Friday, 7/19, Market WrapUp (Capitulation, or precious metals, water, oil & gas, and defense?)

Financial Sense Online ^ | 7/19/2002 | James J. Puplava

[BlackJack]

Amazing.....mentioned "Perfect Storm"! August 14 should be
interesting.........companies restate earnings.

[BlackJack]

If trade deficits grow.....budget deficits grow....dollar keeps
falling....and the Fed does not raise interest rates to support dollar....we could see $500 gold soon.

[Deuce]

Dow: 6700 after first bottoming under 6000 around 8/20
NASDAQ: 990
S&P: 890
Gold: $345 (not quite keeping up with yen and euro----yet!)
Silver: $5.20
Euro: 1.07
Yen: 105

[Ken H]

DOW: 9200

S&P 500: 920

NASDAQ: 1460

GOLD: 310

SILVER: 5.00

Rational: I'm using the Rohry contrary indicator. Since Market WrapUp burst onto the scene at FR, stock markets everywhere have tanked.

Therefore, in your absence, stocks will stage a nice bear market rally.

Enjoy your time off!

[Ken H]

Rational should be Rationale in previous post.

[Mr. Jeeves]

9/8/2002

DOW: 7200
S&P 500: 775
NASDAQ: 1350
GOLD: 325
SILVER: 5.00

9/8/2003

DOW: 5700
S&P 500: 610
NASDAQ: 820
GOLD: 410
SILVER: 9.00

9/8/2004

DOW: 3200
S&P 500: 350
NASDAQ: 375
GOLD: 850
SILVER: 25.00

9/8/2005

DOW: 2900
S&P 500: 390
NASDAQ: 400
GOLD: 1250
SILVER: 45.00

[StockAyatollah]

My 9/6/2002 (Friday) close predictions:

Dow: 6883 (But wait til October!)
NASDAQ: 1,250 (techs might be oversold, I see divergence from the Dow)
S&P: 650
Gold: No clue. Depends on various nefarious actitivies of some shady people, like Mr. Greenspan
Silver: I dunno but somebody will try to corner the market. (LOL)

[Soren]

I've been expecting a plunge for 2 1/2 years, so I've just about given up making short term market predictions. A lot of people are talking about the numerous oversold indicators, but I think those indicators will be irrelevant when the market gets into panic mode. This kind of activity is unusual for the normally quiet summer months. Also, just like NCAA pools, you have to go for the upset if you want to win. So with that in mind I'll go for the crash scenario (which means we will probably rally):

DJIA: 6000
Naz: 1060
S&P: 680
Gold: $360
Silver: $5.80

The alternative is that we rally to maybe 9500. What I don't think will happen is an orderly decline to the 7000 range. Seems like we would get a panic before that would happen. Also, if gold breaks $330, I think it will rise sharply, so predictions of $335-$345 don't seem likely to me. Silver is a wildcard. Butler et al have been predicting the breakout for years. At this point, I 'm beginning to wonder if anyone has a good handle on the actual supply level.

[TigerLikesRooster]

RE #66

Boy, you are at the cutting edge ! If you wins, you can clear the deck and have it all.

[TigerLikesRooster]

Re #68

The alternative is that we rally to maybe 9500.

Gosh, some people have too much money ! Or they just want biggest crash of all time later by pumping Dow back up to 9500. Surely that will be remembered even in the next millenium.

[Yellow Rose of Texas]

I can live with oil $35.

[B. A. Conservative]

"If you have money to invest, begin dollar-cost averaging. A year from now, you'll be very happy."

You could be right.

I have no idea where the market will be in September. But between now and a year from now, I intend to sell short into rallies, cover on the next leg down, and invest my profits and capital in gold. A year from now, I am confidant that I will be very happy. I hope we both are.

[B. A. Conservative]

Sounds too good to be true? How often do they allow you to visit your money?

[Gritty]

August 14 should be interesting.........companies restate earnings.

I can't imagine how this will do anything except plunge the equities markets! There will be none stated higher but myriads lower, as CEOs and CFOs dance to escape the looming rope. But, it's necessary to bring perspective into this ponzi scheme. We'll see how many of these 1,000 are genuine scam artists and how many are just tweakmasters. The former will plummet. The latter will hold their own or maybe increase some. Past honesty will now have it's present rewards.

Now, it we could only get the government to do the same honest math....

[SauronOfMordor]

Part 5 of the "perfect Storm" series had an interesting point regarding derivatives:

Originally, the derivative business began as a way of insuring against risk. In the 90’s the world of derivatives turned into a business of speculation used by institutions, hedge funds and well-heeled investors to leverage their returns. The hedge funds, in particular, remain almost exclusively the domain of the wealthy. They are unregulated investment pools that aren’t registered with the SEC. They can concentrate their portfolios, use leverage, and bet the ranch without prudent concerns for diversification. When they blow-up, as in the case of LTCM, they create nuclear shock waves throughout the financial system

The thing with derivatives is that they can create extreme profits, but with essentially unlimited risk. The problem is, for certain investers, unlimited risk does not affect them.

Suppose I have $1M in assets and I sell $1M worth of uncovered call options. If the underlying stock price goes down, the options expire without exercise and I've doubled my assets. If the underlying stock goes up, I lose money, and I may go broke.

But suppose I've sold $100M worth of options. If I win the bet, I get $100M and I retire. If I lose, I cannot lose more than my actual assets. If I lose so much that my downfall will bring the whole system down with me (as LTCM threatened to do), I no longer have a problem -- the govt does

[SauronOfMordor]

It's to the administration's advantage to have a really bad summer, get all the bad news out of the way, and for things to start going back up by November, than to try to prop things up any longer, and have an even bigger crash later

[SauronOfMordor]

Where will everbody live?

When you can no longer meet the mortgage on your $400K house, then it's time to move into an apartment.

The big problem for the banks will be when too many houses are worth less on the market than the outstanding mortgage.

[Wyatt's Torch]

Trade deficits grew throughout the 80's and 90's and buget deficits grew in the 80's and were eliminated in the 90's. There is no correlation.

Interest rates (the Fed Funds rate) themselves have nothing to do with the strength of the dollar. Only increases in the money supply can affect it. The dollar started falling well after the Fed got down to 175. No direct correlation between interst rates and money supply.

[BlackJack]

The dollar got stronger after 95, when Newt started balancing the budget. In 94 it fell to 80 Yen. Clinton was raising taxes and trying to nationalize health insurance system, money fled country.A few years after Newt started balancing the budget, dollar doubled to almost 160 Yen. Money that foreigners had from trade deficits came back and bought our bonds and equities. Not now. Money supply does also factor and has been growing steadily. There is a correlation between interest rates and currency. Higher rates attract investment.....strengthens currency. Money right now is not
coming in from Japan and elsewhere.....hurts economy and US dollar.
Thats my take.

[BlackJack]

http://www.nationalpost.com/financialpost/story.html?id={25D4F9A9-7139-48ED-A01A-EDFB43B20C14}