What's in the future? Harry Schultz

[Jim Nickerson]

Shultz's latest letter, just in, is absolutely apocalyptical: "A financial tsunami is upon us," he says, caused by lax credit and complications introduced by Wall Street's derivatives craze.

Among other interesting ideas raised by Schultz in his intense, somewhat terrifying introduction: recession, possibly depression; bank failures; exchange controls; housing prices down by 50%; credit card company failures; money market fund dangers; tripling of U.S. jobless numbers; federal bail-outs for Fannie Mae (FNM) Fannie Mae and Freddie Mac (FRE).

His advice, translated out of his shorthand style: "If you have not already done so, take immediate measures to safeguard your assets against the global derivative crisis ... Most urgent is close out time deposits, buy non-U.S. government bonds."

In other words, Schultz is saying the U.S. banking system is threatened. How's that for a Christmas greeting?

Schultz says "the second biggest danger is owning U.S. dollars in any form, (it) has crashed and going much lower ... use dollar rallies to exit dollars or sell short ... This is not a time to seek profits, but to protect what U have ... Portfolio diversification is essential in troubled times."

Now before anyone says all that is old news, consider that it was written some days before Dec. 13, 2007 by newsletter writer Harry Schultz. He made a very good call, but right now the bonar is slightly above the
Dec. '07 highs, otherwise not at all shabby.

http://www.marketwatch.com/News/Stor...66821FC09AB%7D

Peter Brimelow picked Schultz's newsletter as "letter of the year 2008" despite it being down 76.05% through Nov. 2008 in this article dated 12/28/08. (Doesn't say a lot perhaps about how Brimelow picks "winners.")

http://www.marketwatch.com/News/Stor...7EG2PnBf2tch6A

The reason I pick Schultz: the extraordinary prescience he showed in predicting what he called a "financial tsunami" well over a year ago. See Oct. 19 column Well? He was right, wasn't he?

If you care why Schultz did so poorly in the Hulbert portfolio tracking, read the article.

This is what Schultz thinks now:

Schultz is writing about a 20-year V pattern in markets and the economy -- "buying power (etc.) for everyone will shrink for 10 years (with strong 1-year counter-trend rallies) and then rise for 10 years (with strong counter-trend 1-year declines), getting back to 2007-08 levels by approximately 2027-28."
.
In the short-term, Shultz sees deflation and has argued strongly that gold will not make a decisive move until it's over. Which could be soon.

He writes: "This deflation will demand increasing cash/credit transfusions from governments. This supposed "cure" will create its own collapse as public's remaining confidence in currencies & government's phony or failed fixes suddenly evaporates, perhaps overnight, and the world leaps not back into inflation, but probably to hyperinflation. You see, if this view is correct, normal inflation gets bypassed because all sense of value at that point is largely gone. The last chicken comes home to roost.

"One investment conclusion: "This may be your last chance to get out of the U.S. dollar before it falls to historic lows. Note, if you own U.S. stocks, you own U.S. dollars! E.g., if you own U.S. oil, energy, food, resource stocks, you own U.S. dollars. You can sell such stocks and buy similar companies in Europe, Asia, Canada & Oz."

Another cheerful point: Schultz predicts that the government will seize and nationalize private 401(k) plans.

He throws in this cheerful thought that he claims comes from Thomas Jefferson: "This country is headed toward a single and splendid government of an aristocracy founded on banking institutions and monied corporations, and if this tendency continues it will be the end of freedom and democracy; the few will be ruling and riding over the plundered plowman and the beggar."

Schultz's terse comment: "And it came to pass."

As I read the prediction it differs I think with EJ in that Schultz thinks probably hyperinflation lies ahead. I'll leave it to metalman to put up 5-10 links clarifying exactly what iTulip-EJ has written.

Further it seems to me that Schultz doesn't disallow owning commodities, just stocks. That goes along with Rogers and Fabers opinions about the value of commodities.

[raja]

Re: What's in the future? Harry Schultz

"One investment conclusion: "This may be your last chance to get out of the U.S. dollar before it falls to historic lows. Note, if you own U.S. stocks, you own U.S. dollars! E.g., if you own U.S. oil, energy, food, resource stocks, you own U.S. dollars. You can sell such stocks and buy similar companies in Europe, Asia, Canada & Oz."

Why does he think these areas are going to do any better than the US?
I don't think they will . . . but I'd like to hear some counter arguments.

[Guest]

Re: What's in the future? Harry Schultz

For the next three to four years I think Schultz's positions are going to accomplish nothing more than get all who follow his advice flattened. After that, his advice will be one hundred percent correct. The sage wisdom of an octogenarian who has been there and done that once before in the 1970's will prove quite risky to follow to the letter for the next couple of years. JK posted a view from Stephanie Pomboy for a "deflation scare" coming up, and that IMO is correct and provides much more immediate and practical advice for protecting oneself over the next 24 months. I think the next 24 months "safety" will be the diametric opposite of what Harry Schultz is propounding.

Schultz is smart, experienced, and has been around the block a few times - but he's making the mistake of issuing a clarion call for the "main event" without a sufficiently supple sense of timing - and those who follow Harry Schulz's macro call in the next 24 months and get wholly out of the USD will be doing exactly the opposite of what would provide them safety, which is precisely to pile INTO the USD, and INTO US equities, insofar as one wishes any equity exposure at all. He is going to be flat wrong in recommending all stock markets and bond markets outside the USD zone.

I glean that the US equity markets will paradoxically be the safest. For those with guts of steel though, of course, over the longer term Harry Schulz's call is spot on - but the question is whether you can take on his positions and then go through the unholy meatgrinder of "liquidated everything" that lies ahead of us - and the rest of the world will see a much worse meatgrinder than the US before the US zone get's what is fundamentally due and coming to it - namely some sort of immolation. That stuff comes later - betting on it now is not actionable - it is the opposite of actionable - toxic.

My 0.2 cents.

[Jim Nickerson]

Re: What's in the future? Harry Schultz

For the next three to four years I think Schultz's positions are going to accomplish nothing more than get all who follow his advice flattened. After that, his advice will be one hundred percent correct. The sage wisdom of an octogenarian who has been there and done that once before in the 1970's will prove quite risky to follow to the letter for the next couple of years. JK posted a view from Stephanie Pomboy for a "deflation scare" coming up, and that IMO is correct and provides much more immediate and practical advice for protecting oneself over the next 24 months. I think the next 24 months "safety" will be the diametric opposite of what Harry Schultz is propounding.

Schultz is smart, experienced, and has been around the block a few times - but he's making the mistake of issuing a clarion call for the "main event" without a sufficiently supple sense of timing - and those who follow Harry Schulz's macro call in the next 24 months and get wholly out of the USD will be doing exactly the opposite of what would provide them safety, which is precisely to pile INTO the USD, and INTO US equities, insofar as one wishes any equity exposure at all. He is going to be flat wrong in recommending all stock markets and bond markets outside the USD zone.

I glean that the US equity markets will paradoxically be the safest. For those with guts of steel though, of course, over the longer term Harry Schulz's call is spot on - but the question is whether you can take on his positions and then go through the unholy meatgrinder of "liquidated everything" that lies ahead of us - and the rest of the world will see a much worse meatgrinder than the US before the US zone get's what is fundamentally due and coming to it - namely some sort of immolation. That stuff comes later - betting on it now is not actionable - it is the opposite of actionable - toxic.

My 0.2 cents.

Happy New Year, Luke.

Man, what do you eat that makes you so assertively omniscient? Chitlins?

Luke, you are one smart dude, at least to me you are, but as you choose to write not uncommonly these assertions here, I wonder is this all your thinking or just regurtitation of those individuals whose opinions you feel are worthwhile. Because seldom, though not never, do you reference anyone in these assertions you write, they come across as though they are mainly your own thinking. I thought it was your thinking that having all your assets in physical gold and silver was the right place to be. Has that changed, or am I entirely incorrect in my recall of your tactical positioning earlier this year? Still there with PM's if your perception is ongoing deflation and bonar strength? At least for me (not that I expect you would do anything just for me), you should clarify your positioning in metals at the moment? Earlier here, after you burst onto the scene, you were rather antsy if anyone asked you about allocations, but as I recall with not too distant past posts you have suggested strong allocations in the PM's. If stong PM's is where your money is, what are readers to make of your current counter assertions of strength in the bonar?

As far back as I can remember regarding investment advice that one crosses on the web, the most frequent question in my mind is not so much the correctness of what people espouse in their writings, but rather "where is their freaking money invested?" If you know how people are invested, I believe you can figure out rather much what they are thinking.

You mentioned the old post jk put up regarding Pomboy's warning or call for deflation. http://www.itulip.com/forums/newrepl...wreply&p=26239

Your verb selection suggests to me that you failed to have noted the date on jk's post--January 2008--and seem to be suggesting Pomboy's "call" is still "coming up." If I am interpreting that correctly, then your current thinking on deflation may be influenced by having misread jk's post or whatever was the link he put up, or is it?

To me there is no mistake that we have been experiencing deflation since July, and I reference the old FDI as the best source I have to try to sort through that sort of thing. The second chart featuring the past two hundred weeks
http://users.zoominternet.net/~fwuth...terDollarIndex

Don't ask me what is going to transpire over the next year or two or decade. I have no serious idea as to how all that has occurred in the past couple of decades will ultimately sort itself out.

So far, I haven't seen you post an answer on the last post by EJ and below is a snippet

To the extent that it "succeeds" economic recovery will be slow as is has been in Japan, but worse because the US cannot earn income from exports as Japan did since the early 1990s. Who will the US export to during a global economic contraction? Also, US households have a fraction of liquid net worth that the Japanese had in 1990 at the start of their debt deflation. As a net creditor, Japan was able to increase gross public debt from 39% to 194% of GDP from 1990 to 2007 as private debt was transferred to public account via taxes paid on wages generated by government spending. Can the US as a net debtor do the same? At some point creditors worry that repayment of debt to domestic holders will take political precedence over foreign creditors. Does that occur at 100% of GDP? 150% of GDP? No one knows.

I assume had you seen his assertion that "No one knows" you would have posted the answer. What is the answer, oh Wise One? I expect EJ would welcome your assertive insights, but surely that is only my guess.

LUKE, I do applaud your disclaimer" "My 0.2 cents." Two-tenths of a cent is getting on down there in being of little value unless we get into humongous deflation.

[Guest]

Re: What's in the future? Harry Schultz

This quote of EJ's was vintage "best of iTulip". Gawking at the signals the bond market is giving off - many people don't make the simple step forwards to accept it could be instead a huge false signal as EJ points out. But still, the KA could be very long and one has to gauge one's positions for that interlude carefully. I guess some of us did not (me!). As I've freely confessed, I've been heavily positioned in assets which I believe not only HAVE been FLAT FOOTED and WRONG for the current developments, but also WILL be flat footed and WRONG (on the freaking timing - by two or three years!!) for what's upcoming. I think that all those elaborately gearing themselves for a dollar collapse will instead get whittled down by what develops in the next 24n (and possibly even 48) months. EJ's alt-energy boom however IMO can arrive earlier and kick off like a bonfire in the equities markets. But PM'S and the whole crowd gearing up with K-rations, guns and gold is going to be sorely disappointed for a while. I think the best action will be in the US stock markets, in Alt-energy - kicking off even as early as late in 2009!!! :eek: What the heck are all the survivalists and armageddonists going to do with that?

The bond market is not forward looking. It is a big mistake to think it is, especially during times of major dislocations in the financial markets and the economy. Long term, the bond markets tend to get both default risk and inflation risk wrong. The reason is that bond market participants don't know when the government is going to do. That is why we study the political economy so carefully. When the Fed created the 40% inflation surge in 1934, it blew up the bond market that was, much like today, the one place besides gold where investors were willing to park their money. To encourage bond dishoarding -- and how -- the Fed created inflation via radical currency depreciation.

Happy New Year, Luke.

Man, what do you eat that makes you so assertively omniscient? Chitlins?

Luke, you are one smart dude, at least to me you are, but as you choose to write not uncommonly these assertions here, I wonder is this all your thinking or just regurtitation of those individuals whose opinions you feel are worthwhile. Because seldom, though not never, do you reference anyone in these assertions you write, they come across as though they are mainly your own thinking. I thought it was your thinking that having all your assets in physical gold and silver was the right place to be. Has that changed, or am I entirely incorrect in my recall of your tactical positioning earlier this year? Still there with PM's if your perception is ongoing deflation and bonar strength? At least for me (not that I expect you would do anything just for me), you should clarify your positioning in metals at the moment? Earlier here, after you burst onto the scene, you were rather antsy if anyone asked you about allocations, but as I recall with not too distant past posts you have suggested strong allocations in the PM's. If stong PM's is where your money is, what are readers to make of your current counter assertions of strength in the bonar?

As far back as I can remember regarding investment advice that one crosses on the web, the most frequent question in my mind is not so much the correctness of what people espouse in their writings, but rather "where is their freaking money invested?" If you know how people are invested, I believe you can figure out rather much what they are thinking.

You mentioned the old post jk put up regarding Pomboy's warning or call for deflation. http://www.itulip.com/forums/newrepl...wreply&p=26239

Your verb selection suggests to me that you failed to have noted the date on jk's post--January 2008--and seem to be suggesting Pomboy's "call" is still "coming up." If I am interpreting that correctly, then your current thinking on deflation may be influenced by having misread jk's post or whatever was the link he put up, or is it?

To me there is no mistake that we have been experiencing deflation since July, and I reference the old FDI as the best source I have to try to sort through that sort of thing. The second chart featuring the past two hundred weeks
http://users.zoominternet.net/~fwuth...terDollarIndex

Don't ask me what is going to transpire over the next year or two or decade. I have no serious idea as to how all that has occurred in the past couple of decades will ultimately sort itself out.

So far, I haven't seen you post an answer on the last post by EJ and below is a snippet

I assume had you seen his assertion that "No one knows" you would have posted the answer. What is the answer, oh Wise One? I expect EJ would welcome your assertive insights, but surely that is only my guess.

LUKE, I do applaud your disclaimer" "My 0.2 cents." Two-tenths of a cent is getting on down there is little value unless we get into humongous deflation.

[kingrich]

Re: What's in the future? Harry Schultz

Why does he think these areas are going to do any better than the US?
I don't think they will . . . but I'd like to hear some counter arguments.

Doesn't make too much sense since the only currency the underlying commodities are presently traded in are US dollars.

So it doesn't really matter if you own the oil ETF in New York or in London, because the price will be based on the price of oil which is traded in US dollars

[Jim Nickerson]

Re: What's in the future? Harry Schultz

Doesn't make too much sense since the only currency the underlying commodities are presently traded in are US dollars.

So it doesn't really matter if you own the oil ETF in New York or in London, because the price will be based on the price of oil which is traded in US dollars

I believe Schultz was referencing stocks rather than commodities, but regardless if you owned something in the EU and the price goes up in dollars, but the dollar goes down relative to the EURO, you'd be better off owning the position in Euro's, then buying more dollars with those Euro's to live in the US. I hope I have that correct.

[bart]

Re: What's in the future? Harry Schultz

Just for perspective against that alleged yearly loss in the Harry Schultz Model Portfolio, the full facts are that the portfolio gained between 500% and 1500% since about mid 2001, depending on whether dividends are included and how aggressive one was on hedging profits after his deflation call in about April 2008.

[raja]

Re: What's in the future? Harry Schultz

This quote of EJ's was vintage "best of iTulip". Gawking at the signals the bond market is giving off - many people don't make the simple step forwards to accept it could be instead a huge false signal as EJ points out. But still, the KA could be very long and one has to gauge one's positions for that interlude carefully. I guess some of us did not (me!). As I've freely confessed, I've been heavily positioned in assets which I believe not only HAVE been FLAT FOOTED and WRONG for the current developments, but also WILL be flat footed and WRONG (on the freaking timing - by two or three years!!) for what's upcoming. I think that all those elaborately gearing themselves for a dollar collapse will instead get whittled down by what develops in the next 24n (and possibly even 48) months. EJ's alt-energy boom however IMO can arrive earlier and kick off like a bonfire in the equities markets. But PM'S and the whole crowd gearing up with K-rations, guns and gold is going to be sorely disappointed for a while. I think the best action will be in the US stock markets, in Alt-energy - kicking off even as early as late in 2009!!! :eek: What the heck are all the survivalists and armageddonists going to do with that?

Lukester, here's what I see when I look into my crystal ball, FWIW . . . .

Inflation is coming, but it's not here now.
Until it arrives, people will stay mostly in cash and Treasuries.
But inflation is coming . . . .

Stocks will continue to go down as unemployment grows and wealth disappears from plummeting housing assets. People don't have money to invest, and they also fear losing more, so they're not going to invest in stocks.

Gold won't surge until people fear that the whole economy might spin out of control, and/or inflation arrives. But until then it will slowly go up as more and more people buy this disaster "insurance".

As the economy worsens, commodities will stay down, and maybe go lower for awhile. As the year's pass, they will slowly go up because of depletion. The time to buy commodities is right before the recovery . . . about 10-15 years from now :eek:

There are other factors at play, but they will have a minor effect . . . such as those few who buy stocks because are now a "bargain"

[ASH]

Re: What's in the future? Harry Schultz

I think that all those elaborately gearing themselves for a dollar collapse will instead get whittled down by what develops in the next 24n (and possibly even 48) months. EJ's alt-energy boom however IMO can arrive earlier and kick off like a bonfire in the equities markets. But PM'S and the whole crowd gearing up with K-rations, guns and gold is going to be sorely disappointed for a while. I think the best action will be in the US stock markets, in Alt-energy - kicking off even as early as late in 2009!!! :eek: What the heck are all the survivalists and armageddonists going to do with that?

Lukester, here's what I see when I look into my crystal ball, FWIW . . . .

Inflation is coming, but it's not here now.
Until it arrives, people will stay mostly in cash and Treasuries.
But inflation is coming . . . .

Stocks will continue to go down as unemployment grows and wealth disappears from plummeting housing assets. People don't have money to invest, and they also fear losing more, so they're not going to invest in stocks.

Gold won't surge until people fear that the whole economy might spin out of control, and/or inflation arrives. But until then it will slowly go up as more and more people buy this disaster "insurance".

As the economy worsens, commodities will stay down, and maybe go lower for awhile. As the year's pass, they will slowly go up because of depletion. The time to buy commodities is right before the recovery . . . about 10-15 years from now :eek:

There are other factors at play, but they will have a minor effect . . . such as those few who buy stocks because are now a "bargain"

Thank you both for taking a stab at this.

I am 100% unqualified to make an economic forecast, but I do so anyway to put a stake in the ground to remind myself "what the hell I was thinking" when I look back and wonder where my money went.

My baseline scenario for stocks and gold matches raja, with the caveat that the US could experience sudden capital flight and EJ's POOM, in which case gold could rise (the dollar could fall) more sharply, and sooner, than otherwise.

Now comes the fun part. If we get a substantial rise in the stock market in Lukester's timeframe, then suddenly I become much more intrigued by technical analysis. Although I don't think Symbols has posted to this thread yet, if over the course of a few years the dollar's role in international trade stays strong and even increases -- and if we get sustained deflation -- then suddenly I rethink my whole attitude toward "design versus accident", shall we say. If we get sustained deflation and gold goes into the toilet entirely, then, uh -- I petition Phirang for a Barney-style exposition of his thinking. (Apologies to these worthies if I have misrepresented their positions or methods; also, apologies to those prominent iTulipers whose mention I have omitted.)

[raja]

Re: What's in the future? Harry Schultz

My baseline scenario for stocks and gold matches raja, with the caveat that the US could experience sudden capital flight and EJ's POOM, in which case gold could rise (the dollar could fall) more sharply, and sooner, than otherwise.

Would the capital flight go into gold? Or where?
I don't think there's enough gold to support all of it.
People often mention investing in foreign bonds, but every country seems to be in trouble, more or less. EJ has pointed out the political stability of the US that makes it a relatively safe haven.

Ash, what did you think about my comments on commodities? They are very tempting at current low prices, but I just can't buy with the global economic storm clouds gathering . . . .

[ASH]

Re: What's in the future? Harry Schultz

Would the capital flight go into gold? Or where?
I don't think there's enough gold to support all of it.
People often mention investing in foreign bonds, but every country seems to be in trouble, more or less. EJ has pointed out the political stability of the US that makes it a relatively safe haven.

I don't think that it can go directly into gold. I believe the market in gold lacks the requisite size and complexity. However, I do think that there would be sufficient "spill over" from any such displacement so as to increase the price of gold in dollars. Also, given time, an adequate market in financial instruments tied in some way to gold might develop.

In the short term, I have to assume that the flight would be into a market of similar size and complexity, which pretty much means Euros or Yen. But, as you point out, the nature of the "least ugly contest" doesn't really commend one of these alternatives to me. I truly wonder if the lack of plausible alternatives is what will determine the pacing of any possible capital flight. Perhaps there will be very limited short-term capital flight because there aren't any good destinations. Maybe the triggering event will be the appearance of such an alternative in the medium term. My gut feeling is that we'd need something like sovereign bonds, but ultimately backed by something more tangible than fiat currency. Commodity-based bonds or other financial instruments might be where we end up, or perhaps bonds issued in new currency units (backed by gold) or indexed in some convincing way to inflation (i.e. the index not being under the political control of the debtor). A "next bubble" would do it too. So, I'm going to say no big capital flight until gold somehow becomes involved in international trade again (for instance through a new "Bretton Woods"-type agreement), or until a big market in bonds backed by something other than fiat emerges, or until a next bubble develops. (And if that next bubble develops in the US, then no capital flight at all.)

Did you get the part earlier about me being entirely unqualified to make such predictions?

Ash, what did you think about my comments on commodities? They are very tempting at current low prices, but I just can't buy with the global economic storm clouds gathering . . . .

I think your comments on non-monetary commodities make sense to me, but that I am even more clueless than usual on that topic.

[jk]

Re: What's in the future? Harry Schultz

one caveat re schultz's statement: i disagree with schultz on the nature of u.s. equities. equities represent an ownership interest in an enterprise. they are PRICED in dollars but, then, so is e.g. oil, as someone pointed out in this thread. for that matter, so is gold. thus certain equities might be beneficiaries of the great infrastructure and alt.energy fundings, even discounting possible dollar devaluation.

fwiw my view is that the most probable future path includes a substantial rally in equities which then fails as the economy goes into its next downleg. i would expect commodities, including gold, to track with equities in this scenario, until gold gets a boost as more intervention [not intervention in the gold market, but in the banking system and the p+c economy] takes hold during the next leg down.

[Jim Nickerson]

Re: What's in the future? Harry Schultz

one caveat re schultz's statement: i disagree with schultz on the nature of u.s. equities. equities represent an ownership interest in an enterprise. they are PRICED in dollars but, then, so is e.g. oil, as someone pointed out in this thread. for that matter, so is gold. thus certain equities might be beneficiaries of the great infrastructure and alt.energy fundings, even discounting possible dollar devaluation.

fwiw my view is that the most probable future path includes a substantial rally in equities which then fails as the economy goes into its next downleg. i would expect commodities, including gold, to track with equities in this scenario, until gold gets a boost as more intervention [not intervention in the gold market, but in the banking system and the p+c economy] takes hold during the next leg down.

I just got this in Mike Burk's Saturday morning weekly prognostication. You can find his entire note probably today on http://safehaven.com/index.cfm later today if not now.

The good news is:

· By current fashion, a bull or bear market is defined as a major index moving 20% off its low or high. By that definition, we are in a bull market with every major index except the Dow Jones Industrial average (DJIA) more that 20% off its November low. The Dow Jones Industrial Average (DJIA) was 19.6% off its low as of Friday's close, the S&P 500 (SPX) 23.8% off its low, the NASDAQ Composite (OTC) 24%, the Russell 2000 (R2K) 31.3% and leading the way, the Value Line Arithmetic up 39.4%.

I'm not checking Burk's numbers, but I do believe they are based on closing prices from 11/20/08, and these moves have been over 28 market days.

Based on intraday lows, I believe they all occurred on 11/21/08, and my tracking through 1/2/08 based on closing prices, which also I am not checking but I believe is likely correct, the DJI is up 21.28%, SPX up 25.75%, Nasdaq up 25.99%, the NDX up 24.03%, the RUT up 36.23%, and the Value Line Geometric ($VGY) up 37.41% and these moves are in 27 market days. I'm not going to annualize those gains, but by any means I have to discern, we have already had substantial gains.

I noted I think Wednesday night some extremes in bullish sentiment and market breadth in the McClellan Oscillator and the really lackluster volumes that have occurred in these rallies. If you care to look see here http://www.itulip.com/forums/showthr...iper#post68999

I wrote a guy an update last night on some of this stuff, i.e. one more day's data.

Today's 90% (Nickerson's Lowry-like) figures for NYSE at least amount to two back to back 80% days following a pure 90% up day (just 90.01% on volume) on Tuesday--typically or supposedly bullish-so at worst 3 back to back 80% days.

The NYSE and NASDAQ McClellan oscillators when averaged are more overbought than on 11/4/08--remember election day. Now--then(11/4) NYSE 345--320 NASDAQ 206--233 AVG 275--272. The current figures for the oscillators are not at all time highs, but the average of 272 on 11/4 was the highest average I have going back to 2000, and the 275 is a new high average.

The next highest average occurred back in May of 2004 with SPX at 1121, after which in seven days it topped at 1142, and then slid to 1063 over 40-45 days, or six weeks.

The recent 10 dayEMA of the ISEE data of 154 holds as mentioned in the post.

Another indicator I follow is difference in the VGY and its 19 Day EMA. It currently is 6.91%, i.e. the price of the VGY ($XVG) is 6.91% above the average.

Its previous high, from data back to 10/2002, was 6.09% with the SPX at 990 on 6/5/03, then up to 1011 in 8 market days, then down to 974 in the next 9 days, an upswing to 1007 and ultimately down to 965 on 8/5/03. I would summarize that as going nowhere over two months, but remember that was after a good retest of the 10/02 low in March 03, and clearly in retrospect was during a bull market. Perhaps we are again clearly in a new bull market.

I ain't lucky or smart enough to "call" an end to this rally, but these rallies in equities have produced substantial gains already. As I recall the rally off the first down leg of the 1929 crash produced a 50% rally in the DJI. If history were to repeat in here, now, there could be a lot of upside left. Personally, I am a bit long (~29%) and ~1% short $UST in TBT, but I am nervous and wondering how much of a pull back should be in our near future, and whether or not it will mark an end to this rally or just a "healthy correction" (as used so often during the runup from 2002 to 2007).

Edit: I'll throw in a few more things I track $BKX up 37.08%, $XOI up 36.97%, $GDM up 105.32%, $XAU up 94.32%, $SOX 32.44%, $OSX 34.47%, Anyone not undertanding the symbols, if anyone, in bigchart.com you can leave off the "$" but in stockcharts.com indices must have the "$" in front of the letters.


I think all these gains are since October, and to my reckoning most investors would not frown upon such percentage gains for a period of a year or even two, much less in less than three months.