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Unwavering Bull Thread : How high can equities rise?

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WOLF's WORDS

 

How high can equities rise?

 

It was mainly non-mainstream commentators who more accurately predicted the outcome of massive debt build-up but may have been less prescient in understanding how governments and central banks would deal with the aftermath. What we do now know is that massive doses of QE have poured into the equity markets and that the traditional factors that once moved markets have become largely redundant. Rather, those who can control events seem prepared to do whatever is necessary to prevent asset prices (the exception being the housing market in the US) from falling. This, being the case, how can one react if one believes that the markets are seriously overbought but there is nothing to stop much further pumping. Maybe Abby Cohen was not so off-the-wall when she forecast the Dow at 40000?!

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I really doubt we will see the Dow at 40,000

 

These sorts of EXtreme predictions tend to get rolled out near highs, I reckon

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I really doubt we will see the Dow at 40,000

 

These sorts of EXtreme predictions tend to get rolled out near highs, I reckon

 

 

I was being rather tongue-in-cheek with that last comment but I do think that it has never been more difficult to understand the markets because traditional "markers" are becoming increasingly obsolete. Can anyone recall a time when governments were so reluctant to let asset - in this case - equity prices fall? BTW, Abby Cohen's prediction was made several years ago and resulted in her losing her job with one of the largest investment banks. In 2008 Goldman Sachs "replaced" her as their chief forecaster..

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More over, how low can a currency devalue?

 

Indeed - but it is logical that if you print money and have virtually zero IRs the value of your currency is likely to fall and vice versa whereas it seems to me that it is illogical that the Dow is almost at its record high,if one judges it against economic conditions. So if the only thing driving the market is the promise of further QE and the only thing that will change its direction is the termination of this policy, is there any point in using more traditional markers to try forecast what it is likely to do next. Surely all we have to do is listen to what Bernanke says, end of story.

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What do you think of the warning signs, Wolf ?:

 

http://www.greenener...showtopic=17530

 

I hope you don't mind.

I changed the title slightly to:

 

"Wolf's Words : How high can equities rise?"

 

This will give the thread more of a BLOG feeling.

I can change the title back, or change it later, if your take on the market changes later

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Therefore: "It is cheap?" ?

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Indeed, no!

I was talking to a friend today who told me that two of his interviewees (out of many) cried at the interview. " why are you crying?" he asked. " because this is the first time" they got to interview stage from a great many attempts...Age was 30's.

How very sad.

Some others are so glad to see the Nikkei over 12,000, so they at least break even on investments made 5 years ago.

So, how high can the Nikkei go?

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How high can equities rise?

 

It was mainly non-mainstream commentators who more accurately predicted the outcome of massive debt build-up but may have been less prescient in understanding how governments and central banks would deal with the aftermath. What we do now know is that massive doses of QE have poured into the equity markets and that the traditional factors that once moved markets have become largely redundant. Rather, those who can control events seem prepared to do whatever is necessary to prevent asset prices (the exception being the housing market in the US) from falling. This, being the case, how can one react if one believes that the markets are seriously overbought but there is nothing to stop much further pumping. Maybe Abby Cohen was not so off-the-wall when she forecast the Dow at 40000?!

 

 

Have just read a couple of articles pre-Dow opening saying that investors are hoping that economic forecasts are not too rosy because that could lead to less QE and fall in equity prices.

 

So what point have we really reached with the markets.

 

They will go up on bad economic news as that is likely to give rise to more QE.

 

They will fall on good economic news as that is more likely to turn off the printers.

 

This has got to be a nightmare scenario that our Lords and Masters have created for us where investors would prefer to have hyper-inflation than a properly functioning economy.

 

There'll be tears before this one is over . Lol!!!!!

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I don't have a problem seeing the DOW at 40,000. It just a number not bound by anything physical or any tangible anchors. I think we could see it in my lifetime.

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RATIO : SPX to CRB

 

13714887.png

 

Could be peaking

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I don't have a problem seeing the DOW at 40,000. It just a number not bound by anything physical or any tangible anchors. I think we could see it in my lifetime.

 

The point I was trying to make is not how high the Dow might climb but that investors want poor economic news so that this will encourage Bernanke to continue with QE which in turn is more likely to push equities higher. Or in other words investors have said that they would prefer to have hyperinflation than good economic news.

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....investors have said that they would prefer to have hyperinflation than good economic news.

 

Perhaps they think they are hedged.

 

I wonder how well those hedges will work in genuine hyperinflation, and in its aftermath?

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How high can equities rise?

 

The Ratio to CRB, is still in a nice uptrend

 

79334862.png

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Technician Shelley Moen: This Market Rally Has Legs - All Sectors Are Rising

 

Also, Ryan Puplava with the Market Wrap-Up, Erik Townsend on Commodities and Rob Bernard on Fixed Income

 

 

picture-734.jpg

 

BIG PICTURE, NEWSHOUR 11/May/2013

RealPlayer WinAmp Windows Media MP3

 

http://www.financialsensenewshour.com/broadcast/fsn2013-0511-1.mp3

 

Jim welcomes back Shelley D Moen CMT, Senior Market Strategist at Vermilion Technical Research, LLC. Shelley tells Jim that this is the best she has felt about the market since the bottom in 2002. She notes the Dow Theory buy signal, and believes this market has room to move higher. Shelley mentions that the Technology, Energy and Industrial sectors are all undervalued and very attractive at current levels. Also in this segment, Ryan Puplava has this week’s Market Wrap-up, Erik Townsend discusses commodities, and Rob Bernard has the Fixed Income Report.

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I changed the title to:

 

Unwavering Bull Thread : How high can equities rise?

 

I think Wolf has stopped posting here, because he was offended by something I said on THIS THREAD

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From DrB's Diary, kicking off a New Use for this thread...

 

COMMENT ON EQUITIES :

 

I am not TURNING BULLISH (at this high level)

But I want to track the Bullish Stories on a New Thread : Unwavering Bull

 

SPY / etf for S&P-500 ... update

15133263.gif

 

Over the past few years, there is no doubt that I have been Too Bearish on stocks.

And given that frequent attitude, people could be forgiven for thinking that I am Bearish on stocks now.

 

That is not the case, though you could say I am cautious, and prepared for a pullback before long.

 

But I have said several times that I am buying Tony C's argument that after a pullback (if we see one), we can expect a higher high - so that's hardly a strongly Bearish comment.

 

What I do find interesting, is the number of Technicians who are now Happilly Bullish on Stocks, and are Bearish on Gold and Gold stocks.

 

I tuned into the FS podcast over the weekend, and had a interesting time listening to it, after many months of not bothering. Here are some commentts about FS:

 

+ Jim P sounds alot older. There's a quality in his voice now that I had not noticed before, which I tend to associate with older men. But he still generally "makes sense" with his comments. And his sons are coming on the show, and carrying more of the burden. I hope Jim is in good health, and will remain so.

 

+ I was half-expecting him to have Eric King on, talking about the need to "keep the faith" and hold onto Gold and Gold stocks (because of money printing fundamentals). There was nothing like that.

 

stan_weinstein.jpg : MP3 : http://www.financialsensenewshour.com/broadcast/fsn2013-0504-1.mp3

 

Instead he had the "Professional Tape Reader" Stan Weinstein, who was talking about stock rotation, and Stan and Jim seemed to be conmgratulating themselves for having rotated OUT OF GOLD STOCKS and material stocks. Actually the short interview with Stan Weinstein (from the prior week) is very good and I recommend listening to it, even if it is one week old.

 

+ Later in the show, Jim spoke of rotating into "unloved" material stocks.

 

+ At the beginning of the show, Chris Puplava did a section talking about Europe, and how European stocks were doing well. A good reason for this was the rather HUGE DROP in European bond yields. Greek bond yields, or example, are down from over 40% to just under 10% (!)

 

On another thread, Happy has a great chart showing the breakout in DAX:

dax_zps27b02ab9.png

 

+ In most countries, CPI has declined with Gold and commodity prices. As Chris P says, this "gives European governments the bandwidth" to move away from Money-printing. So the world may soon be joining Japan in its more stimulative money policy.

 

+ The time to buy Gold and Gold shares is when it is cheap. If we get something like a retest of the $1322 Low on light volume in the next few days that may be a good buying opportunity. Keep your eyes open for it.

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EWMS seems to have also "gone Bullish":

 

We write to advise that effective today there has been a new intermediate BULLISH trend change in our US Market Trend Analytics.

 

+ + +

 

Another Bullish podcast was aired THIS WEEKEND... 05/11/2013

Technician Shelley Moen: This Market Rally Has Legs

 

picture-734.jpg

 

"A bullish confirmation from the Dow Transports"

"This is the best she has felt about the market since the bottom in 2002."

"We do not have an inflationary situation at the moment."

"The world is giving the US the benefit of the doubt."

"I think Central banks around the world are starting to sell their Gold assets."

"The news can only get better - European markets have good charts*"

 

MP3 :

 

- includes

Jim Puplava’s Big Picture:

Time Is Running Out for Income Investors: Avoiding Impoverishment

Dividend Stocks – Still the Best Game in Town

 

===

*DAX Breakout: (see chart above)

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I really doubt we will see the Dow at 40,000

 

These sorts of EXtreme predictions tend to get rolled out near highs, I reckon

 

Extreme? Seems pretty central to me. The bull market starting in 2009 will probably be one of the largest in history. For the Dow, earnings and P/E's will each rise 50-100% over the coming 10-15 years before we get to the serious froth. Plenty of scope then for reaching 40,000.

 

Nikkei 40,000? I see that too (and have a 20% allocation to that class - probably the "riskiest" position I've ever taken). The valuations are extremely cheap. Extremely - I simply cannot in fact see a better place to be equity wise.

 

The bursting of the housing bubble will remain in the public consciousness for the next decade or more, as will the popping of the current gold bubble. (The unravelling of the bond bubble will probably be the final all-clear to the top but is still a long way off.) Where else will investors be putting their money over the coming years?

 

Inflation is very low for most of the world economy (1.5% US, 2.4% China, -0.9% Japan, 1.2% EU) and World GDP is rising.

 

What's standing in the way of the bull?

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Well, anything is possible, especially on the Unwavering Bull thread

 

Stocks looks stretched on some of the Old Valuation measures - is new ground or a parabola beckoning?

 

Stocks "Stretched" (?) as SPY's lead to GLD blows out to $27.42

 

May : --SPY-- : Chg : : --GLD-- : Chg : volume : x10.36 : Posts : cm'l/ Views : cum'l

01 - : 158.28 : - 1.40 : 141.11 : -1.66 : 13.8 M : 1,461.9 : - 06 : - 006 / : 119 : 0,119

 

11 - : 163.41 : - sat- : 139.60 : unch. : 0.00 M : 1,446.3 : - 04 :- 071 / : 084 : 1,284

12 - : 163.41 : - sun-: 139.60 : unch. : 0.00 M : 1,446.3 : - 10 :- 081 / : 115 : 1,401

13 - : 163.54 : +0.13 : 138.43 : - 1.43 : 6.62 M : 1,434.1 : - 09 :- 090 / : 193 : 1,594

14 - : 165.23 : +1.69 : 137.81 : - 0.62 : 9.82 M : 1,427.7 : - 05 :- 095 / : 134 : 1,727

====

$165.23 - 137.81 = $27.42

 

Here's Bernanke's Racetrack

39542826.gif

 

And SPX in FXE

94593394.gif

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THIS is normally the strongest part of the Wave, if Tony C's count is right

 

With SPX Closing at $1,650.34 +16.57 , here's Tony C's latest

 

"third wave of Minute wave iii"

 

The market opened at the all time high today, and, went higher. This uptrend, Intermediate wave iii, has now traveled 308 points. This is the second largest point gain uptrend of the entire bull market. The buying stampede continues. On a short term basis, it looks like we are in the third wave of Minute wave iii, of Minor 5, of the uptrend. The market ended the day with a slight negative divergence at the new high. Let’s see how this plays out tomorrow.

Short term support is at the 1628 and 1614 pivots, with resistance at SPX 1658-1667 and the 1680 pivot. Short term momentum was quite overbought at SPX 1650, and ended the day overbought. The short term OEW charts remain positive with the reversal level at SPX 1627.

===

/more: http://caldaroew.spaces.live.com/

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Well, anything is possible, especially on the Unwavering Bull thread

 

Stocks looks stretched on some of the Old Valuation measures - is new ground or a parabola beckoning?

 

In the spirit of the thread I have bought just over 200,000 JAIS:LN (at 19.5p). With about 10 months to expiry and about 19p in the money, they look highly undervalued using Black Scholes. A 10% rise in Asian markets (via Investment Trust JAI:LN) will double the money; a large fall will wipe the position out. A very risky bit of fun!

 

http://am.jpmorgan.co.uk/assetmanager/ourinvestmentrange/investmenttrustinformation/subscriptionsharescalculator.aspx

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