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Stretched Out Again


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I'm inclined to agree with B4's outlook here, although after the time that this has dragged on, nothing will surprise me anymore.

 

I'm expecting the negative divergences to come in hard and fast from now on, if the market does still attempt to defy gravity.

 

The Nasdaq new highs and new lows, for one, are showing tiredness. In fact, as this chart shows, they're already turned the corner:

post-7-1052522512.png

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Some snippets from Lance:

 

"The rest of tech was higher across the board as well. It?s worth noting that CSCO, who?s flat guidance was the catalyst for Wednesday?s selloff, rallied 5 percent as if that guidance never even happened and ended the week at a marginal new high. The Internet trash wasn?t exactly exploding higher, but it certainly wasn?t going down, as that area continues to slowly inch higher. So, despite a short pullback earlier in the week, the speculative bid still remains rather strong, as we continue to be in a momentum driven environment dominated by the theory that ?we don?t care about price or facts because things are going to get better.? It?s basically just your everyday, close your eyes and buy until it stops working sort of market."

 

Mark's Translation:

 

Riverboating motion chasing continues unabated. Whatever fails to move is abandoned, and the Keno Chips move to another table. Price or facts don't matter. Charts and momentum rule. Buy whatever is moving. The rest is noise.

 

"For the week, most of the major indices managed to move back to the middle of the week?s small trading range. I had thought that perhaps the continuing collapse in the dollar might be a catalyst to send us a little lower ahead of next week?s last round of tech earnings (which will no doubt be interpreted positively). But, that turned out to be wrong and what little concern over the collapsing dollar appeared yesterday seemed to be quickly swept under the rug and forgotten today. And while the major indexes did not make new highs for the move, the VIX did collapse another 7 percent to a new low. Thus, we?re getting closer and closer to our goal of a sub-20 reading in that indicator. Stocks continue to be in ?nothing matters? mode as there?s apparently still enough money around to push stocks higher simply based on the perennial theory that the economy will improve in the second half."

 

The dollar is of no concern. SARS could spread to plague proportions, but that doesn't matter. In an econony where 79% of the GDP is destined to run off of billions of eyeballs gaming charts and graphs chasing Promise Tickets, the only thing that matters is pointing and clicking, and chasing price motion on the computer screen, even if there is a Nuclear Winter occurring outside your office window.

 

"Next week, we?ll hear from AMAT on Tuesday and then DELL as well as INTC?s midquarter update on Thursday. I suspect all three of these companies will try and spin as positive an outlook as they can. The market is pretty receptive to such spin at the moment, and they know it. We also have an expiration next week, which could add further upside fuel I suppose. So, we?ll see if we can get the VIX down below 20 sometime next week and then take another look again at things to see if the rally is showing any signs of exhaustion. Until the VIX breaks below 20, the bears are likely to continue to have a rough go of it, even if the "top" has already been put in, which I suppose is possible (although doubtful judging by today's strength). My plan, for those that care, is to continue to wait for that sub-20 VIX signal before beginning to look seriously at the short side once again."

 

Shorts covered quickly into the close today, knowing that the most reliable starter pistols (AMAT, DELL, and INTC) are on deck next week with more "beat by a penny" propoganda. In fact, AMAT is of paramount importance. Why is that? Its the lead SledDog of the SOX.

 

The Economy is the Stock Market.

 

The Stock Market is the SOX.

 

AMAT is the largest breasted wonder of the SOX.

 

Therefore AMAT is the economy.

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No housing crash?

 

In January 2002, the median home in the United States was $187,000.

 

With the Euro at .88 cents, it would have cost you 212,500 Euros.

Today, at 1.15/Euro, the median home price is still $187,000.

The Price in Euros = 162,600 or a price drop of 24%

 

With gold at $275/ounce, the median home in 01/02 was 680 ounces of gold.

Today, 535 ounces of gold, or a drop of 21%

 

Here in San Diego County, it isn't as bad. The median home in Jan. 02 was 325,000 Euros. Today it is 326,000 Euros.

 

Gold and Southern California Real Estate have been a wash against the dollar drop of the last 18 months.

 

The SP500 at 1150 in Jan. 02 was 1,306 in Euros. Today at 808. A drop of 38%.

 

Bay Area Real Estate is up 7-10% since Jan. 02. They are all aflutter that home prices haven't dropped even though unemployment is so high.

 

Bay Area homes are actually down 16-19% against the Euro over the past 17 months.

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No housing crash?

 

In January 2002, the median home in the United States was $187,000.

 

With the Euro at .88 cents, it would have cost you 212,500 Euros.

Today, at 1.15/Euro, the median home price is still $187,000.

The Price in Euros = 162,600 or a price drop of 24%

 

With gold at $275/ounce, the median home in 01/02 was 680 ounces of gold.

Today, 535 ounces of gold, or a drop of 21%

 

Here in San Diego County, it isn't as bad. The median home in Jan. 02 was 325,000 Euros. Today it is 326,000 Euros.

 

Gold and Southern California Real Estate have been a wash against the dollar drop of the last 18 months.

 

The SP500 at 1150 in Jan. 02 was 1,306 in Euros. Today at 808. A drop of 38%.

 

Bay Area Real Estate is up 7-10% since Jan. 02. They are all aflutter that home prices haven't dropped even though unemployment is so high.

 

Bay Area homes are actually down 16-19% against the Euro over the past 17 months.

People are buying stocks as a hedge against the dollar crash. Same thing happened in Argentina when their economy crashed. Stocks exploded.

 

I guess some paper is worth more than other paper.

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Bay Area homes are actually down 16-19% against the Euro over the past 17 months.

Great analysis. Too bad we can't make money exporting the product of the most heavily subsidized industry in the US, even when its price falls on world markets.

 

Maybe that's what Warbling Buffart plans to do with his manufactured home finance business.

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I had to leave the fun today at 11:00 am. Was very relaxing to do so.

 

Anyhow, while I was gone I thought of a new trading method for me. I'm going to call it:

 

 

B.A.D.

 

 

It stands for Buy All Dips

 

I think I will implement it Monday...

 

Nah.......don't think so. In for a penny in for a pound-ing. :(

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