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  • Possible Scenario for a Market Rally [View article]
    Hi Chris,

    A very balanced perspective - which confirms the indecision. However I believe the surprises will be more to the downside. The buy the dips which has maintained the rally since March 2009 is still the more prevalent investment mindset. This mindset may enable moderate rally and pull back momentum for a period of time - but ultimately will skew more to the downside and eventually to increased sell off's.

    What could change this? I am not sure any of your points in favour of a sustained rally are significant enough to crowd out the growing problems embedded and now surfacing within the world's capital structural - bubbles created must get deflated which usually creates more bubbles - this time in my very limited opinion the credit bubble is rooted too broadly within the structures for one bubble to be deflated but offset by creation of an offset bubble - if that makes sense. Deflating the credit bubble will introduce deflationary pressures on just about every asset class - which by it's very definition must limit the broader economic re-flation of manufacturing / employment etc. I can't see within my limited understanding of these things where the "offset" is achievable to the credit de-leveraging? Perhaps you could comment on this for those less informed?
    May 27 04:45 PM | Likes Like |Link to Comment
  • Sure, Stocks Are Due for a Bounce, But What About Long-Term? [View article]
    Here is my pennies worth!!

    The bounce today failed to show the necessary momentum to build a meaningful recovery and selling pressures will continue - bear in mind markets can and have demonstrated many times that they can continue downwards within a continuation of heavily over-sold positions.

    The short term may bounce further but it will be weak. The SPX has an open gap at 1,115.05 WHICH it may choose to close - but not necessarily - before continuing to the downside. The key break down level is 1,050.93 - a break below this level should announce the sharpest sell off to date (from prior high).

    My GUESS is that the June / July low is the next low / consolidation - a break through here will have little resistance to the March 2009 low.

    The flip side is another rally - but this will require in very short order a significant up trend - which given the evidence of the sharp downside and grinding overlapping up trends, momentum at the moment does not favour this eventuality.

    Who really knows - not me for sure.
    May 26 05:33 PM | 3 Likes Like |Link to Comment
  • Which Scenario Is It? [View instapost]
    Aarc,

    Your initial wave count from the March 2009 low assumes a 5 wave upleg. If this was rather a A-B-W-X-Y then we could assume this was a corrective wave and not an impulsive wave. If the A-B-W-X-Y is correct then the current wave down is either a B wave which should correct to a Fib 38.2 or 50.0. However, the more scary scenario assumes a 5 wave impulse wave is unfolding - in which we have completed i, ii , i of iii, ii of iii - with iii of iii about to unfold.

    I have my doubts the full impulse will unfold.

    Another possible medium term wave is the expanded flat from late 2007 to March 2009 morphs into a triangle A-B-C-D completed with E currently unfolding - since E can be 1.618 of A this would see the SPX bottoming around 791 which would make a symmetrical triangle.

    As you always say "who knows" - maybe we bottom at 1,095 and rally strongly to 1,500 over the next 12-17 months.

    My guess a fairly strong correction which hopefully creates the triangle - a full Wave 3 impulse is to scary to contemplate.
    May 24 02:12 PM | Likes Like |Link to Comment
  • The Hindenburg Omen, May 2010 [View instapost]
    Hi there "Rocks",

    Got back from Angola last night - a very interesting trip! The Chinese are very visible and their target OIL!!!

    I go away for a week and miss all the shenanigans and mysteries of an inefficient market that now seems to have fully embraced the real problems facing the world - earnings rightly so are now discarded as a "side show" in terms of the fundamental structural longer term issues that our dysfunctional financial world has finally realised it needs to face before sustainable recovery can be achieved. I sincerely hope this time around (although I think Governments "liquidity" is so severely limited that intervention will be limited) the "powers that be" allow the natural sequencing of the Capital markets to find a bottom from which ultimately those infamous "green shoots" can take root and start the recovery process. Further, manipulation / intervention prolongs the acceptance that the next 10 years or so are going to be very difficult - which will unfortunately take it's toll across a broad front - forcing structural changes both in the Public Sector and Private Sector - in the Public Sector the "spend what you don't have drunks" will finally sober up and start the process of rationalisation and priorisation - and the Private Sector will restructure and adopt to new consumer buying behaviours.

    The Chinese curse "May you live in interesting times" is upon us - denial is no longer a strategy. Governments need to accept they can't save us from ourselves (aka the Germans can't save the Greeks from themselves by lending them more money), they need to step down and force the Capital Markets to save themselves and in the process all of us - a frightening thought but a necessary journey. Perhaps that's what the markets are telling us - for while they rallied the "real deeper and longer term" were denied - if they melt down again - it may force reality to become the focus - and with it the "real solutions".

    The first stage of "hurt" is the credit de-leveraging and the ensuing deflationary environment - not easy with it's unfortunate "pain".

    Who really knows - but your past and hopefully continued insights provide much needed perspective that enables all of us to gain a measure of understanding. Your post on the de-flation was well written and I believe an accurate appraisal of where we are today.

    Rock on!!!
    May 21 10:05 AM | 6 Likes Like |Link to Comment
  • The New Hindenberg Omen Blog  [View instapost]
    Hi Rock,

    You bet. Not sure if this is protocol but email me johncook@kingsley.co.za
    May 4 05:12 PM | 5 Likes Like |Link to Comment
  • The New Hindenberg Omen Blog  [View instapost]
    Rock,

    Hope all well buddy.

    You know we could make a small "annuity income" fortune by offering your obvious Technical analysis skills in South Africa. A website that offers a wide coverage of markets, assessments and summary of financial, social and economic events influencing the markets - a daily update, a weekly summation and a quarterly review and forward look for next quarter.

    It needs to be honest in that when the calls are wrong they are acknowledged and considered opinion given as to why it was wrong - that's how Investors learn. Too often Commentators give 10 opinions of which 1 works and they beat your head with the 1 telling you how "great" they are - ignoring the other 9.


    There is nothing like it here - all are much of a much - and really of no real value with little or no learning's'. I have a few ideas and believe it could be really valuable and most importantly make some very important annuity income.

    On the HO the market drivers seem balanced - good revenue /earnings bad sentiment due to PIIGS, POLITICS and SOCIAL UNREST. My guess is the growing SOCIAL UNREST will be the bigger longer term issue. In my book the "correction" will be 15-30% rather than a melt down.

    Keep the updates coming and thank you for the time you put into updating and sharing this important knowledge with us.
    May 4 11:39 AM | 4 Likes Like |Link to Comment
  • Watch and Wait [View instapost]
    Thanks Aarc,

    Your insights are incredibly valuable. What I really appreciate is not only the insights but the commentary on what is driving sentiment - cause and effect. In addition you provide a context for future possibilities. Please keep your posts going - I am sure they are appreciated by more people than you are aware of.

    Thank you
    May 3 06:13 PM | 2 Likes Like |Link to Comment
  • Predicting U.S. Unemployment Rates Based on Housing Starts [View article]
    Hi Jon,

    Thank you for sharing this with us. Would it be possible to articulate in "layman" terms a prediction of what you believe the next 12 months would look like for employment?

    This level of analysis is beyond my small brain - I understand the principles implied by the correlation but lack the analytical skill set to interpret it going forward.
    Apr 27 04:58 AM | Likes Like |Link to Comment
  • The New Hindenberg Omen Blog  [View instapost]
    Thanks Rock.

    I think you should take a break in Cape Town some time - keep us "real".

    I see Portugal is now on the agenda - Ireland still looks dodgy, Dubai has gone "unresolved" under the radar, Germany has elections with Greece an "election" hangover for Merkel, UK looks like a hang Parliament, the USD continues to show signs of contining to strengthen, Italy is in a similar boat but not yet on the radar, The Chinese stock market looks like it is heading the downside in Asian stocks which suggests real liquidity tightening, India has a cricket corruption scandal involving key Government Officials - in summary a derioating "sentiment" on a wide front.

    The good news is earnings and revenues - particularly in stronger developed countries - positive signs of recovery - but with suppressed housing and continued unemployment is the reovery sustainable?

    All in all a precurious state of "recovery" - which as you have mentioned does not mean a significant correction - but surely it implies the easy money has been made and at best the markets shoulld pullback from these levels and churn a protracted sideways move for at least the next year or two? Alternatively it keeps building by going 1% up .5% down for a while - net result is up but slowly.
    Apr 27 04:34 AM | 4 Likes Like |Link to Comment
  • The New Hindenberg Omen Blog  [View instapost]
    Thanks Rock - keep us "real"!!!!
    Apr 23 08:28 AM | 4 Likes Like |Link to Comment
  • Why Popular Market Indicators May Be Giving False Signals [View article]
    I have got the major part of this rally wrong, having moved into mostly cash in October, so my comments should be taken with the pinch of salt they deserve.

    I unashamedly need a material correction (as opposed to a 5-8% pull back) to re-enter this market. Having had so many "bullish" indicators against continued economic deteriorating has not made investment decisions easy for the more conservative - such is life and such are the challenges of managing your investments through these choppy waters. The difficult is not managing "pullbacks" as that is surely part and parcel of the ebb and flow - the difficulty is "risk assessment". The markets have since July 2009 carried both "bullish" and "capitulation" possibility - the conservatively minded are rightly nervous of the "capitulation" and the implications of a continued negative return for potentially another 5-7 years (2015-2017 widely tipped as the end of the current secular Bear) and the more "risk orientated" the "bullish" opportunity of unprecedented returns (who so far have called it correctly).

    The current situation continues to hold both scenario potentials. However, if they kick up from the current "consolidation" my guess is Investors (the retail Investors) will be forced to reconsider their more "conservative" position and re-enter the markets - this will create much needed volume and a stronger rally may unfold. In this scenario it can be argued that the market shifts from strong to weak hands - given that at some point the "high risk" orientated Investors will have to realise some profit. In this scenario; will the "retail" funds out weigh the withdrawal (in full or part) of the shorter term "speculative / market maker" funds? If so a manageable "pull back" results - if not we get panic and potential "capitulation" - the extent of which will be determined by the effectiveness with which the global economy / Governments manage the numerous and potentially compounding "over hangs" of Sovereign debt or default potential in PIIGS: employment, housing, sustainable revenue growths etc.

    To me the risks / rewards are still not sufficiently balanced - and I have fully reconciled that staying on the sidelines is still the most prudent of choices - admittedly at a fairly material "opportunity cost" thus far. Timing in life is everything - particularly in terms of investments - I do not believe now is the time to "chase" the market - rather for those like myself who have "missed" a reasonable chunk of this rally remain patient and wait for the market either to come back to your "value price points" or some of the overhanging economic issues start to demonstrate some sustainable upticks / solution.

    ........."PINCH OF SALT" - I have been overly conservative and despite the lost opportunities continue to remain so.
    Apr 23 08:12 AM | 2 Likes Like |Link to Comment
  • Credit Suisse: Next Stop, S&P 1,270 [View article]
    Thanks again Aarc - some more great insights.
    Apr 21 12:17 PM | 1 Like Like |Link to Comment
  • Monday Rally/Recovery or Just a Pullback? [View instapost]
    Hi Aarc,

    Your last paragraph somes me up! I have spent days and weeks analysisng everything I can possibly think of - in almost every case I seem to be off the mark. Either too early or too late - it is very frustrating.

    Need to find another way.
    Apr 20 09:51 AM | Likes Like |Link to Comment
  • Earnings Season So Far [View article]
    Thanks a really useful analysis.

    Could you have a column which shows % beat or miss of a weighted guidance - more relevant on revenues. It would greatly add to getting a feel on the "in coming recovery tide"?
    Apr 17 06:45 PM | Likes Like |Link to Comment
  • Goldman Sachs, John Paulson, And 'The Fabulous Fab' [View article]
    Very pertinent point. To "wired" to fail in any circumstance - for now?
    Apr 16 02:30 PM | 2 Likes Like |Link to Comment
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