Friday, 8/2 Market Wrapup

http://www.financialsense.com/Market/wrapup.htm ^ | 08/02/2002 | Jim Puplava

[Lazamataz]

Market Wrapup is delivered...

[razorback-bert]

Late lunch tonight?

[razorback-bert]

Goldman Sachs, which predicted a rate hike because of a strong economy only five weeks ago, is now calling for the Fed to lower interest rates again in order to thwart another recession.

Time is compressing in this market, before it would have been five months. A day in this market is like a month ten years ago.

I am holding out for the day, when banks pay me to borrow money from them.

[truthkeeper]

BTTT. I always enjoy reading the comments you smart people make on these threads. (Already lost the shirt, but hoping to keep the pants.)

[TigerLikesRooster]

Re #4

Contrary to what people say about the market, this stock market behaves like 2-person adversarial game. There are moves and countermoves, the force of long-term market trend and the force of intervention by big players to save their butts. That is why the transitions of market are so volatile. Adaptive organisms(big players) tend to make the orderly retreat into the stalemate followed by a total rout.

[Ken H]

I always enjoy reading the comments you smart people make on the threads.

Thank you! Thank you very much!

[Ken H]

Surely this blows my Rohry Bear Market theory all to H-E-double-hockey-sticks.

I figured his stewardship of Market Wrapup was causing the bear market and that stocks would rally when he left.

Sure wish I hadn't cashed in my pension and bought all those out of the money NASDAQ calls last Tuesday.

Looks like I picked the wrong week to quit drinking.

[imawit]

Lazamataz: just ran into these postings about a week ago. Who is Puplava ? Is that you and your monicle is Lazamataz ? Great knowledgeable reporting. Was wondering though, what is keeping gold down ? I clicked on your thread yesterday on the two essays but the page couldn't be found.

Truthkeeper: I would say it's not being smart but seeing what is the truth and what is the noise and chaff. Once gaining this viewpoint one must really stick to it. This market is played by the very very powerful (very very rich or in control of huge sums of money) and those that don't stick to the basics and get pulled off by the media, the pumpers, and the huge hoards that don't know what they're doing and wind up getting jerked everywhich way. This is a very large group and essential en masse have as much if not more money and power as an aggregate. This group and those very very rich often get going in different directions and not for reasons of just because but because it's often part of the plan (the bear trap earlier this week). This usually doesn't last too long and the rubber band between the two snaps. When this happens the huge aggregate of nonundertanders usually gets tromped. No I wouldn't call the winners smart, they are the really big money that are the market makers and not the market followers, quessers, predictors, opinionators, etc. I watch what market makers are doing and the fact that no company on this planet deserves a P/E above 20 under the current growth rates and P/E's over 30 are ludicrous. Just figure, at 7% expansion and growth of business per year (in good years, not in the last two years !), how many years would it take a company to grow and match a 20 times P/E if it ever could (depending on what market it is in). Yes it really was a bubble when P/E's were in the area of 100+

[imawit]

Getting back to basics, since for no discernible reason the market went up, there is one remaining law that irrefutably applies, "Newton's Law of Gravity" Oh....just as a parting thought, looks like sacrificing CEO's to the Gods of the stock market is now a dead issue.

[grania]

Time is compressing in this market, before it would have been five months. A day in this market is like a month ten years ago.

This is what's so fascinating. Both the period (frequency) of changes and the amplitude (highs and lows) are just wild. Puplova's lines showing that the changes actually fall within some defineable boundaries are encouraging.

Everything moves so quickly, and then you get the echos of every major occurance. And add to that the artificial occurances...there are constant attempts to influence stockowner's and consumer's behavior. These are when the gods come off their mountains to assure us everything is ok, increases in money supply, and maybe there is something to this "plunge protection team" stuff.

Mathematically, when things swing this wildly, chaos (a complete breakdown) can happen. Then all of these factors get sorted out and something new emerges.

I would think no debt...for individuals, corporations, and countries would be a good thing right now. The ability to move quickly becomes more important. That's why I like small, focused corporations with no debt and some money in the bank.

I just wonder if maybe the government is trying to defend something that doesn't exist anymore. Maybe big corporations with a million things going on just can't move quickly enough for this environment. Maybe they get too wrapped up in defending their images and going through protocals.

Personally, I'd like that, if all of the Time-Warners of the world just broke up into a lot of parts that didn't contradict each other and actually cared about the individual consumer.

[truthkeeper]

Another bump for comments.

[dtel]

The trend channels suggest,
Look out below.
Being a financial neophyte I am finding this whole cycle quite interesting.
I will keep what few bucks I got left in land and cattle, because that is what I enjoy.

[arete]

We may be heading for more problems next week that will take a healthy dose of intervention to avoid. There is now a full-scale banking crisis emerging globally with systemic risks everywhere that could be amplified by the leverage in the financial system from derivatives.

The whole financial system is tied together, linked and intertwined in ways that most of us don't realize or understand. Banks, brokerage houses, insurance companies, mutual and retirement funds are dependent on the stock and bond market and each other. It goes far beyond just the banks. Reserves at insurance companies are often invested in stocks, bonds and real estate for example. Most of these institutions weather normal contractions and downturns in the economy without many problems, but this bear market is taking its toll and is exposing just how vulnerable they are.

Richard W.

[arete]

I don't know about another rate cut. Things would have to be pretty darn bad for that to happen since it would further depress the dollar. Speaking of dollars:

"AngloGold, the South Africa miner, said on Wednesday it would reduce its hedge book by 2.4m ounces to 10.5m ounces in the second quarter as it reported a 10 per cent rise in operating profit.

The miner attributed the "significant reduction" in the company's hedge book to more positive medium to long-term prospects for the gold price."

Go here for complete article:

AngloGold cuts hedge book in second quarter

Richard W.

[Billy_bob_bob]

I've said it before and I'll say it again, I am VERY bearish on the markets. I believe we still have a long way to go before we "hit bottom". We are only just beginning to see signs of real capitulation in the markets.

Everybody is looking for the "real bottom" of this market. I can't tell you a number, but I can tell you what to look for. When the day comes that the average "guy on the street" would rather pull their own teeth out of their head with a pair of rusty pliers before they would buy a stock, that is when you will have "hit bottom". Not before then. We still have a long, long way to go.

My advice to everybody reading this? Get OUT of all equities, get OUT of all debt, get into cash. Don't carry any debt at all if you can avoid it. If you are a football fan think "DEFENSE". There is NO SANCTUARY in this market, all stocks are going to get pounded by the time this is all over.

Of course, this is all IMHO, your mileage may vary, contents may settle during shipping, etc.

[grania]

When the day comes that the average "guy on the street" would rather pull their own teeth out of their head with a pair of rusty pliers before they would buy a stock, that is when you will have "hit bottom".

ROTFL Bump!

[Soren]

Right on, brother! When I see these guys on CNBC and Bloomberg talking bottom and that it's time to buy, I want to reach out and smack them. The idea of nailing the bottom, getting in on the action, being a player is bubble mentality. The name of the game right now is survival (i.e. capital preservation). Why does anyone have to get in at the so-called bottom? Given the uncertainty right now (the market could easily fall 50%), it makes much more sense to wait until the next bull is firmly established before getting in. The trend is your friend, and right now the trend is DOWN.

[Gritty]

Here is a very interesting article on the wild swings in this bear market. According to the author, they are completely characteristic of this type market. Also, follow his links within the article to even more fascinating information.

Massive Daily NASDAQ Rallies

[Semaphore Heathcliffe]

I believe we still have a long way to go before we "hit bottom".

If you look at long-term (all available data) for the three major US indeces, they essentially followed the same path over the past twenty years (working from memory here). Assuming that the charts are roughly identical, the Nasdaq has fallen through to a point that roughly correlates with 2000 on the Dow. Considering how closely they tracked each other on the way up, it makes sense that they might likewise track each other on the way down. 2000 Dow looks possible, if not likely, if this most rudimentary of TA is valid. And since the Naz is still apparently trending down, sub-2K Dow might be in order.