Seeking Advice

Thursday Outlook: Commodities, Global Markets

Dave,
I think you said it pretty succinctly, "So the liquidity bubble continues to expand and investors are lovin’ it. It is what it is folks, enjoy it while you can." I've kept invested in the market (albeit at lower levels than 2006 or 2007) against my better judgment and feelings but that has proved prudent so far. I remain watchful for signs that either the government is removing liquidity or that investors are getting tired of little signs of real recovery - if that ultimately comes to pass.

Right now, I get the feeling that the only things that matter are that the government says they intend to continue to provide stimulus (1st time home buyer credits and the like) and the Fed indicates that they will keep rates near zero. And for now, maybe that's most of the market...

Friday Outlook: Commodities, Global Markets

Perhaps the path of least resistance for now is still up. There will be an extension to the first time home buyer credit and the U.S Fed and central banks world-wide seem to be taking action to ensure "easy money" to support as much economic growth as they can and in turn supporting equity prices (and commodity prices). As much as I have my doubts about true economic growth and concerns about moral hazard and increasing deficits, I keep feeling foolish when I start to get the urge to fight "the system".

I also see that it's more likely for right now that we edge a little higher than moving lower. But, of course, remain vigilant and aware of signs of potential big moves either down or up.

Thursday Outlook: Commodities, Global Markets

Really sems hard to know how to invest right now, Dave. I do believe that we're seeing an equity bubble. And it seems that the Government is purposely fostering it as a way to increase confidence and allow the big banks to increase their value. The government is devaluing the dollar which makes all comodities rise and the zero interest rates make it impossible to get any return on cash. Hence, the tendency for money to find its way to riskier assets like equities as everyone searches for a way to get some kind of return. It seems so simple in way, though it's not.

As a flexible buy-and-holder, I've been sliding up and down on my equity exposure based on apparent risks (which seem high). And while my exposure is lower for sure, fortunately I have not sold off so I've floated along with the rising equity tide. I keep asking myself how long things can continue and then remind myself that the market can stay irrational for a long time, especially if conditions are pressuring it in that direction. I'll keep reading you're comments as part of how I try to stay informed.

Friday Outlook: Commodities, Global Markets

It's again frustrating for me how a normally great blog entry by you, David, once again gets brought down by ridiculous politics. Yes, politics and the economy/markets are tied, but please wtf does the US President wining the Nobel Peace Prize have to do with today's market action? Exactly, nothing. I suppose these blogs become a nice relief valve for some conservatives frustrated at finding themselves currently "out of power."

But David, for you to join the fray... come on. I get that you're a conservative and it's clear that many of your followers are as well, but as an Independent it just debases the discussion that I look to you for, which is unbiased technical analysis. I have no problem with your witty comments, and look forward to reading your analysis but please I ask you not encourage folks to head down that hole. I need to believe your interpretations of what's going on and what might be happening going forward. I don't want to start questioning your analysis as potentially colored by an ideological bias.

Four Problems Undermining Future American Prosperity

What an interesting post, Rick!
I especially like, "Yet outraged Americans seem most concerned about fictions like death panels and government-enforced euthanasia, while clinging to the myth that our current system of selective availability and perverse incentives somehow represents capitalist ideals" and also "What keeps the rest of us content is the illusion that we, too, will be able to game the system someday—as long as the government doesn't interfere."

How true. Many of us have been sold by many special interests that we will be the privaleged few, and that the problem is all these other people who want to change the status quo. Of course, the status quo always benefits primarily those who already have or hold the power - that's why they work so hard to scare the majority from making any changes. It's sad, but still the U.S. is a great nation and will survive this malaise and the special interests. I do feel though that the high standard of living in the U.S. will necessarily get knocked down somewhat, but maybe some humility needed to come our way at some point?

Tuesday Outlook: Commodities, Global Markets

Thanks for the charts, Dave. As always, the most informative blog on seeking alpha.
@ Dr. O. -- Your commentary almost always veers very political and I often find I disagree with your poltical points though not the economic ones, necessarily.
"...the administration's recent beating in the polls..."? Whether you agree or disagree with their approach, the poll numbers are hardly reflecting any 'beating' as they're approval numbers remain above 50% which is higher than many previous administrations at this point in their term. Perhaps it's wishful thinking on your part. And I've seen no "outright rebellion" of current policies as you describe it, just highly energized partisan fighting that I've seen when any administration tries to redirect policy.

That being said, one can't help but think that the big banks and the government are trying desperately to prop up the markets as we saw during the latter stages of the previous administration (these manipulations are good for whichever party is in power, after all). The temptation is probably too great. For the banks, they're benefitting from trading profits and from having their stock prices rise, while the government benefits from the rise in consumer confidence that results from 401k investments coming back somewhat.

Makes it hard to invest though when fundamentals appear not to matter much.

Why This Is No Time for Buy and Hold

I also got suckered into clicking on the link to the "Cloward-Piven Strategy", which turns out to be right wing fear mongering much like the left wing versions I've seen written during the Bush administration. Unforunately after that the author lost all credibility.

It's definitely non-partisan to see and be concerned by the market manipulation going on. This administration (like any other) is not going to stop the big players from pushing the market up (against fundamentals) since it increases general sentiment. This of course also happened during the Bush admin (and probably every other). Maybe it's worse right now with volume so light, because it leaves markets in a position to be easily pushed around. Sooner or later fundamentals come in to play because they have to in the greater scheme. But in the short run, the manipulators (the big time tradin desks) can profit handsomely.

Friday Outlook: Rage Against the Machine

Dr. O,
Clearly you DO listen to a lot (maybe too much) of right wing talk radio and after all there is far more of that on the air then left wing talk (though there is both around). I would not be getting worried by the points raised from any highly biased sources, such as "conservative talk". That isn't to say that things are good or that everything being proposed is good. The fact is, like most of us, I really don't know what's right. It could be that the proposed stimulus saved us from doom as some say (not on conservative radio) or it could be that it was a near complete waste of resources because nothing can really be done to stop the giant deleveraging going on right now in the economy.

I think the main problem is that as a society we have overspent, overconsumed, allowed the creation of dangerous poorly understood unregulated debt instruments, failed to create jreal obs or the basis for economic growth and somehow failed to spot all this for more than 2 decades. Now it's come home to roost. This has occured through Republican and Democratic administrations alike back from Reagan who cut taxes but not spending to match, up through Clinton, George W. and now the current administration. Each administration kicked the can down the road as best they could. I

Thursday Outlook: Commodities, Global Markets

Dave,
I appreciate your charts on the MCD and the Summation Index. I expect that there will be some sort of bounce with the MCD below -60, now. I'll probably use the bounce to lighten up on equities, expecting a roughed road ahead again.

To Dr. O. Rational people understand that global warming is real. The northern and eastern parts of the country have had a very unusual jet stream pattern this summer, bringing in cool Canadian air. So what? That doesn't change the fact that the average temps on the surface of the earth have been rising over the past few decades and that there'is very strong consensus among those that study it that our industrial activities are driving it. I fail to understand the point of denying climate change or how it became political... but strangely it has. We'll need to deal with it one way or another and ignoring it won't make it go away.

Markets Rolling Over

Always very imformative, Prieur. Thanks for the analysis!

Tuesday Outlook: Commodities, Global Markets

The concerns I see being articulated here and elsewhere is that the small time investors will get crushed if the apparent market manipulations (the "buy programs" of the really big players) stop and the market falls back 15% or 20%. But with few people I know interested in buying at this point (they're wary, shell shocked, or just confused), I don't think individual 401k investors have been jumping in. The light volume I think indicates it's mostly the big players buying and selling to each other. Those with 401k's in target date retirement funds probably could be the most exposed though, if this scenario comes to pass.

Taking a Lesson from the Great Depression

"Americans have saved nothing for the past ten years, and the capital gains that they considered savings-substitutes have vanished. That means that an enormous savings deficit accumulated over more than a decade has been exposed, and that Americans must attempt to correct it quickly and under the worst of circumstances."

This is the theme I keep returning to. The expected way to pull the U.S. out of recession is increased consumer spending (accounts for 70% of the economy). Yet, how can consumers spend when the only reponsible action right now is to save?

Tuesday Outlook: Commodities, Global Markets

Dave, I always appreciate your charts but can't watch CNBC since they have such a ridiculous bias (consistently uber-bullish and consistently politically very conservative). While biases are normal for all of us, they lead to a lot of mistakes and misinterpretations. Following CNBC's recommendations and advice is generally perilous as I've learned the hard way. Hence, the accurate comments above from basehitz. I'd recommend to you and anyone else to follow Bloomberg instead, more information, much less hype.

It's hard to argue with the market manipluation theme. The gov't is providing money to banks who are funneling it to the trading desks. Seems the banks are using the money to trade and make money which obviously helps their bottom line and ability to pay back TARP so the executives can get back to their uncontrolled salaries and bonuses. I don't see the green shoots and still have no clue what the underlying fundamentals are. No administration wants the market to fall on their watch so they take extraordinary actions to keep it from plunging.

Tuesday Outlook: Commodities, Global Markets

Dave,
Always enjoyt the chaets and the short term oversold probably means an up day Tuesday (or Wednesday) I suppose.

There was no apparent "stick save" at the end of the day, which has been unusual on down days, recently. I wonder if there's signifcance to that. I'd cut equities (long) to a little above 40% a few months ago which drifted down to about 34% as the market drifted to the March lows. Now, with the rally, I find my portfolio at between 42 and 43%. But, I wonder whether the games "da boyz" play is coming to an end, meaning less propping, no more stick saves, and maybe a return to reality - you know that place where real economic data drives market action. If that's arrived, maybe I should be taking my % equities back down a bit. Watching and waiting for a sign, I suppose.

Wednesday Outlook: Commodities, Global Markets

Dave, appreciate your continuing to post despite computer frustrations. Hope that your regular posts indicate that the family health issues are for now out of crisis and easing towards resolution. To answer your earlier questions of what types of info to chart/display, I like it pretty basic and mostly follow the basics on your charts and your comments. I don't need the MACD, but do like the McClellan oscillator chart and the addition of the summation index. I'm not a trader, but I do like to have a feel for when the market is overbought or oversold - as I believe you've said, they provide useful info for entry and (sometimes) exit points.