No6's Financial Markets Thread

[No6]

Billionaire Ken Fisher Sees 16% S&P 500 Rally After Elections

 

He's always bullish.

My brother-in-law opened an account with them. and lost plenty in 2008.

 

Well, to be fair he does have history on his side this time. The odds here look good, to bet against it would be to go against history.

 

Fisher’s optimism is based in part on history. Stocks average gains of 11 percent in the third year of U.S. presidencies and haven’t fallen since 1939 when the Dow Jones Industrial Average lost 2.9 percent, according to data since 1833 compiled by the Stock Trader’s Almanac. The fourth year, when elections are held in November, is second-best, with an average advance of 5.8 percent.

[No6]

QE may well help the stock markets, but housing in the UK is still going to struggle because of restrictions, regulated or otherwise around mortgage financing. Builder Redrow reported this morning and despite good results they are clearly worried. They appear desperate for the Government to come up with something, a crazy scheme or two. Interesting, but all the regulators are doing is ensuring that people can afford to buy, something which they turned a blind eye to pre-2007, hence the popularity of self-cert mortgages. Does Redrow want a return to those days of easy money, no regulation lending. I reckon so.

 

Redrow's chairman and founder, Steve Morgan, said that underlying demand remained strong but there were very few mortgages available, pushing up the average age of a first time buyer to 37.

 

"Our message to the government is simple: the regulators are going too far and the medicine risks killing the patient," Morgan said in a statement on Thursday.

 

"We cannot have a buoyant UK economy without a healthy housing market," he added.

 

http://www.reuters.com/article/idUSLDE6A21TN20101104

[drbubb]

FTSE on a roll this morning, up close to 100. They like the US QE announcement and the 3/10 crossover which I pointed out yesterday was a jump the gun on this news. No point fighting the trend.

Approaching the top of the trend ... FTSE-update

 

Some folks that I rate expect a pop in the SPX to 1210-1220 today, and then the selloff starts.

 

I'm not buying into Ken Fisher's +16%, but the market action today is quite critical.

[drbubb]

QE may well help the stock markets, but housing in the UK is still going to struggle because of restrictions, regulated or otherwise around mortgage financing. Builder Redrow reported this morning and despite good results they are clearly worried. They appear desperate for the Government to come up with something, a crazy scheme or two. Interesting, but all the regulators are doing is ensuring that people can afford to buy, something which they turned a blind eye to pre-2007, hence the popularity of self-cert mortgages. Does Redrow want a return to those days of easy money, no regulation lending. I reckon so.

"We cannot have a buoyant UK economy without a healthy housing market," he added (Redrow spokesman).

 

LOL.

That's a silly comment from Redrow.

I would say:

"The UK cannot have a buoyant UK economy until housing prices come down to an affordable level, so as to provide a healthy housing market."

 

[No6]

Approaching the top of the trend ... FTSE-update

 

Some folks that I rate expect a pop in the SPX to 1210-1220 today, and then the selloff starts.

 

I'm not buying into Ken Fisher's +16%, but the market action today is quite critical.

 

It may be approaching the top of the trend, but it could be setting up for a breakout. Should know in the next seven days. 6000 is getting very close, the markets like and is attracted to round numbers.

[No6]

Do we fight the trend?

 

On the positive

 

3/10 crossover

Parabolic Sar trending up

Bollinger Band opening to the upside

ADX moving positive

Stochastics turning up

6000 round number approaching

This latest move has only just started, so in terms of probability and unless there is a quick reverse, you only have to look at the charts to see the tendency for a move like this to continue.

 

On the negative

 

Price is moving outside the Bollinger Band so you would expect it to move back inside the bands fairly soon.

ADX move is still weak, but this often tends to be the case in an early move anyway.

We have had a long run so a "correction" is due. Current action may now be cancelling out that view.

 

 

Weekly chart also looks positive. A higher high looks in view.

 

[No6]

The Bank of England has held UK interest rates at a record low of 0.5% for the 20th consecutive month.

 

The Bank also decided not to pump any more money into the economy through quantitative easing (QE).

 

The decision comes after the latest figures on the economy showed gross domestic product grew at a faster-than-expected 0.8% in the third quarter.

 

http://www.bbc.co.uk/news/business-11694582

[No6]

"We cannot have a buoyant UK economy without a healthy housing market," he added (Redrow spokesman).

 

LOL.

That's a silly comment from Redrow.

I would say:

"The UK cannot have a buoyant UK economy until housing prices come down to an affordable level, so as to provide a healthy housing market."

 

Things are beginning to turn. I'm expecting much lower prices ahead.

 

Housing market loses £500m as 'desperate' sellers slash prices amid fears of another property plunge

 

Families trying to sell their homes have slashed a massive £500million off the asking price since the beginning of August, research has revealed.

 

It warned many people are becoming increasingly 'desperate' to sell amid fears that house prices could be set to plunge, or because their family finances are at breaking point.

 

The research found more than one in three sellers have cut the asking price 'at least once' since it was put up for sale this year.

 

On average, they have knocked off 6.1 per cent from the asking price, equal to a price cut of around £16,000.

 

But many have been far worse hit, cutting the asking price several times and by up to 30 per cent, according to the research from the property website Zoopla.co.uk.

 

http://www.dailymail.co.uk/news/article-13...o=feeds-newsxml

[No6]

History really is on the side of the bulls over the next 12 months.

 

The balance of US power is now more balanced -- or gridlocked, depending on your point of view – with Obama likely to seek more consensus on issues such as the upcoming expiration of President Bush's tax cuts, while retaining a veto that means the Republicans won't be able to drive through enormous changes, either.

 

Yet you don't need to be a political wonk to get excited about the prospects for the stock market in the wake of this result. You just need to look at the numbers.

 

As Deutsche Bank chief US equities strategist Binky Chadha explained before the election to Fortune magazine, the S&P 500 has produced gains in 18 out of the last 19 midterm election cycles:

 

* The S&P has returned an average of 13% in the six months after midterm elections.

* It has returned 17% over the next twelve months.

* When there's a Democratic in the president's chair while the Republicans control the legislature, the average returns over the next year rise to 14.6%.

 

I think an 18-for-19 batting average is more likely to be a real effect than pure coincidence, although nobody can say for sure. For what it's worth, numerous reasons are advanced as to why positive post-midterm returns should be so consistent, ranging from a theory that snarled-up government gives business a freer hand, to claims that the incumbent President is spooked into spending more money ahead of re-election.

 

http://www.fool.co.uk/news/investing/2010/...fwflwlnk0000001

[John Doe]

Things are beginning to turn. I'm expecting much lower prices ahead.

Oh I don't know, things up here are rosy

 

http://www.heraldscotland.com/news/home-ne...evels-1.1065521

 

[No6]

Oh I don't know, things up here are rosy

 

http://www.heraldscotland.com/news/home-ne...evels-1.1065521

 

Except they are not really rosy. It's the same old story, prices can be distorted by the lower number of sales, it's the same across the UK. If prices were going up with sales levels the same as 2007 then I might be impressed, but I would then look for evidence of loose lending and the return of lie to buy mortgages. Can the market go on forever with lower levels of sales? I suppose so, but then the economy will suffer from the lack of movement by the workforce and the average FTB will soon be 50, then 60. They will have to put up the retirement age to 90 so they can pay off a mortgage. I think there is lots of evidence right now of the market being under pressure and the builder Redrow effectively begging the Government to do something about it is further proof of that today.

 

The major downside, though, has been the overall number of sales, which, despite a year-on-year rise, is still only half of what it was at the peak of the market in 2007.

 

Some experts in the property market have claimed the average price rise is due to basic supply-and-demand economics, with fewer houses for sale driving up prices. Others see the figures as evidence the sector is recovering, having now bottomed out.

[littledavesab]

Things are beginning to turn. I'm expecting much lower prices ahead.

 

The great British public has great faith in property as an investment. I have seen some confidence wobble but it does strike me that we will need high interest rates or similar to make a severe impact of say 25%+ on house prices. Of course anything is possible, but property is benefiting to some degree from the ZIRP.

[drbubb]

History really is on the side of the bulls over the next 12 months.

Let's keep this in perspective.

The must bullish part is that the Fed seems determined to devalue the dollar.

The QE announcement may be now fully priced in.

 

Shortcovering may last for a few days, then it may need further destruction in the dollar to keep it going.

 

I don't get any "warm and fuzzy feelings" from what is happening. Like Jim Grant, I get angry with BB

for the long term damage he is doing to the US economy with this.

[No6]

Let's keep this in perspective.

The must bullish part is that the Fed seems determined to devalue the dollar.

The QE announcement may be now fully priced in.

 

Shortcovering may last for a few days, then it may need further destruction in the dollar to keep it going.

 

I don't get any "warm and fuzzy feelings" from what is happening. Like Jim Grant, I get angry with BB

for the long term damage he is doing to the US economy with this.

 

But that is a personal view and as you will know from your years of trading experience the markets don't care what our views are regarding the politics or economics of this situation. In fact, you could argue that they against the prevailing bear, anti-fiat, anti-state, anti-fed, pro-libertarian, in love with gold view and instead quite like what the Central Banks are doing. I try not to take a view on this when I'm looking to trade, but I think it does explain why many bears have been so wrong in their stock market calls for most of the last 18 months.

 

I started off this thread by saying neither bull nor bear, just going with the flow and when it comes to looking at the charts or the probability of history I simply put forward what is out there or my interpretation of it. I'm not trying to second guess or even make an educated guess as to when turns or crashes will come, especially when the market direction looks reasonably set from the available evidence. Not sure what else we should be doing? Personal experince has taught me, don't fight the trend as you will lose.

[No6]

Apparently Robbie Burns, The Naked Trader, is giving a speech to the London School of Economics today. He plans to tell them why economists and accountants don't make good traders!

 

An economics talk that may not add up

 

I won't be here on Friday - no update. That's because, bizarrely when I would normally be writing the Friday update I will be at the London School of Economics.

 

Ahem, giving a talk on.. er... well... you'd think economics wouldn't you?

 

But in fact my talk is on... Why economics or understanding of it is no use to a trader. And why trading is more like a card game than anything to do with economics!

 

I never normally do talks (apart from my all day seminars).

 

I turn down all the invites from investors groups, Investor and trader shows and the rest of it. I guess I would sell more books but I don't feel I can say what I really do in half an hour.

 

And in any event I'd rather be at home on the computer or doing something else. (Mind your business about what that something else might be) (No not that)

 

When I got the invite from the LSE I wrote back to say I didn't give talks and in any event I didn't know anything at all about economics and the students would know a lot more about it than I did.

 

They wrote back to say that didn't matter. Go on say what you want, we don't mind.

 

Then I thought hmmm....it might be a fun and interesting thing to do. Even though it will actually cost me to do it!

 

Whenever I've met economists and also accountants at my seminars it's the same story.

 

They struggle to trade. Why? After all they know a lot about economics and accounts..

 

It's because first of all they are scared! Because they look at the economy or a set of accounts and look at them so in depth that something always scares them so they never place the trade.

 

What they don't get is that trading is like a game of cards. It's a game of poker I guess - there is bluffing, all in, the lot. Fear, greed and plenty of tension.

 

And of course it's very psychological and it's all about fear and emotions.

 

So I'll be telling them that being at economics school may not in fact be the best grounding to be a trader.

 

http://www.nakedtrader.co.uk/index.htm

[drbubb]

Where's the Rally?

... I'm not trying to second guess or even make an educated guess as to when turns or crashes will come, especially when the market direction looks reasonably set from the available evidence.

Don't get carried away.

 

This market has gone nowhere since Q1-2010, and even somewhat downwards since June, if you correct for the weak dollar.

 

Look, here's SPX-in-terms of Euros:

 

I cannot see the rally here

[jerpy]

Where's the Rally?

 

Don't get carried away.

 

This market has gone nowhere since Q1-2010, and even somewhat downwards since June, if you correct for the weak dollar.

 

Thats a fair and proper warning Dr B, but as a trader is it not right to play upside in any market and the FTSE has done what since mid summer? Did we not see a 4800 mark and many bears growling?

 

Have to confess i've erred on the side of caution due to a more pessimistic long term outlook and it's cost me on a few plays; some i'd maybe have been more gung-ho bullish about - taking profits too soon for starters!

 

Think it's great to see a few positive slants show up from No6, as far too many have been calling markets down too quickly, meantime the FTSE is now what?

 

No predictions from me and not knocking your warning but I think it's a fair point to make whilst many have been calling it down, it's hard to deny those trading on the long side, have enjoyed positive returns since mid July; however short term this rally may be.

[No6]

Incredible charts seeing a major rally.

 

We are witnessing a global resurgence in stocks, with the Dow Global index ($DJWO) breaking above its April high to indicate a primary advance to 280*. Rising Twiggs Momentum (21-day) indicates a strong up-trend.

 

===================

 

USA

 

Dow Jones Industrial Average

 

The Dow broke above its April high of 11200, signaling a primary advance. The long term target is 12000*. Twiggs Money Flow (13-week) rising strongly indicates buying pressure. Expect retracement, however, to test the new support level in the medium term.

 

===================

 

S&P 500

 

The S&P 500 rose above April high of 1220 to confirm the Dow breakout. Twiggs Momentum (21-day) rising high above its trendline indicates a strong up-trend. Long-term target for the breakout is 1420*.

 

===================

 

United Kingdom

 

The FTSE 100 broke through its April high, signaling an advance to the 2007 high at 6750*. Twiggs Money Flow (21-day) recovery above the October high of 15% would confirm.

 

===================

 

India

 

The Sensex is testing the 2007 high of 21000. Rising Twiggs Money Flow (13-week) indicates strong buying pressure. Breakout would signal a strong primary advance into blue sky territory — with no significant resistance. Failure of support at 20000 is most unlikely, but would indicate another correction.

 

===================

 

Japan

 

The DJ Japan index ($JPDOW) reversed sharply above long-term support: a bullish sign. Breakout above 5650 would complete a broad double bottom, offering a target of 6000*. Twiggs Money Flow (13-week) recovery above the zero line would strengthen the signal.

 

===================

 

Hong Kong

 

The Hang Seng index respected the new support level at 23000, signaling a primary advance to 27000*. A strong primary up-trend. Rising Twiggs Money Flow (13-week) confirms buying pressure.

 

===================

 

Brazil

 

The Bovespa index broke resistance at 72000. Twiggs Momentum (21-day) holding above zero indicates a strong up-trend. Expect retracement to test the new support level, followed by a rally to the 2008 high at 73500/74000.

 

===================

 

http://www.incrediblecharts.com/tradingdia...-08_markets.php

[No6]

Thats a fair and proper warning Dr B, but as a trader is it not right to play upside in any market and the FTSE has done what since mid summer? Did we not see a 4800 mark and many bears growling?

 

Have to confess i've erred on the side of caution due to a more pessimistic long term outlook and it's cost me on a few plays; some i'd maybe have been more gung-ho bullish about - taking profits too soon for starters!

 

Think it's great to see a few positive slants show up from No6, as far too many have been calling markets down too quickly, meantime the FTSE is now what?

 

No predictions from me and not knocking your warning but I think it's a fair point to make whilst many have been calling it down, it's hard to deny those trading on the long side, have enjoyed positive returns since mid July; however short term this rally may be.

 

I'm just attempting to bring some balance on this one thread in the forum. 99% of the rest of the market threads here tend to be towards the negative or in the bear camp, so for people that want that and that alone they know where to look. No point in ignoring the market when it is going up even if you can show that measured in x currency it isn't. I'm in the Robbie Burns camp when it comes to economics and trading. Too much of it will stop you doing what you really know you should be doing.

[jerpy]

I'm in the Robbie Burns camp when it comes to economics and trading. Too much of it will stop you doing what you really know you should be doing.

 

Likewise. Spotted Intertek(INTK) earlier this year, moved a little from SVT profits, but only a little because it had already reached the 1600's and I was too wary of a general market pullback. Now i'm cursing my caution. Same goes for selling too many OMI in a different market camp. Good companies with real prospects for growth, just keep on escalating in these runs; my caution has cost me and now i'm beginning to question my trading influences for stocks at least.

[No6]

Likewise. Spotted Intertek(INTK) earlier this year, moved a little from SVT profits, but only a little because it had already reached the 1600's and I was too wary of a general market pullback. Now i'm cursing my caution. Same goes for selling too many OMI in a different market camp. Good companies with real prospects for growth, just keep on escalating in these runs; my caution has cost me and now i'm beginning to question my trading influences for stocks at least.

 

I've done this many times myself and it is one of the reasons why I now steer clear of reading too much bad news, a general awareness of the problems we face is necessary, but I see no reason to feed on it unless you are attracted to that sort of thing. Some bears are different, many are only looking for shorting options because that is all they are interested in. I see no point in listening to them all the time, especially if you are a long side trader/investor, which for many UK ISA investors is in the main the only choice outside of being in cash.

 

I think the key is to be nimble and not be afraid to take losses if something turns against you. These are difficult things to overcome, when stocks are making new highs there is a tendency to believe that it can't go on, so trade against it or not at all, 3, 6 months later you look again and curse the fact that it is much higher. I've done that often! Sooner or later a trend will end, but when looking at the charts, more often than not once a trend is in place it doesn't end straight away, it may retrace, but then go again and again. The big fall is always a rare thing, but our mind places the possibility higher than it deserves, hence we hold back. Reading doom and gloom all the time will place this possibility higher and higher in your mind, so you do nothing and miss out. Stay nimble I say.

[drbubb]

Thats a fair and proper warning Dr B, but as a trader is it not right to play upside in any market and the FTSE has done what since mid summer? Did we not see a 4800 mark and many bears growling?

My point is simple: the rally in stocks has been driven my a weak dollar, and liquidity from the Fed.

 

Be alert to changes, since the Dollar is now oversold, and behaving better

[jerpy]

My point is simple: the rally in stocks has been driven my a weak dollar, and liquidity from the Fed.

 

Be alert to changes, since the Dollar is now oversold, and behaving better

 

Fair enougn good DR. But i've been that alert to the likes of the dollar aspect and heeded sound advice taking half stakes (or more) on many mining plays when they double, i'm going to start crying if the market doesn't retrace soooon!!!!

 

[No6]

FTSE up again on the back of good and some very impressive results.

 

LONDON (ShareCast) - London has opened stronger than expected after the dip on Wall Street overnight, largely due to some well received trading updates from index heavyweights on a very busy company announcement day.

 

Barclays eked out a small increase in nine-month profit as a doubling of profit at the investment banking arm offset huge impairment charges at the Spanish business. The bank has made £4.27bn so far in 2010, up 4% on the same time last year, or 6% to £4.24bn excluding movements on own credit, gains on acquisitions and disposals and gains on debt buy-backs. Impairment charges were slashed by 31% to £4.30bn.

 

Mobile phone giant Vodafone raised its profits forecast for the current year and vowed to get more cash out of its stakes in Verizon Wireless and SFR one way or another in a bullish half-year update. The firm now expects adjusted operating profit for the 2011 financial year will be in the range of £11.8bn to £12.2bn, up from its previous range of £11.2bn -£12bn.

 

Marc Bolland, the new boss of Marks & Spencer, will focus mainly on the UK initially, with the aim of becoming the UK's leading multi-channel retailer by 2013/14. Bolland unveiled his strategic plan for Marks & Spencer (M&S) as an accompaniment to interim results that showed adjusted profit before tax in the 26 weeks to 2 October up 16.9% to £348.6m from £298.3m a year earlier.

 

Primark and British Sugar owner Associated British Foods had a record year with group revenue up 10% to £10.2bn and adjusted profit before tax up 26% to £825m.

 

Hotel giant Intercontinental Hotels grew revenue in the past three months for the first since early 2009, as recovery in the global economy fed through into demand for rooms. Revenue per room, or revpar, rose 8.1% in the three months to September, with Greater China increasing 24.4% and Europe, Middle East and Africa all growing at the fastest pace for two years.

 

Gold miner Randgold Resources saw a 12% quarter-on-quarter increase in gold sales in the third quarter, helped by a 4% rise in the received gold price. Gold sales in the quarter ended 30 September totalled $116.3m, up from $103.4m in the preceding quarter and $103.5m in the third quarter of 2009.

 

Profit rocketed at fund manager Schroders during the third quarter to more than twice the figure for last year thanks in part to net inflows of £5.4bn since the end of June.

 

Legal & General has confirmed a 27% hike in worldwide sales for the first nine months of the year and says it’s set to beat its full-year net cash target. Most of the numbers, including total worldwide new business of £466m in the three months to 30 September, were published last month, more than two weeks early after it sent them to analysts by mistake.

 

http://www.digitallook.com/cgi-bin/dlmedia...tory_id=3813205

[No6]

We are seeing a bit of a mining sell off today ahead of China's inflation figures tomorrow.

 

China “has been the trigger for investors to lock in profits in the heavyweight mining stocks,” said Joshua Raymond, a market strategist at City Index Ltd. in London. “I would not say that the selling we have seen in the miners today marks a turnaround in sentiment but may simply be investors locking in strong gains having seen the mining sector hit a new 28 month high yesterday.”

 

Government data due for release in China tomorrow will show the inflation rate accelerated to 4 percent in October, according to the median estimate of 28 economists surveyed by Bloomberg. That would be the fastest pace in two years. The government’s full-year inflation target is 3 percent.

 

China’s central bank will increase the reserve ratio requirement for the nation’s banks by 50 basis points from Nov. 16, according to a statement posted to the People’s Bank of China’s website today.

 

http://www.bloomberg.com/news/2010-11-09/a...ty-preview.html