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Have we reached a bear market rally top in the market?




 
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Author Topic: Have we reached a bear market rally top in the market?  (Read 20295 times)
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Bill, KD0HG
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« Reply #25 on: May 06, 2009, 02:15:44 PM »

I've worked in many industries, Steve, including for several 'lifetime' sort of employers like the Denver electric company.

But in this case the nature of my employment is irrelevant in part because none of my friends and acquaintances are in the same line of work.

As I stated, I don't know a single person that's been a lifer in their current residence. Period. A simple fact. No one. Nada.

The only exceptions are my deceased mother and my mother-in-law, both of whom lived out east, Chicago and Canton, respectively.

Perhaps I'll find some statistics to back up my assertion that there are likely regional differences how frequently the average person moves, or maybe you can.

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K1JJ
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« Reply #26 on: May 06, 2009, 02:30:16 PM »

Today I see the market is hanging at the highs of the move - like it wants to have one more spike up.  This would be a good thing to grab the last hold-outs looking to buy - to call their brokers and say, "I can't take it anymore... buy me in at ANY price!"   

The talking heads would love it.

This is what I call the "stalking" part of a trade where you patiently let the trade come to you on your own terms. Sometimes averaging in over a period of days works well too, as long as we sell (or sell short) into strength. Selling/short-selling the next big spike up would be what I call a "low risk" trade.  After short-selling into extreme strength, the market will usually pull back somewhat and give us a nice buffer to work with in case we are wrong and need to bail out later if it keeps advancing strongly.

T
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Steve - WB3HUZ
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« Reply #27 on: May 06, 2009, 03:26:36 PM »

Now you got it. Actually stats over the entire population vice the few people you or I know.



I've worked in many industries, Steve, including for several 'lifetime' sort of employers like the Denver electric company.

But in this case the nature of my employment is irrelevant in part because none of my friends and acquaintances are in the same line of work.

As I stated, I don't know a single person that's been a lifer in their current residence. Period. A simple fact. No one. Nada.

The only exceptions are my deceased mother and my mother-in-law, both of whom lived out east, Chicago and Canton, respectively.

Perhaps I'll find some statistics to back up my assertion that there are likely regional differences how frequently the average person moves, or maybe you can.


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Pete, WA2CWA
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« Reply #28 on: May 06, 2009, 03:46:42 PM »

I've been at the same location for 37 years

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« Reply #29 on: May 06, 2009, 04:08:58 PM »

I've been at the same location for 37 years
It's an east coast thing, Pete. We lack wanderlust.  Grin
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Ralph W3GL
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« Reply #30 on: May 06, 2009, 04:11:24 PM »

 

    39 years here!

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« Reply #31 on: May 06, 2009, 04:14:43 PM »

Who is going to buy real estate in a deflationary environment?
People who:
* have a (VERY) stable job

Not too many of those left.
All you need is a Federal Government job, and those are increasing.  Cheesy

(My dad was a Rural Letter Carrier (mailman).  I don't recall him ever worrying about being laid off.)
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« Reply #32 on: May 06, 2009, 05:06:12 PM »

I've been at the same location for 37 years
It's an east coast thing, Pete. We lack wanderlust.  Grin

Even though my parent company changed names a number of times, went through two divestitures, upsizing, downsizing, several mergers, and my job and responsibilities changed course numerous times throughout my career, I never had to leave the NJ. NJ has a lot to offer. We have an ocean, swamps, high hills(our version of mountains), lots of flat land, dense woods, big cities, small cities, big rivers, small rivers, and rivers that can turn your neighborhood into a large swimming hole after a good rain. We generally don't have tornadoes running through our back yards or 3 foot high snow storms. And NYC and Philly are just down the road if one wants to really party.   Grin
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Bacon, WA3WDR
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« Reply #33 on: May 06, 2009, 07:05:00 PM »

Maybe that uptick rule change I hear being recommended will stop the shorters and cause the market to rise.  But I think some real answer has to be implemented for the obvious oncoming train wreck of Social Security and Medicare that are not there, not to mention the staggering national debt and its staggering debt service payments.   I read that the average interest on that - what now? - 11 or 12 trillion dollar debt is 4%... that's 400 to 500 billion a year just in interest.  How can anybody who considers themselves to be sane believe that this is workable?

We have been borrowing hand over fist for over a generation just to make ends meet, and now we are trying to borrow two or three times as fast to do the same thing.  The lenders are increasingly skittish, and the printing presses are putting out lots of new dollars to compete with the ones we earned, to buy all of the things that we need.  That will cause huge inflation, IMHO.

The Chinese see it coming... our enormous dollar debt to them, paid in dollarettes.  And they don't like it.

It will help if we can cut our losses in Iraq.  But have you seen the games they play to put a few miles of commuter rail anywhere these days?   We can not afford squat.

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« Reply #34 on: May 06, 2009, 07:08:18 PM »

Yesterday, I tuned in the business channel and heard three "anal-ysts" urging everyone to buy now - not to miss the train! 
I watched the beginning of Cramer this evening declaring victory and lambasting the bears for not admitting that they were wrong and he was right and that this is a REAL bull market.  Either he's right, or he's setting himself up for some major egg-on-face.  IMHO, he's got himself pretty far out on a rather shaky limb.
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« Reply #35 on: May 06, 2009, 07:15:24 PM »

Maybe that uptick rule change I hear being recommended will stop the shorters and cause the market to rise. 
Ironic.  IMHO, the shorts are getting squeezed right now and that's part of what's making the market go UP so consistantly.

AFAIK, the uptick rule is only going to put the brakes on a short-amplified decline (if it does anything at all).
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W2XR
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« Reply #36 on: May 06, 2009, 08:31:12 PM »

Maybe that uptick rule change I hear being recommended will stop the shorters and cause the market to rise. 
Ironic.  IMHO, the shorts are getting squeezed right now and that's part of what's making the market go UP so consistantly.

AFAIK, the uptick rule is only going to put the brakes on a short-amplified decline (if it does anything at all).


Ah.......but just wait until this market begins it's inevitable downturn. All of the big institutional bankers (and including myself) will start shorting the market. There is absolutely nothing wrong, immoral, unethical, or illegal with doing this, and it is consistent with the philosophy that you can make money in a declining as well as a growth market.

Those big Wall Street banking firms that cried foul when the smart money was shorting them during the vicious downturn of last year, will be the first ones to begin shorting the market as soon as the tides start turning. My guess is that they already have their strategy in place. I think it was Goldman Sachs that made an absolute fortune last year shorting the banks that issued the sub-prime mortgages.

73,

Bruce
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« Reply #37 on: May 06, 2009, 09:40:11 PM »

Yes Bruce.  Ironic that the banks cry foul about shorting while doing it for their own investments.

I plan to try some short ETF's.  It's been said that the uptick rule could cause problems for these ETF's.  We shall see.
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K1JJ
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« Reply #38 on: May 06, 2009, 09:56:56 PM »

Selling short is an important part of any market's structure and balance.  It's been going on continuously for 100's of years in the futures markets.

Short selling adds liquidity and is the only transaction that requires the seller to buy back his position later on, causing latent buying power that can fuel rallies and create support for the market.

When short selling isn't permitted, all you have is optimistic buy-buy-buy that can get way out of hand. Short selling puts the market back to reality.  It's funny how people think short selling is so easy and making money is a cinch when the market declines. The truth is that when short selling we must be more nimble and sharper than when buying cuz the market usually declines twice as fast as it rallies - and spends more time on the upside. ie, The sell-offs are usually faster and sharper, even when the trend is down. Trade professionals favor the short side for many reasons.  The public generally ignores short selling  and would rather look for reasons to buy buy buy everything.

As for the uptick rule... there has never been an uptick rule in the futures markets and they are some of the most liquid and fair markets in the whirl. As usual, the government overreacted after the stock market turned down and put on the uptick rule. Of course, the market just continued down to run its course.  Free markets work best when they are left alone to let the buyers and sellers do their thing. The more liquid a market is, the more efficient and fair it becomes. (Best trade executions)

Funny to hear about Cramer today, John.  He's a one-way street.... buy, buy, buy all the way down! The market breathes in and out. All he does is inhale.  He's probably led more people to financial ruin than anyone in TV history.  But as he admitted himself, his show is more for entertainment than investing.  Entertain this!

T


 

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WB2YGF
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« Reply #39 on: May 07, 2009, 08:37:36 AM »

Short selling adds liquidity and is the only transaction that requires the seller to buy back his position later on, causing latent buying power that can fuel rallies and create support for the market.
Short selling is very risky because there is no limit to the price you may have to pay to buy the stock back.

Buying short ETF's is a little safer because your losses are limited to your original investment.  The downside is, it's not clear these instruments exactly replicate the function they claim, especially long term.  Even some regular ETF's (especially leveraged ones) have these issues.
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Steve - WB3HUZ
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« Reply #40 on: May 07, 2009, 10:12:37 AM »

There is some limit. I've never seen a stock price go to infinity. Tongue
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Bacon, WA3WDR
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« Reply #41 on: May 07, 2009, 11:05:19 AM »

I'm not sure that the market will rise happily, when the rest of the economy is in collapse due to enormous debt service costs, inflation from massive printing of bogus money, and a stunning lack of real production.   Somehow Europe and Asia seem unable to go to their own trade and economy as the USA flounders, but this will surely change.  A trillion or more dollars a year of rising debt... is simply and obviously not going to work.  The 500 or 600 billion a year of rising debt we had going for the past several years wasn't working either - we were just going down the drain a little less quickly.  But we have been going down the drain for over a generation now, and the gurgling sounds are making themselves heard.

Add to that over 100 million retirees finding no Social Security money and no Medicare money.  There are IOUs where that money is supposed to be, payable by... the US Taxpayer.  Hmm, the taxpayers who would be paying that back... are not the ones who borrowed it...  and on top of that, the money would be for the same ones who took it and spent it on other stuff!  So tomorrow's taxpayers would be expected to pay twice.

I don't think they will stand for that, especially in the dismal economy they will inherit.  I predict some very ugly times ahead.
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« Reply #42 on: May 07, 2009, 11:24:45 AM »

Short selling is very risky because there is no limit to the price you may have to pay to buy the stock back.

Buying short ETF's is a little safer because your losses are limited to your original investment. 


Yes, that's correct - unlimited liability when short.  Though, a stock can drop overnight from 90 to zero too and be devastating. Some of these overnight "surprises" in the stock market create bigger opening gaps than commodity trading.  Normally, one would have stop loss orders in to limit a loss before it got out of hand on the short side, but there is NO protection for overnight gaps in stocks, bonds or futures whether long or short.

Personally, I'd much rather go short than long, simply cuz there is less public company riding along and the moves are often swifter and sharper on the downside. Fear and panic cause down-moves.... while a slow building optimism creates up-moves. (not counting short covering rallies which are panic generated) Which emotion is faster to take hold?


John, OK on  the ETF's. (Exchange Traded Funds) I'm curious - what is their DISadvantage to other vehicles like futures? Is it the lower liquidity, transaction fees, or restrictions of some kind?  There is always a downside or else everyone would be trading them...  Wink    I see the limited liability is one advantage. Options have that too, but pay a stiff price for time erosion and strike price.

T





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« Reply #43 on: May 07, 2009, 11:34:39 AM »

Anyhow,

Hey Bacon, it's great to hear from you _._
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« Reply #44 on: May 07, 2009, 12:35:15 PM »

John, OK on  the ETF's. (Exchange Traded Funds) I'm curious - what is their DISadvantage to other vehicles like futures? Is it the lower liquidity, transaction fees, or restrictions of some kind?
Think of ETF's as mutual funds who's NAV adjusts in real time, and can be traded like a stock in real time. The main DISadvantage compared to a no load mutual fund is the you pay a fee on each trade just like a stock. You wouldn't want to buy ETF's in $100 increments if you pay $12.99/trade like I do.  Nearly all ETF's are unmanaged index funds and have very low overhead.

In general, if your a good stock picker and have the time to do the homework, you might be better off with stocks than ETF's.  If you just want a diversified basket of stocks without having to buy a whole bunch of individual stocks, but still want the liquidity of stocks,  ETF's are the way to go.

I can't comment about options and futures.  I know virtually nothing about them.  I imagine you could buy put protection (married put) on an ETF to hedge your gains just like a stock.

There is always a downside or else everyone would be trading them...  Wink  
Everybody IS trading them...ETF's are on fire.  The GLD (Gold ETF) now has almost $32 billion under management. How big is that? This fund is now the number six holder of gold in the world.  (The Government of Italy is number 7.)

Advantages of ETF's:

http://www.investopedia.com/articles/mutualfund/05/060605.asp
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K1JJ
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« Reply #45 on: May 07, 2009, 12:50:33 PM »

OK on the ETF's.

Usually the disadvantage is the transaction fees, as you said. For day trading, it can eat us alive.  But if you do larger transactions and hold them longer term (as you do) then it may work out.

As far as volume.... you could look at the numbers, but gold futures trading each day is probably into the $billion dollar figure too, as far as total gold changing hands. Nothing is better than the futures contracts markets for raw commodities and the stock indices. (S&P 500)
But that could change, who knows?

Though I think the SPY, which just requires a stock account, not futures, is quite popular and liquid.  The problem is transaction fees still -  I once compared the SPY to the futures and found the commissions were about four times higher. This can reallly add up when day trading for 90 minute trades like I do here.

Good luck, OM.

T
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« Reply #46 on: June 22, 2009, 09:54:39 PM »

Well, it's been about  6 weeks since this posting was made last May 5th. I want to continue to stick my neck out...  Grin  We were looking for the last gasp of this bear market rally.  The optimism should have peaked by now with the talking heads calling for a new bull market and recovering economy. I think we saw what we needed to see to complete the rally phase.

The Dow was at about 8500 on May 5th. Today it's at about 8295.  So, the market struggled higher to 8799 and is now heading down. It took its time to unfold, as usual.  I think we have just begun the new bear stock market swing down that will break to NEW LOWS, create lower real estate prices, more corporate defaults and cause general market psychology to get worse than it did last fall and winter. It could be a bad tumble with "surprising" news.

Time will tell, but I think we have been given the chance to dump the stock dogs we wanted to dump on this rally (some never did rally) and raise as much cash as possible.

The unemployment rate will probably be on its way to 15% as the year progresses.   The market has rallied roughly 35% since last March. This is a normal bear market rally when compared against the 1929 crash.   

It looks like the European markets have already started the decline in earnest and are ahead of the USA markets.

I'm not looking to alarm anyone - just give those interested a heads-up to be more financially conservative in case this scenario continues to unfold.  Let's hope for the best. 

BTW, I still think deflation is in its early stages and has a long way to go yet.  Inflation sounds the "logical" choice, but is dead for now.  Deflation's nasty job is to destroy assets and liquidate debt every 70 years or so. It continues to do this well. Cash and cash equivalents (like T-Bills, etc) will continue to be king for the next few years.

T
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« Reply #47 on: June 22, 2009, 10:45:35 PM »

I've been tempted to bump this thread for a while.  Glad to see an update.  Grin
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« Reply #48 on: August 07, 2009, 07:27:36 PM »


Tom,
We've climbed a good bit above that 'last gasp rally' in June (over a thousand points on the Dow).  I very much respect your 'sticking your neck out'.  I think that right now it's important for all of us that are in the market to keep an eye on things.  You don't want to miss the rally, but you don't want to ride the next down-turn either.  Wake up!  It's your money/retirement!  Shocked

73, Karl
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« Reply #49 on: August 07, 2009, 08:27:01 PM »

Hi Karl,

Yep, this is sure turning into a relentless rally that is about five months old now. Generally, moves against the main trend are the hardest to forecast. This is assuming the main trend is still down. 

Personally, I haven't owned a stock or mutual fund since 1987 and have done no long term trades since then. All of my trading is short term S&P 500 futures that last about 90 minutes on average.   So, I live through mini bull and mini bear markets each day.... Grin  This five month rally is a good example of why I stay away from longer term trading.  ( I would have been longer term short in late June and lost money on the overall index as of today)

I'd agree with you that there is more risk on the upside right now than the downside.  August has been a month of important tops with Sept/Oct being good for sharp declines. Maybe we will see it again this year.  After it finally tops, I think the next decline will be truly devastating - watch out below.

Other than that, I still think simply holding cash and cash equivalents is the most prudent thing to do with our "important" money right now. Nothing wrong with speculating with 5-10% of it, however.   Probability dictates that occasionally the speculation money will make more than the safe money - but usually not.

BTW, those cash for clunker videos broke my heart. What a waste of good machines -  what a crazy way to stimulate the economy...sigh.

T
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