Bullish Information

[Jim Nickerson]

Re: Bullish Information Re. Volatility

Sy Harding present interesting data on volatility of the market recently.

http://www.decisionpoint.com/TAC/HARDING.html

How unusual has the lack of volatility been? So unusual that investors and the media are astonished when the Dow occasionally closes up or down 100 points in a day. If it's to the upside it creates excitement. If it's to the downside it creates alarm.
And why not. Over the last three years there have been only 24 days when the Dow closed upor down 150 points or more. That's an average of 8 times per year. Is that unusual? During the five years from 1998 through 2002, which included roughly 2.5 years of bull market, and 2.5 years of bear market, there were 245 such days. That's an average of one day out of every five trading days that investors had to contend with the Dow closing up or down more than 150 points.
And even that was nothing. During those same five years (from 1998 through 2002), there were 122 days when the Dow closed up or down more than 200 points, 56 days when it closed up or down more than 250 points, 30 days when it closed up or down more than 300 points, and 8 days when it closed up or down more than 400 points.
How many times in the last three years has the Dow closed up or down 200 points in a day? Just five. How many times in the last three years has it closed up or down more than 250 points? None. 300 points? None. 400 points? None.
It's even been quite some time since the market has had that kind of move in a week, let alone a day. The last time the Dow gained more than 200 points in a week was mid-November when it closed up 234 points for the week. Prior to that you have to go back to August 18 of last year, when the Dow gained 293 points in a week. And you have to go back to June 14 of last year for the last time the Dow declined more than 200 points in a week, when it declined 351 points.

Will investors be surprised if and when volatility returns?
There was a similar period of very low volatility back in the early 1990s. Suddenly one day in 1994, the Dow declined two days in a row, for a total of 3.6%. One of my subscribers called the office in a panic and demanded that I issue recommendations of some kind, in view of the fact that "the market has just crashed". I had been assuring subscribers that there had only been two market 'crashes', a decline of 23% in 1929, and 26% in 1987, in 100 years, and another was not likely, perhaps ever. But after a long period with little to no volatility, no waves, or even ripples, a one or two day decline of 3.6% can seem like a crash.
Maybe this time will be different. Maybe volatility has gone away for good. Perhaps it moved down the road, got into real estate, and won't be back.

[Jim Nickerson]

Re: Bullish Information

http://www.decisionpoint.com/ChartSp...216_rydex.html

Carl Swelin Cash Flow Shows Wall of Worry

It is also worth noting that, in spite of a price advance of around 18% since last summer, investor response has been remarkably tepid, as demonstrated by the Ratio's failure to move to the top of its normal range. In my opinion this means that there are far too many people ignoring the trend in favor of their personal belief that a bear market is an absolute and immediate certainty -- a belief they have held for many, many months. I am reminded of an unforgettable line from James Dines: "Don't think. Look!"
Bottom Line: The Rydex Cash Flow Ratio shows that investors have been extremely reluctant to accept the market advance from the summer lows. Until they do, the advance is likely to continue.

This article which is short shows CRB as the only Bearish rating, everything else is either rated Bullish or Buy with Crude Oil (USO) an 30-yr. bond rated Neutral.

[Jim Nickerson]

Re: Bullish Information Re. Asian Markets

http://online.barrons.com/article/SB...ne_market_week



I don't know whether this is a bullish indication or not. If one is momentum player, perhaps it is bullish for most of Asia. When markets drop as China did last week in 3 days, it show how quickly gains can disappear, but if one has made 200%, of what significance is a minus 10%?

In the 2 weeks since I posted the above, China is back at new highs.

Should have bought the dip.

[Jim Nickerson]

Re: Bullish Information re: HUI

BY MARTIN GOLDBERG, CMT 2/15/07

http://www.financialsense.com/Market...2007/0215.html

The $HUI gold bugs index is at a level which is not a safe entry point for buyers. Since May of ’06 the best strategy was to buy weakness and sell strength. This “trend” such as it is will not last forever, though. There will come a day where it makes sense to buy strength – but this day has yet to come. Buying strength now is the stuff of the fundamentalists and guessers in my view. A decisive break of the trendline changes the big picture, I believe, as it would signal a move into the much-referenced Wave 3 of Wave III.

Emphasis JWN

I take these comments to be basically a warning not to buy into the HUI or gold stocks now, but on the other hand, if you look at his $HUI chart, it is on the verge of breaking the down trend in place since May '06.

[Jim Nickerson]

Re: Bullish Information

Al Goldman is chief market strategist for A.G. Edwards, so perhaps he is biased, but I think he may be more correct than not in his sense of what the equity markets may continue to do--that is not correct significantly.

http://www.mlive.com/business/jacitp...630.xml&coll=3

Too many gurus are crying wolf


Wednesday, February 14, 2007

[Jim Nickerson]

Re: Bullish Information Re. Asian Markets

http://online.barrons.com/article/SB...ne_market_week



I don't know whether this is a bullish indication or not. If one is momentum player, perhaps it is bullish for most of Asia. When markets drop as China did last week in 3 days, it show how quickly gains can disappear, but if one has made 200%, of what significance is a minus 10%?

Chinese indices are back to all time highs.

[Jim Nickerson]

Re: Bullish Information Re. Gold, HUI

Maund, http://www.safehaven.com/article-6887.htm 2/10/07

We will start by looking at the 1-year gold chart. On this chart we can see that gold's next uptrend isn't a matter of conjecture or about to begin - it has already begun. It began with the breakout from the 3-arc Fan Correction last month, which signaled the end of the corrective phase and the birth of the new uptrend. The only question now is whether it will first run back to the upper side of the third fanline, as often happens, before the nascent uptrend gets underway in earnest. This remains a possibility as it still hasn't broken above the July high, although the action late last week is greatly increasing the chances of it continuing higher from here. Once it breaks above $680 it should really get moving, and advance quickly towards last year's high at $730, which should prove to be nowhere near as serious a resistance level as the current $660 - $680 zone.

The long-term uptrend drawn on this chart immediately makes 2 things clear. Firstly, if this trend channel is operative, and the higher low last month, coupled with the gold fanline breakout and the bearish looking dollar chart strongly suggest that it is, then we are close to an optimum buying area with the index still being relatively close to the lower boundary of the uptrend channel. The other point is that the upside is enormous - if the index embarks on a major uptrend that results in it making contact with the upper boundary of the channel again, then we are looking at it rising to the 700 - 900 area, perhaps higher, depending on when it meets it. Sound outrageous? - if you had told people at the end of 2000 that this index would rise by over 600% in the following 3 years, they would have sent for the men in white coats. In the light of this the potential gains mentioned here sound rather conservative. On the downside, a general sell signal for Precious Metals stocks would be generated not by a break below the channel line, but by a break below the support level at and above 270.

[Jim Nickerson]

Re: Bullish Information Re. ? manic behavior in China

http://www.marketwatch.com/news/stor...o&dist=myyahoo

If Shanghai stocks suffer a meltdown, how far would the fallout extend?

By Jonathan Burton, MarketWatch Last Update: 9:17 PM ET Feb 9, 2007

China's "A" share market -- restricted mainly to Chinese nationals -- has run up almost 140% in the past 12 months, soaring 46% in the fourth-quarter of 2006 alone.

The Shanghai-based market's rapid ascent, the result of structural reforms that boosted investor confidence after a multiyear slump, has riveted Chinese people from all walks of life.

"Late last year the market was exploding, and I thought this is just a super-bullish market," said Zhu Hui, a 28-year-old journalist in Shanghai. She started buying stocks in January, and says her investments are up about 10% so far. "Of course," she added, "the market has been going too fast, but I don't think it is too risky to be in the market right now."

Across China, similar tales of riches are captivating the country and enticing millions. Investors opened an estimated 50,000 retail brokerage accounts a day in December. A new mutual fund from a Beijing-based money manager partly owned by Germany's Deutsche Bank AG raised the equivalent of $5.1 billion in its December launch, a new record.

None of this excitement has been lost on authorities in Beijing.

Indeed, the government is openly determined to keep this bull in China's shop under control. They fear that without deliberate intervention, the A-share market could inflate into a Nasdaq-like bubble. Only if this one bursts, market professionals and experts say, it could deal a sharp setback to China's political stability and market reforms. It also could have a chilling effect on Hong Kong-listed stocks -- the main way U.S. and other foreign investors have been engaged in China's unprecedented growth.

"If the market goes up another 50%, eventually we may have a huge correction," said Frederick Jiang, manager of the Ivy Pacific Opportunities Fund in Overland Park, Kans. "Many sectors would be affected."

It's not just domestic investors who are exposed to the market's risks.
U.S. and other foreign investors in Hong Kong-listed "H" shares could also take a punch. Some high-profile A-share companies such as China Life are listed not only in Hong Kong but also in New York, giving foreign investors a stake in their futures.

"The impact to U.S. investors will be fairly noticeable if China falters," said Roger Nusbaum, a money manager at Your Source Financial in Phoenix. "Clearly, the demand for all things China is reflected in the success of the local market as well as how U.S. investors have picked up on that theme."
Last April, he cut his holdings in Chinese stocks and funds in half. One of those was China Petroleum & Chemical Corp.

"I still own it, but over the next six months, I'd expect the whole China theme to drift lower," Nusbaum said. "I still own some of this stock because longer term we're still bullish on the company and the Chinese market."

China's footprint is significant in many international portfolios. It makes up roughly 10% of the MSCI Emerging Markets Index, one of the most widely used benchmarks for tracking developing economies. It's also the basis for a hugely popular exchange-traded fund, the iShares MSCI Emerging Markets--EEM.

"In the short term, there will be a correction," Ba Shusong, a senior official in the research and consulting arm of the Chinese government, said in an interview. "In the medium term, I'm optimistic, as long as China's economy doesn't experience a major adjustment."

With that in mind, officials have taken concrete action in addition to trying to talk stocks down.

Banks have been told to prevent investors from borrowing money to buy stocks. Retail investors are required to show brokerages proof of identification to prevent people from opening multiple accounts.

A two-month moratorium on new mutual funds was lifted this past week, evidently with the aim of encouraging investment in diversified, professionally managed portfolios rather than single stocks.

As Merrill Lynch pointed out in a recent research report, Chinese government controls will have to get stronger. That could lead to a 20% to 30% pullback in A-share stocks before the end of the first quarter, according to Merrill.

Beijing may ramp up bank-deposit rates as a way to sop up liquidity from the system, Joan Zheng, Merrill's analyst wrote. But ultimately, Zheng concluded, only a tax on capital gains would deter buyers.
Some China watchers believe the government has learned from the Nasdaq's collapse, and is acting accordingly.

"It's very good for them to pour on some cold water, to make sure a bubble will not become a reality," said Jiang, the Ivy fund manager.

One of the main lessons the government may have learned is the importance of portfolio diversification. That could impact one of Washington's longest-running issues to monitor: China's vast holdings of U.S. government debt.

"It looks like they will diversify their investment," Jiang said. "How is a big question. We don't know when, how much money, and what asset classes they will invest in. It may be blue-chips in the U.S. or developed markets, private equity, strategic interests in mining and energy.

"It's hard to say what the impact will be on U.S. Treasurys." he added. "Chinese leaders are very pragmatic. They will do things very gradually to minimize the impact on global financial markets."

[emphasis JN]

I put this in the Bullish thread, not because I see it as bullish, but perhaps momentum "players" will see it that way.

[DemonD]

Re: Bullish Information

Not a link, but I heard on the radio today a fund manager in LA saying he is in full on bull market mode, fully invested. He stated (without a source) that there is a 94% chance the markets will end up for the year, and he was expecting at least a mid single digit return if not over 10%. I've also read a lot of articles that state that when january ends up there is a high percentage chance that the rest of the year will end up.

Personally, after being a bit scared by Dr. Hudson's analysis, I'm back to being comfortable being in stocks. Corporate earnings have been coming in line or above expectations. Finster's analysis on bonds v. stocks has also got me comfortable again being in stocks. And also having read the lag that we'll see in housing, i think the housing downturn won't affect non-housing related stocks this year all that much.

Edit: also wanted to mention that mergers and acquisitions are still going strong. Note the equity office partners buyout today. Since people can't invest too much in real estate, the liquidity has to go somewhere and back into stocks seems to be where it's going to go. I would again refer to finster's analysis on his forum as being bullish with good cause.

Update: Despite a lot of lenders and financials getting KILLED this week, the Dow held up this week. To me that signals there is a continuation of support and demand for quality companies on the open market.

[Jim Nickerson]

Re: Bullish Information Re. Aden sisters on gold, silver.

February 06, 2007
Off to a Good Start in 2007
by Mary Anne and Pamela Aden

http://www.safehaven.com/article-6856.htm

These ladies are supposed to know something about gold and silver, and they remain steadfastly bullish.

I was looking at some of the gold/silver index charts tonight, XAU, HUI, GDM, and they don't show the same breakouts as GLD, nor does SLV so far.

[Jim Nickerson]

Re: Bullish Information Re. Dow Theory Confirmation

February 03, 2007
Dow Transports Confirm the Bull Market
by Clif Droke http://www.safehaven.com/article-6836.htm

From a Dow Theory standpoint, the Transportation index closing above 5,000 will cause a number of market technicians and investors to re-evaluate their previously bearish or non-committal stance on the future direction of stock prices (see "Ode to a Dow Theorist," below). Those analysts that have stubbornly held to their bearish outlook, if they're intellectually honest, will at the very least question their reasons for remaining bearish. Once they openly admit that the new high in the DJTA is bullish from a Dow Theory perspective, the followers of these analysts will become more comfortable with the long side of stocks and this should translate into greater inflows into the market. A surge in trading volume followed by higher stock prices will then ensue.

Until now, the public's participation in the stock market has been very lackluster. For instance, the Rydex series of mutual funds measures participation in the stock market through its various bull and bear funds and by looking at the ratio of public assets in these funds you can gauge to what extent the public is invested in the market. Total assets in Rydex market funds is amazingly at a 3-year low despite the fact that the S&P 500 index is at a multi-year high, if you can believe that.

One reason why this bull market isn't likely to end anytime in the immediate future is because of the clear lack of public participation, or of anything approaching euphoria. Major bull markets always end with a final flourish where the public is heavily invested (usually leveraged to the hilt) and everyone and their hair stylist is excited about the "inevitability" of higher prices to come.

Indeed, public participation in the stock market isn't nearly as widespread as it probably should be given the high levels of the major indices, but the new closing high in the DJTA will soon change all this if my guess is correct. The Dow Theory signal which has now been generated when will be a major shot across the bough for the bearish analysts and market advisors who chose to ignore the broad market's strength over the past couple of years. They won't be able to fall back on the excuse that the Dow Transportation Average is no longer confirming the Dow Industrials at new all-time highs.

Bottom line: The latest all-time high in the DJTA should mean we'll see more money from the retail investor finding its way into the stock market in coming weeks and months.

As long as the broad market's internal momentum as defined by the rate of change in the number of net new highs keeps increasing, stock prices have higher to go in the foreseeable future. The fact that the Transportation industry stocks are finally joining the new highs list once again will only add to the market's internal strength.

One can check my post # 76 in the Bearish Information thread
http://www.itulip.com/forums/showthr...p?t=555&page=2 that shows the current Margin Debt on the NYSE and Nasdaq has now exceeded that around the beginning of Y2K.

The last Investor's Intelligence numbers were 53.3 bulls, 21.1 bears. From Barron's the Consensus Index was 73% bullish two weeks ago, and 74% bullish three weeks ago. Market Vane has been 70% for the past three weeks. AAII is 46.% bulls, 30.5% bears. Two weeks ago it was 57.6% bulls, then dropped the weekending 1/26/07 to 39.5% bulls.

I guess Margin Debt could get even a lot higher. The higher the prices of marginable equities in one's account, the more one can borrow. Perhaps the breakout of Margin Debt is the beginning of another move up in it.

Friday 2/3/07

Yesterday, after months of holding back or diverging, the D-J Transportation Average came within a tiny fraction of confirming the long series of new highs in the Dow. Today, the May 9 Transport high of 4998.95 was finally bettered. The Dow, however, ended down. What does this belated confirmation mean? Honestly, I'm not sure. The belated Transport confirmation arrived nine months after the previous Transport high. Whether this is a bullish development remains to be seen. I'll defer to my PTI, which closed at a record high today.

Russell has a proprietary indicator he calls the Primary Trend Indicator, which he says is smarter than he is.

The world of paper money is on a tear, and the old criteria of valuations appear to have lost their meaning. For this reason, my best guide is my PTI. The PTI doesn't care about valuations, the PTI doesn't care about risk, the PTI doesn't care about news. The only thing the PTI cares about is the underlying market direction. And right now, the direction is due north -- better known as UP.

The Nasdaq is still more than 2500 points beneath its 2000 top.

The DJ Wilshire 5000 (bigcharts.com symbol 9719901) is within a hair's width of equalling its Y2K peak.

The Russell 2000-RUT- is 200 points over its Y2K top--that is a 33% gain above its 2000 top.

The SPX is 80 points off its Y2K top.

If one pays attention to seasonality, then that suggests the markets could move up until end of April. It wouldn't surprise me to see it happen, though it will frustrate me further if it does. If the market continues to move up until the last bear capitulates, then the mother may in fact go to the moon or further.

[Jim Nickerson]

Re: Bullish Information Re. Asian Markets

i'm not sure if this should have gone under bearish information, instead. in 1998 the thai market and baht got hit and everyone thought that was that. then it spread. so the question in my mind is: "does the selling spread?" similarly, does the selling in sub-prime institutions spread up the quality latter? or can enough liquidity "heal" or at least localize the problems?

Well, as I wrote when I posted it, I didn't know either. We'll just have to see. The action in Asia doesn't make me personally bullish, but then nothing does, and I have been wrong since July but that was not the first time by a long shot. Your point is a good one.

[jk]

Re: Bullish Information Re. Asian Markets

http://online.barrons.com/article/SB...ne_market_week



I don't know whether this is a bullish indication or not. If one is momentum player, perhaps it is bullish for most of Asia. When markets drop as China did last week in 3 days, it show how quickly gains can disappear, but if one has made 200%, of what significance is a minus 10%?

i'm not sure if this should have gone under bearish information, instead. in 1998 the thai market and baht got hit and everyone thought that was that. then it spread. so the question in my mind is: "does the selling spread?" similarly, does the selling in sub-prime institutions spread up the quality ladder? or can enough liquidity "heal" or at least localize the problems?

[Jim Nickerson]

Re: Bullish Information Re. Asian Markets

http://online.barrons.com/article/SB...ne_market_week

ASIAN MARKETS CLOSED SHARPLY HIGHER last week with Japanese stocks climbing to their highest level in six years, while markets in India, Singapore and Australia hit record levels. Malaysian shares closed the week at a 10-year high.

Oddly enough, the bourses of regional economic leader China not only didn't rise, they plunged on fears about further government monetary tightening and the emergence of a possible stock bubble. Chinese shares fell, on average, about 4% last week. After rising 107% and 102%, respectively, in the previous 12 months, the Shanghai and Shenzen composite indexes are now down about 10% from 52-week highs established Jan. 24.

The problems in Shanghai and Shenzhen stood out because the Asian markets were buoyed by a record finish on Wall Street and the release of robust U.S. consumer spending data. Singapore stocks rocketed 4.2% higher, establishing a new record; Malaysian and Philippine shares rose 3.4% each; South Korea, 3%; Thailand, 2%; and Japan, 0.71%, after the Nikkei index set a new six-year intra-day high. Hong Kong, Indonesia,
Sydney and Mumbai all rose significantly.

So why is China's stock market suddenly faltering?

Beijing has warned that share prices are too high and that it may reduce liquidity if they continue to rise.

"The government is worried about a bubble developing which, if it bursts, could wipe out the savings of a fairly significant portion of the population and further inflame social instability," says Robert Kuhn, a senior adviser to Citigroup in New York and author of a flattering, state-sanctioned biography, called The Man Who Changed China: The Life and Legacy of Jiang Zemin.

I don't know whether this is a bullish indication or not. If one is momentum player, perhaps it is bullish for most of Asia. When markets drop as China did last week in 3 days, it show how quickly gains can disappear, but if one has made 200%, of what significance is a minus 10%?

[Jim Nickerson]

Re: Bullish Information Re. Aden sisters on gold, commodities.

http://www.safehaven.com/article-6707.htm 01/15/07

These ladies present their bullish case for precious metal and commodities, saying that both have a long way to run upwards.