Sure, I realize a sing along can easily turn into a string along. But check out his charts of the 1973-74, 1987, 2000-2002, and 2007-2009 bear markets:
http://www.hussmanfunds.com/wmc/wmc120702.htm
I'm quite serious, guys. I'm having a hard time visualizing the bull case here. The Europeans have ----ed up again> no guts, no solutions. That's kind of a deal-breaker, no? I think China and the US are going to turn away and let that sorry continent go through its recession. What a bunch of deadbeats> short work weeks, long vacations, skip taxes if you feel like it, and throw a tantrum when it's time to face the music.
3 words: US Housing Recovery. That's the only way we escape this. The housing affordability index is at all time highs (i.e., houses have never been cheaper) and the for sale inventory levels are near all time lows.
I don't see a housing recovery, bro. Too many unemployed. Too many employed worried about their jobs. And a serious recession in Europe will worsen the situation> no company will want to hire given the uncertainty of the global economic outlook.
Hussman has a point. I recall many of us blogging in 2007 in disbelief about the number of new cars on the freeways and the number of people buying homes. In many cases, people who could seemingly ill-afford either a new car or a new home.
Now it's corporate profits. Where are these profits coming from? And are the sources of the profit growth sustainable?
2nd - Who knows bro...the world works in strange ways. It's all a confidence game. I know in my area it's extremely cheap to own homes (as long as you're more than 3 miles from the beach) compared to renting. Obviously getting a loan...well, I have no idea about that.
I guess if you're not long from lower levels, we're at a riskier place for entry now(laggards excluded?).
DECK - As I see it, this one could go either way... lower highs for MACD concern me, as does the potential OBV trend reversal? I can also envision where the left shoulder of a large multi-year (decade?) H&S pattern was completed at $119? Gaps down aren't being bought yet, wait till one is? Weekly and daily are oversold, while dad won't allow junior to wear the product he's willing to eat the leather? I have no idea what a pair of Uggs look like at this moment but I adore the name. ;)
CP - I think DECK doubles in a short period of time man.
2nd - I think we need to just ignore the market BS. we've traded sideways for 13 years...ain't no crash coming bro. too many people are prepped for it. banks are neck deep in cash. let's just focus on our stocks bro. lots of stocks are deeply oversold.
2nd - take a look at the regional banks man. One on my watch list is FRME...up almost 100% in past 10 months. And the housing stocks. BLDR, HW...other construction stocks. All at 3 year plus highs. If we're going into a recession do you really think this would be happening?
If TOF is correct about US housing, then the whole game changes. That's enough juice to drive us MUCH higher. I'm seeing some signs it might be happening.
I also think there is plenty of cash in the hands of investors to change the game. Plenty. Yes, getting a loan is tough, but sprinkle in a whiff of property appreciation and that changes also.
Mark - Housing has not only bottomed but it's getting much better...check these charts out man: http://www.raymondjames.com/images/inv_strat/120702_1lg.gif
Hussman is wrong and will continue to be wrong. Sorry 2nd. If it was 2000 and we had just gone through a massive bull market then I would agree. But we've been through 2 massive bear markets and haven't gone higher for the past 13 years. No one wants a part of equities. I play basketball every Sunday with guys from the neighborhood...after the game we were all shooting the shit...several of them are 15 years older than me and to a T all of them said that the stock market is rigged and the central banks are fucking with it too much. No one wants a part of it. Corporations are stocking up on cash, banks are stocking up on cash. We ain't crashing. Not sure if we rip higher but we ain't crashing. I think we need to focus on the stocks setting up...ones that have been decimated. My list includes:
NIHD – insider buys recently TZOO – shit we all know the story GMCR – patent issues but looks due for bounce DMND – nice bottoming hammer on weekly; bullish MACD crossover with potential cross above 0 to confirm buy signal; bullish stochastic crossover could also be setting up SQNS – 7 month base, bullish stochastics crossover DECK – Bottoming tail hammer; fundamentals (EPS, future growth in Asia) support much higher price in 5 years (I.e., $250) CREE
quite frankly i could give two shits where the market goes. most likely we are in a big range bound market. but i do think the odds of a US based housing recovery gaining steam are at least decent. and in this environment it pays to be long stocks. my bet is economically sensitive stocks will do well, but i'm focusing on beaten down stocks mostly because some of them are really ridiculously cheap.
This is what I was talking about earlier today...we could probably do well just buying 5 or 10 stocks that have been severely beaten down, hold them for 5 years and make out like a bandit. A portfolio like the following:
This is a confidence game. Interest rates are at all time lows yet employment is low and we just went through a very serious credit default driven depression which changed people's mindset on debt. If we come out of this it is going to be very slow and gradual. In the meantime we have other global regions struggling with more debt and global slowing with easing on tap. It remains to be seen if more printing (inflation) and lower rates will do anymore than it has (hasn't?).
As far as markets we have a a down trend with a retracement running into over head supply and the previous range. My magic 8 ball says "to early to tell, ask later."
TOF, I am sticking with the call I made a few years ago about 2012 being the bottom in housing prices. However, the appreciate rate will be quite slow in 2013, so the housing recovery will not have a noticeable impact on the stock market for a while.
If you really believe that a recovery is around the corner, then you should be buying AUMN with both hands now. Why? Because when people catch on to the fact that the housing has bottomed, they will start taking out loans before the interest rates shoot up, and the velocity of money will jump up. Since the Fed is not planning to decrease its monetary base (by selling its portfolio of Treasuries), a jump in the velocity of money multiplied by the same monetary base will mean a large jump in inflation. It is an accounting identity.
Remember, folks, I said it here first. :) Actually, Hussman has been saying it for a couple of years now...
At the beginning of June I purchased in my friend's account 4000 shares of LPH at $1.05. I just placed a sell limit on these shares at $1.60. Too bad I didn't have any money in my own accounts to buy any LPH near $1.00...
But then, I was buying MUX and AUMN call options instead, which are doing fine so far.
The buy limit order on the 10 contracts of January $2.50 AUMN calls was executed on Friday at $2.15. So my effective purchase price on these shares will be $4.65, which is below the current AUMN close...
2nd, I would not be counting Hussman as an effective market prognosticator at this time. He is still down 30% from the 2007 peak whereas the market has regained all of its losses. I also read his report you linked and, to me, it sounds like he is ready to turn bullish either if the market crashes or it moves up - not particularly useful.
The way I still think you have to look at it is to go back to individual stocks. Many stocks are very cheap and I'd say not that many are grossly overvalued at this time. Sure you can't point at some high P/E stocks (eg. LULU), but they have high P/E's because people have a reasonable expectation of high growth. On the other side, many stocks are trading at valuations generally seen at major market lows and at huge discounts to their traditional valuations.
Bear markets generally occur when their are excesses in the system that have gotten too large and need to be corrected. I do not see this at this time, other than probably in government bonds.
And, as others have said, housing is giving signs that it is turning. Housing is a great business for the domestic economy as it is labor intensive and can't be off-shored, so would really help the unemployment situation.
just read your comments on Hussman and the market and individual stocks and I think you are right on.
What I particularly like is that even though you and I hunt for stocks in different areas of the market and play different time horizons, we are both seeing the same things with regards to individual stocks - probably a very good sign!
One other thing - your trading approach seems to be working very well for the year 2nd - up over 9% in 6 months while only having money at risk for a very short percentage of the time - I'm sure Hulbert would give you a high risk-adjusted rating.
If you can keep picking your spots like this, it really doesn't matter what the market does.
Any suggestions on what I should do with REED? My thinking was the whole natural soda trend would continue and REED could turn into a mini MNST over time. It's up 20% since when I bought it. I only have 2600 shares but I'm thinking I should take profits and reload later. But it's a small enough position to maybe just let it ride and see if it turns into a multi bagger?
For just once I want to buy and hold something and say I bought that thing at $3 when it's at $50. Of course the reverse can happen and I could say ugh I bought that thing at $3!?!
IYR - Pretty dang good OBV. Yeah sure, there could and likely will be a pullback at some point when it's well into overbought territory(for a nice entry?) but those who said real estate is crashing have been wrong for over 3 years, in respect to the IYR ETF.
Don't count on $0.50 gasoline anytime soon either, those times are gone, it's just not gonna happen.
HEK - A fairly tight MACD/ADX pinch, not quite the 50 but tight nun-the-less. Note also, the ADX +DI fell under 10, further indication of positive star alignment. OBV doesn't impress me but we can't always have everything, right?
HEK came up on a screen I did today of stocks at least 30% below their 200 DMA but above their 50 DMA...although I see that has failed today. My suspicion is if it has truly bottomed it will do what FSLR has done for 2 weeks...trend along the 50 DMA and piss everyone off.
I just heard on CNBC's Fast Money that Meredith Whitney cut JPM to a hold with a price target of $43. WTF that's a 20% gain!? I'm curious to know how much she expects a buy to gain.
Clever 2nd.
ReplyDeleteI'm quite serious, guys. I'm having a hard time visualizing the bull case here. The Europeans have ----ed up again> no guts, no solutions. That's kind of a deal-breaker, no? I think China and the US are going to turn away and let that sorry continent go through its recession. What a bunch of deadbeats> short work weeks, long vacations, skip taxes if you feel like it, and throw a tantrum when it's time to face the music.
ReplyDelete3 words: US Housing Recovery. That's the only way we escape this. The housing affordability index is at all time highs (i.e., houses have never been cheaper) and the for sale inventory levels are near all time lows.
DeleteI don't see a housing recovery, bro. Too many unemployed. Too many employed worried about their jobs. And a serious recession in Europe will worsen the situation> no company will want to hire given the uncertainty of the global economic outlook.
DeleteHussman has a point. I recall many of us blogging in 2007 in disbelief about the number of new cars on the freeways and the number of people buying homes. In many cases, people who could seemingly ill-afford either a new car or a new home.
DeleteNow it's corporate profits. Where are these profits coming from? And are the sources of the profit growth sustainable?
Of course, the stock market continued to trend up well into 2008. And it may well continue to trend up into 2013.
Delete2nd - Who knows bro...the world works in strange ways. It's all a confidence game. I know in my area it's extremely cheap to own homes (as long as you're more than 3 miles from the beach) compared to renting. Obviously getting a loan...well, I have no idea about that.
DeleteI guess if you're not long from lower levels, we're at a riskier place for entry now(laggards excluded?).
DeleteDECK - As I see it, this one could go either way... lower highs for MACD concern me, as does the potential OBV trend reversal? I can also envision where the left shoulder of a large multi-year (decade?) H&S pattern was completed at $119? Gaps down aren't being bought yet, wait till one is? Weekly and daily are oversold, while dad won't allow junior to wear the product he's willing to eat the leather? I have no idea what a pair of Uggs look like at this moment but I adore the name. ;)
CP - I think DECK doubles in a short period of time man.
Delete2nd - I think we need to just ignore the market BS. we've traded sideways for 13 years...ain't no crash coming bro. too many people are prepped for it. banks are neck deep in cash. let's just focus on our stocks bro. lots of stocks are deeply oversold.
2nd - take a look at the regional banks man. One on my watch list is FRME...up almost 100% in past 10 months. And the housing stocks. BLDR, HW...other construction stocks. All at 3 year plus highs. If we're going into a recession do you really think this would be happening?
ReplyDeleteIf TOF is correct about US housing, then the whole game changes. That's enough juice to drive us MUCH higher. I'm seeing some signs it might be happening.
DeleteI also think there is plenty of cash in the hands of investors to change the game. Plenty. Yes, getting a loan is tough, but sprinkle in a whiff of property appreciation and that changes also.
DeleteMark - Housing has not only bottomed but it's getting much better...check these charts out man:
Deletehttp://www.raymondjames.com/images/inv_strat/120702_1lg.gif
http://www.raymondjames.com/images/inv_strat/120702_2lg.gif
Hussman is wrong and will continue to be wrong. Sorry 2nd. If it was 2000 and we had just gone through a massive bull market then I would agree. But we've been through 2 massive bear markets and haven't gone higher for the past 13 years. No one wants a part of equities. I play basketball every Sunday with guys from the neighborhood...after the game we were all shooting the shit...several of them are 15 years older than me and to a T all of them said that the stock market is rigged and the central banks are fucking with it too much. No one wants a part of it. Corporations are stocking up on cash, banks are stocking up on cash. We ain't crashing. Not sure if we rip higher but we ain't crashing. I think we need to focus on the stocks setting up...ones that have been decimated. My list includes:
NIHD – insider buys recently
TZOO – shit we all know the story
GMCR – patent issues but looks due for bounce
DMND – nice bottoming hammer on weekly; bullish MACD crossover with potential cross above 0 to confirm buy signal; bullish stochastic crossover could also be setting up
SQNS – 7 month base, bullish stochastics crossover
DECK – Bottoming tail hammer; fundamentals (EPS, future growth in Asia) support much higher price in 5 years (I.e., $250)
CREE
And FSLR of course!
Deletequite frankly i could give two shits where the market goes. most likely we are in a big range bound market. but i do think the odds of a US based housing recovery gaining steam are at least decent. and in this environment it pays to be long stocks. my bet is economically sensitive stocks will do well, but i'm focusing on beaten down stocks mostly because some of them are really ridiculously cheap.
DeleteThis is what I was talking about earlier today...we could probably do well just buying 5 or 10 stocks that have been severely beaten down, hold them for 5 years and make out like a bandit. A portfolio like the following:
ReplyDeleteFSLR
DECK
DMND
ACI/ANR
TZOO
CREE
should do the trick.
This is a confidence game. Interest rates are at all time lows yet employment is low and we just went through a very serious credit default driven depression which changed people's mindset on debt. If we come out of this it is going to be very slow and gradual. In the meantime we have other global regions struggling with more debt and global slowing with easing on tap. It remains to be seen if more printing (inflation) and lower rates will do anymore than it has (hasn't?).
ReplyDeleteAs far as markets we have a a down trend with a retracement running into over head supply and the previous range. My magic 8 ball says "to early to tell, ask later."
TOF, I am sticking with the call I made a few years ago about 2012 being the bottom in housing prices. However, the appreciate rate will be quite slow in 2013, so the housing recovery will not have a noticeable impact on the stock market for a while.
ReplyDeleteIf you really believe that a recovery is around the corner, then you should be buying AUMN with both hands now. Why? Because when people catch on to the fact that the housing has bottomed, they will start taking out loans before the interest rates shoot up, and the velocity of money will jump up. Since the Fed is not planning to decrease its monetary base (by selling its portfolio of Treasuries), a jump in the velocity of money multiplied by the same monetary base will mean a large jump in inflation. It is an accounting identity.
Remember, folks, I said it here first. :) Actually, Hussman has been saying it for a couple of years now...
At the beginning of June I purchased in my friend's account 4000 shares of LPH at $1.05. I just placed a sell limit on these shares at $1.60. Too bad I didn't have any money in my own accounts to buy any LPH near $1.00...
ReplyDeleteBut then, I was buying MUX and AUMN call options instead, which are doing fine so far.
The buy limit order on the 10 contracts of January $2.50 AUMN calls was executed on Friday at $2.15. So my effective purchase price on these shares will be $4.65, which is below the current AUMN close...
2nd, I would not be counting Hussman as an effective market prognosticator at this time. He is still down 30% from the 2007 peak whereas the market has regained all of its losses. I also read his report you linked and, to me, it sounds like he is ready to turn bullish either if the market crashes or it moves up - not particularly useful.
ReplyDeleteThe way I still think you have to look at it is to go back to individual stocks. Many stocks are very cheap and I'd say not that many are grossly overvalued at this time. Sure you can't point at some high P/E stocks (eg. LULU), but they have high P/E's because people have a reasonable expectation of high growth. On the other side, many stocks are trading at valuations generally seen at major market lows and at huge discounts to their traditional valuations.
Bear markets generally occur when their are excesses in the system that have gotten too large and need to be corrected. I do not see this at this time, other than probably in government bonds.
And, as others have said, housing is giving signs that it is turning. Housing is a great business for the domestic economy as it is labor intensive and can't be off-shored, so would really help the unemployment situation.
TOF,
ReplyDeletejust read your comments on Hussman and the market and individual stocks and I think you are right on.
What I particularly like is that even though you and I hunt for stocks in different areas of the market and play different time horizons, we are both seeing the same things with regards to individual stocks - probably a very good sign!
One other thing - your trading approach seems to be working very well for the year 2nd - up over 9% in 6 months while only having money at risk for a very short percentage of the time - I'm sure Hulbert would give you a high risk-adjusted rating.
ReplyDeleteIf you can keep picking your spots like this, it really doesn't matter what the market does.
T-1 hour for cabinet instillation.
ReplyDeleteBought another 650 shs of DECK at $43.8. Now 100% long again.
ReplyDeleteI've been watching FSLR along with you. That is one nasty stock man. At least the volume is tradeable.
Deleteeverything looks good so far. break above the 50 DMA with some decent vol today.
DeleteAny suggestions on what I should do with REED? My thinking was the whole natural soda trend would continue and REED could turn into a mini MNST over time. It's up 20% since when I bought it. I only have 2600 shares but I'm thinking I should take profits and reload later. But it's a small enough position to maybe just let it ride and see if it turns into a multi bagger?
ReplyDeleteI'd take it, but that's coming from a cabinet installer.
Deletehahaha. i almost spit up my cereal.
DeleteFor just once I want to buy and hold something and say I bought that thing at $3 when it's at $50. Of course the reverse can happen and I could say ugh I bought that thing at $3!?!
DeleteSo much for the buy and hold. Sold at $3.69!
DeleteLDK has completely erased it's earnings losses. The Solars are in play it seems. And coals. GMCR ripping today.
ReplyDeleteIf you can get past the acctg issues DMND looks interesting.
Rolled my REED into 218 more shs DECK at $44.3
ReplyDeleteSell-side research most bearish in 15 years. Another sign that any good news will deliver a good move upwards:
ReplyDeletehttp://www.alsosprachanalyst.com/markets/wall-street-sell-side-strategists-have-become-most-bearish-in-15-years.html
Sold 1/4 of the FSLR at $15.9
ReplyDeleteScratch that...Sold all remaining FSLR at $15.85
ReplyDeleteHousing - "If we're going into a recession do you really think this would be happening?"
ReplyDeleteThe only argument I can come up with is the current positive action may be a bull trap, similar to the PM bull trap of last year.
My gut feeling is we're past the bottom.
Mark - Please take your time on the cabinet install and do it right this time!
Was hoping to get cute and grab FSLR on a dip...no dip coming. Back in full position at $15.95.
ReplyDeleteWow PCX
ReplyDeleteIYR - Pretty dang good OBV. Yeah sure, there could and likely will be a pullback at some point when it's well into overbought territory(for a nice entry?) but those who said real estate is crashing have been wrong for over 3 years, in respect to the IYR ETF.
ReplyDeleteDon't count on $0.50 gasoline anytime soon either, those times are gone, it's just not gonna happen.
PCX - Holy chit! Seems like someone was lying big time about the death of coal, how the hell do they get away with that?
ReplyDeleteAh…f*ck it. I'm out of FSLR $15.87. I need a break for the holiday. Keeping the DECK. Happy 4th to you fellas.
ReplyDeleteha...and back in again. ok i officially need to be locked up.
DeleteThey're covering FSLR and other beaten down stocks on Fast Money. I will be out as soon as it's covered if there is a spike. If not I'm out at $15.7
DeleteBack to cash with the FSLR stuff. I just peeled back about $0.15 of my gains. Argh.
DeleteI expect the entire short thesis begins to disintegrate (in an overall sense) when it no longer applies to banks.
DeleteHEK - A fairly tight MACD/ADX pinch, not quite the 50 but tight nun-the-less. Note also, the ADX +DI fell under 10, further indication of positive star alignment. OBV doesn't impress me but we can't always have everything, right?
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=HEK&p=W&b=5&g=0&id=p11316766272
The daily chart tells a slightly different story, primarily that the safest entry is past:
http://stockcharts.com/h-sc/ui?s=HEK&p=D&b=5&g=0&id=p31468024554
HEK came up on a screen I did today of stocks at least 30% below their 200 DMA but above their 50 DMA...although I see that has failed today. My suspicion is if it has truly bottomed it will do what FSLR has done for 2 weeks...trend along the 50 DMA and piss everyone off.
DeleteOkay, so now I'm thinking that any pullbacks in quality companies with real products will prove to be buying opportunities.
ReplyDeleteI agree man. DECK is the #1 that comes to mind to me. Just need confirmation of a bottom on the charts to go long in a big way.
DeleteSpeaking of which...back in FSLR on the dip...much smaller position this time. Yeesh someone help me.
I just heard on CNBC's Fast Money that Meredith Whitney cut JPM to a hold with a price target of $43. WTF that's a 20% gain!? I'm curious to know how much she expects a buy to gain.
ReplyDeleteTTM closed above it's 200 DMA
ReplyDeleteFCX looks juicy
ReplyDeleteSold 2/3 of my FSLR after hours at $15.69 for a whopping $0.05 gain. I like the idea of keeping less on hand over the short holiday break.
ReplyDeleteThe MAD HEDGE FUND TRADER disagrees that housing will rebound anytime soon:
ReplyDeletehttp://www.madhedgefundtrader.com/real-estate-hard-truth/
"if the toilet blocks up, I just call the landlord."
DeleteYes of course, but what does he do in case he gets a hangnail?