Market Bottom?

[The Rabbi]

Where is the bottom on the current market? With so much uncertainty out there it doesn't make sense to be in anything but cash right now. The downside potential is enormous, with sovereign debt default, municipal defaults, and bad gov't policy just around the corner.
Prices on stocks have come down but I am thinking they will need to go further to make up for all the risks.
Any thoughts?

 

[tommywho70x]

get a real job?

 

[The Rabbi]

get a real job?

Leave the grownups to talk amongst themselves, OK?

 

[Toro]

Don't know. Risk assets aren't cheap enough to be at a true bottom.

My thesis is that we are going to trade in a range for some time, perhaps several years. Maybe that range is 900-1200 on the SP500, I don't know. But I don't think that the market is going to hit new highs anytime soon.

But maybe I'm wrong.

 

[william the wie]

The only rule of thumb that is surefire is 1 oz of gold = DJIA is a bottom or close enough for government work. However bottoms are often formed without getting that low. Therefore I am a huge fan of black swan strategies, asset allocation and hedging. I have June and Dec 120 straddles plus 105 June xsp straddles I am waiting to unwind some commercial property I have interest in and my wife is over invested in bonds. My other assets, if any, I would prefer not to mention but I have no debts. I will be unsurprised by a Dow 3K-20K by the end of this year hence the straddles.

 

[hvactec]

This market looks like it's rigged to me.
It just don't make sense at all

 

[tommywho70x]

This market looks like it's rigged to me.
It just don't make sense at all

best to let the grownups get suckered into that fraud and us immature types stick to tangibles.

 

[Terral]

Hi Rabbi:

Where is the bottom on the current market?

There is no bottom to the Housing Market, which means there is no bottom to the other markets. Period. The fundamentals ARE BROKEN, because the Consumer/Tax Bases are eroding right before your very eyes. The primary causes of the coming Economic Collapse are:

1. Worker Displacement of American Workers 'out' of the local job markets caused by:
2. NAFTA Offshoring of the manufacturing base.
3. 23 Guest Worker Programs.
4. 20 to 30 MILLION Illegal Alien Foreign Nationals.
5. Outsourcing of service sector JOBS to other nations like India.
6. Walmart Global Conglomerate-like Companies that import Chinese goods and put U.S. 'Mom & Pop' companies out of business.
7. ObamaCare driving Health Care costs 'up' to create 'hiring freeze' for struggling U.S. Companies.

With so much uncertainty out there it doesn't make sense to be in anything but cash right now.

All the fiat currencies are losing value against gold!!!! Five ounces of gold were required to buy the S&P in 2000. However, today the entire S&P can be bought for less than one ounce of gold! The U.S. Dollar is worthless, but the other currencies just happen to be losing value faster than the greenback. I would buy food stocks, guns, ammo, survival goods and 'then' gold ...

The downside potential is enormous, with sovereign debt default, municipal defaults, and bad gov't policy just around the corner.

Bad Govt Policy has been around for decades! The true national debt is far beyond 100 Trillion Dollars right now!

Prices on stocks have come down but I am thinking they will need to go further to make up for all the risks.
Any thoughts?

The stock markets will crash in the day that STUPID day traders wake up and realize that the U.S. Dollar is WORTHLESS. Right now the entire system is running on mere confidence that is dwindling. The markets only tell us if the STUPID day traders are believing Obama's LIES. Eventually the Las Vegas-like Charade will collapse when Obama's house of cards comes tumbling down ...

GL,

Terral

 

[boedicca]

The market is being supported at higher levels than it deserves because interest rates are virtually 0%. This encourages riskier investments to have a chance to make something - which is exactly in the interests of big money that is busy extracting whatever wealth has been accumulated by the middle class.

Once the middle class is driven to a further state of fear and panic, watch for the Feds to drop the Guaranteed Retirement Act into the mix in order to nationalize the remaining assets in 401Ks to offset some of their spending binge.

 

[william the wie]

I don't really have anything useful to add on the bond thread but I would like to point out that innovation/growth is funded by junk bonds. If junk bonds (BB+ and lower) are not doing well then neither is the economy or the capital markets.

 

[Toro]

Hey, Rabbi made a post questioning that the bottom was in, and guess what - it was the bottom! At least in the near-term. Maybe we'll fall back down to lower lows. In fact, I'm expecting it. But for now, Rabbi called the bottom, even if he didn't mean it.

Well done, Rabbi!

 

[The Rabbi]

Hey, Rabbi made a post questioning that the bottom was in, and guess what - it was the bottom! At least in the near-term. Maybe we'll fall back down to lower lows. In fact, I'm expecting it. But for now, Rabbi called the bottom, even if he didn't mean it.

Well done, Rabbi!

Pshah. That was the bottom. For the week. What we saw today was a lot of short covering with the market oversold ahead of a long weekend/shortened trading Friday.
No, I expect next week to get uglier. THere is no reason to own stocks now. Now compelling story that I can see that would justify higher valuations. But there is plenty to justify lower ones.

 

[saveliberty]

MADRID - Spain's governing Socialists have won approval for a 15 billion euro ($US18.4 billion) austerity package by a single vote, but the narrowness of the victory raised doubts over the government's ability to steer the country through an economic crisis.

The razor-thin majority piled pressure on Prime Minister Jose Luis Rodriguez Zapatero, who has been forced to ditch his party's traditional alliances in pushing through spending cuts and labour reforms as markets fret Spain could suffer a similar crisis to Greece but on a larger scale.

The prime minister called off a scheduled trip to Brazil on Thursday, as an end-May deadline loomed for an agreement with unions and business on wide-ranging labour reforms - a key policy demand by international markets.

Unions met Thursday and warned that they would call a general strike if the government goes ahead with changes to labour market rules without their consent, saying there were still big differences with business on the reform.

They said agreement may not come before the end-May deadline set by the government. A regular Europe-wide meeting of unions is scheduled to take place in Brussels on June 1.

Spain's parliament backs austerity | News | Business Spectator

A missed deadline here will be the reason for a tough week ahead.

 

[Toro]

The answer to the OP is "no" at least not yet.

It was pretty clear around noon that the market was going to go lower when it couldn't hold the lows on Friday. We had to rally and hold the gains today but we couldn't do it, so they sold stocks hard into the close.

There is a lot of technical damage in the market and I think there is more downside to come.

 

[The Rabbi]

I agree completely. Lots of reasons to sell, few reasons to buy.

 

[saveliberty]

The big question: When will the small investors inject new money into the market?

At this point it is just one big retreat. My upside has to be much better than the down before I'll budge. I'm thinking that is around 8800.

 

[william the wie]

The big question: When will the small investors inject new money into the market?

At this point it is just one big retreat. My upside has to be much better than the down before I'll budge. I'm thinking that is around 8800.

That big question has a lot of little questions inside of it:

At this point a Gold bull market in the euro is causing a real shortage to develop in anti-inflation investments and driving up the costs of US imports. So why buy equities?

More people are running out of UE bennies and going homeless. How can they add to consumption?

More state and local governments are teetering on the edge of insolvency/bankruptcy every week. The muni-treasury hedge of a few months back has destroyed a huge chunk of the nation's private capital so where will the capital come from?

More information about missteps by the current administration's economic team going as far back as to when they were part of the Clinton economic team liquidating Long Term Capital Management keeps dribbling out. Two memoirs of former Bear Strearns CEOs are supposed to come out later this year. So, if evidence is presented that most of the current administration's economic team knew in 1998 that a real estate meltdown was building and did nothing ("House of Cards" William Cohan) and that is what is going to be claimed who will trust this administration not to screw the pooch again? Bear Stearns stayed out of the LTCM bailout entirely and Lehman contributed only a third as much other participants. How come Geithner and Summers didn't figure out that Bear and Lehman were sending out signals of pending insolvency? A totally unfair question I will grant you but it will be asked.

With that much bad news in the pipeline who, besides insiders, has enough information to take unhedged long positions? Where is a surefire bottom above 1200 DJIA? Why is anyone going to buy into all of the recovery hype?

 

[Mini 14]

What makes no sense to me are the metals. How often over the past year have we seen one of the metals rising while all the others fall? Just last week gold rose $8 one day while silver and platinum fell.

It tells me there are a LOT of people in the markets who don't know what they are doing, and that makes it dangerous even for those who do.

But the world is driving the metals as well. As the dollar continues to weaken, even copper is becoming a sound investment.

How soon before the government again calls in all the metals, and makes it "illegal" for citizens to possess?

 

[The Rabbi]

What makes no sense to me are the metals. How often over the past year have we seen one of the metals rising while all the others fall? Just last week gold rose $8 one day while silver and platinum fell.

It tells me there are a LOT of people in the markets who don't know what they are doing, and that makes it dangerous even for those who do.

But the world is driving the metals as well. As the dollar continues to weaken, even copper is becoming a sound investment.

How soon before the government again calls in all the metals, and makes it "illegal" for citizens to possess?

The dollar has been strengthening. Silver and platinum are industrial metals and the expectation is there will be less production overall in the coming year.

 

[Douger]

If you are in a position to do it get the hell away from the dollar and Euro.
I made a nice sum when I went from the dollar to the euro at 117 and bailed when it reached it's artificial 143.
Now I only have Can$, Aus$, Chilean peso, Hon. Lempira and Br. Real.....and a few Cordobas and Colones in my shirt pocket for fun tymez.