Stocks up, gold down - time for a change in thesis?

[idianov]

Re: Stocks up, gold down - time for a change in thesis?

No bearish position yet, holding steady core PM positions. Almost ready to establish a speculative short on financials. The dumb money optimism and put/call ratio climbed too fast too soon and is at the level of previous peaks in the stock market.

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[Jay]

Re: Stocks up, gold down - time for a change in thesis?

I'm a bear and sold my shorts before this bull fortunately. I have been picking up some SKF and have bought more gold coins recently also. I think the money pumped into the system won't touch equities in any meaningful way and see DOW sub 5,000 at some point in the next three years. There is going to be much more bad news to come in my opinion.

[Supercilious]

Re: Stocks up, gold down - time for a change in thesis?

What is driving the bull? The flood of $$$?

Basically yes. The reversal of the dollar tide drives this bull. Here are the signs of the beginning:
http://blogs.cfr.org/setser/2009/03/...n-illustrated/

Here is one indication of the scale of the change: the US government was — according to the latest US balance of payments data – a large net lender to the world. Yes, a net lender, not a net borrower. Foreign central banks are no longer providing the US with much new credit. Indeed, they withdrew $13.6 billion of credit from the US in the fourth quarter, as central banks’ agency sales ($96b) and the fall in their deposits in US banks (bank CDs fell by $80 billion) produced a net outflow despite record purchases of US treasuries ($179b, all short-term bills). And the US — through the Fed’s swap lines — provided a rather large sum of credit ($268 billion) to the rest of the world. For the year as a whole, the BEA data indicates the US government lent $534 billion to the rest of the world while foreign governments lent “only” $421 billion to the US.

But, please just don't ask me for the sound/real fundamentals behind this bull drive because there aren't any ... it's all BS monetary magic ...

(BTW I voted for the last option because there was no other better. I'm not a good timer. If we had another one with "I was a Bear and now I'm a prudent Bull very weary of Bear traps"...)

[Sharky]

Re: Stocks up, gold down - time for a change in thesis?

What is driving the bull? The flood of $$$?

My guess:

1. Fraud / manipulation
2. The Fed is buying bonds at above market prices (QE+); proceeds from those sales are going into stocks
3. The USD has weakened considerably, making stocks look cheaper in other currencies and motivating overseas investors out of cash and into stocks. e.g., NZD is up ~18% vs. USD in the last month; in the chart below, the market "increase" looks pretty flat when priced in NZD.
4. Short covering as some CDS contracts get triggered or unwound

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[goadam1]

Re: Stocks up, gold down - time for a change in thesis?

How about a new poll?

A: I drank the koolade and it tasted sweet.

B: I drank the koolade and I tasted a touch of poison and felt a little burn in my throat, AAAARGGGGHHH!

What the hell are some of you doing hanging around this board. Go watch "Mad Money" or a rerun of "Flip This House." Go buy some Pets.com stock.

[goadam1]

Re: Stocks up, gold down - time for a change in thesis?

It's not a question of bullish or Bearish. If you are making polls like this, then you aren't paying attention. As far as a bull market, what is up with people. We bounced off a bottom and it's a bull market. Is the Nasdaq a bull market?

What year do you predict a new high from 2000?

What has changed about the structure of the economy?

[FRED]

Re: Stocks up, gold down - time for a change in thesis?

EJ writes in:

“We’re in a government-dependent financial system; I never thought I would live to see the day… We’ve got to fight to get away from that.” – Paul Volcker, March 24, 2009

An iTulip Thesis only changes when the underlying conditions that support the thesis change.

We have avoided stocks since 1998 and held gold since 2001 through many gold dips and stock market rallies.

What has changed since then?

The financial oligarchy that we spotted in 1998 can now be discussed in polite company in public, mentioned in passing by ex-Fed chairmen and read about in Harper's Magazine, The Atlantic Monthly and The Rolling Stone and not only iTulip.com since 1998.

Other than that, not much has changed since we developed our thesis.

Does the popularization of this fact change the outcome?

Jim Cramer is back in business after his supposed career changing dressing down by Jon Stewart two weeks ago. Evidence is that the implications of financial markets run by governments has, apparently, not sunk in. (Hint: they will be ruined.)

We hold our position: long gold and short government.

[Guest]

Re: Stocks up, gold down - time for a change in thesis?

What is driving the bull? The flood of $$$?

What is the basis for the (very popular here) assumption that "market fundamentals alone" can permit any renewed sustained uptrend? Since when have market fundamentals driven shorter term market action? The very expression "The fundamentals must always reassert themselves" - clarifies the point by implication: fundamentals play an eventual game of catch-up to what the vagaries of the market produce. In the 1970's the markets staged numerous very sustained market moves which were in no way tightly correlated to any fundamentals. Also the mention that "the Mainstream Media is cheerleading this rally therefore this is another sure fire indicator it must be false". Since when do we consider the marginal contrarian value of what the mainstream media is spouting to be a reliable indicator of anything, contrarian or otherwise?

How many of the markets' most famous speculators have repeatedly pointed out the markets are composed of well over 50% mass psychology? We've had a highly compressed world class bear market even just this far. We quite possibly indeed are due for another severe leg down - but that is not the definition of being in the middle of a long term bear market.

Meanwhile, the USD has to collapse against some other currency unit in order to stage a visible collapse. Say that it does not, while the global debasement of all currencies muddies the entire picture and exhibits no overt currency collapse anywhere - that is by no means outlandish, given that the observable events today instead portray exactly the opposite - that these other currencies are instead visibly collapsing against the USD? "What?" you say - "but under the present USD fundamental circumstances, that is highly improbable to continue"? Please note, what you are assigning such high improbability to continuing, is just exactly what has observably been occurring for a lot longer than was originally expected?

We might assign some weight to the actually observable extending events here, along with our notions about "fundamentals"?

Say no repatriating flood of dollars materialises for two or three more years, resulting in a continuously deferred emergence of the (long anticipated) cost-push inflation. That alone seems to be regarded here as an outlandish notion. Meanwhile, all fiat currencies certainly seem to be staging a very concerted inflation (in the true sense of the term), but it does not appear visibly anywhere at all in this highly anomalous global environment other than in a general weakening of all others vs. USD! What seems to develop, instead of staging a USD collapse is merely buildup of more and more "latency", along with plenty of global currency tensions - but currency tensions are not equivalent to currency consequences - and meanwhile, most of this community discards any possible continuing latency scenario out of hand? And all this time,"latency" is instead exactly what is currently playing out.

Once again - We might give some weight in these speculations to what is already observable, no?

Now add in the wild action in USD monetary aggregates. Anyone insisting upon the guidance of "market fundamentals" for equities in that context seems to be employing some notably conservative conclusions in response to the wild money action, as far as what they can imagine equity markets might produce in response. What bears scrutiny today: "fundamentals today absolutely don't suggest a sustained market rise". This unqualifiedly assumes that fundamentals have ever guided shorter term market moves to begin with. Is this an incontrovertible fact perhaps? Not hardly.

It's a wide open field of possibilities at this juncture. Here's a Robert Prechter broad markets valuation chart posted elsewhere a couple of days ago - it shows that we are indeed not in value territory in the stock indexes. I bet everyone looking at this chart jumps to the same conclusion: thinking that as the market valuation today is not yet "in the value box", it must be still headed down. What's the assumption here? The assumption is, that with the wildly distorting monetary aggregates in the US (and elsewhere) today, it is a "certainty" that before equities can rise, they must descend into the value box area.

Do the monetary aggregates worldwide hint that they want equities indexes to return to fundamental valuations perhaps?

PRECHTER ALL MARKETS VALUATION CHART.png

[Atlas]

Re: Stocks up, gold down - time for a change in thesis?

Still following belief in ITulip with regard to being a bear overall but I get bored and always try to trade the oscillations on the way down. So far I've been lucky with this last wave up and have been waiting until we hit about 8300 on the Dow before going short again. (Sticking my neck out a little here by posting a number I know.)

You have to believe the thesis overall but I think that too many people want to be optimistic and with the government doing everything it can to prop things up for as long as they can, we must expect these rallies. You can always rely on government to kick the can down the road a little farther and deal with it later.

[Raz]

Re: Stocks up, gold down - time for a change in thesis?

I bought SPDRs (SPY) on March 10th @ 71.01 - sold them all last Friday and am currently flat.

I'm bullish for the short-term for several reasons.
One is that most people remain bearish and Mr. Market rarely lets the crowd make money. Fundamentals don't move the Stock Market over the short to intermediate term. Money managers who fear being outperformed do.
Another reason is Lowry's technical service: they have been consistently right for the past two years. And another is a call by the best chart technician I've ever come across, as I posted here back on March 16th.

http://itulip.com/forums/showthread.php?p=84160#poststop

[Guest]

Re: Stocks up, gold down - time for a change in thesis?

Observations on this juncture from an asshat old dog of a market technician (30 Years Experience watching):

QUOTE: "I believe the probabilities have moved squarely in favor of a final low in the commodities being in place. And we know from history that during historic deflations on the order of what we have experienced, the final bottoms in the Stock Market and overall Commodity market coincide very closely to one another".

QUOTE: "In gold I do not have any compelling evidence to be on the short side, but I do in silver".

QUOTE: "Nasaq - very impressive relative strength - the fourth time at an old high almost always goes through".

This guy took a year before issuing this verdict on this market decline. No false calls. He called late November as being the highest probability window for a first (and definitive) low. We could wind up with a record number of Wrong Way Charlie bets on this poll.

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[Guest]

Re: Stocks up, gold down - time for a change in thesis?

More asshat technician guidance.:

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[Chris]

Re: Stocks up, gold down - time for a change in thesis?

It's a seasonal thing and coming to an end in the next week or so. People must fund retirement accounts by 4/15. Some of that money finds it's way into the stock market, especially when it's down over 50%. The MSM is calling 3/9/09 the market bottom. Jim Cramer was on CNBC saying that "the depression is over". The cheer leaders are out. It's unfortunate since the underlying economy has not changed one bit since last September when it bottomed.

Its the same old Wall Street formula. Get in for the bear market rally then sell it to JSP looking to put some money away to fund his future before the crash. Nothing has changed.

[Guest]

Re: Stocks up, gold down - time for a change in thesis?

Here you go Chris - might as well keep the old wheels of skepticism turning - at least to a token extent - even if only spinning just idly enough to ensure they don't seize up from too long a disuse. ;)

Its the same old Wall Street formula. Get in for the bear market rally then sell it to JSP looking to put some money away to fund his future before the crash. Nothing has changed.

DOW and S&P looking singularly advanced in their deflation against gold here, aren't they? Any smallest risk we might now be verging towards testing the "overshoot" theorem for robustness? What an annoyance, to have to constantly reexamine one's premises.

Seems we've got a few people here at iTulip, (maybe recent arrivals?) who have read the core meme about hyperinflation, and are "backing up the truck" on gold here. Frankly, these charts make their decision look just a shade "late to the party" and overenthusiastic, at least relative to the DOW and the S&P.

These charts are looking just a little bit "mature" to this jaundiced pair of eyes. I'm interested in iTulip's thesis - that the US indexes are overwhelmingly likely to be moribund for the next four years while we remain mired in depression, and that meantime gold is the likeliest thing to rise with the inflation level instead? Four or five years, eh? Not looking overwhelmingly likely on these charts! Or gold would have to overshoot massively to the downside on this chart relative to the DOW / S&P to eke out another four years of trend.

BTW - I'm starting to see one or two deals on real property in upscale neighborhoods here that are practically making my eyes bug out of my head. And I remember this town from the late 1990's when it was really, really *dirt cheap*. These (one or two) deals are looking like 1996-1998 prices. Seriously.

US MEDIAN HOME PRICED IN GOLD - 02 JAN 2009.gif

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Are these images visible now? One is .GIF format (housing) the other is .JPG

[Chris]

Re: Stocks up, gold down - time for a change in thesis?

Luke, I can't see any of the images you've posted. Am I the only one?