Bearish Information

[Jim Nickerson]

Re: Bearish Information - PRPFX rising wedge update

We already discussed this fund a while ago: http://www.itulip.com/forums/showpos...3&postcount=17 , remember?

My perspective is, this fund is both safer (long-term) and more profitable, than $US cash. Even more so in the current situation, if you use some DD (like buying on dips).

Also, important point is, it uses some tax planning to minimize taxable gains.

(see http://permanentportfoliofunds.com/p...ent_123105.pdf page 2).

m.

Thanks, I totally forgot.

[medved]

Re: Bearish Information - PRPFX rising wedge update

This strikes me as an interesting mutual fund. It has done well certainly for the last 5 years, and from the charts I can find, held up reasonably well from 2K top, and actually started up in early 2002 and never looked back. As of May 31, 07 has ~25% cash.

Does anyone including medved have any insights they wish to share?

We already discussed this fund a while ago: http://www.itulip.com/forums/showpos...3&postcount=17 , remember?

My perspective is, this fund is both safer (long-term) and more profitable, than $US cash. Even more so in the current situation, if you use some DD (like buying on dips).

Also, important point is, it uses some tax planning to minimize taxable gains.

(see http://permanentportfoliofunds.com/p...ent_123105.pdf page 2).

m.

[Jim Nickerson]

Re: Bearish Information - PRPFX rising wedge update

On the same subject - the rising wedge for PRPFX.

Adjusted pattern starts at the beginning of this year and ends by mid-summer 2008. The drop should happen before that. This fund never crossed the DMA200 for the last 5 years. So, if it does, it is worth buying.

m.

Permanent Portfolio
Investment Objective. The Permanent Portfolio seeks to preserve and increase the purchasing power value of its shares over the long term.
Principal Investment Strategies. The Permanent Portfolio invests a fixed target percentage of its net assets in each of the following investment categories:

• gold;
• silver;
• Swiss franc assets such as Swiss franc denominated deposits and bonds of the federal government of Switzerland;
• stocks of U.S. and foreign real estate and natural resource companies;
• aggressive growth stocks; and
• dollar assets such as U.S. Treasury securities and short-term corporate bonds.

Investments may include gold and silver bullion and bullion-type coins; Swiss franc denominated deposits and bonds of the federal government of Switzerland of any maturity; stocks of U.S. and foreign companies whose assets consist primarily of real estate and natural resources such as oil and minerals; stock warrants and stocks of U.S. companies that are expected to have a higher price volatility than the stock market as a whole; and U.S. Treasury securities and short-term corporate bonds rated “A” or higher by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“Standard & Poor’s”), and having a remaining maturity of twenty-four months or less. The Permanent Portfolio may invest in shares of companies of any market capitalization, including small- or mid-capitalization companies; however, at least 60% of its investment in aggressive growth stocks will ordinarily be in securities listed on the New York Stock Exchange. The Permanent Portfolio may own investments issued by foreign banks and governments and may own stock in foreign companies or investments held outside the United States, including emerging markets.

This strikes me as an interesting mutual fund. It has done well certainly for the last 5 years, and from the charts I can find, held up reasonably well from 2K top, and actually started up in early 2002 and never looked back. As of May 31, 07 has ~25% cash.

Does anyone including medved have any insights they wish to share?

[medved]

Re: Bearish Information - PRPFX rising wedge update

On the same subject - the rising wedge for PRPFX.

Adjusted pattern starts at the beginning of this year and ends by mid-summer 2008. The drop should happen before that. This fund never crossed the DMA200 for the last 5 years. So, if it does, it is worth buying.

m.

[Jim Nickerson]

Re: Bearish Information Re. Buying Climax.

http://www.marketwatch.com/news/stor...siteid=yahoomy 7/24/0007

MARK HULBERT
The stock market's buying climax
Commentary: There's mounting evidence that it's losing steam

This was enough to satisfy the definition of what Michael Burke and John Gray of Investors Intelligence call a "buying climax." This happens whenever a security makes a new 12-month high and then closes the week with a loss. Buying climaxes "are a sign that stocks are moving from strong hands to weak ones," the editors argue.

Not only did the overall market experience a buying climax last week, but lots of individual stocks did so as well. According to Investors Intelligence, in fact, no fewer than 362 issues last week had a buying climax.

What does this mean for the overall market? Burke and Gray report that they have found, in their work, that 80% of the time following a buying climax, prices in four months' time are lower.

[Jim Nickerson]

Re: Bearish Information Sy Harding, a decent contributor.

BEING STREET SMART

By Sy Harding
RED FLAGS ARE STILL FLYING IN DEBTLAND! July 20, 2007.
http://www.decisionpoint.com/TAC/HARDING.html

Harding posts an article on decisonpoint.com every Friday. It generally is concise and brings forth some decent points from Harding. It is worth putting it on one's calendar to check each Friday.

[Jim Nickerson]

Re: Bearish Information Re. Gold Shakey.

http://www.decisionpoint.com/ChartSp...tSpotMenu.html

On Thursday our trend model for gold switched to a buy, which means our medium-term posture is bullish on gold; however, when I looked at a very long-term chart of gold I saw something that gave me a slightly queasy feeling. What I saw was that gold is forming a pattern now that has very similar dynamics to the one that preceded gold's crash in the early 1980s. Note the huge parabolic blowoff top in 1980, followed by a failed rally top, followed by the crash.

While the current pattern is not as exaggerated as the earlier one, the dynamics are the same -- a blowoff top, followed by a rally that has so far stalled below the previous top. To be objective, we must acknowledge that the rising trend line is still intact, but the similarity between the two patterns should keep us on edge until the current pattern is resolved.

[Jim Nickerson]

Re: Bearish Information RE. Ehen not to buy.

http://hussmanfunds.com/wmc/wmc070716.htm

July 16, 2007
A Who's Who of Awful Times to Invest

John P. Hussman, Ph.D.
All rights reserved and actively enforced.
Reprint Policy

December 1961 (followed by 28% market loss over 6 months)

January 1973 (followed by a 48% collapse over the following 20 months)

August 1987 (followed by a 34% plunge over the following 3 months)

July 1998 (followed abruptly by an 18% loss over the following 3 months)

July 1999 (followed by a 12% loss over the following 3 months)

December 1999 (followed by a 9% loss over the following 2 months)

March 2000 (followed by a 49% collapse in the S&P over the following 30 months)

The defining characteristics of these instances were:

1) price/peak-earnings multiple above 18

2) 4-year high in the S&P 500 index (on a weekly closing basis)

3) S&P 500 8% or more above its 52-week moving average (exponential)

4) rising Treasury and corporate bond yields

Depending on how we define the interest rate trends, we can include two additional historical instances of these conditions: October 1963 and May 1996, both closely followed by 7-10% corrections.

One more instance completes the list: July 2007.

[TraderJoe]

Re: Bearish Information

Not how I was taught the game is played, I would be very worried about these puts covering and shooting the market higher, before I'd consider this to be a bearish sign.

The increase in so-called put options coincides with analysts' outlook for the worst corporate earnings since 2002.

To me the above has upside surprise written all over it, so far the press is rolling out the earnings in a very favorable light, perception is everything not the number itself. Low expections equals upside surprise not downward surprise, high expectations leads to downward surprise. Upside surprise, lots of shorts and puts in the market, tells me the market can go a lot higher before it changes direction.

Being somewhat of a contrarian myself, I can "half-agree" with you.....but if you read the article you will find they aren't necessarily indicated the 2-1 put buying comes from so called dumb money, but professional investors (including hedge funds who are shorting futures, not buying puts)

[Tet]

Re: Bearish Information

Buying Puts--->
Article appeared July 16th 2007


LINK TO ARTICLE (on bloomberg)

Not how I was taught the game is played, I would be very worried about these puts covering and shooting the market higher, before I'd consider this to be a bearish sign.

The increase in so-called put options coincides with analysts' outlook for the worst corporate earnings since 2002.

To me the above has upside surprise written all over it, so far the press is rolling out the earnings in a very favorable light, perception is everything not the number itself. Low expections equals upside surprise not downward surprise, high expectations leads to downward surprise. Upside surprise, lots of shorts and puts in the market, tells me the market can go a lot higher before it changes direction.

[TraderJoe]

Re: Bearish Information

Buying Puts--->
Article appeared July 16th 2007

TraderDaily.com
Options Check

Bets in the options market are pointing to a 10% drop on the make in the U.S. stock market. Forewarned is forearmed and all that.

---

Bets in the options market against the Standard & Poor's 500 Index have exceeded wagers it will rise by a 2-to-1 margin for a month, the longest since Bloomberg began compiling the data in 1995.
That's seen as a warning sign the market is due for a decline of 5 to 10 percent after the S&P 500 rose to two records last week, say managers of almost $1 trillion at Morgan Stanley Global Wealth Management, National City Private Client Group and Russell Investment Group. The Leuthold Group, whose flagship fund has beaten 99 percent of similar funds over the last five years, expects the S&P 500 to slide as much as 19 percent by the end of the year.
The options market is ``a bell ringer,'' said David Darst, who oversees $728 billion as chief investment strategist at New York-based Morgan Stanley's private banking unit. ``On a short- term basis, the market's ahead of itself and could have a pullback.'' Darst, who cashed in some stocks in the past 12 months, said the market could drop as much as 10 percent.
The increase in so-called put options coincides with analysts' outlook for the worst corporate earnings since 2002. Retail sales slid in June by the most in almost two years, a signal that near-record gasoline prices and falling home values are taking a bigger toll on consumers than economists had forecast.
(Continue reading this story on Bloomberg)

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Copyright © 2007 Doubledown Media, LLC. All rights reserved. Trader Monthly, 240 West 35th Street, 11th Floor, New York, NY 10001 Your use of this site is governed by our Terms of Service (http://www.traderdaily.com/members/terms.html).

LINK TO ARTICLE (on bloomberg)

[Jim Nickerson]

Re: Bearish Information Re. Hussman on risks.

http://hussmanfunds.com/wmc/wmc070709.htm 7/9/07

• With stock valuations rich, interest rates still relatively low but clearly rising, just 18% of investment advisors bearish, and short-term trends overbought, my hope is that investors do not allow the excitement (or frustration) of a market near new highs to obscure the very real danger here for long-term investors. The best performing investment models I've developed over the past 25 years are defensive. Those with a record of strong full-cycle returns at limited risk consistently reject market exposure in the current environment. Generally speaking, if a model accepts large risks here, it accepts large losses historically.

• We do not need to be correct about these risks immediately in order to substantially benefit from avoiding them.


As usual, “on average” is the operative phrase. To say that stocks have substantial risk but have performed worse than Treasury bills, on average, means by definition that there is a spread of possible returns, some positive, some quite negative, but on average below Treasury bills. This of course allows for the possibility that returns in the next particular instance may be on the positive side of the average, as well as the possibility that the next particular instance may be on the negative side. In either case, my hope is that the historical analysis I've provided in recent weeks helps to underscore that the market is presently in a set of conditions where avoiding risk would have ultimately been beneficial to long-term returns. When the average expected return on stocks is below the Treasury bill yield, there is simply no reason to accept risk.

[Jim Nickerson]

Re: Bearish Information Re. Parallels to 1987

http://www.msnbc.msn.com/id/19650867/site/newsweek/


Barton Biggs considers how now is eerily similar to 1987.

Beginning in mid-May 1987, the U.S. and most other world stock markets took off, with the Dow Jones industrial average climbing from just over 2200 in late May to well over 2700 (a gain of more than 20 percent) by August. Big-capitalization blue-chip stocks led this surge. This pattern is very similar to what is currently happening. Each scare is followed by a surge to new highs. Gradually the bearishness is beaten out of the sellers. Big-capitalization stocks are on the rise. We could be headed for another blowoff and then a bust. My guess, though, is that in terms of time, we are in the spring of 1987. There could be a spike ahead. But then watch out.

I believe Biggs is retired now, but he used to be something like global strategist for Morgan Stanley. Personally the things I read that were attributed to him generally made good sense.

[chris.steven1975]

500 Trading System

Take a look at the track record page of
www.consensus-trading.com That's very good trading.

[Jim Nickerson]

Re: Bearish Information Re. Gold

MARK HULBERT 7/6/07
Discouragement in the pits
Commentary: Contrarian analysis more bullish about gold

http://www.marketwatch.com/news/stor...siteid=yahoomy

Consider: The current HGNSI level is still markedly above its record low reading, which is minus 31.3%. It's not even as low as it was on five other occasions over the last 12 months.

So we're not seeing anything like excessive levels of bearishness.
The bottom line? Prospects for a meaningful gold rally are far better now than they were a month ago. But they are not good enough to justify throwing caution to the wind.

It will be crucial to see how the gold timers react after gold rallies, whenever that begins to happen in earnest. If gold timers on balance remain cautious and skeptical, then the rally is likely to continue.
But if the gold timers rush to jump on the bullish bandwagon, as they did in the days preceding my June 6 column, then contrarian analysis will have to conclude that the rally is yet another in a frustrating series of false starts.

Depending upon one's personal opinion, this might just as well be in the Bullish thread, but the Bearish thread gets more hits, so here it is.