Bullish Information

[Jim Nickerson]

Re: Bullish Information Re. Oil Bubble?

I'm not intending to continue the argument whether or not oil is in a bubble, but below is a technicians perception from 6/20/08.


http://www.decisionpoint.com/ChartSp...80620_oil.html

While fundamentals play an important role in futures prices, human emotions are also a big part of the mix. Occasionally, like now, irrationality rules the day and a price bubble forms. The easiest way to tell that a bubble exists is to check the monthly-based chart for a parabolic formation. This is w[h]ere prices move higher in an accelerating curve that eventually becomes vertical. On the chart below, you can see that this is the case with crude oil. This is a sure sign that prices are no longer connected to reality.

You will notice that just eighteen months ago oil was at $50/bbl. Now it is nearly three times that price. Have fundamentals changed so radically during that time? Of course not. The same kind of irrationally is at work in the oil market as we currently have in the housing bubble, and as we had in stocks in 2000.



The expansion in the number of oil mutual funds and ETFs has also placed a lot of demand for oil futures contracts. While this has helped drive prices higher, remember, it is a two-way street. When the parabolic finally breaks, there will be a stampede for the exits.

I can't guess how high oil prices will go, but eventually there will be a catalyst of some sort, and prices will fall almost vertically, quickly bringing oil prices back in to the realm of reality. The most obvious catalyst would be if congress lifted the ban on domestic drilling. While that doesn't sound likely now, the rising price of gasoline may eventually turn the screws enough to change some minds.

One could certainly argue Swenlin's observations are bearish for oil, but I placed the reference here, because if oil were to undergo a significant correction, I take it as bullish for most everything else, though a question of duration of such potential bullishness would then arise.

[Jim Nickerson]

Re: Bullish Information Re. II bearish sentiment.

I wonder if "never" goes back further than 1998?

Rob, just for clarification, it was not I who wrote the statement that included "never." It came from David Fuller about whom I do not know anything.

Perhaps bart has the data of Investors Intelligence that would show a longer time frame than just back almost 10 years and would be kind enough to graph it versus the SPX performance. He might be like I was when Barron's stopped publishing II data as a freebie for those who subscribed to Barron's. II cost too much for me to just to continue to collect that data. Currently II data is available free but there is no access to longterm data there.

If one chooses to bet only on things that are just "sure bets," then I for one would never bet on anything. I will gamble on what appear to me to be good bets with regard to stock market movements.

[Jim Nickerson]

Re: Bullish Information Re. II bearish sentiment.

looks to me like the time to trade the bulls and bears was back in march 08 when the index was -10. anyhow... the correlation to the s&p is high but i do not see anything predictive about the bulls and bears... when it's up, the s&p is up, when it's down the s&p was down... it follows doesn't lead. what use for trades is an index with no predictive value?

metalman, I don't know if "predictive" is the best word or not. "Suggestive" of subsequent market direction is when extremes in investor sentiment seems at least to me to be useful, and my opinion is the extremes of lows are better near-term indicators than are extreme highs.

Another thing to consider is that betting (investing) is a piece of cake when one looks back at how things have gone--which your opening line seems to indicate. Knowing what to do tomorrow is the goddammed difficult part of my life, and I expect it is the same for most people, unless their bet is that regarding their opinion they believe they are right and choose to sit tight--to paraphase someone. For those who can do that, that is fine with me. I can't do that.

When I look at the bottom panel of the graph, it suggests to me that when the bull/bear difference is at or below zero, since 1998, it has been rewarding to be long the SPX, though not all the uptrends from those low indications were good for longterm buy and hold mentalities.

Right now, Friday, the DJI is near its 6-month lows, and as is posted elsewhere the other major equity indices are not so low as they were earlier this year.

I guess you read investment stuff as much or more than I do, but after reading for the past week, there is almost nothing I have encountered that suggests the markets are going anywhere but down.

This thread is open to all, including spooks like yourself, and it would be nice right now if anyone would put up some bullish arguments they are encountering if for no other reason than what might be the novelty of anyone venturing bullishness.

I definitely do not think anyone should act upon my opinions, but presently I expect the other indices are either going to correct mightily to bring them more in line with the DJI, or either there is going to be an upward bounce in here because of the rather extreme pessimism that currently is flourishing.

[WDCRob]

Re: Bullish Information Re. II bearish sentiment.

There has never been a reading at current or lower levels that was not soon followed by a sharp rebound, including during the last bear market. This indicates to me that we are within a week or two of a bear squeeze, providing at least a tradable rally in which I aim to participate.

I wonder if "never" goes back further than 1998?

[metalman]

Re: Bullish Information Re. II bearish sentiment.

looks to me like the time to trade the bulls and bears was back in march 08 when the index was -10. anyhow... the correlation to the s&p is high but i do not see anything predictive about the bulls and bears... when it's up, the s&p is up, when it's down the s&p was down... it follows doesn't lead. what use for trades is an index with no predictive value?

[Jim Nickerson]

Re: Bullish Information Re. II bearish sentiment.

From du Plessis, 6/22/08 http://www.investmentpostcards.com/2...80%93-22-2008/

David Fuller (Fullermoney): Bearish sentiment indicates stock market rebound
“… this graph speaks for itself. There has never been a reading at current or lower levels that was not soon followed by a sharp rebound, including during the last bear market. This indicates to me that we are within a week or two of a bear squeeze, providing at least a tradable rally in which I aim to participate.”


du Plessis also mentioned that short interest on the NYSE jumped to an all-time high during the week.

[Jim Nickerson]

Re: Bullish Information Re: Mike Burk

http://www.safehaven.com/article-10569.htm

June 21, 2008
Technical Market Report
by Mike Burk

The good news is:
• The market is oversold and there is reason to think we are at or very near the low for this downward move.
Short Term
Every one of the issues in the Dow Jones Industrial Average (DJIA) is below its 50 day EMA, a relatively rare event that has occurred near bottoms.
The chart below covers the past 6 months showing the DJIA in red and the percentage of the component issues of the DJIA that are above their 50 day EMA's in olive drab. Dashed vertical lines have been drawn on the 1st trading day of each month and dashed horizontal lines have been drawn at 25%, 50% and 75% values for the indicator.
The indicator hit 0 on Friday for the 1st time since February 2003.

There was a cluster of 0% readings near the 2002 bottom shown in the chart below that covers the period from April 2002 to April 2003. All of the 0% readings occurred near tradable lows.

Prior to the 2002 - 2003 cluster there was one at the September 2001 low, the April 2000 low and the August 1998 low.
Currently the percentage of the component issues above their 50 day EMA's is much better for the other major indices, they are:

DJIA	0%
S&P500 (SPX)	17.5%
S&P Mid cap	32.0%
Russell 2000 (R2K)	43.1%

Intermediate Term
Near the low last August there were 1132 new lows on the NYSE, at the January low there were 1114 new lows and at the March low there were 759 new lows. At each of those points I pointed out there was a high likelihood of a retest because of the high number of new lows. On Friday the DJIA closed less than 1% above its March low (close enough to qualify as a retest) and there were "only" 275 new lows, not enough to imply a high likelyhood of another retest. The market could collapse in the next few days generating a lot of new lows, but that scenario seems unlikely.
The chart below covers the past year showing the DJIA in red and a 10% trend (19 day EMA) of NYSE new lows (NY NL) in blue. NY NL has been plotted on an inverted Y axis so decreasing new lows move the indicator upward (up is good). NY NL hit its lowest low for the period last August, came close to the previous low in January, made a much higher low in March. As of Friday's close the DJIA was less than 1% above its March low while NY NL is substantially higher than it has been at any of the previous lows.

It is only the DJIA retesting its March low.
The chart below covers the period from the March low through last Friday showing the DJIA in red, the S&P 500 (SPX) in black, the NASDAQ composite (OTC) in blue and the R2K in Magenta. The DJIA is 0.9% off its March low while the SPX is 3.5% off its low, OTC and R2K are 10.9% and 12.7% off their March lows respectively.

It appears we are at or very near an intermediate term low.

I like this guy, not because he is always correct, but because he looks at a lot of the breadth internals that no one else I know analyzes.

Though he is wrong about 50% of the time on his weekly calls, his call in October 10/06/07 was as MasterCard would say, "Priceless." http://www.safehaven.com/article-8558.htm

Currently, he writes, "It appears we are at or very near an intermediate low."

[Jim Nickerson]

Re: Bullish Information Re. Hulbert Bonds

http://www.marketwatch.com/news/stor...FEE9A5DCAA1%7D
MARK HULBERT Bond timers are bearish 7:21 p.m. EDT June 5, 2008

Commentary: Dejected newsletters a good sign for contrarians

The editor of the typical bond-timing newsletter is more bearish today than he has been at any time since June 2007, one year ago.

And that, from a contrarian point of view, is good news for bond holders.

Consider the latest readings of the Hulbert Bond Newsletter Sentiment Index (HBNSI), which reflects the average recommended bond market exposure among a subset of short-term bond-timing newsletters tracked by the Hulbert Financial Digest. As of Thursday night, the HBNSI stood at minus 31.6%. That means that the average bond timer is recommending that his clients allocate 31.6% of their bond portfolios to selling bonds short -- an aggressive bet that bond prices will fall and interest rates will rise.

The last time the HBNSI was lower was June 14, 2007. In classic contrarian fashion, bond prices rose significantly in the weeks and months following that period of extreme bearishness. Indeed, the CBOE Ten-Year Treasury Yield index (TNX ) closed on June 14, 2007, at $52.17, within pennies of that index's closing high for the year as a whole.

Notice carefully, however, that the TNX today is nowhere close to being that high. In fact, it is some 120 basis points lower. That is highly significant, from a contrarian perspective.

It means that the bond timers are treating today's lower TNX level with the same degree of bearishness that, up until recently, they had reserved for much higher interest rate environments. Normally, you'd expect bond timers to become more bullish as interest rates fell and the bond market rose. The fact that they are nevertheless so bearish today suggests that the wall of worry that bull markets like to climb is very much alive and well in the bond market.

To be sure, bond prices have fallen over the last couple of months.

But if that decline were the beginning of a major bear market, and if sentiment trends adhered to the historical pattern, then the typical bond timer would have reacted to the recent decline by stubbornly maintaining his bullishness.

The fact that he did not suggests that recent bond weakness is more likely a mere correction rather than the beginning of a major bond bear market.

[Jim Nickerson]

Re: Bullish Information Re. Richard Russell

http://www.investmentpostcards.com/2...008/#more-1207

Via Prieur du Plessis:

Richard Russell (Dow Theory Letters): Third phase of bull market is going to be speculative “explosion”

“Let’s get back to the markets. As you know, I’ve been bullish. As a matter of fact, I’m exceedingly bullish. Here’s what I think, wrapped up in a nutshell. The greatest bull market in history was born in the early 1980’s. It turned out to be a very unorthodox primary bull market. We’ve gone through the first and most of the second phase of the bull market with the third phase maybe beginning now or maybe just a bit ahead.

“The third phase is going to be ‘something else’. It’s going to be the greatest speculative stock market ‘explosion’ the world has ever seen. It’s going to include (include, hell, it’s going to be led) by the BRIC nations (Brazil, Russia, India, China) along with most of Asia and Europe, and it’s going to rub off on the poor old indebted US – BIG TIME!

“Right now most of the world’s potential investors are sitting on the sidelines reading about ‘how tough it is, and how this is a horrendous real estate disaster and how every other American is going to lose his home due to foreclosure.’ But wait – so far the markets are telling us something different. As my subscribers and readers of Barron’s know, it’s been telling us that the stock market has discounted the bad news and the ‘coming disaster’ and is preparing itself for better times ahead.

“I think there’s a mighty third phase coming. Most of the world is sitting with cash. There’s $3.5 billion in US money market funds. There’s God knows how much cash in bonds on the sidelines. There are tens of trillions in sovereign wealth funds that will be looking to be invested. The oil and commodity nations are choking on cash. The planet is up to its neck in fiat money, and once the third phase of the bull market starts cranking up, this money will want to be in stocks.”

Source: Richard Russell, Dow Theory Letters, May 19, 2008.

Russell's note was after the up-day last Monday. I don't know what he thought by Friday afternoon.

[Jim Nickerson]

Re: Bullish Information

http://www.safehaven.com/article-10288.htm

5/18/08

The technical condition of silver has continued to improve since the last bullish Silver Market update was posted a week ago. This is because it has held above the strong support in the $16 - $16.50 area, and by virtue of moving sideways during last week, it has broken out upside from the bullish Falling Wedge so that it is now in position to take off immediately, and is likely to, especially given that gold has started to lift off, rising strongly on Thursday on Friday. The position of silver, on strong support not far above its rising 200-day moving average, coupled with the strong convergence of the boundary lines of the Falling Wedge just completed are a particularly potent combination pointing to a strong advance very soon.

[Nicolasd]

Re: Bullish Information Re. Maund on Gold

Agree with you 100% Metalman--It took me more than a decade to slow down my itchy fingers :eek:. Now I use them to peruse various web sites so I get a solid feel for what the secular trends are , make investment decisions then enjoy the noise around them.:p

[metalman]

Re: Bullish Information Re. Maund on Gold

http://www.safehaven.com/article-10220.htm

May 11, 2008
Gold Market Update
by Clive Maund

Originally published May 11th, 2008.



It even involves Elliot wave analysis, which is something I know little about. Actually, I don't think the RSI has set up to give what I interpret as a classical RSI buy signal, but nevertheless, I happened to re-enter my GLD and SLV positions Friday morning--mainly because of reading Williams' hyperinflation article Thursday night. I would call attention to the bottom in August of last year on Maund's chart which was not a classical buy signal by RSI, but was a helluva good time to have entered new positions. Personally, I don't know what will happen next--nor does Maund, it is all a guess I believe.

Regarding his dollar chart discussion, despite the DOME which is something I think is worth eschewing, the RSI and MACD are not negative indicators right now. The entire technicl picture in the dollar chart of 3-years is populated by spikes, up and down, and there are few good RSI signals, perhaps none, on the chart.

WARNING: The article contains information that may be offensive to those who eschew technical analytical considerations. DO NOT cheat on your convictions and go peaking at Maund's work, if you are not a BELIEVER.

not offensive, jim... irrelevant. astrology, charts, bones, tea leaves, whatever you 'believe' is your business.

buying or selling anything timed to an article you read... pure emotion.

hard to stick with any solid investment thesis. maybe what charts do for "believers' is give them an excuse to 'do something' as jim rogers says so many investors wrongly feel compelled to do. sit in cash profits made during the last boom in whatever boomed last and use the time to look for the next one instead of trading in and out... that's the ticket!

[Jim Nickerson]

Re: Bullish Information Re. Maund on Gold

http://www.safehaven.com/article-10220.htm

May 11, 2008
Gold Market Update
by Clive Maund

Originally published May 11th, 2008.

Gold's corrective phase is believed to be complete, meaning that it is now in position to begin another major uptrend. In the last update, which was about 5 weeks ago, we were looking for it to continue to react back to support in the $830 - $850 area above its 200-day moving average, and that is exactly what it has done.

It even involves Elliot wave analysis, which is something I know little about. Actually, I don't think the RSI has set up to give what I interpret as a classical RSI buy signal, but nevertheless, I happened to re-enter my GLD and SLV positions Friday morning--mainly because of reading Williams' hyperinflation article Thursday night. I would call attention to the bottom in August of last year on Maund's chart which was not a classical buy signal by RSI, but was a helluva good time to have entered new positions. Personally, I don't know what will happen next--nor does Maund, it is all a guess I believe.

Regarding his dollar chart discussion, despite the DOME which is something I think is worth eschewing, the RSI and MACD are not negative indicators right now. The entire technicl picture in the dollar chart of 3-years is populated by spikes, up and down, and there are few good RSI signals, perhaps none, on the chart.

WARNING: The article contains information that may be offensive to those who eschew technical analytical considerations. DO NOT cheat on your convictions and go peaking at Maund's work, if you are not a BELIEVER.

[friendly_jacek]

Re: Bullish Information

I'm on the same page and pulled a plug on my long positions (or most of them, but I wish I knew what to do with my 403b), bought some gold and silver and shorted oil and equities.
The only downside is that the stocks and oil could keep surging on for some time longer (although they should not, at least not both oil and equities).
We will see.

[Jim Nickerson]

Re: Bullish Information

I would not trust Russell. Isn't he the guy screaming BUY! last July on the top of the peak?

The only reason I am still somewhat bullish and didn't sell all long positions yet (but decreased my leverage) is that we came from very oversold positions in March and sentiment wise, we can easily go over on the other end of the extreme, just like it happened in 2003 or 2006 when there was no end of rallying from the oversold positions. It is likely especially if that coincides with a sell off in commodities and oil (that is happening now) and a dollar rally that will bring (or is bringing) overseas investors in. This combined with the election year keeps me invested long, especially heavy in emerging markets and china and short on energy and bonds. But I will be quick to sell when the next wave of recessionary force comes.

Quite prescient, jacek.

MARK HULBERT May 6, 2008
Advisers in wonderland
Commentary: Richard Russell now says he was bullish in 2002. Oh yeah?

ANNANDALE, Va. (MarketWatch) -- More than a few eyebrows were raised this past weekend by an article in Barron's by Richard Russell.

Russell, of course, is editor of the Dow Theory Letters newsletter. He has been editing this service since 1958, which is longer than any other newsletter editor still publishing today.

In his article, entitled "A Rally With Serious Muscle," Russell argued that, not only are we in a bull market right now and that "new highs are coming," but also that "the great bull market that began in the early 1980s is still intact."

Those are headline-grabbing pronouncements, to be sure. But I don't think that they were what raised the most eyebrows. After all, he has been saying much the same thing for several weeks now. ( Read my April 9 column.)

Instead, what caught many investors' attention was the following Russell sentence: "Interestingly, at the 2002 low... I believed the bull market was still in its 'expensive' and speculative phase, and that there would be a major recovery, with probable new highs."

Oh yeah? That certainly wasn't my recollection of what he was saying at the time.

To determine whether my recollection was right, I went digging through the Hulbert Financial Digest archives, which contain copies of all of Russell's daily postings on his website.

My hunch was right.

Throughout 2002, in fact, Russell consistently argued that the primary trend of the market was down. And far from giving bullish noises on October 9, 2002, the day of the low, Russell argued that the bear market was very much alive and well.

For example, after the close on that day, he wrote to subscribers: "The Dow Jones Transportation Average broke below its September 2001 low today. In doing so, it confirmed the prior bearish action of the Industrials. Under Dow Theory, the twin penetrations reconfirm the primary bear trend. The bear market is still very much in force."

Russell furthermore went on to predict that the bear market he was envisioning wasn't going to be just a minor decline, either. "This is a Big Poppa bear market," he wrote.

Nor did Russell change his mind in the ensuing weeks. At the end of 2002, for example, when the Dow Jones Industrial Average was more than a thousand points higher than where it stood at its October 9 low, Russell took issue with those who thought the bear market was over:
"Bear markets have always ended one way -- in exhaustion. Exhaustion is characterized by black bearishness, usually low volume, and great values in blue chip stocks (the market for secondary stocks almost ceases to exist). So let me put it gently, we're not there yet... This bear market has followed the greatest, the longest, and the most wildly speculative bull market in history. It's illogical to believe that this bear market has ended after erasing only 38 percent off the peak price of the Dow."

It would be easy to conclude that Russell simply took liberties with the truth in order to make him look better. But what makes his case interesting is the possibility that Russell actually believes what he wrote in this week's Barron's.

I say this because our memories play tricks with us all the time. Selective memory is not the exception, but the rule - and not just when it comes to investing, but in all walks of life. Just ask my wife, who is a clinical psychologist.

This is why it is so important that we submit our memories to a reality check. If someone as distinguished as Richard Russell, and as close a student of the market as he is, can engage in rewriting history, then it should serve as a warning that we could easily succumb to the practice ourselves.

Notice, by the way, that you don't become immune to rewriting history just by having a good track record. After all, Russell's market timing performance puts him in the upper echelons of the market timing newsletters the HFD has tracked since 1980.

Of the many reasons to be accurate historians of the past records of both ourselves and various advisers, one of the more important is to develop realistic expectations. If, after reading Russell's article, you were to mistakenly believe that by following him you would have been bullish on the exact day of the bear market's bottom, you'd have unrealistic expectations about what Russell -- or any market timer, for that matter -- could do for you in the future. By thinking that near perfection is available, you'd be likely to prematurely stop following your market timer.

That could end up costing you, since long-term success when following an adviser is dependent on not getting rid of him at the first sign of trouble. Instead, you need to stick with him long enough for him to actually be able to produce decent returns.

One of the good things about the internet is the abilitity (given enough compulsion) to access and organize a lot of information easily. Probably few went to the trouble as did Hulbert to go back and see what Russell was really saying at the bottom in 2002.

jacek,

I think equity markets are going to retest the recent breakout highs in the next week and fail and then head down to the Jan-Mar lows, and if the long-term bear prognosticators are correct, then break through those lows for new bear market lows.

Somewhere in all that there should emerge a failure of commodities. I have no bets on any of this yet.