged a whopping 158 points, moving in the direction of the Dow. Dr. Copper is pushing at its highs.

If you listen carefully, you can hear the rumbling. That rumbling is the distant thunder of the third phase of this great bull market. I'm thinking that within a year or so the US public will turn highly enthusiastic. Business will pick up. Prices will be heading up. The punch bowl will be filling up toward overflowing. Today's skepticism will turn to bullishness. It wouldn't surprise me if even our "friends" in the Mideast such as Iran, Egypt, Syria, will be in on the fun. Greed conquers all. The only thing stronger than greed is fear. The time for fear is not here yet. Much of the fear will leave when President Bush leaves Washington. His "war on terror" will simmer down. Even the war in Iraq will simmer down. North Korea will hold hands with South Korea. China will get off Taiwan's back and concentrate on making money. Africa will open up. The military tyrants of Burma will fall. I see the good times rolling, I really do. But it will take a while."

[Jim Nickerson]

Re: Bearish Information: Re: Dow Theory Letters

He's not the only one. Below an excerpt from veteran market observer Richard Russell's comments on Monday, Oct 8. He's been writing about this "3rd wave" view of his since just after the August low. He is still wary of the potential for a set-back before year-end, however. (Jim: you might have to change this to a bullish thread after all...)

"Below I show a monthly chart of the Dow going back to 1982 when the greatest bull market in history began. The blue line is a 34-month moving average. The big 2000-2002 decline you see on the chart is, as I see it, the correction that separates the second phase of the bull market from the third phase. We're at the beginning of the third phase now. The public is still basically on the sidelines. The big money is waiting to get the year 2007 out of the way and they're also waiting to get the fourth quarter of 2007 out of the way. And finally, they want to get the subprime mess out of the way, and they want to be assured that the banking system is intact and "ready to go."

I think all that will occur next year. Gold just rose to a 27-year high. The Dow has been rising to new record highs. Last week the S&P Composite and the NYSE Composite (surprise) rose to a record high, thereby confounding the skeptics and confirming the Dow. Last Friday the lagging Transports surged a whopping 158 points, moving in the direction of the Dow. Dr. Copper is pushing at its highs.

If you listen carefully, you can hear the rumbling. That rumbling is the distant thunder of the third phase of this great bull market. I'm thinking that within a year or so the US public will turn highly enthusiastic. Business will pick up. Prices will be heading up. The punch bowl will be filling up toward overflowing. Today's skepticism will turn to bullishness. It wouldn't surprise me if even our "friends" in the Mideast such as Iran, Egypt, Syria, will be in on the fun. Greed conquers all. The only thing stronger than greed is fear. The time for fear is not here yet. Much of the fear will leave when President Bush leaves Washington. His "war on terror" will simmer down. Even the war in Iraq will simmer down. North Korea will hold hands with South Korea. China will get off Taiwan's back and concentrate on making money. Africa will open up. The military tyrants of Burma will fall. I see the good times rolling, I really do. But it will take a while."

Yes, but as you know, Russell's most recent long position was in the DIA, and he has gold probably in all forms and other stocks he has had for years apparently, and he apparently has a lot of cash (taking in ~2.5M/yr on subscriptions--assuming he is a truth-teller). To me Russell is barely sheepishly bullish right now compared to Sullivan if one believes in "putting one's money where one's mouth is."

It is our intention to start another Actual Cash Account in
the not too distant future. It will be different than the
Actual Cash Account, which we will continue to feature
on the front page of The Chartist. The main difference is
that it will be more aggressive than the Actual Cash
Account because of the volatility of the stocks it buys and
sells and the fact that margin will be frequently used. I’m
calling it Dan Sullivan’s Aggressive Account. We are
going to fund this real money account with an original $5
million dollars. This aggressive account in most instances
will invest in a different group of stocks than the Actual
Cash Account. The portfolio will consist of 25-30 stocks
or exchange traded funds. It will not buy options,
futures, or go short. It will be run along the lines of the
Actual Cash Account. We will announce the buys and
sells over our hotline the day before we take action
ourselves. This new real money account will be a
permanent part of our newsletter featured in every

edition.

So to me, at my level of wealth, Sullivan is very seriously bullish.

[GRG55]

Re: Bearish Information RE: JPM & BAC to write down $3 B...

From Reuters. What's that old Congressional line...a Billion here, a Billion there, pretty soon you're talking about real money...

JPM and BAC to write down $3 billion in loans: report

Mon Oct 8, 2007 4:59am ET
NEW YORK (Reuters) - JPMorgan Chase and Bank of America are expected to disclose losses of about $3 billion in mortgage securities and leveraged loans when they report earnings this month, the Financial Times reported, citing an analyst.

JPMorgan is likely to report mark-to-market losses on leveraged loans of about $1.4 billion and an additional $700 million in write-downs of mortgages and mortgage-backed securities, according to Howard Mason, analyst with Sanford Bernstein, the paper reported.

Mason estimated Bank of America will take write-downs of $700 million for leveraged loans and mortgage write-downs of $300 million, the paper said.

Other banks have already taken losses on the value of their holdings in mortgage-backed securities and leveraged loans.

Citigroup, the biggest U.S. bank, took a pretax write-down of $1.4 billion as of the end of the third quarter.

Bear Stearns said last month it was writing down its $7.6 billion portfolio by about $250 million, or 3.2 percent. Morgan Stanley wrote down its $31 billion portfolio by $726 million, or 2.3 percent.

The losses by the banks were the result of credit turmoil in recent months that drove down the values of mortgage and loan-related securities.

[GRG55]

Re: Bearish Information RE: West Coast Container Imports Slipping...

Another small data point. From this morning's LA Times.

Of course they could turn this around very quickly if American parents would stop complaining about lead painted toys...

TRADE
Slipping imports reflect slowing economy


The falloff of goods from toys to kitchen tiles flowing into the L.A., Long Beach and other ports stuns observers.
By Ronald D. White and Leslie Earnest, Los Angeles Times Staff Writers October 9, 2007
Cargo containers crammed with foreign-made goods that were supposed to set a record in August at major U.S. ports took an unexpected turn, with imports sinking 1.4% in another sign of the slowing of the economy.
Imports of items as diverse as toys and tiles could also be lower in September and October, when retailers will be stocking shelves for the holidays, because shell-shocked shoppers are expected to continue to pull back....

...The slump in oceangoing imports unloaded at the 10 largest U.S. container ports in August was the first drop since Global Insight began its monthly Port Tracker report in 2005. The number stunned some port watchers.

"When I first saw these numbers, I called the researchers and asked them if they had left a column out of the spreadsheet. I thought it was a typo," said Craig Shearman, vice president of the National Retail Federation, which pays Global Insight to conduct the trade research...

Link to full article:
http://www.latimes.com/business/la-f...la-home-center

[dewa]

Re: Bearish Information

dewa,

do you have a chart, link or some numbers ?

ty

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

[friendly_jacek]

Re: Bearish Information

Option traders purchase of puts have exceeded calls for the first time since 2001.Then, the market fell 34%.This is a signal that the Dow has reached its peak.

Later you provided a link to article that stated:
"The gap between the price of so-called put options on the benchmark for U.S. equity and the cost to wager on further gains has averaged about 8 percentage points since August. That's more than the previous high in July 2001, before the index dropped 34 percent and fell to the lowest this decade."

You clearly misrepresented the point. Regardless, we have only one data point on this fear indicator (July 2001). Other fear indicators, like the P/C ratio you mentioned, are neutral now.

[GRG55]

Re: Bearish Information RE: ECB pledges indefinite liquidity injections...

From the FT. If the "worst of the credit crisis is behind us", as many would have us believe, then why do we keep seeing these sorts of headlines? Indefinite?

ECB pledges indefinite liquidity boosts

By Ralph Atkins and David Oakley
Published: October 8 2007 22:50 | Last updated: October 8 2007 22:50

The European Central Bank pledged on Monday that it would inject extra liquidity into money markets for as long as is necessary in order to stabilise short-term interest rates.

The move suggested that the ECB had accepted its work in attempting to ease financial market tensions was far from completed.

“The ECB continues to closely monitor liquidity conditions,” it said in a statement ahead of its latest weekly refinancing operation, and would aim to reduce “volatility” in short term rates around its 4 per cent main policy interest rate.

With three-month euro Libor – the average interbank rate offered in London for the single currency for the next three months – trading at 4.767 per cent, close to the six year high of 4.795 per cent recorded last week, market participants backed the ECB stance.
Amanda Sudworth, director of interest rate derivatives at Liffe, the international derivatives exchange based in London, said: “The market has normalised a bit since the summer, but interbank rates are still high because of the continuing uncertainty in the market.”
She said short-term money market rates suggested there was still tension in the system.

With many in the market expecting the ECB to raise base rates from 4 per cent, three-month euro Libor would in normal times trade at about 25 basis points higher, rather than nearly 80bp higher.
The ECB announcement followed a promise by Jean-Claude Trichet, ECB president, last week after the central bank’s governing council meeting in Vienna, to “continue to do what is appropriate in our view to help markets . . . We consider it our duty to act in such a way that the very short term money market rates are close to the level of the interest rate that we have set for our main refinancing operations”.

Link to article:
http://www.ft.com/cms/s/0/bc7098ee-7...0779fd2ac.html

[GRG55]

Re: Bearish Information RE: Trucking giant sees blue Christmas

Another data point to watch...

Trucking giant sees blue Christmas

Fortune's Matthew Boyle sits down with the CEO of YRC Worldwide (formerly Yellow Roadway) to discuss the effects of economic instability on the transportation industry.

By Matthew Boyle, Fortune writer
October 10 2007: 3:46 AM EDT


(Fortune Magazine) -- As the head of YRC Worldwide (formerly Yellow Roadway), a $10 billion trucking and transportation company with 27,000 trucks and customers in 80 countries, Bill Zollars has a crow's-nest view of the global economy. From the pace of Chinese manufacturing to shipments of holiday retail goods to fluctuations in gas prices, he has the data to grasp what's happening in economic sectors before the rest of us do. Amid rumors of a bid for YRC by German shipping giant Deutsche Post, Zollars tells Fortune's Matthew Boyle it might be a disappointing Christmas unless business perks up in the next few weeks.

Link to article:
http://money.cnn.com/2007/10/09/news...ion=2007101003

[GRG55]

Re: Bearish Information RE: D.C. & National Housing Trend...

We hear a lot about housing in the mega-bubble areas of California, Vegas, Florida and Phoenix, but here's a little blurb about Capital City, followed by a WSJ link with a national look and some interesting graphics (prime reason for posting as the raw info in the article won't be news to anybody here).

Foreclosed homes flood auction

By Tom Ramstack
From the Washington Times on October 10, 2007

Auctioneer Hudson & Marshall sold nearly 240 foreclosed homes in the Washington area last weekend, making a small dent in a large backlog of homes abandoned by buyers who couldn't keep up with escalating payments.

Link to article:
http://washingtontimes.com/apps/pbcs...110100078/1001

The United States of Subprime

Data Show Bad Loans
Permeate the Nation;
Pain Could Last Years
By RICK BROOKS and CONSTANCE MITCHELL FORD
October 11, 2007; Page A1

As America's mortgage markets began unraveling this year, economists seeking explanations pointed to "subprime" mortgages issued to low-income, minority and urban borrowers. But an analysis of more than 130 million home loans made over the past decade reveals that risky mortgages were made in nearly every corner of the nation, from small towns in the middle of nowhere to inner cities to affluent suburbs.

Link to WSJ article:
http://online.wsj.com/article/SB119205925519455321.html

[GRG55]

Re: Bearish Information RE: Boeing...

Well this won't help close the trade gap...

Boeing Delays 787 Delivery on Assembly `Challenges'

By James Gunsalus
Oct. 10 (Bloomberg) -- Boeing Co., betting on the 787 Dreamliner to win back leadership in commercial airliners from Airbus SAS, postponed delivery of the plane by six months because of parts shortages and assembly delays.

Dreamliner shipments will now begin in late November or December 2008, instead of May, Chicago-based Boeing said today in a statement....

Link to article:
http://www.bloomberg.com/apps/news?p...efer=worldwide

[GRG55]

Re: Bearish Information RE: Is it different this time?

In the past I used to take the appearance of these sorts of articles as an indication that the market was on the verge of a turn as the recession was on its last legs. This time there is no recession (at least not yet), the markets are at all time highs, the unemployment rate is rock bottom, and there's lots of chatter about 3Q earnings once again beating estimates. Dare we use those always dangerous words...it's different this time?

Working families need help to afford the basics
New report finds 41 million Americans 'struggling to make ends meet'

By Ruth Mantell, MarketWatch
Last Update: 5:42 PM ET Oct 10, 2007
WASHINGTON (MarketWatch) -- About 1 in 5 Americans in working families can't afford basic needs, and many are scraping to get by on insufficient income and government aid, policy researchers conclude in a report released Wednesday...

...About 41 million people in working families can't afford such basic necessities as health care and housing, according to the report. The study, which examined conditions in nine states and the District of Columbia, found that government programs close abut two-fifths of the "hardships gap" -- a measure of the difference between a family's income, including all aid programs, and the local costs of goods and services.

"Families fall into the hardships gap because the low-wage labor market provides meager pay and few employment-based work supports for low- and moderate-wage workers," the report noted...

Link to article:
http://www.marketwatch.com/news/stor...D&siteid=yhoof

Seems a bit of a disconnect with this...

Fed Signals No Rush to Lower Interest Rates Again

By Craig Torres

Oct. 10 (Bloomberg) -- Federal Reserve policy makers signaled they are in no hurry to reduce interest rates again because they aren't convinced the U.S. economic expansion is coming to an end.

Link to article:
http://www.bloomberg.com/apps/news?p...efer=worldwide

Which in turn seems at odds with this...

AP Poll: Growing numbers see economy as top problem facing nation

By Alan Fram
ASSOCIATED PRESS

11:16 a.m. October 9, 2007

WASHINGTON – A growing number of people say the economy is the nation's top problem, with the less educated among the most worried, an Associated Press-Ipsos poll showed Tuesday.

Link to article:
http://www.signonsandiego.com/news/b...my-appoll.html

[friendly_jacek]

Re: Bearish Information

The markets reached a moderately overbought status as of last weak. The pullback was inevitable. Anyone cares to predict the severity of pullback?
There are so many references in the general media to the 20th anniversary of 1987! Who knows, it may have a psychologic impact.