One Year To Nowhere

[OriZ 3,157]

Bottom? Take a look at M2 velocity and tell me where you think the market and economy are heading.

I didn't mean now...I mean anywhere say from 600(very unlikely as I said but cannot be excluded) to 1300(once we hit the latter which will of course come first). So how are we going to know which it is? We're going to monitor internals and technicals. When they improve so will prospects for the market and the economy as a whole. So far they are nowhere near that.

BTW notice the nice little rally in oil, as well as gold and stocks. I think there's more of it to come in the short term. I actually decided to eliminate some of my shorts this morning in order to put them back in at a higher level along with the other portions I mentioned. I think this is part of why the market is rallying - alot of short covering by others as well.

[OriZ 3,157]

I just want to emphasize the reason why I even mentioned 600 although right now it might look like a fictional number - that would be the area that would equate to the historical undervaluation that has accompanied most important bottoms throughout the 20th century. 1,200-1,300 would only equate to a run of the mill mean reversion that has happened in every important bottoms, including those of 2003 and 2009. So the range is basically between common historic undervaluation and common historic simple mean reversion.

[Expat1 971]

I didn't mean now...I mean anywhere say from 600(very unlikely as I said but cannot be excluded) to 1300(once we hit the latter which will of course come first). So how are we going to know which it is? We're going to monitor internals and technicals. When they improve so will prospects for the market and the economy as a whole. So far they are nowhere near that.

BTW notice the nice little rally in oil, as well as gold and stocks. I think there's more of it to come in the short term. I actually decided to eliminate some of my shorts this morning in order to put them back in at a higher level along with the other portions I mentioned. I think this is part of why the market is rallying - alot of short covering by others as well.

Do not forget that earlier price range (oil). 1300 is well within my comfort zone.

The best thing that could happen to the market is for the Fed to announce that they will stay the course and normalize. A deal to bring in corporate profits from overseas is also badly needed. One will stick a final pin in the bubble, the other will provide 2-3 tril in investment where it's needed, business growth.

Loaning to prosperity hasn't really worked. That bubble hasn't popped (yet) either.

Edited January 27, 2016 by Expat1

[OriZ 3,157]

Well, unsurprisingly - no hike today. Was just announced.

What earlier price range are we talking about? My target for oil since it was over $100 has been around $30. Now that it has been reached, I think downside is much more limited than upside. Doesn't mean there can't be some further downside, but it's pretty much done. However, like I said I will update when my system actually turns Long on oil as this has not yet happened.

I think 1300 will be too early to buy, but it will still be better than buying at 2000 that's for sure.

[Expat1 971]

Well, unsurprisingly - no hike today. Was just announced.

What earlier price range are we talking about? My target for oil since it was over $100 has been around $30. Now that it has been reached, I think downside is much more limited than upside. Doesn't mean there can't be some further downside, but it's pretty much done. However, like I said I will update when my system actually turns Long on oil as this has not yet happened.

I think 1300 will be too early to buy, but it will still be better than buying at 2000 that's for sure.

I believe we discussed a range and a cap (oil). That, barring a significant event of political nature, is a good number.

Just sayin'.

4 hikes a year doesn't compute to one hike every meeting and I believe we can expect a springish hike. They sent the message that they are staying the course and the market, which now hangs on cheap borrowed cash and nothing else, did exactly what it should - took another nice dip down.

[OriZ 3,157]

I believe we discussed a range and a cap (oil). That, barring a significant event of political nature, is a good number.

Just sayin'.

4 hikes a year doesn't compute to one hike every meeting and I believe we can expect a springish hike. They sent the message that they are staying the course and the market, which now hangs on cheap borrowed cash and nothing else, did exactly what it should - took another nice dip down.

Oh you mean the 40-45 range? Yes I believe it is on its way there in the coming months. However, I still think that at a later time(by the en of this year or maybe at some point next year) and even if it goes back to the 20-30 range first, we will see it higher than 45.

Right now already a 20% rally from the lows of last week...

I don't see a scenario where the market falls as hard as we both believe it will in the spring and the fed hikes. Either the fed will hike because the market will not fall, or the market will fall and the fed will not hike. I don't see both.

The market today still stayed in the range of this week, so I still think it's going higher near term(couple weeks).

[Expat1 971]

Oh you mean the 40-45 range? Yes I believe it is on its way there in the coming months. However, I still think that at a later time(by the en of this year or maybe at some point next year) and even if it goes back to the 20-30 range first, we will see it higher than 45.

Right now already a 20% rally from the lows of last week...

I don't see a scenario where the market falls as hard as we both believe it will in the spring and the fed hikes. Either the fed will hike because the market will not fall, or the market will fall and the fed will not hike. I don't see both.

The market today still stayed in the range of this week, so I still think it's going higher near term(couple weeks).

I believe you might be right. Higher meaning playing around well below where I sold LOL but yeah, in the short term central banks are still meddling in their markets and the effects will ripple around a little bit.

Energy and financial services right now still have the best overall valuations. Real estate is screamingly overpriced, industrials surprisingly are at the low end of fair valued. The rest of the sectors are 10% or so from at least fair valuations - this market MIGHT just stabilize at about 10-15% lower at what looks like a 4% dividend yield.

Earnings are starting to drive decisions and that is in my view very good for stability. I have a mild concern about liquidity but even the junk bond markets seem to be self-correcting (albeit leaving a lot of investors with fresh new haircuts). M2 velocity is accelerating to the positive side implying that in the intermediate term we are seeing some circulation.

[OriZ 3,157]

I believe you might be right. Higher meaning playing around well below where I sold LOL but yeah, in the short term central banks are still meddling in their markets and the effects will ripple around a little bit.

Energy and financial services right now still have the best overall valuations. Real estate is screamingly overpriced, industrials surprisingly are at the low end of fair valued. The rest of the sectors are 10% or so from at least fair valuations - this market MIGHT just stabilize at about 10-15% lower at what looks like a 4% dividend yield.

Earnings are starting to drive decisions and that is in my view very good for stability. I have a mild concern about liquidity but even the junk bond markets seem to be self-correcting (albeit leaving a lot of investors with fresh new haircuts). M2 velocity is accelerating to the positive side implying that in the intermediate term we are seeing some circulation.

Not a chance in hell.

What we're seeing is an anticipated bounce from oversold conditions. I still believe in the range I mentioned several weeks ago 1800-2000 on the S&P500 give or take 50 points till spring time. But then, I think we will see 1500-1600, and later on in the year, 1200-1300, and possibly lower.

[Expat1 971]

Not a chance in hell.

What we're seeing is an anticipated bounce from oversold conditions. I still believe in the range I mentioned several weeks ago 1800-2000 on the S&P500 give or take 50 points till spring time. But then, I think we will see 1500-1600, and later on in the year, 1200-1300, and possibly lower.

You know I sort of share that view too (certainly zero exposure in current conditions could be interpreted as putting one's money where one's mouth is and is an indication of no faith in the markets) however there have been extended periods of time where the market cap rode along the 80-90% GPD line (in fact that seems to be "normal" very unlike the last 3 bull/bust speculaton cycles) and one can always consider this to be more aligned with the "stable, driven by business growth" model that would reflect purpose and intent of investment in companies or groups of companies, as opposed to get in/get out speculation.

I regretfully say that this is the reason I believe short-term speculation, day trading, and volatility trading should be taxed out of existence leaving speculators the option of applying their decision making skills to making sound investments (or) finding something else to do.

Edited January 29, 2016 by Expat1

[OriZ 3,157]

Hey that's your opinion and you're entitled to it. I enjoy my trading very much and what alot of people don't understand is that the speculators and day traders and HFT actually add alot of liquidity to the market.

Edited January 29, 2016 by OriZ

[Expat1 971]

Hey that's your opinion and you're entitled to it. I enjoy my trading very much and what alot of people don't understand is that the speculators and day traders and HFT actually add alot of liquidity to the market.

LOL nothing personal dude - I'm not even on the rule-making radar screen.

Every jump and dip that has been historically highlighted however have one thing in common - speculation. Speculation isn't good and has never been good for the overall economy or the markets but one makes money how and when one can by the rules that are in place to make it.

[OriZ 3,157]

LOL nothing personal dude - I'm not even on the rule-making radar screen.

Every jump and dip that has been historically highlighted however have one thing in common - speculation. Speculation isn't good and has never been good for the overall economy or the markets but one makes money how and when one can by the rules that are in place to make it.

Are you talking about day to day or week to week 5%-10% moves or larger ones? Because the larger ones actually have nothing to do with traders. Speculators have always and will always exist, even as "investors". What creates bubbles and the inevitable crashes that follow them is not traders - it's the investing herd. That's why you had crashes long before trading became popular - such as the early 20th century and even the 19th and 18th centuries. Traders really don't care what they profit from - if the market goes up we can profit, if it goes down we can profit, matters not at all to us. Sure, short term moves and volatility, especially in bear markets can be caused by traders opening and closing positions but at the end of the day it doesn't change the long term picture of the market.

I think that for instance the jumps and dips created by the fed since its inception in 1913 have done alot more damage than any traders ever have. Encouraging speculation in recent years has been a crime.

[Expat1 971]

Are you talking about day to day or week to week 5%-10% moves or larger ones? Because the larger ones actually have nothing to do with traders. Speculators have always and will always exist, even as "investors". What creates bubbles and the inevitable crashes that follow them is not traders - it's the investing herd. That's why you had crashes long before trading became popular - such as the early 20th century and even the 19th and 18th centuries. Traders really don't care what they profit from - if the market goes up we can profit, if it goes down we can profit, matters not at all to us. Sure, short term moves and volatility, especially in bear markets can be caused by traders opening and closing positions but at the end of the day it doesn't change the long term picture of the market.

I think that for instance the jumps and dips created by the fed since its inception in 1913 have done alot more damage than any traders ever have. Encouraging speculation in recent years has been a crime.

I definitely agree with you on that.

[OriZ 3,157]

Was a beautiful rally today, that brought me right to the point I wanted for my first portion of added short, I got in right at the close, along with putting back in the portion that was sold the other day at 1880. Now we wait.

[OriZ 3,157]

NYA and FTSE month end update - bands still expanding, opening up more room for declines. For now it is support. Bears will have to be patient.