BrucePile

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  • A Bull Is Born, 2009
    The above chart shows that the market has dropped the same amount as in the previous recessions - one argument for saying it's about at its end. But the chart also shows that it got there much faster than in the previous recessions and that it is, in fact, tracking along the path of the Depression - one argument for saying this isn't your ordinary recession.
    Jan 04 22:52 pm |Rating: +2 0 |Link to Comment |View article
  • Margin Debt Down 37.6%; Is The End of Selling Near?
    Down 37%? Well, that's nice. But you have to look at that in context. You can do this if you study a historical debt chart comparing the stock market and margin debt and see how the wind-up and wind-down cycles play out. I drew such a chart two years ago, updated it, and borrowed another. They are posted at The Oil Drum. You can view them by putting these addresses in your URL

    www.theoildrum.com/nod...
    www.theoildrum.com/nod...

    As these charts plainly show, the up and down trips for debt are far more than 37%. The 2002 debt decline was about 55% all told and it took over two years.
    That means at 37% just since October, we are only about half delevered with maybe the sharpest declines ahead a year or more out. The mid 2002 selling was more intense than the earlier phases.

    But here's the thing about comparing these two market debt cycles. The 2002 event was just market debt playing out a cycle. The rest of Debt World was doing just fine and dandy. In fact, credit was free and easy and the housing boom was just getting started. Now we have a market debt cycle unwind, but it is in conjunction with all the rest of Debt World in a gargantuan unwind as well. So you might suspect the down cycle might be a little more extensive this time around, being reinforced with every other kind of debt. But even if it follows the previous, less toxic cycle, we still have a ways to go on the downside of market debt and the market itself as the charts clearly show.

    This would agree with the Bernstein survey of fund managers that found that most think we are only about half way through the delevering process (Barron's 12/15).
    Jan 04 18:23 pm |Rating: +4 0 |Link to Comment |View article
  • Pamela Aden: Ready for a Rebound?
    Many gold stocks, even though they've come off their Nov. lows by a lot, are behaving like a break-out group with a wide selection smashed down near levels they were at clear back at the start of the current gold bull market ('01,'02) only with much better operating cash-flow levels and sharply growing revenue. They are typically a group that is not good cash-flow-wise, but many of them are looking like value selections now.

    NXG, Northgate Minerals, is a case in point with a price/sales at 0.5 and a preposterous price/cash-flow at 2.6! Yet the market has priced this one like a cashless piece of rubbish at $0.90. This odd pricing may be due to their some $72 million worth of problem auction debt with liquidity issues. Does anyone have any insight on why Northgate has been so apparently mispriced by the market?
    Jan 04 08:18 am |Rating: 0 0 |Link to Comment |View article
  • First Call of a Double-Dip Recession: Setting Up a Market Bottom?
    Conventional recession dynamics are not what is controlling the markets now. It is the global debt bubble unraveling dynamics that is in the drivers seat. If you want to analyze things, you really have to look at this and not past recessions. It is a debt thing. Any recessions are just collateral damage.
    Jan 03 19:06 pm |Rating: +1 0 |Link to Comment |View article
  • Diverging Indicators: Treat Them As Suggestions, Not Rules
    The McClellan Oscillator does tend to dip below 0 before the worst parts of the sell-offs. But an extreme high very typically comes before major moves down. If you look at the last year, you had highs (over 40) at the following points:

    Date Oscillator Market Action That Followed
    Feb. 1 70 9% decline over next 5 weeks
    May 15 40 15% decline over next 2 months
    Aug 30 60 31% decline over next 5 weeks
    Nov 1 100 25% decline over next 3 weeks
    Jan 2 108 ?

    I guess the moral of the story is a high reading means it's safe to be in the water, but the day it crosses 0, head for the beach.
    Jan 02 22:38 pm |Rating: 0 0 |Link to Comment |View article
  • 2009: Expecting a Massive Rally
    I wonder how there can be so much money on the sidelines when the individual investor is switching his shopping to Walmart and hoarding every dime, and the fund managers have barely edged down in their bullish sentiment from 76% in December 2007 on 2008 outlook all the way to 72% now on 2009 (Russell Money Manager Survey) and the hedge funds are still looking to delever some more (Barron's 12/15). Maybe the Fed will step in and buy.
    Jan 01 23:42 pm |Rating: +1 0 |Link to Comment |View article
  • Looking Toward 2009
    It is still there, and it is the only thing on the outside of the credit house of cards.
    Jan 01 21:41 pm |Rating: 0 0 |Link to Comment |View article
  • Versar's Early 'January Effect'
    This stock is cheap enough at a price/sales of 0.3 and a price/cash flow of 5.4, and it broke out of a nice, long base in mid 2007, ran to 10, then got crushed by the small cap break-down and then the overall fiasco. So now it acts like it wants to complete what got interrupted at 10. Since then, Obama has made the government supported infrastructure that Versar does one of the better areas. I've been watching this stock off and on for years because it has a good base. Now may be the time to buy it, but I'm afraid we have more big market sell-offs ahead and it hasn't shown much immunity to them.
    Jan 01 20:48 pm |Rating: 0 0 |Link to Comment |View article
  • The Pitfalls of Using Inverse ETFs
    Why do they call them funds? If they only track the underlying index for 1 day and are worthless for anything but a day trader, why on earth are they presented as an investment or fund hedging tool? What an idiotic outrage.
    Dec 31 22:29 pm |Rating: 0 -2 |Link to Comment |View article
  • Market Signal: Proceed with Caution
    In addition to the good and bad signs for the market I mentioned upstream, you have a pretty reliable sentiment indicator giving a pretty clear signal right now. This is the put/call options ratio charted as $CPC. If you look at SharpCharts' version of this on a 6 month chart, you can draw a circle around the extreme moves down (bullish sentiment) and you have these dates circled:

    1. August 2 and 27
    2. September 21 and 25
    3. October 20 and 29
    4. November 24 and December 22

    Then looking at the S&P 500 chart, you see that each of these pairs was right in front of a market dive, ideal short points. This would suggest that a dive is imminent. It also agrees with the prevalent sentiment you hear about the direction being up to start the new year and the fact that prevalent sentiment is usually wrong.

    But sentiment is actually right now and then, and it agrees with some technicals, so we are in a dry-powder zone.
    Dec 31 11:30 am |Rating: 0 0 |Link to Comment |View article
  • Gold Poised to Move Higher
    I don't know if you should say that the commodity bull market is over or if you should say it has been superseded by a global debt/monetary thing that we've never had in any past cycles. I don't think you can expect gold and silver to behave relative to the other non-monetary commodities the way they have in the past. You have a totally new debt and currency implosion now that makes the past economic cycles of limited use in modeling what any commodity will do. Gold and silver will probably be controlled by what this debt thing is doing to the world's paper wealth while the practical use commodities will be controlled by the economy.
    Dec 30 20:12 pm |Rating: 0 0 |Link to Comment |View article
  • Market Signal: Proceed with Caution
    The market seems to be sending out an inscrutable set of conflicting signals over the last month:

    1. The quieting of the price action after a severe beating is a good sign

    2. The formation of a falling channel consolidation after a sharp drop is
    a bad sign. These typically break in the direction from whence the initial
    move came (down).

    3. The fact that the market has stopped diving on really bad news is a good
    sign.

    4. The pattern of the 3 rallies within the falling channel formed since late
    September hasn't made the change needed to break the channel to the
    upside. Each rally has been with withering buy volume, and each rally
    has been less sharp leaning more each time to the horizontal - a really
    bad sign.

    5. The Accumulation/Distribut... strength of this latest rally is notably better
    than the previous attempts at the 50 dma - a very good sign.

    6. The fact that most expert opinions you hear are bullish on 2009 and the
    Russell Money Manager Survey has fund managers at 72% positive on
    the new year is a bad sign. This does not indicate a despairing bottom.
    Back in December 2007, this survey stood at 76% bullish and only 15%
    bearish on 2008. This is a very bad sign.

    7. Few seem to fully appreciate the destabilizing debt unwind. Fund
    delevering is just a small part of this. In the 2000-2002 bear market, it
    provided most of the dynamite (just a mild recession and the rest of Debt
    World doing just fine, inviting the start of the housing boom, in fact). But
    now, even more fund debt is being reinforced with all the rest of Debt
    World unwinding in unison. A Bernstein Co. survey of funds concluded
    that fund deleveraging is "only half complete" Barron's 12/15 and they
    estimate that about $40 billion was yanked in the October move and that
    another $200 billion will be unwound as of a November 21 report to clients.
    The $200 billion would be another 3 or 4 Octobers. This is a very bad sign.

    8. The central banks are providing unprecedented infusions. That's good.

    So which way is going to be the next big move? I absolutely, positively can say without equivocation that I do not know. You can, however, divide the pros
    and cons into two camps:

    1. Debt money flow and technicals in the one camp, and

    2. Opinion/government meddling in the other.

    The technicals that aren't bearish are sentiment related (A/D money flow, stable price action). So you have something of a standoff between the debt money flow and geometry signs pointing to lower bottoms, and the opinion and proactive government positive vibes. I wouldn't bet too heavily on either side right now.
    Dec 30 18:31 pm |Rating: +9 0 |Link to Comment |View article
  • Five Sophisticated Gold and Silver Investment Strategies for 2009
    While it's true that many gold stocks are up 50% or more just in a month or two, making you feel like an idiot to buy anytime soon, you must consider that before this they were DOWN maybe 80% in a month or two. The bigger picture is that they are probably putting in a gyrating bottoming phase. You want to wait until they have tired of throwing this hissy fit before accumulating them, which may not be quite yet (Q1 delevering could knock them down again). But the gold stocks seem to be starting to track up and away from the general market with the November 20 sell-off not making much of a lasting dent.

    Gold seems to be such a popular topic now, but If you look at a big picture charting of the viable gold stocks against their operating cash flow and revenue over the last 10 years, they very typically have the look of a dull, out-of-favor group - a value investor's dream. I've found many of them with price/cash flow of 6 (Gold Fields, Richmont Mines) and 5 (DRDGOLD) and 8 (Aurizon Mines) by Morningstar tabulations. There is a whole slew of them that have been hammered down to near where they were in 2001 before the current gold bull market even began (GFI, RIC, DROOY, GRS) with price/sales and price/cash flow less than general market averages.

    Given the fundamental outlook for gold, the gold stocks just don't seem to be overextended in any way - except maybe to the downside!
    Dec 28 18:27 pm |Rating: +1 0 |Link to Comment |View article
  • Gold Poised to Move Higher
    The chart in the article, as Elliot Wave devotees would point out, traces out a text book example of the five waves of a bull move. We've had the first four - up, down, up, down. What's left is the third big multi-year up move. They project it to run to about 2015. That would make the entire gold bull market about 15 years in length - about par.
    Dec 28 17:03 pm |Rating: +3 -2 |Link to Comment |View article
  • Silver and Gold: More Than Just A Christmas Carol



    On Dec 25 09:58 AM aitvaras wrote:

    > Russia has used up around 1/3rd of its reserves trying to prop up
    > the Ruble in recent months. Russian external debt exceeds their reserves.
    > Russia is in a bind on two money generating fronts: Energy and the
    > rest of the Commodity complex.
    >
    > Russia has had a previous history of diverting attention from economic
    > woes. They are called Wars.
    >
    > IMO
    And natural gas transmission is their main weapon. Don't be surprised if they stir something up soon with the pipelines.
    >
    Dec 25 21:02 pm |Rating: +1 0 |Link to Comment |View article

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