Terence Chan

Bonds Signal Inflation Is Coming

by the way, inflation will be here so long as the Fed keeps its foot on the money-printing accelerator pedal... its their only way out of this mess, to create another bubble


On Nov 09 01:44 PM WD216 wrote:

> Exactly Bartpr, inflation is a disaster for stocks. Terence I realize
> you are too young to remember the 70's and early 80's but both stocks
> and bonds plummeted. You should check your history before assuming.
> So the market can obviously correct and bonds can also drop.
>
> I'm not sure how you conclude inflation is here from a couple of
> weeks of bond trading, especially with the economy still in dire
> straits. Higher prices cannot be supported from debt ridden consumers.I
> believe inflation is many months if not years away.
>
>

Bonds Signal Inflation Is Coming

s&p 500 revenues right now is 50% correlated to global economies and commodities prices (most notably oil). with inflation this fuels company profits which should be good for stocks


On Nov 09 01:24 PM bartpr wrote:

> inflation has never been good for stocks. witness the 70-80 period.
>
> where are alll these investors money coming from. their home equity
> is gone. their 410k are decimated.

Will a Dollar Rally Stop the Asset Reflation Story?

a lot of factors to take into account for the dollar... really can't pinpoint what will influence it either way as there is too much to consider (carry trade, interest rates, trade deficit, etc). it's up in the as to which factor is really valid. i'm looking at it from a technical perspective, momentum still calls for a weaker dollar longer-term and prices don't just reverse trend from the type of damage the dollar has sustained... we'll see..


On Oct 27 08:37 AM SkiDad wrote:

> Mr. Chan,
>
> Short term? I think in light of the secular trend in gold, yes.
> However, in light of the rising inventories and speculative bubble
> in oil, no.
>
> Then there's the substitution of the dollar for the yen in carry
> trade which I agree, could valut the USD index to 80 near term.
> But, I think the substitution for carry trade currency coupled with
> the fact that the dollar won't be replaced anytime soon as the World
> reserve currency could place a support under the dollar, again near
> term.
>
> Your thoughts?

Crude Oil Situation Bears Watching

If its just technicals, its just the fact that its holding above $65... but if it falls below that, which can happen easily (less than 10% away) he would be wrong. I guess we have to monitor both fundamental and technical factors. One thing he might has on his side is that the spread between the November contract and the December contract has narrowed quite a bit, but the fact that the latter is still lower suggests that there is still a glut.


On Oct 05 05:52 AM freya wrote:

> Ray Barros, a technical analyst, was on Bloomberg last night. He
> was asked by Bernie which one prediction he currently had the greatest
> confidence in?
>
> His response was $90 oil by the end of this October with an 80% certainty.
>
>
> Try as I might, I do not see anything at all in the Charts which
> would predicate such a move.
>
> The only thing that could do it would be Photographed "Clean up"
> activity at the New Iranian Enrichment Facility and an increased
> perception of an Israeli attack sooner than later.
>
> But this is not Technical. Any idea what he could be looking at?

'Cash on the Sidelines' Should Be 'Investors on the Sidelines'

hehe. expand your chart to 3 years. the light volume was before march 2007. After that volume picked up so there is sign of distribution. compare it to the period before march 2007. There was volume at the top. but of course nobody gets to sell at the top, so a lot of volume also came out thereafter. right now, there is no signs of distribution, so no top for the market:)


On Sep 27 09:29 PM logicalthought wrote:

> That's absolutely not necessarily true. Assuming that SPY volume
> is a good proxy for overall market volume, look at how light it was
> in late September and into October of 2007 when the SPY/S&P hit
> the all-time highs, and then look at how much stronger it was in
> the July-August plunge that preceded that and then the big plunges
> that happened after.

'Cash on the Sidelines' Should Be 'Investors on the Sidelines'

Volume always comes at peaks. If there's no volume, it might correct short-term, but it won't crash:)


On Sep 27 05:27 PM logicalthought wrote:

> >>People also have to understand that the stock market can't be all
> fundamentals.<<
>
> Of course not, but only in the short run. Otherwise, how would you
> explain where the Nasdaq was in January of 2000, or the S&amp;P in
> the summer of 2007? I understand and use technicals all the time,
> for entry and exit points for my fundamentally-based positions. But
> if you're so highly technically-oriented, surely you'll note the
> implications of the fact that the volume on almost this entire ride
> up has been far less than it was on the way down.

Don't Ignore Low Interest Rates

Nick, that S&P p/e you are referring too is a trailing p/e. it uses one-off write-offs. it's better to use a 10-year trailing p/e or forward p/e. Also, present day facts are lagging. the market is always forward looking.


On Sep 27 10:19 AM Nick36 wrote:

> It all depends on which P/E you choose to use.
>
> The official P/E of S&amp;P 500 is now well over 100.
> www2.standardandpoors....
>
>
> And a P/E of 100 is equivalent to getting paid 0.7% per year on your
> investment. Which is a lot lower than the current 4.09% you can
> get by investing in 30-year US Treasury Bonds.
>
> You can argue till you are blue in the face that the earnings of
> companies are going to improve a lot in the future. But nobody knows
> the future for sure. And present day facts clearly show that US
> government bonds are by far a more profitable investment than the
> current stock market is.

'Cash on the Sidelines' Should Be 'Investors on the Sidelines'

People also have to understand that the stock market can't be all fundamentals. One has to understand demand and supply and also sentiment (when to be contrarian). Fundamentals can be wrong since it is based on subjective assessment. Demand and supply of stock are actual and cannot be disputed. Stock prices are also "real" and it is better to let the market tell you where it is going, not you telling the market where to go. You are not in control of the market. This is not to say fundamentals are useless, it is in fact necessary. But it's not the only analysis. You have to see the bigger picture and confirm fundamentals with technicals. Technicals right now are showing a different picture compared to what you see in the actual economy. Some people dismiss technicals and other analysis on supply and demand just because they do not understand this aspect of market analysis and don't want to learn something new. That's being rigid and closed minded.


On Sep 27 08:31 AM logicalthought wrote:

> >>...the smart money who accumulated near the bottom will keep the
> supply of shares and only unload it when the demand is there.<<<br/>
>
> The alternative scenario is that "the smart money" (most of which
> is quite bearish on the economic fundamentals) will get tired of
> waiting for "the dumb money" to take those shares off their hands,
> and will instead dump their stocks before the music stops playing
> again in order to preserve whatever profits they have left.

'Cash on the Sidelines' Should Be 'Investors on the Sidelines'

It's a cycle actually. Even if the smart money dumps their positions there will be a new group of buyers though still limited in number given the bearish sentiment prevailing in the market. This new group of buyers can keep the shares for a while longer, and new groups of buyers emerge at higher levels as the economic recovery doesn't falter. Eventually the groups of buyers will reach a critical mass that will further propel stocks. Data shows we don't have a bubble in stocks. People aren't overleveraged in stocks out of fear, and are in fact underinvested. Just look at all the bearish comments in Seeking Alpha. You cannot have a crash when people are underinvested. Also, think about this... will smart money buy that much shares if they will just flip it? They're smart enough to now that they aren't nimble enough to flip that much shares, so most likely they are buy and hold and don't believe in any armageddon scenario.


On Sep 27 08:31 AM logicalthought wrote:

> >>...the smart money who accumulated near the bottom will keep the
> supply of shares and only unload it when the demand is there.<<<br/>
>
> The alternative scenario is that "the smart money" (most of which
> is quite bearish on the economic fundamentals) will get tired of
> waiting for "the dumb money" to take those shares off their hands,
> and will instead dump their stocks before the music stops playing
> again in order to preserve whatever profits they have left.

Market Correction Won't Be as Harsh as Expected

Sorry, "not a lot of people didn't buy this rally then" should be a lot of people didn't buy this rally then


On Sep 24 10:02 AM Terence Chan wrote:

> When I say demand and supply, don't misunderstand me. It's not the
> actual amount of shares out there. It's the desire to buy (demand)
> or sell (supply) stocks. The mutual funds ($11 Tril in assets) flows
> shows not a lot of people didn't buy this rally then (put it in money
> market) and even now (put it in bonds). So where do you get new
> people with intentions to sell now? Institutions smart enough to
> buy the last few months won't flip it since they are still underweight
> equities and need to add their weightings. They will buy more.<br/>

Market Correction Won't Be as Harsh as Expected

When I say demand and supply, don't misunderstand me. It's not the actual amount of shares out there. It's the desire to buy (demand) or sell (supply) stocks. The mutual funds ($11 Tril in assets) flows shows not a lot of people didn't buy this rally then (put it in money market) and even now (put it in bonds). So where do you get new people with intentions to sell now? Institutions smart enough to buy the last few months won't flip it since they are still underweight equities and need to add their weightings. They will buy more.


On Sep 24 09:45 AM Terence Chan wrote:

> I think we're looking at it from a different perspective. I'm not
> talking about the number of shares out there. You probably took
> it too literally. I'm talking about demand and supply of stocks.
> Few institutions were able to go long AFTER we bottomed in March,
> thus there was no NEW supply added to the system. New demand turns
> into new supply eventually, and demand wasn't there at the bottom.
> It's always like this at troughs. The demand will come in when it's
> too late and the market has rallied so much from the bottom. The
> OLD supply (the smart people who held their shares and didn't dump
> it in panic with the capitulation) distributed it on the way up in
> this rally. They won't wait and dump it at the peak because they
> know that the bid volume won't be there. The few who absorbed this
> old supply are stronger hands since they are probably ahead in their
> positions. They will buy more on the dips.

Market Correction Won't Be as Harsh as Expected

I think we're looking at it from a different perspective. I'm not talking about the number of shares out there. You probably took it too literally. I'm talking about demand and supply of stocks. Few institutions were able to go long AFTER we bottomed in March, thus there was no NEW supply added to the system. New demand turns into new supply eventually, and demand wasn't there at the bottom. It's always like this at troughs. The demand will come in when it's too late and the market has rallied so much from the bottom. The OLD supply (the smart people who held their shares and didn't dump it in panic with the capitulation) distributed it on the way up in this rally. They won't wait and dump it at the peak because they know that the bid volume won't be there. The few who absorbed this old supply are stronger hands since they are probably ahead in their positions. They will buy more on the dips.


On Sep 24 07:20 AM logicalthought wrote:

> >>...one can wonder how equities can drop in that fashion when there
> aren't enough long positions to liquidate in the first place.<<<br/>
>
> LOL... You're kidding, right? This statement makes absolutely no
> sense whatsoever, assuming that there are approximately the same
> number of shares in existence now as there were during the March
> lows (thereby making for the same number of "long positions"). In
> fact, I suspect that there may actually be MORE shares out there
> (and thus more "long positions"), as there have been few if any buy-backs
> while there has been lots of equity issuance. Meanwhile, what HAVE
> declined greatly are the short positions, so you can kiss that cushion
> goodbye.

Today in Commodities: Inflation or Deflation?

I think as of now, inflation is not a concern. but obviously it will be in the future. low inflation expectations for now will be good for stocks, it's just needs to correct in the short-term
www.cheapeststocktradi...

Busting Yet Another Market Indicator Myth

Don,

Please do not try to comment on data that relates to technical analysis if you do not know your technical analysis. Clearly you don't have an idea of when to implement moving averages. The theory of stocks outperforming when above the 200 day moving average is when stocks are coming from below it, not from above it. In 1929, stock were falling towards the 200 day MA. In 1975, the markets consolidated after bottoming, but launched higher and never did a retest. The real move was just delayed a few months. Clearly you just pulled the data and made a simplistic analysis without looking at the bigger picture. Please study how the moving averages work and when they are applied. I have a tutorial here. www.cheapeststocktradi.... I'm sure a lot of chartists will agree with me. Please be more responsible next time.

Blackstone Group: A High Beta Play on Recovery

hehe sure is... complicated set up... its a limited partnership, but since its listed the stockholders are now like general partners as well and benefit/suffer from any rise/fall in the fund assets