One Year To Nowhere

[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.

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.

Already in the lower end of the range, man - over $40. From mid 20's to low 40's in a very short time. Feel for anyone caught short in that one.

[Expat1 971]

Already in the lower end of the range, man - over $40. From mid 20's to low 40's in a very short time. Feel for anyone caught short in that one.

I'm not expecting to see 40+ much longer.

So I'm looking across the world. EM still the most attractive from a valuation standpoint. Yields in the US non-index midcaps are starting to tick up though (buybacks? It isn't earnings) but nowhere near where they need to be. On a gold hold with cash making around .8% and short-term around 2.2%. So what to do? I'm not into trading, used to play around in the early/mid 90's but not really interested mainly because of the time difference. Europe (parts) is improving but my guess right now is EM eastern Europe, Asia, and South America is probably where the best opportunities are (for this year). Mexico excluded, they're overvalued.

Trouble is if Trump looks like a real possibility those EM are going to hang up "closed" signs and any investment there will evaporate like a drop of gasoline on hot pavement. Overall it's a bad environment to invest.

[OriZ 3,157]

I'm not expecting to see 40+ much longer.

So I'm looking across the world. EM still the most attractive from a valuation standpoint. Yields in the US non-index midcaps are starting to tick up though (buybacks? It isn't earnings) but nowhere near where they need to be. On a gold hold with cash making around .8% and short-term around 2.2%. So what to do? I'm not into trading, used to play around in the early/mid 90's but not really interested mainly because of the time difference. Europe (parts) is improving but my guess right now is EM eastern Europe, Asia, and South America is probably where the best opportunities are (for this year). Mexico excluded, they're overvalued.

Trouble is if Trump looks like a real possibility those EM are going to hang up "closed" signs and any investment there will evaporate like a drop of gasoline on hot pavement. Overall it's a bad environment to invest.

Definitely going to drop again soon(oil)...how long and how deep remains in question for the time being.

Buybacks have been the main thing holding up this market. Institutionals aren't buying and neither are retail investors. Margin debt is starting to decline though and soon the money for buybacks will dry up.

Early to mid 90's? How'd that work for ya without computers? lol

[Expat1 971]

Definitely going to drop again soon(oil)...how long and how deep remains in question for the time being.

Buybacks have been the main thing holding up this market. Institutionals aren't buying and neither are retail investors. Margin debt is starting to decline though and soon the money for buybacks will dry up.

Early to mid 90's? How'd that work for ya without computers? lol

LOL c'mon it wasnt that bad! I started in '92 when I opened my first 401k account, and opened a Fidelity brokerage account in '93. CNBC was different back then, they used to scroll every single major index stock price and mutual fund closing price daily after about 6 pm or so. That was back when there weren't so many mutual funds. Internet was dialup and you had to buy a service like Compuserve or AOL. AOL was king, there was no such thing as online real time chat, everything was done on boards like this one. Banking was done by phone and if you wanted to cash out you could but you either had to wait for a check or set up a wire by phone. Fun days!

[X Factor 1,112]

Notice the high yielding stocks are up big the past few weeks. This is a defensive play by mutual fund managers

[Rob L 3,811]

Notice the high yielding stocks are up big the past few weeks. This is a defensive play by mutual fund managers

Defense against?

[X Factor 1,112]

Defense against?

Mutual funds have to be nearly vested at all times. They can't be sitting on cash. Since they don't trust the market rally they put their funds in high yielding stocks which is a flight to safety so as to get the dividend yield. Look at a stock like Phillip Morris MO near a 3 year high. Edited March 21, 2016 by X Factor

[OriZ 3,157]

At this point the S&P500(after having held above 1820) can definitely eke out new highs. My guess is IF it does, it will be marginal, and without the participation of the broader market indexes that topped late 2014 already and are much further from their all time highs at the moment. Nor would it be accompanied by the banking index or the Russell. Nevertheless, it is a possibility, but it won't change the longer term picture which is valuations that currently imply near zero 10-12 year returns and negative 10-12 year real returns. Even this scenario is not certain, I think we will at the very least get a pullback first(towards the 1950-2000 range) possibly even this week. Once we get there it will be much easier to assess if they're going back up again or continuing lower.

Unlike dailies, the monthlies don't change on a dime. I will post something later that shows the bear is still here.

[OriZ 3,157]

So as I have said, monthly charts don't change on a dime. There's been a lot of damage done that will be hard to turn around, even with the recent rallies and even if it continues. I believe the chart speaks for itself. You can see the recent range in the S&P500 in the upper right side circle, roughly 1800-2100 for a very long time now. Bollinger getting even narrower, eventually this will explode. It could either explode upwards, or downwards, but judging by all the other factors(like the MACD at the bottom of the chart) it will be downwards.

Another thing is corporate share buybacks. Those, along with short covering, and massive central bank intervention have created this recent rally. In fact, buybacks have been a huge reason for the rise in recent years, not just months. But now they are set to go quiet as earnings "blackout period" begins.

[Expat1 971]

Defense against?

There is no, zero, possibility that the market can be sustained at these valuation levels. Never has, never will. Eventually the free cash will dry up and when it does there is significant artificial value priced in that has to correct. This has been stop-gapped since 2014 but a 40% (minimum, Oriz expects more and I ain't arguing that last 10% LOL) drop is inevitable and probably impending.

I have always called Q2 2016 earnings season as the do or die period. Right or wrong, we are way past one year to nowhere and I don't care how long it takes but I will not throw money into this market until the represented stocks are sanely valued. I believe that by late summer we will all be back in the business of investing but right now outside of short trading this market is dangerously overpriced.

Edited March 22, 2016 by Expat1

[OriZ 3,157]

There is no, zero, possibility that the market can be sustained at these valuation levels. Never has, never will. Eventually the free cash will dry up and when it does there is significant artificial value priced in that has to correct. This has been stop-gapped since 2014 but a 40% (minimum, Oriz expects more and I ain't arguing that last 10% LOL) drop is inevitable and probably impending.

I have always called Q2 2016 earnings season as the do or die period. Right or wrong, we are way past one year to nowhere and I don't care how long it takes but I will not throw money into this market until the represented stocks are sanely valued. I believe that by late summer we will all be back in the business of investing but right now outside of short trading this market is dangerously overpriced.

Late summer is when the fun only starts dude!

[Expat1 971]

Late summer is when the fun only starts dude!

LOL ain't arguing over that last 10, 15% or a difference of a few weeks. You see it, I see it coming - and it isnt far off.

[X Factor 1,112]

Because most people don't view this rally as real and are still leaning short, then it could go up a little more.

The shorts are getting squeezed to death. Any pullbacks they are unloading causing the markets to slowly grind upwards. Triple top seems imminent.

[OriZ 3,157]

The shorts are getting squeezed to death. Any pullbacks they are unloading causing the markets to slowly grind upwards. Triple top seems imminent.

I am enjoying this market so much - plenty of opportunities. They gave us the same range 3 times now. Which is making the bands even narrower. I'll upload a monthly later - we will see a sharp move soon.

[OriZ 3,157]

Dow: Short daily, weekly, monthly.

NYSE composite: Short daily, weekly, monthly.

NASDAQ: Short daily, weekly. NEUTRAL monthly(but close to turning short, also)

S&P500: Short daily, weekly. NEUTRAL monthly(but close to turning short, also).

Still no change in any of the above despite(and for the monthly S&P500 and NASDAQ, due to) the recent rally.

I do not recall seeing them this tight in the monthly in like...forever. While bands don't provide a direction of where price will go once they expand, the other indicators in the bottom I believe do. I'll give them 2-3 more months before they start expanding again.

However notice XFactor the really isn't very broad anymore. ad's today were negative. Many indexes(besides the main 3) are way below their last highs. hyg:iei is already diverging again, oil is back down, this is all telling me that in the very short term we are due for at the very least a 4-5% correction. When I say short term I mean this month. Beyond that if they decide to go higher is fine with me, but 1. I wouldn't count on it and 2. even if it happens, it won't change the longer term picture as evident in the chart above, as well as valuations which imply negative returns in the next 10-12 years. This is one big trap just like we called the one for the bears at 1820, this time for the bulls.

Edited April 2, 2016 by OriZ