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.

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.

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.

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.

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.

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.

Tuesday Outlook: Commodities, Global Markets

Dave,
Happy for you that Francie's surgery seems a success. I'm sure that brings relief. Have seen a fox eat a squirrel in the morning here in the suburbs of Boston.

I'm sitting with less than 50% equities, though as the market powers upward and not making any moves, the % keeps rising. I fear getting swept up in the euphoria and finally adding to equity positions just as the market turns downward again. Timing tends to work that way. As you note, this appears to be a market for professionals, which I am not.

Thursday Outlook: Commodities, Global Markets

Dave, hope all goes as smoothly as possible for your wife tomorrow. Like 'Boom_Bust' above, I've had trouble with the recent persistent optimism on the economy. The consumer is weak and has to be - they've had real wealth loss in terms of home values and investments and for many the loss of a job or reduced salaries. Consumers have to save more to make up for these real losses and to be prepared for a poor economy going forward. How could this can lead to a return to prosperity as we knew it (which it seemed as if the stock market was looking for)?

I apparently don't know much about markets, but I get uncomfortable when I see such a dichotomy between what seems intuitive about the state of the economy versus the recent performance of the equity markets (which in theory are tied to that economy).

Tuesday Outlook: Commodities, Global Markets

Dave, I didn't expect to hear from you for a while. I appreciate you keeping the charts and analysis going given all the distractions (putting it mildly, I suppose) in your life, right now.

So many of the charts seem so synchronized. Makes diversification a more difficult task. I started investing in individual stocks in the late 90s (thuoght I was pretty smart) then went to buy-and-hold indexing after getting smashed by the early 2000s. But index investing diversification has often meant a mix of U.S. large, mid and small caps plus maybe 20% international stocks (plus some bonds and cash). That's been considered sufficient in the past. However, If everything continues to be fairly synchronized, index investors will have to look to expand into these other ETFs like USL, UNG, DBA. Of course, these can be far more volatile and not all that suited to buy-and-hold.

Wednesday Outlook: Commodities, Global Markets

So, Dave, do we just give up on fundamentals? Can 'we' just keep talking up the economy and the markets go up... indefinitely? Can we remain on the top side of the overbough/oversold chart indefinitely and not have any significant correction? I would love to believe the the 'all clear' bell has rung but I fail to see what's changed. Unemployment is high and likely to continue higher as there's no catalyst for that to change. Wages aren't going to increase in this environment. Home prices are declining and foreclosures remain severly elevated.

Personal debt also remains high and people still have to save more to make up for their lower home values and smaller 401(k)'s, neither of which are likely to leap up to their former trejectory.

I fail to see how we can just jump back to where things were. The way things were was/is part of the problem, it was demonstrated to be an unsustainable model. I admit being confused but still holding stocks, albeit at a little lower percentage.

Tuesday Outlook: Commodities, Global Markets

So what's driving the market? Still missing an "engine" to drive the economy forward, IMHO. The last several years, it was home prices and home equity loans that drove consumer buying while incomes remained flat. Another normally key piece to drive the economy is rising employment or incomes. Neither of these is present or appears to be coming soon. The government of the past and present administrations has looked to fill the "gap" with government money. Are we seeing some results of that?

I continue to hold equities (though less than 1 or 2 years ago) and am enjoying the upturn. But I still have trouble making the case for a return to a sustainable bull market when I can't make a case for sustainable economic growth, I can only make a case for this slow down to ease somewhat. How long can the market seperate itself from the apparent underlying economic fundamentals? I admit I don't know. I just don't want to get caught too severely on the wrong side - whichever way it's going to go next.

Tuesday Outlook: Commodities, Global Markets

"We’re paying a big price for past excesses, primarily from bubbles caused by easy money policies of the past combined with the demise of Glass-Steagall in 1999. So the lying and cover-ups just continue apace since, given the election cycle, politicians would just as soon inflate as admit mistakes and make the hard choices."

I guess that about says it all, Dave. It makes it very hard to believe in this rally. I guess my growing concern is that "we" eventually reflate a portion of the economy and equities come along for the ride only to be crushed on the next downside when the stimulus runs dry. If, by then, many small investors have jumped back in, this may do at least as much damage to investors as the initial downturn in equities. I'm afraid I could even become too complacent just in time for the next big leg down.