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IDS World Markets 27th February 08


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The market's reaction to bad news have changed over the past few weeks.  Bad news are brushed aside and folks are buying.

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Why do I feel that on Fri Dow is going to be down more than -400 pts. Of course, this is going to be short of Dow 13.2k my target for next week. They can ignore lots of economic indicators, but , they can not ignore Personal Income and expenditures.

 

DJUS Oil & Gas Index is only 3% off its all-time-high. Many oscillators that I look at, are overbought including DOW.

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Markets go up, markets go down... they have to go up in order to come down.

 

This action really looks like the climbing of the edges of the burning diesel pits of worry but it's just ST stuff, I'd be waiting for this to continue for some weeks before saying that the market is brushing off every signs of worry. EOM is near.

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My exact thoughts. Chart hasn't proven anything yet beside another bear market rally.

I see higher prices first then who knows.

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it just makes me sick, to see our economy in the state that it is in, debt load, oil, degrading dollar, and we still stay at these levels. in previous pre-recessions or recessions, or oil crisis, what percent did the dow clip off?

 

maybe it just goes to show how manipulated the markets are now, rather than 25-40 years ago. just plain sickening.

 

DOW 10,000!

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Good news hitting some sectors isn't providing much lifting power either, banks are still not doing well despite the news earlier in the week. Yesterday IBM should have spurred big cap tech and it hasn't yet.

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Depends how you look at it. The news coming out on C the last 2 weeks have been horrendous. More write offs, downgrades, earnings cut and dividends cut by 50% and yet C is a good 20% off the lows. If it clears the 26 area it might be off to the races.

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So this jam is a gift for shorts?

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My picks are all longs at the moment. Whether that will change tomorrow, we'll have to see. Based on the cycle projections I am not anticipating that I will change anything immediately, but that depends on how the rest of the day plays out, how the Fed handles the issues it faces over the next 3 days, and how the market responds, particularly in terms of the cycle indicators. I'm comfortable with my longs at the moment, but they are making a beeline for their price targets. If they hit them, I'm out.

 

I am always looking for shorts, but except for that one ill timed stab last week, I haven't done anything on the short side for the entire month of February. I generally do not consider shorting at all when the 13 week and 6 month cycles are early in up phases. I want to load up on shorts when those up phases are topping out.

 

Ditto for longs. I got the bottom signals a little late but subsequently saw pretty clearly which groups were going to move. I was too scared to load up, and then let myself get stopped out of a couple of the best movers. But I still have two good ones, so I suppose I shouldn't complain too much about the ones I let go. Coulda shoulda woulda will drive you crazy. I just try to learn, and be prepared for the next opportunity. As Satchel Paige said, "Never look back, something might be gainin' on you. "

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I don't know. It's just a concern I have about what to hold in a worst case scenario.

 

I am beginning to become concerned that the time is coming when T-bills will not be as safe an investment as we think they are. At that point, I don't know what the alternatives would be.  It would probably be the end of life in the US as we know it. 

 

It's just that the rate at which US Gov finances are collapsing and the rate at which cash is flowing into T-bills, is beginning to concern me greatly. This is not rational behavior. It is bubble like panic behavior.

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Contrary Investor had a nice Feb write up on this issue basically called it FEAR: a bit and link:

 

Importantly, as we stand back and again look at the character of current investment environment in the Treasury market, we see anomalistic recent buying within the context of: 1) lack of alternative AAA rated fixed income vehicles, 2) negative real rates of return along virtually the entirety of the Treasury curve, 3) buying based on safe haven status as opposed to economic return potential, and 4) cash in the mutual bond fund complex remains quite low relative to historical experience.

 

So as we look ahead, we believe now is the time to at least start thinking about the possibilities for financial market and real economic outcomes if and when this panic behavioral trade in the US Treasury market reverses. We already know that at that point it does become the crowded theater with one small exit door. For at least as far as the message and data of history is concerned, it may very well be that at some point the US bond mutual fund complex is trying its best to squeeze out of the same door with so many institutions who first panicked to get in. Aren't the actions and thinking of crowds amazing...to watch from a distance, of course? Indeed they are.

 

http://www.contraryinvestor.com/mo.htm

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Contrary Investor had a nice Feb write up on this issue basically called it FEAR: a bit and link:

 

Importantly, as we stand back and again look at the character of current investment environment in the Treasury market, we see anomalistic recent buying within the context of: 1) lack of alternative AAA rated fixed income vehicles, 2) negative real rates of return along virtually the entirety of the Treasury curve, 3) buying based on safe haven status as opposed to economic return potential, and 4) cash in the mutual bond fund complex remains quite low relative to historical experience.

 

So as we look ahead, we believe now is the time to at least start thinking about the possibilities for financial market and real economic outcomes if and when this panic behavioral trade in the US Treasury market reverses.  We already know that at that point it does become the crowded theater with one small exit door.  For at least as far as the message and data of history is concerned, it may very well be that at some point the US bond mutual fund complex is trying its best to squeeze out of the same door with so many institutions who first panicked to get in.  Aren't the actions and thinking of crowds amazing...to watch from a distance, of course?  Indeed they are.

 

http://www.contraryinvestor.com/mo.htm

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Ron Paul is reading Ben the riot act! Hilarious!

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