One Year To Nowhere

[OriZ 3,157]

Futures down magnificently today. I told myself a while ago if the DOW gets under 16k I'd move the last bits I have in money market into the market, but it hasn't been that low in a few months and I missed my arbitrary cut off last time.

Oil down under $30 today, wow. I can't imagine it can stay this low (or lower) for too long.

Interesting to see how much higher it got around the turn of the century and hung out at that high price for many years, except for 2002:

http://inflationdata.com/Inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp

If you think 16,000 is low wait a year or two lol...

Oil has been getting hammered for so long now it is in the panic stage which is the point where nearly everybody thinks there's only one way to go and in this case it's to keep going down. When everyone is on the same page that's where things tend to turn around. Just like while it was between 100-140 no one thought it could be this low(well, except for yours truly and a few other people I know), now it looks imaginary that it could ever get back to around $50 which is my target for it in the next year. But like I said my system is still short. When it comes to my system I trade what the market does not what I think it will do, they are two different sets of indicators: following, and forward looking. Forward looking is just to gear up but not to trade based on.

[OriZ 3,157]

The problem is, I can think of a particular buffoon online (I don't even want to mention his name lest google give him more credit than he is owed) with a significant following of people who called the crash of 2008. And the crash of 2009. And the crash of 2010. And the crash of 2011, you see where I''m going. He's still calling crashes. In fact, he called the stock market as it crashed all the way from the 7k it was in 2009 up to the 18k it was last year. Anybody who listened to him and kept out of the markets got obliterated by the loss of potential gains.

You can find people today who are bearish and others who are bullish. If you look long enough term the bulls are always right.

It's easy to be right when the market goes up most of the time. No problem there. But that's exactly why people with short memories tend to forgive them and forget that they missed opportunity after opportunity to exit and lost lotsa money. The key is not to call crashes all the time just like it's not to call bull markets all the time, but yet those people never get a single bear market right. And I think that's just as bad if not worse than what Prechter(I'm assuming you mean him?) does, because he's actually been right on alot of other things(like commodities and the dollar etc). Easy to look only at where he's been wrong and bash him. At the end of the day if you listened to him and stayed out of the market for the last decade and a half, or if you listened to those clowns and stay in the market now, you're actually going to lose more money with them than with him by the time this cycle is completed.

[OriZ 3,157]

BTW in the chart you posted(and I quoted), see 1982 there? At the time most people were so bearish on stocks after 2 decades of nothing. Guess who was a bull, then? Prechter.

Bear markets unfold much faster than bull markets. People see all those people saying the market will keep going up and think well they are usually right so they are so much better than the bearish advisors. But they fail to remember that 5 years of gains can be wiped out by one year of a bear market.

Edited January 15, 2016 by OriZ

[ExPatty 502]

It was actually karl denninger. He has a blog that a bunch of people read. But he's made some stunningly bad other predictions, like saying netflix is a ####### stock for years and years (I think it was best performing in S&P or something last year). Also has been bullish on blackberry for a long time and bearish on amazon. He's basically a really good contrarian indicator, but his readers don't see it.

[OriZ 3,157]

OK. I thought you were talking about Prechter cause he also seems to get a ton of heat these days.

Basically what I am looking for now is some "flush panic". I think it will happen in the next week or so. I need a day that starts down at least 3-4%, and then closes much higher. With the VIX in the high 40's. I think that will give us a better bottom that could last for several weeks and create the range I mentioned earlier.

[OriZ 3,157]

Aug lows just got taken out by the S&P500 on an intraday basis(need to wait for the close for a closing basis obviously).

[Expat1 971]

The problem is, I can think of a particular buffoon online (I don't even want to mention his name lest google give him more credit than he is owed) with a significant following of people who called the crash of 2008. And the crash of 2009. And the crash of 2010. And the crash of 2011, you see where I''m going. He's still calling crashes. In fact, he called the stock market as it crashed all the way from the 7k it was in 2009 up to the 18k it was last year. Anybody who listened to him and kept out of the markets got obliterated by the loss of potential gains.

You can find people today who are bearish and others who are bullish. If you look long enough term the bulls are always right.

When market cap to GDP is below .95 and the Shiller is below 20 the market will be entering into the upper end of fairly valued. This buffoon doesnt expect a crash around every corner but i dumped it all on Dec 4th.

My dip buying will start somewhere around the above metrics and i guarantee you that those metrics do NOT reflect the market bottom, but they do preserve 30% of my capital. That last 15, 20% dip is ok with me.

This market was valued at 2015 levels 4 times ever since 1880. An idiot could see this coming.

Edited January 15, 2016 by Expat1

[Expat1 971]

Aug lows just got taken out by the S&P500 on an intraday basis(need to wait for the close for a closing basis obviously).

Well i sort of was thinking that was imminent.

I'm not seeing real panic selling. Yet. I believe we might see some selling after folks check their balances and figure out their 401k's are about to, again, turn into 301k's.

[OriZ 3,157]

Well i sort of was thinking that was imminent.

I'm not seeing real panic selling. Yet. I believe we might see some selling after folks check their balances and figure out their 401k's are about to, again, turn into 301k's.

lol...yeah, there's no panic. Like I said I want VIX in high 40's and an opening of at least 3-4% down at the open(similar to what we had on Aug 24) with an intraday reversal. That is what i like to call a "panic flush" and that normally marks a decent(albeit not necessarily forever ever lasting) bottom. And I think that's coming next week.

BTW another thing you can see in the long term Dow chart is that every 20 years or so the market pauses for 20 years. Meaning, levels in 1940 were just a little higher than those of 1920 despite all the volatility inbetween, and levels in 1980 were just a tad higher than those in 1960. Levels in 2020 will be just a tad higher or around the same as those in 2000. The final bottom of what we're seeing now(somewhere in the next 12-24 months) will be a huge buying opportunity for 20 years of incredible gains, just like the early 80's were(which is why Warren Buffett is such a wealthy guy), or early 40's for that matter.

Edited January 15, 2016 by OriZ

[OriZ 3,157]

Aug lows just got taken out by the S&P500 on an intraday basis(need to wait for the close for a closing basis obviously).

Managed to save it at the close.

Hey, this movie should be awesome to watch come May - http://www.marketwatch.com/story/money-monster-trailer-with-george-clooney-and-julia-roberts-is-out-and-its-intense-2016-01-13

I love how they always come out right on time for the next big one. Perfect timing.

Also to add something to the conversation before about the importance of getting things right, even at the risk of being a little early, I want to add this lil excerpt from one of John Hussman's commentaries(This is about the Big Short movie):

As one of the few who anticipated both the 2000-2002 and 2007-2009 collapses (and having shifted in 2003 to a constructive outlook in-between), what I thought the film particularly got right was just how excruciating the wait was before the crisis unfolded, even for those who expected it (see, for example, my November 2007 weekly comment Critical Point). Though I don’t take leveraged positions in credit default swaps, or sell bank stocks short, even refusing to take equity market risk in the later stages of that bubble was excruciating enough. One had to suffer fools parroting things like “being early is the same thing as being wrong” until the collapse demonstrated that, actually no, it’s really not. The 2007-2009 collapse wiped out the entire total return of the S&P 500, in excess of risk-free Treasury bills, all the way back to June 1995. I love that the line made it into the movie.

I couldn't agree more.

[OriZ 3,157]

It was actually karl denninger. He has a blog that a bunch of people read. But he's made some stunningly bad other predictions, like saying netflix is a ####### stock for years and years (I think it was best performing in S&P or something last year). Also has been bullish on blackberry for a long time and bearish on amazon. He's basically a really good contrarian indicator, but his readers don't see it.

Netflix...was a huge bubble leading into 2011, any child could see the drop from $43 to $7 coming. However, if you're telling me he stayed bearish even after that, then yes he's a retard. However, now that Netflix is over $100 I can tell you my target for it is $60 to start with, could be even lower.

[Expat1 971]

Levels in 2020 will be just a tad higher or around the same as those in 2000. The final bottom of what we're seeing now(somewhere in the next 12-24 months) will be a huge buying opportunity for 20 years of incredible gains, just like the early 80's were(which is why Warren Buffett is such a wealthy guy), or early 40's for that matter.

http://www.gurufocus.com/shiller-PE.php 24.4 is improving, but we're still in a bubble

http://www.gurufocus.com/stock-market-valuations.php At 109.4% the long term market predicted returns JUST turned positive. 1.6%, though better than the negative returns the charts predicted through most of last year (they were right by the way) doesn't beat 10-yr treasuries.

http://www.cnbc.com/2016/01/15/a-recession-worse-than-2008-is-coming-commentary.html

household debt has increased back to its 2007 record of $14.1 trillion. Specifically, business debt during that time frame has grown from $10.1 trillion, to $12.6 trillion; the total national debt boomed from $9.2 trillion, to $18.9 trillion; and the Fed's balance sheet has exploded from $880 billion to $4.5 trillion.

The one thing that is difficult to guess is just how much liquidity is out there. I suspect not much. I looked into the savings rates 2-3 years ago and they were up, but I'm realizing that those saving rates are equity-based and statistically the average household doesn't have enough cash for a car repair.

The only real equity that I can detect is international corporations overseas holdings. Not enough, only about 3 trillion. Stuck outside the country because it is subject to 35% tax if it is brought in. There is a perfect debt, commodity, and balance sheet storm set up so that when the switch is hit, and sellers really want to sell, there is no bottom to see.

I thought the market would screw around until after Q1 earnings season. Now, I don't believe we even have that long. I think the panic selling is imminent and no later than early Feb.

[Expat1 971]

Like I said a massive rally is brewing, a rally that I think will surprise people.

I think $40-$45 brent based would be just about right

[OriZ 3,157]

http://www.gurufocus.com/shiller-PE.php 24.4 is improving, but we're still in a bubble

http://www.gurufocus.com/stock-market-valuations.php At 109.4% the long term market predicted returns JUST turned positive. 1.6%, though better than the negative returns the charts predicted through most of last year (they were right by the way) doesn't beat 10-yr treasuries.

http://www.cnbc.com/2016/01/15/a-recession-worse-than-2008-is-coming-commentary.html

household debt has increased back to its 2007 record of $14.1 trillion. Specifically, business debt during that time frame has grown from $10.1 trillion, to $12.6 trillion; the total national debt boomed from $9.2 trillion, to $18.9 trillion; and the Fed's balance sheet has exploded from $880 billion to $4.5 trillion.

The one thing that is difficult to guess is just how much liquidity is out there. I suspect not much. I looked into the savings rates 2-3 years ago and they were up, but I'm realizing that those saving rates are equity-based and statistically the average household doesn't have enough cash for a car repair.

The only real equity that I can detect is international corporations overseas holdings. Not enough, only about 3 trillion. Stuck outside the country because it is subject to 35% tax if it is brought in. There is a perfect debt, commodity, and balance sheet storm set up so that when the switch is hit, and sellers really want to sell, there is no bottom to see.

I thought the market would screw around until after Q1 earnings season. Now, I don't believe we even have that long. I think the panic selling is imminent and no later than early Feb.

Depends on what kind of panic and what kind of bottom. I think a temp bottom is definitely at hand soon, and we'll see some panic before this month is over. But then, like I said I think we will end up in a range for a couple months, 1800-2000 give or take 50 points. I don't really see levels lower than 1750 till sometime mid spring.

True there is not much money out there to hold up the market - mutual funds cash to asset ratio is the lowest in history - under 4%. Just to put this in perspective, it was slightly higher in 2007 and even higher than that in 2000. And in the past every time it hit 4% or more that was a top. Bottoms? Well they come at 6-7% or more. Really what was holding the market up even throughout most of last year was buybacks. That is all. Professionals were and are selling.

I think $40-$45 brent based would be just about right

That will work for me.

Edited January 16, 2016 by OriZ

[OriZ 3,157]

http://www.gurufocus.com/shiller-PE.php 24.4 is improving, but we're still in a bubble

Even based on just this one indicator...and, it's only one and not the most reliable one(although one of the top 5), we need another 30% drop from current levels just for a run of the mill mean reversion alone(which will basically mean S&P500 ~1300), not even talking about undervaluation.

Edited January 16, 2016 by OriZ