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Re: [RT] weekly analysis



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Thanks Bob for the counter points. This forum is supposed to be about exchanging ideas and I appreciate yours. Of course, in the long run all the negatives will pass and order will be restored - but I don't know how long that will be and  in the long run we will all be dead.
By the way a particularly good book to read to understand what America is going through is " The Fourth Turning - An American Prophecy" by Strauss and Howe.
Take care.
Jim White
Pivot Research & Trading Co.
PivotTrader.com
----- Original Message -----
From: BobsKC
Sent: Wednesday, November 07, 2007 1:52 PM
Subject: Re: [RT] weekly analysis

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@yahoogroups.com
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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