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MARKET OUTLOOK - Global & Local, Perspectives & General Market Feeling
post Posted: Mar 25 2004, 09:54 PM
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IN REPLY TO A POST BY s4rx7, Thu 25/03/04 03:32pm

Bear Market? Bull market? who cares. If it is a raging bear market then trade short. Bear markets are good, they scare away the idiots. Anyway, I think we've been in a 100 year bull market, with the dow rising from a low sixty to over ten thousand. Generally, more technology, better productivity and expanding markets and the human race is in a bull market of growth and prosperity. It's only a bear market for idiots who trade long against stocks that are over inflated and stubbornly sit on them, or worse, let funds managers do it for them then complain their savings / super / whatever isn't doing so well. No matter how bearish the market, if you insist on trading long you can find ~something~ that is doing OK, chances are all the other diehard longs will be jumping on those stocks as well.

post Posted: Mar 25 2004, 09:48 PM
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I really hate to say this but alot of this will do with the elections this year...

Someone was telling me that New Presidents seem to always spark the market (esp when the last one is linked to bad markets)

But should always listen to the tea lady.... its amazing how many leaks can be tracked them

Don't stall a plane
post Posted: Mar 25 2004, 09:21 PM
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I agree moneyman

Only when you start hearing hot stock tips from taxi drivers, your physiotherapist and average Joe at parties should you start to go short.

[b]Later, Flash[/b]
post Posted: Mar 25 2004, 08:41 PM
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There is no doubt that this period is nothing more than a bull market correction. We are only in the second phase of the bull market.

We are still seeing IPO's, increasing earnings and M&A activity. The market has, as usual, got ahead of itself.

I expect, failing another Sept 11, type incident or major natural disaster such as an earthquake destroying Japan, that the ASX 200 will break 4000 over the next 12-18 months, as we enter the 3rd phase of the bull market. Other markets I expect similar performance.


Super is on the agenda big time, top up is the message and where will most of the funds go, equity funds.
Property is getting on the nose, soon the "everyday" investors will be following the latest "hot" thing, stocks!!!

Even the put/call ratio doesn't indicate a major fall is expected, currently sitting comfortably around 0.8.

Sure active traders, may have some cash on the sidelines at this time, but investors would be well versed to top up on quality stocks.

There is a big push of growth coming as the world economy shakes off the funk, yes there may be a systemic collapse due to terror or a disaster, but that risk is always there.

Just MHO


Life does not have to be empty or faced alone
post Posted: Mar 25 2004, 03:32 PM
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Bear Sightings?

March 24, 2004
Admit it. How many of you opened this report because of the word ?Bear? in the title? It is amazing to me that after a -6% decline over the last 3 - 5 weeks (actually it?s been -5.43% on a closing basis for the S&P 500 and -6.55% on an intraday basis) that so many investors are ready to throw in the towel because of the lesson learned from the ?Great Bear of 2000 ? 2003?? (The lesson, of course, was ?gee that was brutal, let?s make a point to never sit through something like that again!?)

Unfortunately, the vast majority of investors (including some professionals I know) are experts at preparing now for what they should have done in the last cycle. Everybody seems to be talking about whether or not we?ve got a new Bear Market on our hands. Everyone appears all too anxious to jump the gun and head for the hills ? because that?s what they should have done at some point in 2000. But let?s remember that in early 2000, no one was talking about a Bear Market.

Let?s remember that as of early 2000, the leadership was very narrow and limited to just one area ? technology. Let?s remember that the momentum had peaked long before the market actually headed down. And let?s remember that the majority of stocks had already experienced a decline before the broad averages finally caved in. In other words, the handwriting was on the wall, but ?everyone? ignored it. Now ?everyone? sees a Bear Market after a correction which is less than 3 weeks old.

Last week we made the case that the current correction is certainly no fun ? but it also is NOT the start of a new Bear Market. Since then, the Dow has given up 300 points, the NASDAQ has made a fresh new low, and perhaps most disconcerting, the leaders (the Russell 2000 and Midcap indices) finally joined in the fun and broke support. While I can argue that the Midcap chart is still technically healthy, it is the sole holdout among the major indices. The rest of the market has turned ugly. So... inquiring minds want to know... have I changed my tune?

To review, we?ve got a market which appears to be in an intermediate term downtrend, it clearly has some downside momentum, it has a lot of bad ?geopolitical? news to deal with, it now has negative returns for the year, and it definitely has a whole bunch of nervous investors. Granted, seeing red in your portfolios is a definite bummer at this point in the year, but? does this make it a Bear Market?

Good News and Bad News

Let?s start with a bit of Bad News. (You Bears out there should stay calm though, it?s not THAT bad!) Probably the most important model we use is our Big Picture Trend & Momentum Model. The model is designed to give an indication of the technical health of the broad market. The model is comprised of more than 100 indicators and looks at the trend and momentum of 104 industry groups. By looking at each industry group individually, we avoid the pitfall of focusing on the capitalization weighted indices such as the S&P 500 (which are dominated by the largest companies), and thus, get a much truer picture of the underlying health of the broad market.
The bad news is that our Big Picture Trend & Momentum Model has downticked from a Positive reading (last week it was at 9.0) to Neutral (although just by a smidge as the current reading is 8.7). Since this is a major component of our management strategy, we turned to the computers at Ned Davis Research to tell us how the market has performed in the past when this model goes from Positive to Neutral.

When the Model?s reading is 8.8 and above, the S&P 500 has historically risen at a rate of +24.5% per year. However, when the model is in the neutral zone (6.5 ? 8.8) the market?s gain per year is cut in half to +12.2% per year. So while the movement from Positive to Neutral is definitely a ?downgrade? to the market?s overall trend and momentum, since the outlook for gains in this zone are still in double digits, we have to continue to rate the environment as moderately positive, or ?constructive.?

However, the gang at NDR are never ones to leave well enough alone. They took the analysis a step further and asked their computers what happens to returns when the model is moving ?up? or ?down? within the zones. What they do is look at the model?s reading and compare it to where it was 9 weeks ago. The bad news is the model was higher 9 weeks ago, so the model?s movement is technically down (although not by much). And when the model?s reading is neutral AND moving down, the gain per year is just +1.5%.

So, it will suffice to say that in the Big Picture, the momentum of the market has to be downgraded. And this, in turn, means that the overall environment must also be downgraded.

What does this mean? Basically, we have to recognize that the upside momentum that the market carried so well into the New Year, has most likely peaked, and thus the Big Picture Trend & Momentum can only be given a mildly positive rating, at best.

Weaker, Yes?

So, yes, momentum is weaker. Yes, things have been ugly lately. Yes, we had a simply awful technical day on Monday with downside volume swamping upside volume by more than 10 to 1. Yes, there are losses on the indexes for the year. Yes, the election could be a problem for the market. Yes, we have to worry about Terrorism again. Yes, the situation in the Middle East is unsettling. Yes, China?s saber rattling makes for nervous trading. Yes, oil prices are high right now. And yes, any acts of terror in the US would stop the economy in its tracks.
Frankly that list makes my head (and stomach) hurt and I too, want to run and hide at times. But, but, but? there are also lots of good things happening (earnings, economy, rates, money supply) and in any given month we can usually make a similar list of worries. The reality is that these are mostly worries at this stage ? and the market is in the process of ?pricing in? the likelihood of any of the above impacting profits. I?m not suggesting we should blindly plow forward and just dismiss this mounting wall of worries. But I do think it?s premature to assume the Kodiak has returned.

?But Still No Bear Sighting

Now for the good news. While we?ve gotten some good arguments from readers lately (keep ?em coming ? it?s always good to have someone poking holes in your position? it makes for a better analysis of other team?s argument), we still have a hard time arguing that this is the start of a new Bear Market.
Why, you ask? As usual, let?s turn back to the unemotional models and see what we?ve got. And since the discussion du jour centers around the question of a Bear Market and the Momentum of the market, let's look back at history and see what we can find. In the last 7 Bear Markets, the momentum of the market actually peaked before prices did ? and then typically fell off of a cliff during the first 5 weeks of the initial Bear decline. To illustrate this let?s look at how the Big Picture Trend & Momentum Model acted at the beginning of the last 7 Bear Markets. The average reading for the model at the last 7 market peaks has been 7.8 (which is a neutral reading). But then it fell precipitously in the following 5 weeks to an average of 5.3 (which is a negative reading). So in the last 7 Bears, the broad market?s momentum took a rather severe dive as the Bear began.

The good news is this is simply not happening right now. The model?s reading at the recent peak in the Dow was 9.1 (a strong reading). Five weeks later, with the Dow off -6.5%, the model has indeed experienced some weakness, but it has only dropped to 8.73. And while this technically is in the ?neutral? zone (by a smidge), it is still a strong reading and nowhere near the 5.3 seen during the beginning of the last 7 bear markets. This tells us that, at least at this point, the ?troops? are still marching in a positive direction.

Couple this with improving levels for our Monetary, Investor Sentiment, and Economic models and the ?weight of the evidence? says there is no Bear to be seen (at least for right now).

The Point

The point to this analysis is a downgrade of the environment doesn?t mean we are in a Bear Market. It also doesn?t even mean the Mini Bull is over. But it does mean that it?s time to shift to a slightly lower risk profile.

What if I?m Wrong?

I am very aware that my stance on this being an annoying, yet "normal" correction could wind up being flat-out wrong. The good news is that I learned a long time ago that the market doesn't care what I think, and thus, we don't manage money based on what we "think" is right or wrong. We manage money based on the reading of our models and the environment. For example, it was a bit frustrating to reduce the exposure in our model portfolios on Tuesday since the market has already declined a good bit. However, time has also taught me that discipline is the key to long term success in the markets.
If my current view is "wrong" as some readers suggest, then this will have been the first of many reductions in exposure - as we keep portfolios "in-line" with the environment. If this does turn out to be a "normal" type of correction of -5% to -10% (the average decline after "extended rallies" has been -9% on the Dow and has lasted 46 days) then we will simply redeploy the cash we raised to buy the "leaders."

I guess my main point is that if I am indeed wrong on the outlook for this correction, I have no intention whatsoever of having it affect my portfolios (both my firm's and the letter's) for a long period of time. So while I may be "talking tough" here, if our models deteriorate further, we will continue to reduce exposure to market risk.

In sum, nothing is ever guaranteed in this business, so I like to let the models be my guide - to help stack the odds in my favor. It may not be the most exciting management method because I won't spend any time crowing about being right, but it has kept me out of trouble and focused on the leaders over the long haul.

In spite of all the red ink, make it a point to enjoy the rest of the week.

David D. Moenning

Get Rich or Die Trying
post Posted: Mar 17 2004, 01:18 AM
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Just had a funny thought and had to search for this post to check dates and times.

Now if I'm right, this post was started even before the Bombs went off in Spain.


Posted: Thu 11/03/04 08:11am

The market looks to be getting REALLY nervous...

The ASX200 is at a record high (it's following the US markets)
The AUS is weakening against the US (and therefore there is the threat that money will start flowing out of the Australian market back into the US)
I saw WB has been making some noise RE: He thinks the US market has issues.
Metal/mineral prices are dropping (yet another factor against the Australian economy)

Anybody else got any thoughts ?


If I remember correctly, this happen just before 9/11.

May be the security agencies should have one eye on the market.

Any thoughts ?


People who follow me are bigger fools than I.

post Posted: Mar 12 2004, 07:29 AM
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IN REPLY TO A POST BY mminion, Fri 12/03/04 07:22am

Don't think it's a beat-up this time Matt. From the ABC website a short time ago:

'Al Qaeda' claims Madrid blasts: report

A statement attributed to Al Qaeda and sent to a London-based newspaper has claimed responsibility for a series of deadly bombings in Madrid.

Ten simultaneous blasts ripped through four packed commuter trains at peak hour, killing 190 people and injuring 1,247 others.

The letter, which called the attacks "Operation Death Trains", was sent to the Al-Quda Al-Arabi newspaper.

"We have succeeded in infiltrating the heart of crusader Europe and struck one of the bases of the crusader alliance," it said.

There was no way of authenticating the letter, a copy of which was faxed to Reuters's office in Dubai by the newspaper.

The letter bore the signature "Abu Hafs al-Masri Brigades/Al Qaeda".

The newspaper received similar letters from the same brigade claiming responsibility on behalf of Al Qaeda for a November bombing of two synagogues in Turkey and the August bombing of the UN headquarters in Baghdad.

Koran tape

In Madrid, Spanish officials say they have found seven detonators and a tape in the Arabic language in a van which may be linked to the 10 simultaneous blasts.

Spanish Interior Minister Angel Acebes says the van was found in the east of the Spanish capital.

He says the tape contained recordings of verses from the Koran.

Mr Acebes says authorities are not ruling out any line of investigation in their probe of the bomb blasts.

"The conclusion of this morning that pointed to the terrorist organisation [ETA] right now is still the main line of investigation," he said.

"[But] I have given the security forces instructions not to rule out anything."

Earlier, Mr Acebes had said there was "no doubt" the Basque separatist group ETA was responsible for the attacks.

He says the Koranic verses were those "usually used to teach the Koran" and he left open the possibility that the tape might have been planted to mislead authorities.

The van had been stolen from the southern town of Alcala de Henares, which was the point of origin for the four trains targeted in the bomb attacks, Mr Acebes said.

There has been no claim of responsibility for the attacks, the worst to hit Europe since the 1988 bombing of a US plane over Lockerbie, Scotland that killed 270.


Officials had earlier brushed aside suggestions that Muslim militants angry at Spain's support for the US-led war in Iraq could have planted the bombs.

The blasts - which come three days before Prime Minister Jose Maria Aznar's Government faces national elections - triggered fears in world financial markets that Al Qaeda was responsible.

US intelligence agencies say it is too early to say who was responsible but see the hallmarks of both ETA and Al Qaeda.

One US official, who declined to be named, said: "There are characteristics of each. You have multiple attacks, multiple explosions in different locations in a short period of time which is very Al Qaeda-ish."

At the huge Atocha station in central Madrid, ambulance driver Enrique Sanchez said: "The train was cut open like a can of tuna. We didn't know who to treat first. There was a lot of blood, a lot of blood."

Passenger Ana Maria Mayor's voice cracked as she told reporters: "I saw a baby torn to bits."

The other blasts occurred at El Pozo station in southern Madrid and at Santa Eugenia in the south-east of the capital.

A sombre Mr Aznar called on Spaniards, who have protested in their hundreds of thousands against past attacks by ETA, to take to the streets on Friday and vowed the Government would arrest the "criminals" behind the bombings.

The radical Basque party, Batasuna, accused by the Government of being an integral part of ETA, said it "absolutely rejected" the attack and was convinced ETA was not responsible.

Terrorist group

ETA (Euskadi ta Askatasuna) has killed about 850 people since 1968 in its fight for a separate Basque homeland in north-western Spain and south-western France, and has been branded a terrorist group by the United States and the European Union.

If the Basque group was responsible for the bombings, it would be its deadliest attack, far exceeding the 21 people it killed in a supermarket blast in Barcelona in 1987.

Mr Aznar called an emergency Cabinet meeting and his conservative Popular Party suspended its election campaign, which had focused on a tougher stance against ETA.

Many political analysts say that if ETA was responsible for the attack, it would favour the Popular Party in the election because of its hard line against the group.

"If, however, the rumours about Al Qaeda gain credence, then things would be perceived in a very different way," pollster Julian Santamaria said.

Mr Aznar defied main opposition parties and huge public anti-war sentiment to back the Iraq war.

Some experts on ETA said the bombings did not fit the group's usual profile for attacks. ETA has frequently warned of its attacks in advance.

In October, two audio tapes purportedly from bin Laden said the al Qaeda had the "right to respond at any suitable time and place" against countries backing Washington over Iraq.

The Australian Department of Foreign Affairs says it is not aware of any Australians being caught up in the blasts.

A spokeswoman says embassy staff are keeping in touch with local authorities.

regards: jbeatty
post Posted: Mar 12 2004, 07:24 AM
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IN REPLY TO A POST BY theflasherman, Thu 11/03/04 10:59am

Yep I also agree Flash, I'm finding it difficult to select 3 stocks for this months comp because every stock has had such a solid run.
I'm pulling some cash out today and sitting it on the side lines.
Realistly the market has been taking a canning for the last 2-3 weeks with punters moving into defensive stocks.

I still feel the market will continue it's upward direction over the next 6 months, but we may see some short term retraces on quality stocks, most stocks have/or are about to go X-Div which is also creating some pressure.

Any short term pullback should be seen as an opportunity wink.gif

All the best, Tex.

The above comments are just my opinions, do your own research before deciding to buy or sell.
post Posted: Mar 12 2004, 07:22 AM
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Guys we need to remember the media love to drum these type of things up..

How many people REALISE Spanish elections are this weekend ?

It's the normal spanish terror groups.... I'm sure if the IRA where still bombing England the media would be first to blame Al Quaeda

Anyhow the market was not feeling good EVEN before this happen... not a nice way to go to the weekend

Don't stall a plane
post Posted: Mar 12 2004, 07:02 AM
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The linking of the Spanish bombings to Al Quaeda has plunged the NYSE into gloom.

A short time ago it closed down 170 points (This figure will change as trades are adjusted)

Caution today everybody.

regards: jbeatty

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