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I agree with Mick100, in that money will be made in good commodities in the next stage of the cycle. However, timing of entry into such stocks requires some very very careful management IMHO.
In this respect that old saying... making the $$$ when you buy - is particularly acute. In respect of this, I must remind myself daily as "cheap" commodity stocks keep ending up cheaper, on an average basis ; )
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Richard Russel - not quite as bearish as most commentators
Are you ready for something happy? Below we see a daily chart of the D-J Transportation Average. The Transports have moved steadily higher in the face of the declining Dow and in the face of the worst kind of economic news. Why argue with the Transport action (as many people are doing) -- it's a fact, it's happening. This is money talking. You might as well argue with gravity or the waves of the ocean.
Note that the Transports have not only refused to confirm the Industrials, they have build a rising three-level structure, which I show with the help of the three blue horizontal lines. It's difficult for me to see a big bear market developing while the Transports are diverging so strongly.
So what are we dealing with here? I'm just going to call it a mixed and confusing market. But it's a market that I would still treat with caution. When the Averages disagree, it's best to be cautious. Robert Rhea, the great Dow Theorist of the 1930s, wrote that "when the Averages disagree, it's usually a sign of distribution." That's a warning I've never forgotten. I pass it on to you for your consideration.
But hey, you've got to be impressed by those Transports. If it's a bear market, the Trannies aren't listening!
Richard Russell
Editor-in-chief - DOW THEORY LETTERS
http://ww2.dowtheoryletters.com
July 23, 2008
The inimitable and venerable Mr. Russell gained wide recognition via a series of over 30 Dow Theory and technical articles that he wrote for Barron's during the late-'50s through the '90s. Through Barron's and via word of mouth, he gained a wide following. Russell was the first (in 1960) to recommend gold stocks. He called the top of the 1949-'66 bull market. And almost to the day he called the bottom of the great 1972-'74 bear market, and the beginning of the great bull market which started in December 1974.
He who lives by the crystal ball soon learns to eat ground glass. (Edgar Fiedler)
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Hoop .... you don't reallt want to read this, esp the latter half where S&P earnings are forecast to be $40 which means the S&P500 could go anywhere
http://www.investorsinsight.com/blog...-schedule.aspx
P/Es and Stock Prices
Our forecasts imply S&P 500 operating earnings of $40 per share in 2009, down 35% from our $62 estimate for this year. That may sound extreme, but not for the most severe worldwide financial crisis and deepest global recession since the 1930s. At stock market bottoms, the S&P 500 P/E tends to be in the 10-12 range. But low interest rates normally push up P/Es and 10-year Treasury now yield 2.66%, and will probably be even lower later while 30-year Treasury bonds are now at 3.0%, our long-held target, and also a low in recent decades, but may drop further.
So a P/E of 15 at the stock bottom sounds reasonable, but would put the S&P 500 index at 600 then, down 32% from here and 61% below its record close on Oct. 9, 2007. Wow! Earlier, we warned of the number 777, not the Boeing airliner model but the low on the S&P 500 in 2002. If it were breached, we noted, then the bear market that started in early 2000 would still be intact, and all of the rally from the 777 low in October 2002 to the peak five years later would merely be a rally in a bear market. Last month, the S&P 500 fell below 777. It has since bounced, but probably not for long as new lows lie ahead.
There are other reasons to expect considerable further weakness in stocks. High dividends can support stocks at least to a degree, and dividend yields in Europe are meaningful, averaging 5.2%. But not in the U.S. where the S&P 500 yield is a miserly 2.5%. And dividend cuts are coming fast and furious. In the U.K., dividends are constrained for financial institutions getting government bailouts, while in the U.S., the financial sector is slashing dividends.
Some 36 of the S&P 500 have cut dividends 46 times this year, axing $33.8 billion, with $30.8 billion coming from financials. Among those S&P 500 firms, about 20% of dividends this year are from financials, down from 34% in 2007. Elsewhere, REITs are cutting payouts, and GM eliminated its dividend. Only 202 S&P 500 companies have initiated or raised dividends 218 times this year, representing payments of $18 billion, with only $2.4 billion being from financials. In 2007, 298 did so and only 12 reduced or suspended dividend payments.
In troubled times, investors tend to withdraw from foreign markets to concentrate on the home scene they know best. That's why bear markets tend to be uniform. U.S. investors sold a net $92 billion in foreign stocks and bonds in the July-September period, a record flight from overseas investments, while foreign investors pulled over $100 billion from stocks in Japan, South Korea and India so far this year. U.S. stocks are actually falling less than most foreign markets.
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Hoop
Don't try and be a hero and go for the exact bottom.
None of Russell Napiers indicator's a flagging a buy yet and Charts definitely are signalling a LT buy. So just be patient.
You've done so well staying out this year, wont hurt to wait for confirmation of a bottom (in case it doesnt occur)
IMHO the investment clock is just after 3pm... Commodities have just collapsed. Oil is still falling.
Don't go for the top of the bottom, just try and capture the "fat", the 80% in the middle.
PS last yr you were using charts to indicate the top,.... so tell me what are your charts telling you now? I bet the say wait
Last edited by Footsie; 17-12-2008 at 09:48 AM.
“If you're worried about falling off the bike, you’d never get on.”
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I have found that the one and only thing to worry about in this investing world is your level of common sense. Without that you are nothing. The market is manipulated by greed and fear where fundamentals count for less than nothing.
You cant read books to find common sense, you either have it or you dont. My rules for investing in the market are very simple.
If in doubt get out. Always have a stop loss. Never buy a downtrending share. Always check the commodoty price chart first, the company comes second. Only invest in a rising sector. Never pick bottoms you only get covered in crap. Keep your finger hovering over the sell button in over the top steep uptrends.
Dont waste your time worrying about the rights or wrongs in company business, they are only there to make you money. The companies to avoid are the companies with the highest debt levels, they get hit the hardest in downturns.
I have been out the market this year and fully expect to be out in 2009 this market is not a place that i want to be in right now. I expect next year to really get bad with the whole world economy reduced to tatters. Material things that hold their material value is what to buy, money after all is only a bit of paper with promise to pay stampted on it. Macdunk
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Your a bloody legend macdunk
This sharetrader forum wouldn't be the same without your input
Merry christmas
He who lives by the crystal ball soon learns to eat ground glass. (Edgar Fiedler)
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Originally Posted by duncan macgregor
. . . I expect next year to really get bad with the whole world economy reduced to tatters. Material things that hold their material value is what to buy, money after all is only a bit of paper with promise to pay stampted on it. Macdunk
Ain't that the truth . . . some good advice there.
I'm a just a "johnny come lately" . . . but I think 2009 will be a huge year for the precious metals complex.
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Latest estimation for the 2008 earnings for the S&P500is about $48 ,,, which puts the S&P500 currently at at a PE of nearly 19 on estimated past earnings
Projected 2009 earnings are $42 ..... so the S&P500 on a PE of 21 forward earnings (and earnings estimates are notoriously optimisitic)
Hardly the territory for the end (bottom) of a secular bear market is it. even though this is the S&P500 one still needs to assume that generally the situation is much the same in this part of the world (ANZ) .... so we should expect any decent long term returns from the market either.
As said early on in this thread it does come down to stock selection and managing the downsides, ie strict stop losses.
However as Hoop has pointed out several times there are bull rallies in a secular bear market.
The ANZ market are looking a little more positive. On weekly closes the ASX200 is up nearly 10% from a low (weekly) on Nov 21st ... and the chart is pointing to a confirmed uptrend ... esp if we can get a weekly close above 3582 and not any disasterous weeks to put us back to square one again
as Kenny Rogers said in The Gambler -
You got to know when to hold 'em
know when to fold 'em
Know when to walk away
and know when to run.
You never count your money
when you're sittin' at the table.
There'll be time enough for countin'
when the dealings done
This quote was the basis of an argument in this article 'Setting the Bull Trap"
http://www.investorsinsight.com/blog...bull-trap.aspx
Last edited by winner69; 11-01-2009 at 10:59 AM.
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Member
Double top Vix around Nov/Dec and downtrending since, indicating fear in market may be subsiding.
http://finance.yahoo.com/q/ta?s=%5EVIX
Big job cuts slowing or ceasing to occur may be just as pivotal for restoring confidence in the markets (Nissan just anounced its cutting 20,000 and anglo-platinum 10,000)
Any sectors showing absolute or relative strength can be seen as a bottoming sign, transportation, tecnology, or maybe even financial sectors this time, they got us into this mess so maybe they will lead the way out.
Last edited by Dusty; 10-02-2009 at 01:16 PM.
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