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# Our bear market rally has topped

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Senior Manager
Joined: 30 Jul 2007
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Re: Our bear market rally has topped  [#permalink]

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25 Jun 2009, 04:41
trader1 - i am in ur camp!

The green shoots are looking brown now! The govt has pretty much pulled all the tricks outta its bag. Lets see wht else thy got.

I was a bit early on my call, but it looks like it's now rolling over. It's only luck that you catch the very top.
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Re: Our bear market rally has topped  [#permalink]

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25 Jun 2009, 04:57
Haha.. i agree. Interesting to see now as even World bank is talking of a not-so-rosy picture. IMF already spoke about it.

trader1 - i am in ur camp!

The green shoots are looking brown now! The govt has pretty much pulled all the tricks outta its bag. Lets see wht else thy got.

I was a bit early on my call, but it looks like it's now rolling over. It's only luck that you catch the very top.

_________________

If you have made mistakes, there is always another chance for you. You may have a fresh start any moment you choose, for this thing we call "failure" is not the falling down, but the staying down.

Senior Manager
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Re: Our bear market rally has topped  [#permalink]

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25 Jun 2009, 05:37
1
jb32 wrote:
I have to chime in and disagree with Trader1 here. The market in March was priced for armagedon, which did not happen. And there have been so called 'green shoots' in the markets lately. I believe the rally was based on some fundamentals in the economy. Not good news per se, but less bad news. The rally was in large part because many economic indicators are not still plunging, but have rather gained stability.

Consumer Confidence has doubled in the past 2 months based on the future expectations component. People see things getting better in the future and not worse as things were in April. Consumer Spending has flatlined over the past 2 months and is no longer declining. Retail Sales have also reached a floor. Durable Goods orders have also stabalized and are no longer falling. In addition, housing seems to have reached a trough. Both New and Existing Home Sales have stopped falling and appear to have reached the floor. The Baltic Dry Index, which is a measure of international trade, is up 377% since its December low. TED spreads are back near there historical norms. The VIX index is back to more normal levels. Commodities are up across the board. Oil and metals are up. Dr. Copper is up significantly in the past few months. Treasuries yields are rallying as investors are moving into more risky asset classes. Banks have been able to raise capital in the public equity markets.

These are all examples of the 'green shoots' of a recovery and show the market rally does have some legs to stand on.

I've been on hiatus for a while, but disagreement is good. Things would be real boring if we can't share our different opinions.

I will grant that on the surface, less bad news is good news. But, we're passing through the eye of the hurricane when everything seems calm, but when it will actually get worse again very soon.

What I see as troubling signs that the market rally is not sustainable:

1. Insider Selling at extreme levels

http://www.bloomberg.com/apps/news?pid= ... lROe0Pe0QM

http://www.forbes.com/2009/05/05/inside ... argin.html

If insiders actually see things getting worse (which I think it will), then they have been acting smart to free up cash now into a nice bear market rally before the markets resume the next leg downward. If they are actually de-leveraging their personal financial positions along with everyone else, this is understandable but still points to continued weakness in spending and investment, which will be essential for a full recovery.

2. Currency crisis in the US dollar and an epic financial crisis in OTC derivatives still unresolved.

http://network.nationalpost.com/np/blog ... fault.aspx
http://money.cnn.com/2009/06/22/news/ec ... 2009062410

3. Decline in access to credit and availability of loans for consumers will hamper any economic recovery.

http://online.wsj.com/article/BT-CO-200 ... 16178.html
http://www.forbes.com/2009/06/16/whitne ... quity.html

"We expect further line reductions and \$2.7 trillion in credit card pulled from the system by 2010," Whitney said.

4. Businesses are continuing to cut capex, unemployment is still rising, mortgages and credit defaults are still rising, and consumers/businesses are still deleveraging.

http://www.forbes.com/feeds/reuters/200 ... USIVE.html
http://www.bloomberg.com/apps/news?pid= ... 1S8bp1DPiA
http://www.reuters.com/article/rbssFina ... 4020090624
http://retailtrafficmag.com/charts/comm ... high-0609/
http://industry.bnet.com/financial-serv ... tensifies/
http://www.msnbc.msn.com/id/31064583/

Recently, I have been humbled after reading Taleb's The Black Swan. Instead of trying to perfectly time the markets (which is more luck than anything, but still something that I have fun in trying to do), the best thing we can do is keep a steady head on our shoulders and prepare ourselves for the highly improbable events, both positive and negative, that have been so powerful in shaping world history. I highly recommend the book for anyone that is into the financial markets, history, and philosophy.
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Re: Our bear market rally has topped  [#permalink]

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25 Jun 2009, 05:54
Haha.. i agree. Interesting to see now as even World bank is talking of a not-so-rosy picture. IMF already spoke about it.

trader1 - i am in ur camp!

The green shoots are looking brown now! The govt has pretty much pulled all the tricks outta its bag. Lets see wht else thy got.

I was a bit early on my call, but it looks like it's now rolling over. It's only luck that you catch the very top.

Well, I continue to challenge my own view on the markets. What would prove it false?

Here are two items that really make me uncomfortable with my bearish view on the markets:

1. Reinstatement of the uptick rule.

This was a rule in place for a long time before it was repealed in summer 2007. Yes, summer 2007, right before the market peaked the following October. I don’t think that’s a coincidence. We all know what happened since then, and the repeal of the uptick rule has made it much easier to short sell stocks. Before, short sellers had to wait until a stock had an uptick in price before selling short. Since summer 2007, short sellers can sell even as the stock price has a down tick. This has helped fuel a lot of the dramatic and continuous drops in the market and in specific stocks. Once this rule is reinstated, it should create a massive short covering sending prices of almost everything higher.

2. Runaway hyper-inflation sending the US dollar into the abyss.

Very probable scenario given the Fed's support of quantitative easing, i.e. printing money. T-bills need to be purchased to continue funding the current account as long as the government doesn't increase taxes. And during hyper-inflation, prices of nearly everything will go through the roof, including the stock markets. Just look at the massive hyper-inflationary episode of Germany during the 1920s:

http://www.nowandfutures.com/weimar.html
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Re: Our bear market rally has topped  [#permalink]

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25 Jun 2009, 06:33
On the second scenario - if mkts take off due to hyper inflation (like ZIM), the mtks will skyrocket..but the stocks with inflated value will be worthless. So from an argumentative standpoint, its still bearish in terms for wealth creation.
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Re: Our bear market rally has topped  [#permalink]

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05 Jul 2009, 06:45
Senior Manager
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Re: Our bear market rally has topped  [#permalink]

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04 Sep 2009, 12:31
~1500 Dow points and over 150 S&P points higher from my initial short call, i'm still short equities, and i have been adding more shorts as this market has continued to move higher

Senior Manager
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Re: Our bear market rally has topped  [#permalink]

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04 Sep 2009, 18:55
With precious metals spiking up..somethings gotta give!

~1500 Dow points and over 150 S&P points higher from my initial short call, i'm still short equities, and i have been adding more shorts as this market has continued to move higher

_________________

If you have made mistakes, there is always another chance for you. You may have a fresh start any moment you choose, for this thing we call "failure" is not the falling down, but the staying down.

Senior Manager
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Re: Our bear market rally has topped  [#permalink]

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24 Sep 2009, 14:14
http://stockcharts.com/h-sc/ui?s=\$SPX&p ... 2080936288

Is the market top in (that I've been waiting for the last couple months)?
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24 Sep 2009, 15:19
We should also pay attention to the rally in gold. While it might not be a direct correlation to a loss in bear market steam, it definitely an indication of the dollar weakness.

Trader1 - I don't want to agree with you, but I have to.
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Re: Our bear market rally has topped  [#permalink]

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24 Sep 2009, 19:11
The interesting thing is, all this run up has been on dwindling volumes. I cant catch the top but surely there are more and more of the toppings signs emerging.

But heli ben is relentless in his money supply game. I dont think he will stop anytime soon. So any dips might trigger fresh deployment of cheap (or free) cash.

The question is not IF but When we are going to top out...and boy we are going to have a big/wild leg down when all the green shoots are not so green after all!

Interestingly, one side everyone is missing out is the US\$ index. Touching 76 and bouncing...not sure how long the bounce is going to be.
US\$ index and the S&P seems to have a inverse correlation nowadays...

Interesting times indeed!!

I believe this scenario might play out.
http://3.bp.blogspot.com/_ZdctlOEsqMQ/SqsZgb4UvkI/AAAAAAAACW8/d2PxyhYhb88/s1600-h/DC+Capital+04+Sep.+11+22.594.GIF

http://stockcharts.com/h-sc/ui?s=\$SPX&p=D&yr=0&mn=7&dy=0&id=p42080936288

Is the market top in (that I've been waiting for the last couple months)?

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Re: Our bear market rally has topped  [#permalink]

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01 Dec 2009, 13:00
I've been short since Sep and it's burning me to see the market still so high. I'm honestly baffled at how the market can be so optimistic given that the US government has essentially artificially propped up its economy and that it really can't last.

Still though, sucks that all my shorts are not making money...good thing I didn't try to time it with put options lol...that would've hurt. I need the market to go down so I can make my MBA tuition lol...
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Re: Our bear market rally has topped  [#permalink]

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01 Dec 2009, 18:40
I think its a no brainer now..as long as the USD keeps falling....the mkts will keep rising.
Heli Ben and Turbo Timmy wont stop printing \$\$\$ until they run out of paper.

So we are in for further rise in equities/Commodities. I will be looking closely at the USD index (74 and change now).

The other way to fund a MBA is....borrow in USD/GBP and hope that they get devalued over the next 2 yrs...an event, i think is highly probable.

Cheers!

DrSatisfaction wrote:
I've been short since Sep and it's burning me to see the market still so high. I'm honestly baffled at how the market can be so optimistic given that the US government has essentially artificially propped up its economy and that it really can't last.

Still though, sucks that all my shorts are not making money...good thing I didn't try to time it with put options lol...that would've hurt. I need the market to go down so I can make my MBA tuition lol...

_________________

If you have made mistakes, there is always another chance for you. You may have a fresh start any moment you choose, for this thing we call "failure" is not the falling down, but the staying down.

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Re: Our bear market rally has topped  [#permalink]

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30 Jan 2010, 07:04
Its been a while since i posted here. Essays do take a toll.
Back to the mkts.. mkts are correcting, USD is up. No brainer. Just as expected. I think we have hit an intermediate top in all asset classes except USD, which is going great guns.

Any thoughts?
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30 Jan 2010, 09:13
it's been good to my portfolio. bringing me back up close to last yr's high water mark. up like 15% in a week.
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Re: Our bear market rally has topped  [#permalink]

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09 Feb 2010, 09:01
lucky you! I'm still long equities. fortunately I agreed with the sentiment on this thread that a correction was due and started reducing my positions so it could have been worse, but I guess I should have moved a little faster.

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Re: Our bear market rally has topped  [#permalink]

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13 Feb 2011, 17:48

I don't want to sound like a jerk, or gloat too much buuuut well i just cant help it i've gotta say.... i was one of the only people saying there were legitimate improvements happening in the real economy and that i did NOT think this was the top of a bear market rally. Well... since this thread started the market has consistently moved upward, and is now 55% above the call that it had reached its peak.
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Re: Our bear market rally has topped  [#permalink]

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12 Feb 2012, 06:51
Hi

I read this post 2 times. It is very useful

Tks very much for post
Re: Our bear market rally has topped &nbs [#permalink] 12 Feb 2012, 06:51

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# Our bear market rally has topped

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