slavtcho_nikolov
2 posts
msg #27468
- Ignore slavtcho_nikolov |
7/20/2003 1:36:20 PM
If one enters the following query into stockfetcher and examines the corresponding charts, one would likely conclude that the erstwhile
market leaders are wrong to buy at this time.
[price is above 30 and average volume(200) is above 1000000 and average volume(30) is above 1000000].
Furthermore, a double top formation has recently come into existence on the SP500 chart, with about a month's distance between the humps amid weakening demand from bulls.
The author of the following article also claims to have detected the signature
of an anti-bubble in the making (http://www.ess.ucla.edu/faculty/sornette/prediction/index.asp#prediction).
He estimates that in a couple of month's time a serious reversal is imminent
with the new low undercutting the previous market low.
Stepping back from technical (or psychology) analisys for a moment and turning
to fundamentals instead, they don't look all that great either.
While the property bubble seems to be getting bigger, foreclosures in many US
metros are reaching all time highs - this is not a bullish divergence.
The value of properties divided by disposable income is also way too high.
The rents properties fetch relative to their mortgages also shows a bearish divergence in larger US cities. (For Boston where I live it's estimated to be about 0.67).
Jobs appear to have left the USA for good. Manufacturing, technology, call centers, radiology, accounting and more are now done in China and India and there are no plans to bring them back.
Consumer confidence is not likely to improve while blue and white collar workers alike watch their jobs disappear overseas and wonder when their job
will be eliminated next. Keep in mind that consumer spending is said to account for more than 65% of the GDP.
With deflation in many smaller economies already taking hold (e.g. South America) and growth prospects in the Euro zone constantly being revised downward, South Korea slipping again into recession, growing US fiscal deficit and the danger from default by municipalities like California on their bond obligations, I don't see a whole lot of reasons to be betting the long side of the market, despite all the fiscal stimuli.
It looks like a highly leveraged bet by way of long term put options
is the best strategy that I can think of.
If the wonderful profit opportunities just described on the short side indeed
materialize then the sectors of the economy that should decline the most
are IMO banks with large exposure to mortgages - Bear Stearns, Wells Fargo,
Lennar, etc. ; technology stocks like LLTC, and companies like Sears, Wall Mart, etc.
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