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Jim, I'm not debating you but simply playing devil's advocate to the
pessimism.
I think we will push through $100 a barrel on oil not so much because of
demand but simply to have done it and I also believe that the actual
supply and demand of the product puts a price of around $75 per barrel on
it with the rest being speculation. The Arabs are planning on oil
settling at around $60 short term and $40 long term and have built these
numbers into their economic models.
Housing is a problem certainly but it's not a crash in real value.
It is simply a bubble bursting and for all of us who didn't borrow
against the equity in our homes and if we are not planning a move, the
drop is of little to no importance. Secondly, the correction will
begin to slow soon and prices will stabilize just as they always do with
every bubble that finally bursts. Those who did borrow heavily
against inflated equity are having problems .. there is no doubt about
that but people who use temporary gains in value to buy toys and live a
higher standard of life than they could otherwise afford, should expect
there to be a day of reckoning. However, this too, will pass just
as the 5200 NAS did and we all survived and have made nice returns from
the equity markets. Financial institutions who loaned money in the
sub-prime area were operating on pure greed and with little to no common
sense. Heads are now rolling for that lunacy and will continue to
roll as the depth of the problem unravels.
Inflation has probably been very falsely represented to us by the U.S.
government but this isn't necessarily a bad thing for the market since
once people find out what goods are really costing them in terms of real
percentage increases, they will also realize there is no place to earn
that much return anywhere other than the stock market. (Mutual
funds for the average American).
I do think it possible and even likely we will test the 12,600 area which
represents a 10% retracement from the highs but for I am positive on the
market over-all at least until Hillary fear sets in later next
year. I am holding 80% cash now but as of the close today, I am
looking to begin putting that to work.
Bob
At 01:52 PM 11/7/2007, you wrote:
Rising energy
prices act as a tax on the economy - all elements of the economy- and it
is one we cannot lower by congressional action. The impact will be on
lowered earnings and eventually higher unemployment world wide.
Here in the US the real estate correction will hurt all the downstream
businesses.
As more of the credit crises comes visible, underlying confidence will
deteriorate and a rising market depends on confidence.
Inflation in this country has only been kept low by improved productivity
by out sourcing manufacturing to low wage economies. As money supply
increases to counteract the credit bubble, inflation must rise, usually
with a six month lag. Add to this the continued lack of faith in the
Dollar and in holding US debt and I would say we could be on the
verge of a major down turn. And, if the world economy is truly on fire,
you can rest assured there will be better places to put money than the
US.
Admittedly this is a very pessimistic analysis but the facts are the
facts.
Jim White
Pivot Research & Trading Co.
PivotTrader.com
- ----- Original Message -----
- From: BobsKC
- To:
realtraders@xxxxxxxxxxxxxxx
- Sent: Wednesday, November 07, 2007 10:26 AM
- Subject: Re: [RT] weekly analysis
- At 10:39 AM 11/7/2007, you wrote:
- Please forgive my last post - I posted the wrong
chart.
- My work suggests we are in the period for a weekly pivot on major
indexes.11/16 is the Near Impulse forecast for DOW, S&P and
Russell.This should be a low pivot and start a year-end rally.
- This is what the methodology says yet when I consider all the
external influences( the Dollar, Oil, Near East Uncertainty, Credit
correction, etc.) I see no basis for bullish behavior.
- Jim White
- Pivot Research & Trading Co.
- PivotTrader.com
- What about full employment, rising wages, strong S&P performance,
reasonable PE's, a world economy on fire and no other choices for returns
exceeding inflation?
- Bob
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