LR European

Chart of the Day: Gold and the Dow

If you were to cut out the extremes - equity over-valuation in the late '20s, 60's and '90s the ratio has consistently traded below 10. A move to 5 now would imply (estimated by eye) a doubling in the gold price or a halving in the Dow.

Sentiment Overview: A Scarcity of Bulls

Excellent piece, drawing a lot of relevant information together without bias. Thank you.

New 'Crash' Warnings for U.S. Markets

I take it you're not long the market then?

An more nuanced report of Marc Faber's recent comments would mention that he sees a crash coming BUT is uncertain as to the timing. It could be a few days or weeks or it could be in several years, but given the vast imbalances in the global economy when it comes is may well rock the foundations of capitalism!

Colourful, eh? I guess if you can afford to stay out of the market you probably could. Otherwise, keep working it, but stay frightened.

Promising Signs for the Economy and the Equity Markets

Excellent, well balanced article. Thank you.

Buying Stampede Winding Down? Tread Cautiously

Assuming we have started a correction/ consolidation, Fibonacci retracements would be to about 777, 756, 735, 706 or all the way back to test 666. Raymond James is clearly going for the mildest of these.

My feeling is that is a sensible stance given
1)the volume of negative sentiment (rally wont last, dead cat, sucker, ignoring fundamentals press comments) together with
2)the longer term oversold state of the market (versus 200 day MA for example) and
3)the high volumes of cash on the sidelines in money market accounts that will be put to work once the market twitches to show some upside life again.

In the medium term (a few months out) I would imagine 1)press will be more positive 2)market will no longer be oversold and 3)cash levels will no longer be so exceptionally high. At that point, given the reek from fundamentals still rotting, it will be time to get out!

Credit Crisis Watch: Some Positive Developments

Excellent review of the major credit metrics. Thank you.

Rolex18, what is that all about? Maybe you were hoping to read an article about something else altogether? FWIW, my own view is that buying TIPS right now would be one of the highest risk strategies. We are sliding into deflation, not inflation. Money is being lost faster than it being created. Yes, we all know that government spending on this scale (let alone potential quantitative easing) is inflationary. We also know that governments must be (desperately) hoping for inflation to erode their debt burden. What we don't know is when. We could follow a variant of the Japanese template with an extended deflationary environment for many years.... I do agree, though, that in this situation, keeping investment thinking short term is appropriate.