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Oliver Juergens
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Oliver Juergens is the founder of PearlFisher Investments and the writer of the PearlFisher Newsletter. He can be heard weekly on several radio broadcasts and his newsletter comes out once a week. In addition the PearlFisher website (www.pfiii.com) provides educational material on how to invest... More
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  • The Stock Market Is In The Sweet Spot For Upside Again!

    Every few years it happens again, to be precise about four years into a bull market, which is the typical average length of a bull market cycle and also the length of the presidential cycle. Right now we are right at that point again. We are in the fourth year of the stock market rise that started in 2009 and at that point commodities typically show some weakness while the Baltic Dry Index finally recovers. In the chart below you can see commodities in black, the S&P500 in green and the Baltic Dry Index in orange and the previous times when we reached a similar state in the market are shown in red vertical lines.

    (click to enlarge)Baltic Dry vs Commodities (www.pfiii.com)

    The same thing happened in 1999 and in 2006. The stock market went on a strong bull market run before it finally built a top and could not advance any further while commodities still had a strong rally in 2000 and 2007 at a time when stock markets already began their long descent.

    The bottom in the Baltic Dry Index now seems to have put in place because capacities are being taken out of the shipping market and at the same time commodities keep showing weakness while the stock market keeps making new highs.

    This should also be once again a good indicator for a stock market top down the line. Once the stock market starts to go sideways or down while commodities start to rise again, then the end of the current cycle is near.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Oct 18 12:27 PM | Link | Comment!
  • What's Good For Stock Markets Is Now Bad For TIPS And Commodities!

    Inflation protected securities like TIPS (treasury inflation protected securities) have been rising along with the stock market for the past few years, but what we saw over the last week was a little shocker for many investors as TIPS (see chart below) started to fall relative to normal treasury bonds while the stock market saw a big booster. Similarly precious metals recently showed some weakness, which was also uncharacteristic in recent years when stock markets rose.

    (click to enlarge)

    The market finally seems to recognize the fact that the FED is successful in keeping inflation very moderate (somewhere between 1.5 and 3%) which is a best case scenario for stock markets and increasingly bad news for commodities and inflation driven assets.

    We are actually already seeing a decoupling of commodities from stock markets and bond markets since 2011. My long-term proprietary cycle model (go to pfiii.com for details) shows that effect very nicely (see next chart). Commodities in green already started to show negative growth in 2011 and since then they have not been able to get out of the slump which is mainly tied to three factors: 1) Inflation is not very high, sometimes even too low 2) China and India are in a slump 3) On a historic basis commodity prices are already high

    (click to enlarge)go to www.pfiii.com for details

    In a moderate inflation and low interest rate environment long-term investors will look for investments in equity markets and the recent rise of the IPO pipeline is a first sign that the confidence in stock markets is slowly coming back.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Oct 17 10:45 AM | Link | Comment!
  • Apple And The Analog Bubble Theory Or Why A Price Target Of $690 Makes Sense!
    Apple's magic run over the last few years is mind boggling to say the least but even the fact that it has become the largest company on a market cap basis does not seem to keep its share price from reaching new highs every other week. The stars seem to be the limit, but wait have we not heard that tune before?
    Now don't get me wrong I am one of the largest Apple fans there is and I have been for two decades, which is the part that may be slightly unusual. Apple is a great company and for the share price the sky is the limit which is usually a great time to try to apply the Analog Bubble Theory. Some of the readers may remember that we have very successfully applied the Analog Bubble Theory a year and a half ago to the price of silver to call the silver top in time and while there is no guarantee it still gives a pretty good guidance to where Apple might be and where it is heading in terms of past bubbles. Now many will instantly say Apple is no bubble because it is too cheap and generally that is right but when you are the largest company in the world then a similar law of large numbers applies anyway. If you would compare Apple's market cap of around US$ 560 billion with the GDP of countries according to Wikipedia then depending on what list you use Apple is now the 19th largest country in the world about even with Switzerland and ahead of countries like Sweden, Saudi Arabia, Norway and Poland to name a few. It is almost twice the size of Greece which makes you wonder why the media does not focus more on the stock market rather than some troubled small countries.
    In any case you get the point Apple will soon face the headwinds of being the largest fruit on the block and one way to get a good idea of where we are is to look at the Analog Bubble Theory, which you can see in the chart below. Apple is in green and the Nasdaq of the year 2000 during the dot.com bubble is in black. If Apple continues to follow the Analog Bubble Path then it has about 3-6 weeks and another 15% to go. Apple should reach a target of somewhere around $690 before reaching a top, possibly a double top. Then things could turn quickly the other way. I doubt by the way that Apple's fall after the rise to the top and a final acceleration would be as troublesome and long as the fall of the Nasdaq was during the dot.com era, but it could still turn into a significant sell off of around 25% before starting to go sideways. The reason why I would not expect more of a sell off is because Apple is not as expensive as the Nasdaq was at the time and because Apple is becoming more of a victim of its own success rather than a dot.com story full of hot air.
    Apple remains a great story perhaps one of the greatest of all time but even Apple will eventually find out that being the biggest draws some unwanted attention to an otherwise awesome story.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Mar 21 11:32 AM | Link | Comment!
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