Bullish Information

[Jim Nickerson]

Re: Bullish Information Re. Insider Buying

http://www.bloomberg.com/apps/news?p...Jg0&refer=home

Insider Buys Exceed Sales, Signaling Market Bottom (Update3) 02/04/07

Feb. 4 (Bloomberg) -- August Busch III, an AT&T Inc. board member since 1980, bought $2.27 million of shares in the biggest U.S. phone company last month, his largest purchase on record. Monsanto Co. director William Parfet added to his holdings in the world's No. 1 seed producer for the first time in eight years.

Chief executive officers, directors and other senior officials in corporate America are buying more of their companies' shares than they're selling for the first time since 1995, prompting growing confidence the stock market is poised to rally for the rest of the year.

The last seven times insiders bought more than they sold, between 1988 and 1995, the Standard & Poor's 500 Index rallied an average 21 percent in the following 12 months, according to data compiled by the Washington Service. The purchases show executives believe the worst may be over after stocks suffered the biggest January drop in 18 years on signs the economy is in a recession.

"If it's so bad, how come these guys are gobbling up their own companies' stock? That's the telltale indicator,'' said Fritz Meyer, 57, the Denver-based senior market strategist at AIM Advisors Inc., which manages about $166 billion. ``Companies are in the best possible position to assess the economic outlook.''

What do you think, could these insiders possibly know something that isn't known on iTulip?

Same article:

While executives step up buying, short sellers are betting against U.S. companies like never before. The amount of short selling -- when traders sell borrowed shares expecting to buy them back after prices fall -- grew to 3.7 percent of the total shares on the NYSE last month, the highest since at least 1931.

[Jim Nickerson]

Re: Bullish Information

Small-Cap U.S. Stocks Rally After JPMorgan Predicts 12% Advance

By Lynn Thomasson
Jan. 31 (Bloomberg)

The Russell 2000 Index gained almost twice as much as the Standard & Poor's 500 Index after JPMorgan Chase & Co. said the measure of small U.S. companies will surge because its members are cheap and investors are too pessimistic.

"The market is telling us that the stocks have bottomed and a recession isn't going to happen,'' Thomas Lee, U.S. equity strategist at the New York-based bank, said in an interview. ``By buying small-caps now you'll be ahead of investors as they get more comfortable with the economy.'' The index, whose members have a median market value of $539.5 million, will gain 12 percent from yesterday's close to 780 in the next six months, he said.

Almost $150 billion in mortgage losses at banks and record foreclosures gave the Russell 2000 a 22 percent decline last week from its July record. That was the biggest drop since 2002. The gauge underperformed the S&P 500, whose members have a median value 23 times larger than the small-cap gauge, last year for the first time since 1998.

The Russell 2000 rose 2.6 percent to 713.30, led by rallies in video recorder-maker Tivo Inc. and software company Concur Technologies Inc.
The S&P 500 gained 1.7 percent.

Small companies have fallen too rapidly, Lee said, citing the so-called relative strength index. Technical analysts use the RSI to predict when unusual gains and retreats will probably reverse. The weekly RSI on the Russell 2000 dropped to 19.7, according to Lee's data. The other two times it got that low, the index advanced an average of 28 percent in six months.

'Extreme' Pessimism

Bearish investors outnumbered those who are bullish by the most since November 1990 during the week ended Jan. 10, according to an American Association of Individual Investors survey. The proportion of people who were pessimistic was 58.9 percent, compared with 19.6 percent who were optimistic, AAII found.

The "extreme'' pessimism reached this month suggest small stocks will rebound from their six-month decline, Lee said. The Russell 2000 typically gains 20 percent in the six months following similar differences between pessimism and optimism, according to the strategist.

Two-thirds of the companies in the Standard & Poor's SmallCap 600 Index, another small-company benchmark, are cheap according to the so-called Fed model, Lee said. That's one of the highest readings ever, he added.
Projected annual per-share earnings divided by stock price in the Russell index exceeds the yield on the benchmark 10-year Treasury note. The size of the spread implies a 20 percent rally by small-cap stocks by the middle of the year, Lee wrote, citing the Fed model.

Tivo, whose recorders let television viewers skip advertisements, added 29 percent to $8.77. The company won an appeals court ruling that Dish Network Corp. infringed a patent on its technology.

Concur had the biggest gain since May 2001, rising 24 percent to $35.06. The maker of software that automates business- expense reporting posted twice the profit that analysts estimated, according to Bloomberg data.

To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net .
Last Updated: January 31, 2008 16:42 EST

Personally, I am very nervously bullish, just because it seems everyone else is bearish.

[BoggleFed]

Re: Bullish Information

Jim,

Here is another interesting contrarian take to go along with your last article:

http://www.ft.com/cms/s/0/0b6bc354-c...658,s01=1.html

[Jim Nickerson]

Re: Bullish Information Recalling Joe Granville.

This is an interesting article discussing Granville's "Golden Rule:" "The obvious is obviously wrong."

It considers the applicability of contrarian principle to the current predicament.

http://www.safehaven.com/article-9316.htm

Clif Droke, 1/25/08

Some have suggested that the financial markets have entered a vortex of fear the likes of which has never been seen. They believe that this time will really be different and that the contrarian principle will cease to work; that reading investing with the headlines instead of against them is the "new style." In other words, they believe that "Granville's Golden Rule" has failed.

Somehow, I don't think this assumption will be proven correct. I seriously doubt the media have suddenly become prescient and truthful (to say nothing of benevolent) in telling us what is really going on within the financial realm. And I don't believe the masses will become millionaires by converting to full-time short sellers.

In other words, I'm banking on the ageless wisdom of "The obvious is obviously wrong."

Edit: it seems that reading should have been left out above in order for the sentence to make sense.

[Jim Nickerson]

Re: Bullish Information RE. Bull Market Ahead 1/22/08

Bull Market Ahead

Indicators Read Warp Speed Eight

by Joseph Dancy, LSGI Advisors, Inc. | January 22, 2008

Summary
The last few months have been incredibly brutal months to be invested in the stock market. The news of impeding doom, bankruptcies, potential recessions or even depressions is echoing around the financial press.
While such reports may or may not have a grain of truth to them certain market indicators are flashing long term table pounding buy signals. If they hold true to past performance the market will be flying at warp speed eight by year end.

I don't know this fellow, but his "call" caught my eye. I didn't read all his arguments, but noted some of his points, and I agree there is a chance for some sort of an up-move in here because the markets are so oversold, but I have been seeing that for a while as they have continued down.

Listening to the BBC last night as they are broadcasting the soccer tournament in Ghana--African Cup perhaps it is called, and the BBC guy interviewed a lot of Ghanaians Sunday, and it seems the whole country was praying to God and Allah that Ghana would win its match. For those long the US (and actually most world markets the past few weeks) who are given to praying, I expect there has been some of that going on. Maybe that will boost the markets. The Ghanaians interviewed said most of the year they pray for divine intervention for things of greater import.

[Tulpen]

Re: Bullish Information Re. AAII data

"The prices of oil and other commodities are surging primarily because of the weak dollar."

Simply untrue. While the weakening dollar had an effect it is not the primary effect.

"President Bush should promptly reverse the government's destructive course by boldly declaring that the U.S. will now actively support the integrity of its currency ( see Current Events). "

The value of the dollar is directly related to the US trade balance and the interest rate policy of the fed. Just "boldly declaring" is simply Clintontalk.

Fact is, the US produces less than it consumes and fills the gap with borrowing money. Something's got to go in that spiel.

[BiscayneSunrise]

Re: Bullish Information Re. AAII data

Fred, I am sorry to report that your view is not so contrarian anymore. Republican stalwart, Steve Forbes agrees with you.


One question, though. When Forbes says the markets will force the US to return to a strong dollar fairly soon, any idea of what he means or how it may play out?
http://www.forbes.com/columnists/for...teglove_google

Bush's Big Boo-Boo
Steve Forbes 01.28.08, 12:00 AM ET




The dumbest, most destructive economic policy of the Bush Administration has been its weak-dollar position--letting the dollar slide in value against the euro, the yen, the pound and gold. The repeatedly disproved theory in operation here is that cheapening your currency will improve your trade balance and that an improved trade balance makes your economy stronger and wealthier. Put aside the meaninglessness of the trade balance as a measure of economic health or sickness--the U.S., after all, has had a trade deficit with the rest of the world for 350 years out of the last 400. A weak-currency policy has disastrous economic and political consequences--most immediately, our tumultuous equity markets.

Look at what's happened since the Federal Reserve began creating excess money in 2004. The already booming housing market was, in effect, shot up with steroids as lending standards were lowered to put all the excess liquidity to work. We are still feeling the effects of the subprime mortgage crisis, as banks tighten up on lending (they don't even want to lend to each other, which tells you something), which in turn has sharply slowed the economy.

Banks themselves engaged in a binge of creating off-balance-sheet structures, most notably with so-called SIVs (structured investment vehicles). The idea was that you could generate juicy fees packaging subprime mortgages and could finance them with commercial paper and not have to set capital aside. Voilà! Returns on capital blossomed! Now many of these institutions are scrambling for infusions of capital from Asia and the Middle East, as circumstances force them to put these bizarre, loss-laden vehicles back on their balance sheets. The banks' behavior is inexcusable. But, as with bartenders who continue to ply drunken patrons with drinks, the Federal Reserve bears a heavy responsibility for creating loads of excess capital in the first place and the Bush White House for winking and nodding while the dollar was being debased.

The geopolitical fallout from the weak dollar is all around us: Terrorist Iran gets massive windfalls for its oil; ditto Venezuela under its wounded but still reigning lunatic, Hugo Chávez; Russia becomes more truculently anti-American with each uptick in the price of oil; so-called sovereign funds buy up U.S. corporate assets at fire-sale prices; China, which outsourced its monetary policy to the Fed in the mid-1990s when it tied the yuan to the greenback, now faces increasingly destabilizing inflation; and oil-lacking developing countries, many of them fledgling democracies, are being hit with potentially destabilizing economic squeezes.

The prices of oil and other commodities are surging primarily because of the weak dollar. Between mid-2003 and the beginning of 2008 oil has zoomed from $25 a barrel to almost $100. Real demand in oil didn't suddenly massively increase to justify a nearly fourfold rise in price. The best indicator of inflation is gold. In this same time period the yellow metal has zoomed from around $350 an ounce to more than $800 an ounce. More than $50 of the per-barrel price of oil today comes from inflation and the speculation that inflation induces.

President Bush should promptly reverse the government's destructive course by boldly declaring that the U.S. will now actively support the integrity of its currency ( see Current Events). Bush aides might say that the President is no economist and must therefore rely on advice from the Treasury Department and the Federal Reserve, even if it is manifestly misguided.

John Kennedy was no economist either, yet he didn't hesitate to declare that the dollar should be as good as gold. Bill Clinton was no economist, but he understood that a weak dollar and the ensuing inflation it begets destroyed Jimmy Carter's (nyse: CRI - news - people ) presidency. Ronald Reagan actually did study economics, and he was willing to pay a severe but, thankfully, short-term political price to break the inflation fever gripping the country in the early 1980s.

If President Bush is too befuddled or fearful to act now to shore up the dollar, the markets will force him to do so fairly soon. It would be better to act ahead of events than to be seen responding to them defensively and belatedly.

[FRED]

Re: Bullish Information Re. AAII data

If I get it to work, attached should be a graph from GaveKal that I found in a note by Prieur du Plessis at http://www.safehaven.com/article-9268.htm 1/20/08


It demonstrates the relationship between extremes in bearishness in poll amongst American Association of Individual Investors and lows in the SPX since 1998. Perhaps this time is different, I truly don't know.

The question is, how is today not like these other apparently excessive instances of bearishness?

Well, for one thing these guys weren't in charge.

[Jim Nickerson]

Re: Bullish Information Re. AAII data

If I get it to work, attached should be a graph from GaveKal that I found in a note by Prieur du Plessis at http://www.safehaven.com/article-9268.htm 1/20/08


It demonstrates the relationship between extremes in bearishness in poll amongst American Association of Individual Investors and lows in the SPX since 1998. Perhaps this time is different, I truly don't know.

[Jim Nickerson]

Re: Bullish Information Re. Markets very oversold.

Mike Burk, 1/19/08 http://www.safehaven.com/article-9263.htm

Technical market report for January 19, 2008

The good news is:
· The market is near record oversold extremes and likely to have a tradeable rally.

Short Term
The market is nearly as oversold as it has ever been.
As of Friday’s close 8% of the component issues of the S&P 500 (SPX) are above their respective 50 day EMA’s. There have been lower numbers, but not many.

I keep writing this guy offers some unique techical analyses of the markets' actions, which personally I find beneficial. He also makes weekly predictions for the following week, to which I pay no attention in trying to arrive at my decisions of whether to buy, hold, or just sit and wring my hands.

His articles are posted on safehaven.com on Saturdays, I would put in the link to today's post by him, but the site is down right now. My copy of his quote is from an email which contains same information as posted at financialsense.com

[Jim Nickerson]

Re: Bullish Information Re. The Chartist

http://www.thechartist.com/ subscription required.

Dan Sullivan has persisted in the bullish camp after entering long positions for himself and any subscribers who wished to participate back on 10/9/07--which in retrospect has not turned out to have been the most propitious time to get long.

Only in the last couple of "hotline" messages has he discussed "taking defensive action" if the markets did not turn in his favor.

Today's note I am putting in because he gives an assessment of where he sees the markets now--covering some pros and cons.

The numbers he gives in the fourth paragraph regarding how far below the indices are now compared to their highs I believe are based on closing numbers as opposed to what were intraday highs. The numbers he gives are a bit less-bad than if the intraday highs are used--assuming my numbers are correct.

CHARTIST HOTLINE

Thursday, January 10, 2008
The market has rallied sharply on the news that Federal Reserve Chairman Ben Bernanke is about to take aggressive action to counteract the financial strains caused by spiraling oil prices and the slumping housing market fueled by the subprime debacle. Analysts now expect the Fed to lower the Federal Funds rate by 1/2 of 1% at the next Fed meeting on January 29th and 30th, but they are not ruling out a surprise cut in the interim. Many pundits feel that no matter what the Fed does, it will not be able to prevent a recession.

Nevertheless, a two-day rally, which represents the first rally of any substance of the New Year, has taken hold with the S&P 500 gaining +2.17% while the Dow has jumped 269.47 +2.14%. Unfortunately we are not out of the woods. Just about all of the key indices have traced out a pattern of declining tops since early October. One big positive was the ability of the S&P 500 and Wilshire 5000 to hold above their August 16th intraday lows. The Dow dropped briefly below its August 16th intraday lows on January 9th in the early going but managed to rally above this key support area by the close. It is also encouraging that the NYSE Advanced Decline Line, although eroding, has also held above its August lows.
Having said that, we should point out that the Russell 2000, S&P midcaps, as well as the Value Line Geometric, have already taken out their August 16th intraday lows by a significant margin. The rally thus far has only retraced a very small portion of the lost ground. Currently, the S&P is still 9.25% below its bull market highs recorded on October 8th. Over the same timeframe, the NASDAQ has lost -11.20%, Russell 2000 -14.84%, and Value Line Geometric -15.79%. All of the indices with the exception of the Utilities are well under their 200-day moving averages, which are in the process of leveling out and tilting south.
None of the stocks in the trader's portfolio closed below their mental stops in today's session. The closest is Arcelor Mittal (MT), still 4% away. The Actual Cash Account gained 1.04% in today's session while the Aggressive Account was ahead 1.95%. At this juncture it is very important that we keep this rally going. While we are cautiously optimistic, we are ready to cut back if it fails.

[Jim Nickerson]

Re: Bullish Information Re. Hulbert Gold < Stocks

MARK HULBERT
Stocks look better than gold for 2008
Commentary: Contrarians bet equities will outshine gold

By Mark Hulbert, MarketWatch
Last update: 9:27 p.m. EST Jan. 1, 2008

On the contrarian grounds that markets like to climb walls of worry, the stock market would appear to have a lot more upside potential than gold.

He reviews his analyses for the past two years which suggested gold would do better than stocks--now it seems different.

[Jim Nickerson]

Re: Bullish Information Re. The Chartist

I've not been posting much, because I am tired of reading.

The Chartist, which has a major buy signal on 10/9/07 came out tonight with its tri-weekly newsletter.

Dan Sullivan wrote on 12/13/07

STILL A BULL MARKET

There is no question that the majority of investors are becoming increasingly nervous. You can’t blame them given the preponderance of adverse news highlighted in the financial press day after day. One analyst describes it as a blitzkrieg of bad news. However, we learned a long time ago that the market seldom accommodates majority opinion. Believe it or not, this market has a lot going for it. Corporate insiders certainly think so, as they have been buying on balance over the last 3 months.

Public shorts have pulled back somewhat since the end of November. However, specialist’s shorts, as of December 10th, were at a multi-year low. Currently, specialist short-selling is only 6.79% of public short-selling. This is the third lowest percentage in over 5 years. It is interesting to note that the two lowest readings of 6.29% and 5.48% occurred in mid to late August of this year, which came close to coinciding with the August lows. Also, the short-interest ratio on the NYSE, which is bumping up against 8%, is close to a multi-year high. Bottom line is that the public, judging by their shorting activity, is apprehensive while the specialist’s data is highly bullish.

I don't personally attempt to keep up with insider buying, but the thought is the insiders are "smart money." I also do not keep up with short-selling data. Perhaps Sullivan is on to something here, I really don't know.

I think he is correct there are not a lot of bulls around, and on contrarian basis that is bullish. Actually the Investors Intelligence data and AAII data seem to me are rather neutral.

Sullivan's recent buys in his actual cash account, which I referenced above back around 10/9 are up 2.04% by my tracking of it, and his agressive cash account is down 1.80% according to my tracking of it. The latter account has been down 9% and up 1.4% on 12/10.

[Jim Nickerson]

Re: Bullish Information Re. The Chartist

The Chartist Newsletter was published last night. http://www.thechartist.com

Dan Sullivan, or his ghost writer, recounted

Thus far, we have been encouraged by the performance of our Actual Cash Account. Since the October 9th peak, the S&P 500 has dropped 8.25%, while the Actual Cash Account has only given up 4.14%. The Aggressive Account is more in line with the S&P 500.

that being in reference to its new buy signal on 10/9/07. The return since 10/9/07 on the Aggressive Account is -7.44% through last night's close 11/20/07.

The newsletter concluded with, "Putting it all together, we remain in the bullish camp and continue to advise a fully invested position."

In tonight's Hotline message Sullivan wrote,

The Dow dropped 211 points -1.62% and in the process finished narrowly below its closing lows of Aug.16th while the S&P 500 lost 22.93 -1.59% finishing slightly above its Aug 16th closing lows.

The market has worked its way into one of the heaviest oversold condition since the bull market began back on Oct. 2002 with our overbought/oversold indicator closing out today's session at -5.20.

There is no question that a snapback rally is way overdue, and we would be surprised if it did not take hold within the next two trading sessions. However if the market continues to slide we will be forced to take defensive action.

As of today, 11/21/07 the DJI is only off 10.03% from its high, the SPX off 10.02%, the Nasdaq off 10.11%, the NDX off 10.4%, the RUT off 13.56% and the VGY off 15.69%. Only the last two indices start to be impressive with regard to losses.

I use online.wsj.com to continually look at a lot of data. I keep a tracking of the online.wsj's international markets.

Considering Australia, China, Hong Kong, India, Nikkei, Malaysia, Philippines, S. Korea, Singapore, Taiwan, and Thailand from recent highs, all together this group is down an average of 12.11%. The most down is the Nikkei down 18.7% and the least down is Australia -6.92%. These are approximately correct calculations.

The major European averages are down ~12%. Brazil is off 7.74%

So despite whatever, if any, pain anyone may be feeling these markets so far have made what many would consider just "normal" pullbacks, that are "abnormal" because for a change they approximate 10% losses.

[Jim Nickerson]

Re: Bullish Information

fj,

Below is another bull, and Sullivan has been correct in having stuck with this market since April 2003, based he says on his "proprietary indicators." Only Sullivan and someone omniscient might know what those are.



I believe I recounted Sullivan's new buy signal on 10/8/07 back a few posts.

One thing my data show is that there now have been three 90% down days in NYSE volume and points according to the method of Paul Desmond.

Richard Russell pointed out tonight that there is "half of a Dow Theory Sell signal" with the DJT having closed today below 4672.37, BUT he also notes that such a close is meaningless unless it is confirmed by the DJI closing below it August lows of 12845.78.

The three 90% down days on 10/19, 11/1/07, and today are a rather decent warning that more downward action may be in the offing.

The biggest thing that would make me reverse my bearish positions is two 90% up days in something less than a month, and perhaps some other indicators which aren't secrets, but which I don't want to think about just now.

Since the three 90% down days, there was a 90% up day on Tuesday 11/13/07.

The Chartist to which I occasionally refer wrote yesterday:

We remain bullish and recommend holding on to all current positions. If you are underinvested we recommend purchasing the stocks in the Actual Cash Account or Dans Aggressive account. We would recommend investing equal amounts of money into each stock.

I mentioned above when Sullivan went long on 10/9/07 in two actually funded portfolios.

I've attempted to track the stocks in those two accounts.

The Actual Cash Account through last night was down ~2.10% or 15.3K, and Dan's Agressive Account was down 7.04% or ~442K. These numbers are not exactly what The Chartist's numbers are, but rather my best effort to track the postions and should be close.

I think last night's recommendation by the Chartist was the second since the original buy signal on 10/9 for anyone who felt under-invested to use the pullback to establish positions. So far, the market's actions have not deterred Sullivan's bullishness.

Personally, I am mostly short, but I am not wedded to that posture.