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  • standardshigh standardshigh Nov 10, 2007 10:55 AM Flag

    Would you short this market?

    After the recent plunge?

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    • We are sitting right on the 200 day moving average. We didn't break down trough it, but we didn't bounce back up of it either. I calculated the MA by 10 points incorrectly which now is thankfully lower. More later.

    • And that's because emotions defy predictions.

      My only point is that the downside risk should be limited because based on historical cycles (and the 2002-2003 decline was a major down cycle) this market is cheap.

      I'm holding all my positions because I expect the markets to come back soon and continue the bull run.

      My account hopes I'm right, too.

    • Not that I'm complaining, but the Nazdaq didn't quite hit the 200 day MA for the expected bounce. It needed another 25 points it's hard to tell whether this little rally will hold. Saleem and I predicted the rally for late today/early tomorrow. We'll certainly know by the end of the day.

      In markets like this there are so many wild swings that it defies prediction.

    • Saleem, thank you for the praise.

      What investors fail to see is that the S&P is selling at only 14.7 times estimated earnings. At the bottom of the 2002-2003 bear market it sold at 15.2 estimated earnings. The market is very cheap at this time, and I would be surprised to see it go lower. (We were beating the war drum for most of 2002 into 2003).

      The S&P is yielding 7.12% on forward earnings, and ten year bonds are yielding 4.22%. When emotions settle down, I suspect that institutions will be selling their bonds to buy stocks. It's a no-brainer. This is the cheapest market since June 2005 and before that, 2003 just before we went to war.

      And the dollars fall is caused by the Federal Reserve, but being new and green, they don't know it. Last week just before the huge drop in the dollar the Fed started talking tough on inflation. There is no inflation.

      The problem with the dollar is that the Fed is starving the country of dollars. The monetary base is growing the slowest it has in 50 years. It's between one and two percent. This is scaring foreign investors from our shores causing the dollar to fall.

      The Fed needs to admit there is no inflation and start cutting agressively, and then USA will explode. We've been micor-managed into a corner because our Fed was trained in the seventies during hyper-inflation, and see inflation everywhere they look. They need to cut now to prevent deflation and then jerking us the other way (like Greenspan did over and over and over).

      This bull market has a long way to go.


    • CMED is going down along with 98% of all other china stocks. CMED will likely drop another 20-30% before it resumes it upward move. If you can stand the short term pain, stay in. However, most can't stand the 20% draw down and will sell.

    • Just noticed that Asian markets are down Monday (today), financial's hit hard. Following wall street on Friday. ugh

    • Hi Tin,

      Excellent historical perspective & sentiments uptake.

      Futures are pointing HIGHER $$$ far ????

      Oil is down......

      Gold is down......

      If Asia is any indication....the bleeding may have stopped..hopefully !!!!


    • On a more simplistic note, at the close on Friday the market was undervalued by 41%, nearly as much as it got to by March of 2003 before the start of this bull market.

      The Fed has the short term rates too high. The bond market has been telling them that for well over a year. There is no inflation, other than energy, and that is good for USA longterm forcing us to wean ourselves from foreign oil.

      And the money supply is growing double digit. And foreign sales by our corporations are at an all time high.

      Why we had such as big sell off, I have no idea. Momentum coupled with fear, maybe. But the market is not going to zero, and the fear in the markets right now indicate that it is going to zero.

      This is definitely a correction, and because it's so sharp, I believe it will be short. And this bull market has a long way to run.

    • I like your analysis. Sounds very logical. Do not try to catch a falling knife! Yikes! I've been cut thru my hand several times trying that maneuver. Learn from others mistakes, not your own! ha! Watch the tape, when it gets really elongated down, then buy. You may catch a big move. I agree we should be near a bounce.

    • szsz;

      You are one of the smartest guys on this board. You are correct that the U.S. has had declining influence in financial clout around the world.

      The statement by a Chinese offical recently that their country would be looking to shift its assets to other countries has been denied by their government. The offical was rebuked and taken to the shed for a thrashing. Nevertheless, how can that policy continue to favor the dollar if things continue the way they have been going? That "offical" policy is done strickly out of respect for our country and our economy that purchases so much from China.

      One of the attributes of China, gathered from my Chinese friends, is their tremendous control over their own economy while still allowing great opportunities in enteprenuership which are far greater than here in the U.S....believe it or not. I haven't got the room here to explain all of it.
      Bottom line: they are truly in control of their own destiny...still with tremendous government control which the people accept GLADLY. Think about it!

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