Bearish Information

[Jim Nickerson]

Re: Bearish Information

BEING STREET SMART
By Sy Harding
NO SAFE HAVENS! June 8, 2007. http://www.decisionpoint.com/TAC/HARDING.html

My own expectation is that there is more downside to go. My argument is based on two key points. The first is based on technical analysis. Having gone for one of the longest periods ever without even a normal 10% correction, the major market indexes are overbought above their 200-day moving averages to a degree that has always resulted in a correction at least back down to test the support at the moving average. The Dow's 200-day moving average is at 12,385. That's about 1,000 points lower, and would be a 10% correction from the Dow's recent high.

However, it is not difficult to come up with a lower projection. The market has only become this over-extended above its 200-day m.a. seven times since the 1990s bull market top in 2000. Each time, the correction that followed did not end until the Dow was at least equally oversold beneath the moving average. Were that to happen, the decline would be to 11,100. That would be a correction of 18%. As severe as that sounds, it would not be a bear market, which is defined as a decline of 20% or more.

My other reason for expecting the downside has more to go than the decline seen this week, has to do with the market's seasonality.
The market has a very long history of making most of its gains each year in its 'favorable' season of October to May, and suffering most of its serious declines in its 'unfavorable' season. The favorable season has ended.

It doesn't happen that the market has a serious correction in its unfavorable season every year, but it does happen so consistently that over the long-term it pays well to factor the pattern into investing strategies.

Another seasonal consideration is that when the market does have problems in its unfavorable season, the ultimate low is most frequently not seen until September or October.

[Jim Nickerson]

Re: Bearish Information

Bill Gross Bearish on Bonds



Bearish for stocks

Here's the link referenced to Ablan writing on Gross in above note. http://www.reuters.com/article/ousiv...49402420070608

[TraderJoe]

Re: Bearish Information

Bill Gross Bearish on Bonds

By Jennifer Ablan
NEW YORK, June 7 (Reuters) - Long-time bond bull Bill Gross, just a year after declaring the end of the bear market for U.S. Treasuries, on Thursday conceded the snappy pace of global economic growth will likely keep bonds on their heels.
Furthermore, Gross forecast that benchmark Treasury yields will range higher than previously thought, prompting him to acknowledge he is now a "bear market manager" after a quarter of a century as the global bond market's most powerful bull.

Bearish for stocks

[Jim Nickerson]

Re: Bearish Information Re: Gold

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

Mark Hulbert 6/5/07

"Gold timing newsletters have jumped on the bullish bandwagon with unprecedented speed over the last two weeks.

And that, from a contrarian point of view, is not a good sign."

[Jim Nickerson]

Re: Bearish Information. Now and 1987

http://www.financialsense.com/fsu/ed...2007/0525.html

Peter Schiff IS GLOBAL STOCK MARKET EXUBERANCE RATIONAL? 5/25/07

The persistent weakness in bonds and corresponding recent rise in interest rates further supports my point. Investors are getting out of cash and bonds (which merely represent future payments of cash) in favor of tangible assets such as equities. The fact that rising interest rates are ultimately negative for stocks is conveniently ignored, as the race to get out of cash trumps all else. In the U.S., the yield on the 10-year Treasury has backed up 25 basis points in the last three weeks. If yields rise above 5% on this move, which looks very likely, momentum should take yields to 5.25% before the end of June. There will be some resistance there, but look for 10-year yields to breach 5.5% before the end of the summer. Once that level is taken out, I expect a move above 6% to happen very quickly, perhaps even before the year ends. Is it just me, or does this seem eerily familiar to the summer of 1987?

He ends his article suggesting this scenario will lead to a stampede into gold.

[Jim Nickerson]

Re: Bearish Information. Can Market Top Occur Here

CAN A MAJOR STOCK MARKET TOP OCCUR HERE? by Robert McHugh, Ph.D.
May 26, 2007

http://www.financialsense.com/fsu/ed...2007/0526.html

In 1999, prices staged a dramatic 2,750 point rally over a one-year period, that had folks talking about Dow 35,000, with no end in sight for the glorious bull market. To be bearish was ridiculous. However, the unthinkable happened. In January 2000, a major Bear market started, which lasted through March 2003. Just prior to this historic top on January 14th, 2000, the DJIA rose 2,750 points over a 12 month period, with a significant correction about two thirds the time and price move through this extraordinary rally. Following that correction, the Dow Industrials rose another 1,750 points in a parabolic ascension over three months.

In 2006/2007, since July 2006, we have seen a 2,850 point rally over a ten month period, which has folks talking about Dow 35,000, with no end in sight for this glorious bull market. To be bearish seems ridiculous. About two-thirds the way through this time and price move, a significant correction occurred (late February 2007), which has since been followed by another 1,689 points in a parabolic ascension over three months. The point is, there is historic precedent for a major bear market to start immediately after such a price pattern. Our Demand Power and Supply Pressure indicators will tell us when and if such a bear market decline occurs.
The answer is yes.

[Jim Nickerson]

Re: Bearish Information Re. Equity Market

http://hussmanfunds.com/wmc/wmc070521.htm

John Hussman 5/21/07

As of last week, the Market Climate for stocks was characterized by unfavorable valuations, reasonably positive market action, and overall, a combination of overvalued, overbought and overbullish conditions that has historically been associated with stock market returns below Treasury bill yields, on average.

Our discipline is to align the portfolio at every point in time with the prevailing Market Climate, rather than trying to forecast the market, “catch” short-term advances and declines, or “call” market turns. In practice, that discipline can be frustrating at times, because specific short-term movements during a particular set of market conditions can look very different from what occurs “on average.” At present, we're observing incremental but persistent advances to new highs, despite an unusually extreme combination of overvalued, overbought, overbullish conditions that has historically left the market vulnerable to deep and abrupt declines.

Presently, the market's returns look very different from what prevailing conditions have produced on average. Then again, a deep and abrupt market decline would suddenly make things look very much like the average (or even produce market performance worse than what we've observed on average). For our purposes, what is important here is that prevailing conditions have generally produced total returns on the S&P 500 that have been below Treasury yields. In the instances most closely resembling current conditions, the losses have often been unusually abrupt. Valuations do not provide sufficient “investment merit” to accept market risk, and despite reasonably good technical “internals” such as market breadth, the present overbought and overbullish conditions remove the “speculative merit” that good market action might otherwise provide.

Maund's chart is actually interesting

Here is another possible pattern the silver has been forming: Continuation Wedge (Bearish) (www.trending123.com)

Implication Description Trading Considerations Criteria that Supports Criteria that Refutes Underlying Behavior

Rising Wedge (Bearish) Classic Pattern
Implication

A Continuation Wedge (Bearish) is considered a bearish signal, indicating that the current downtrend may continue.

top

Description

A Continuation Wedge (Bearish) consists of two converging trend lines. The trend lines are slanted upward. Unlike the Triangles where the apex is pointed to the right, the apex of this pattern is slanted upwards at an angle. This is because prices edge steadily higher in a converging pattern i.e. there are higher highs and higher lows. A bearish signal occurs when prices break below the lower trendline.
Over the weeks or months that this pattern forms the trend appears upwards but the long-term range is still downward.

Volume should diminish as the pattern forms.

top

Trading Considerations

Pattern Duration
Consider the duration of the pattern and its relationship to your trading time horizons. The duration of the pattern is considered to be an indicator of the duration of the influence of this pattern. The longer the pattern the longer it will take for the price to move to the Target. The shorter the pattern the sooner the price move. If you are considering a short-term trading opportunity, look for a pattern with a short duration. If you are considering a longer-term trading opportunity, look for a pattern with a longer duration.

Target Price
The target price provides an important indication about the potential price move that this pattern indicates. Consider whether the target price for this pattern is sufficient to provide adequate returns after your costs (such as commissions) have been taken into account. A good rule of thumb is that the target price must indicate a potential return of greater than 5% before a pattern should be considered useful. However you must consider the current price and the volume of shares you intend to trade. Also, check that the target price has not already been achieved.

top

Criteria that Supports

Volume
Volume should diminish as the pattern forms.

top

Criteria that Refutes

Moving Average
The penetration of the 200-day Moving Average by the price is a false bull signal.

Rising or Stable Volume
Volume should diminish as the pattern forms. If volume remains the same or increases this signal is less reliable.

top

Underlying Behavior
In this pattern prices edge steadily higher in a converging pattern i.e. there are higher highs and higher lows indicating that bulls are winning over bears. However, at the breakout point the bears emerge the victors and the price descends.

[flow5]

Re: Bearish Information

I don't believe in charts, just fundamentals. Speculation is that China is going to revalue the Yuan. It's not like they have a choice. Selling dollars will impact all of our trading partners exchange values. Besides, China's sterilzation practices are limited.

"Free trade" is Bush's naive theory. It should be obvious that the U.S. will never stop running a current account deficit until they are forced to, by a "command" economy. In the interim we have a chronically depreciating dollar. Ando our trade deficits are inexorably forcing the dollar down in value and no consortium of central bankers, treasury secretaries, et al. can stop the process.

These events might not happend simultaneously, but with the U.S. economy slowing, the Fed will have to reverse their tight money policy. "Real money", the rate of change in the money supply in excess of the rate of change in inflation, will force the exchange value of the dollar lower -- and propel gold higher.

[Jim Nickerson]

Re: Bearish Information Re. Silver

http://www.safehaven.com/article-7555.htm


May 14, 2007
Silver Market Update
by Clive Maund

The silver chart should strike fear into the hearts of silver investors. There is no Ascending Triangle on the chart (from last May's highs), as some claim, instead the pattern is looking more and more like a large Double Top, with the second peak taking the form of a Head-and-Shoulders top. Before anyone graciously goes to the trouble of enlightening the writer about the wonderful fundamentals for silver, let me say this - don't bother, I know about them - and so does the market, that's the trouble, they may already be fully discounted by the market.

[Jim Nickerson]

Re: Bearish Information Re. Gold

http://www.safehaven.com/article-7556.htm

May 14, 2007
Gold Market Update
by Clive Maund

In the last update, published on or after 16th April, we expected gold to drop back from the $690 area due to the bearish COT structure, and that is what has happened. The latest COTs are not good news for bulls, with the Commercial shorts still at a high level - high enough to preclude a significant advance in the near future, and to maintain the risk of a substantial decline
...

The COT chart shows the extent of the Commercial short position and the Large Spec long position that are thought to be at a level that will prohibit any significant advance in the near future while at the same time making downside risk considerable. Traders should orient themselves accordingly. Enrico Orlandi, in an article published recently on the 3rd May, made the following observation about the Commercials: ?What I'm trying to say here is that people buy gold for the wrong reasons. If your reasoning is wrong, then it's almost a sure bet your timing will be wrong. Enter the Commercials: very large, sophisticated, smart, unemotional traders who make their living off of people with faulty reasoning. And they've got it down to a science. They suck you in, clean you out, and send you home packing and a lot poorer for the experience.

[Jim Nickerson]

Re: Bearish Information Re. Gold

This is just one guy's trading recommendation.

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

OTHER MARKETS.

We are on a buy for bonds as of April 16.

We are moving to a buy for the dollar and a sell for the Euro as of today May 10.

We are moving back to a sell for gold as of today May 10.

We are on a sell signal for crude as of April 19.

[Jim Nickerson]

Re: Bearish Information

http://www.safehaven.com/article-7413.htm

April 23, 2007
Resource Stocks
by Clive Maund

We have already observed the decidedly bearish COT chart for crude oil in the latest Oil Market update published yesterday, and as Precious Metals and Oil have a marked tendency to move in tandem, this is not a good omen. Bearing this in mind, we will now look at the COT chart for gold. On this chart we can see that the Large Spec long positions and Commercials' short positions are at their highest level since July last year, with the exception of a point late in February, which preceded a brief but quite severe plunge by gold and silver late in February and early in March. The writer does not know of an instance where such a setup was not followed by a significant reversal. It is viewed as VERY BEARISH, and the most that can be hoped for is that gold and silver edge still higher over the short-term towards last year's peaks, or even stage false breakouts above them, before the trap closes. The COT chart for silver is similar although it is not as bearish as the gold COT.

[Jim Nickerson]

Re: Bearish Information Re. Recession

http://www.financialsense.com/editor...2007/0422.html

LEI & KRWI - IT'S DIFFERENT THIS TIME?
by Paul L. Kasriel 4/22/07

I am not aware that any recession has been predicted by a consensus of economic prognosticators. Two reliable recession indicators are now flashing a warning signal and private domestic demand is showing weakness. Maybe it’s different this time? Perhaps it isn’t. Only the National Bureau of Economic Research will know for sure.

[Jim Nickerson]

Re: Bearish Information RE. GDX XAU

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

4/4/07

Gold Market:
Below is Market Vectors Gold Miners (GDX) in the Ord-volume format. It appears a Double Head and shoulders Top is forming on GDX. A gap formed on GDX at the 41.25 range and GDX tested that level today on lighter Volume. From the 2/23 high down to the 3/5 low a “Sign of Weakness” appeared that had Ord-Volume of 1.10 million average daily volume which translate into significant downside energy. From the 3/5 low to the current high, Ord-Volume came in at .71m and is 39% weaker then the previous down leg and shows there is more energy pushing down then up and a bearish sign. Also the current rally is running into the gap level near 41.25 on lighter volume and is a resistance level. The current up leg appears to be completing the “Right Shoulder” of a “Double Head and Shoulders” top. So far the S&P and Nasdaq as well as the XAU and GDX appear to be trading together. We are projecting tops in the S&P and Nasdaq possibly forming tomorrow. If the XAU and GDX continue to parallel the S&P and Nasdaq, then a high may be seen in these gold indexes tomorrow. Our target for the low in GDX is 32 and for the XAU is near the 115 range. The next major impulse wave up should start near the 115 range on the XAU. We are neutral on the XAU for now.”

Chart referenced is not shown.