5 Step Rally Process
644 replies to this topic
Posted 12 December 2003 - 07:03 PM
Has anyone else thought of the true value of the indexes like Mannfm11's dissection here?
"Here is what is amazing. These are the top 10 stocks in the S&P 500 at the end of 1999, the closest data I have found to the top. 7 of these 10 are in the Dow. Intel and Cisco went a lot higher and I don't know what sea you find LU and AOL on the bottom of today. To show how much the Dow has fallen since then, I am going to post the current market values of these stocks. On another post I am going to look at the games played with splits since the top that has this index so high right now.
9912 Microsoft Corp 1 604078 4.92%
9912 Genl Electric 2 507734 4.14%
9912 Cisco Systems 3 366481 2.99%
9912 Wal-Mart Stores 4 307843 2.51%
9912 Exxon Mobil 5 278218 2.27%
9912 Intel Corp 6 274998 2.24%
9912 Lucent Technologies 7 234982 1.91%
9912 Intl Bus. Machines 8 194447 1.58%
9912 Citigroup Inc 9 187734 1.53%
9912 America Online 10 169606 1.38%
Prices of the 6 Dow components today
Tot 12/99 $2,355,042
Total of other components of the Dow
in relation to
loss above 49.851%
I sense there is something rotten in Denmark about these indexes that most of us don't quite understand. Most of these stocks on the bottom are not up, but down quite a bit. I sense that INTC, which ran up during the first 9 months of 2000 then split was able to dilute all of its losses in the index by splitting on the top after adding a significant amount to the index. Adding something like 80 points, then locking in that gain in the index, then splitting and spreading the loss around 29 other companies. The net effect of INTC price in the Dow has been negligible, while they were able to wipe out the loss in MSFT. This is merely speculation. The point of the above is to show that the top 7 stocks in the Dow from 1999 still outweigh the lower 23 in cap value, and the top 7 are still the top 7. To get the top 7 back to where they were at the top, it would require a cumulative 25% gain to get them there. I know MMM, INTC and MSFT have split since the top, MSFT for literally no reason that would add to its tradability. I suspect MSFT split when they did to add the proportional value of the split to this rally. If any of you know who has split since 12/31/99 besides these 3 companies, I would be interested in knowing.
I do know the Dow makes concessions for spinoffs, but I don't know how they treat mergers. Thus, I am aware that T has spun off numerous entities over the years and I know they spun off some crap near the top. Exxon has merged with Mobil, Honeywell with Allied Signal, JPM with Chase and HP with Compaq. Citigroup was made in 1998, if my memory serves me correctly. This is going to take me some time, but I am going to look at the sum of stock prices from the end of 1999 and see how far down the Dow really is. I have some statistics I have gleened from the S&P site on excell I will post. In them, I find a real confusion as to what has happened in this index. I am quite interested in dividend growth and the total dividends paid in the S&P index show a better growth than the dividends paid in regard to the index. This may have a lot to do with an adjustment in relative shares that comes from throwing low cap, dividend paying companies out of the index and adding high cap companies that are paying dividends at a lower rate.
The point of this is to show that the top 7 players from the end of 1999 have lost about 50% of the worth of the other 23 today. In order for the losses in the top 7 to be wiped out on a proportional move, the Dow would have to go to 140.8% of where it is today. The losses in the Dow are even greater, as companies on the high end of the scale like MRK, SBC and HWQ are also down big numbers. My sense is the splits, mergers and spinoffs in this index have had an extreme upward influence on this index that doesn't reflect the total losses we have seen.
As bears, we need to find the true status of the markets. I believe 100% of us know this market is overvalued and that only a fool would be buying into this market. Since the market is going up, the other side of the coin must be examined, that you would have to be a fool to not be buying into this market. Total S&P dividends are now around $150 billion. They were $80 Billion in 1990. I am probably going to look at this feature next, as I am trying to value the market based on dividend payout and dividend growth and we are clearly looking at a strange picture. "
Posted 12 December 2003 - 07:04 PM
Sphinxter – you got the word.
Mark, HyperTiger, and many more Stoolies have very clear insights and are all right at the same time. Just a matter of time perspective and looking at the “elephant” from a different angle.
The dynamics of credit bubble implosion are now operative. After reviewing Doc’s latest Feed summary, it’s clearer than ever the money supply will continue to drop – or at least stagnate (barring some unusual new wave of credit).
The Fed is no longer is able to promote credit growth along the hyperbolic curve needed to offset the mounting interest and principal repayments, some of which as you mentioned go to foreign sources. In fact as the balance of payments deficit soars past $500 billion per year, there are constant additional demands on debt repayment. The new “savings” coming into mutual funds from Joe6pack are mostly not new savings – but either withdrawals from other forms of savings or the indirect proceeds of mortgage refinancings. Therefore it is not a sign of economic health except to the extent it shows optimism by investors.
Continuous heavy intervention on behalf of the US$ (from Japan) expands the world money supply pool outside the US - and has seeped back into US markets directly (in bonds) and indirectly (stocks). This temporarily offsets the impact of the steadily falling domestic money supply. On the bright side for gold bulls, the falling US$ and increasing supply of world money continues to support gold.
The day of reckoning will come when there some kind of wolrd consensus that too much inflation is being created in the world monetary system – or Japan finally gives up supporting the US$ at a level near where it is now. Wish I knew exactly what day that will be. Meanwhile Mark will probably be right on a short term basis (and Prector will be wrong about gold bullion).
Posted 12 December 2003 - 07:18 PM
Ol`a to the faithful.
Gee how 'bout this pos market pushing on a string trying to suck the suckers in???/ bwahahahhaahhahahahaahhahahaa
ooooooooohhhh yeah bro. This fatazzed hawg looks good n' ready, dont it. When you peruse that 60 min on the spooz doesn't your head just swim counting the upticks to infinity which is CLEARLY CLEARLY where we are going . bwahahahahahahahahahahahahahaa
Gee how come the retailers are falling apart. Hey what gives with the fabs and the chip equip guys, hey where are my big money center banks sell me the puts Lana its to heavens for us all!!! ahahhahahahahahahaahahha
but wait why the gold move, and that funky stop gap ten year action- what gives? what you say the dollar is diving- can't be can't be- well just look at that TUES graph, or how bout that SBAC or that other ho on the strobe, AZO!!! BBY goodbye- Lana more wood sweetheart Hyper's getting cold!
Gee those builders- yeah they look good-maybe ride those up to infinity!!! bwaahahahhaahahahahahahahaahah
ohhhh hell- meantime I'll just go long some shipping names please.
while I sharpen my pikes and wait on the beach.
stay nimble stay focused and hey smoke' em
so says I,
Posted 12 December 2003 - 07:18 PM
For those of you who are shorting the markets:
I'm still gaming an Inflation Bubble of Epic Proportions. Gold and Oil on the long side for now.
Who knows, the entire stock market may get dragged up, Wiemar-style.
At least I have Al Green's printing press farts at my back.
Glad I'm not spitting into his flatulence.
Go with the flow or get run over, I guess....
I'll go short when liquidity starts faltering. Right now, liquidity is going full blast.
PigMen Proprietary Trading Desk
The Weimar Run: Bullphoria!!!!
Posted 12 December 2003 - 07:23 PM
Lesson For The Day........
I had an illiterate, migrant worker immigrant grandmother.................
She had a famous quote................
"The world shall crumble...........But you stay strong......."
Don't let this stuff affect you...................Don't expose yourself to the point of sleepless, nerve racking stress.................
Sure............The destruction of the way of life I have come to know and am accustomed to.............disturbs me................
Yet, I don't let it consume me...............
One day at a time..................One day..............Next day.............
Day by day............
Eventually they'll be some wins..............Be patient..............Reevaluate.....
Most importantly adapt......................
Good Luck To All.............
Posted 12 December 2003 - 07:26 PM
I'm with Mark here.
I can easily envision DOW 15,000 and 30% unemployment.
If I were to sit you down at a Roulette wheel, right now, give you 100 chips and say "you have to place them all right now, and red is inflation and black is deflation", what would you do?
I personally would place 5 on black and 95 on red.
No waaaaay, do the CB's let this thing break against them, on their watch. Not a chance in hell.
Which is why I hold gold/silver (physical), commodities, non-US paper assets (currencies and bonds), ZERO US bonds, gold/silver stocks, and energy stocks (because I am too inexperienced and/or wimpy to hold oil/gas futures).
Let it rip! I TOO suport a strong dolor!
Posted 12 December 2003 - 07:27 PM
I love economist Gary Schilling
Always loved his realistic gloomy view.
But could there have been a more perfect "wrong-way-Corrigan" during the 90s?
Only Ravi Batra with his embare-assing bookin 1989 predicting a depression in the 1990s could top Gary.
Gary writes a column for Forbes.
I hope he's got it right this time! Gary writes:
"The jump in mortgage rates this summer terminated the mortgage refinancing and home equity loans that have tided people over. . . The big bulge in Iraq spending, $52 billion during the two-month long hot war phase is history.
"The consumers who have kept the economy going are not going to be in the checkout lines. Their new-found zeal for savings will pinch spending further. The spillover to housing will break that bubble and seal the case for 2004.
"The result -- I foresee a profit decline next year with the S&P 500 operating earnings down 9% to $49 per share and reported earnings down 13% to $39. What a blow to investors who believe S&P estimates of $62 per share for operating earnings next year and $56 for reported earnings. I hate to be the bearer of bad tidings. But if you expect the economy and the market to keep climbing next year, you will be sorely disappointed."
Posted 12 December 2003 - 07:31 PM
not me !
sphinx: eloquent as hell. I have very similar outlook and story; after working on it for 6 yrs now; but you said it all way better than I could. tanks.
Posted 12 December 2003 - 08:03 PM
Finally caught up on the thread-man its smokin for a Friday early evening! I hated today, like I hated yesterday-just zip up again to the top of the triangle-Dow makes a new high, nazDuck like a drunk on rollerblades just sloshes back and forth over the cliff edge and the Spoons keep bumping their head on the concrete ceiling-made one futures point on a scalp-the market indexes were virtually untradeable, It is going to break cause it HAS to! There is no VOLUME cause there is no money left to buy with and few buyers. The fundies are playing chicken when the first one sells to lock in profits for the year they all will. The charts say it is over we are compressed at the end of the triangle and no correction has been seen since freakin August. I said when people were wringing their hands over Gold to not worry -all dips will be bought-the Bungee cord of the markets is stretched beyond the manufacturers specs-still short-stop has hasn't been hit! Trade Safe!
Posted 12 December 2003 - 08:11 PM
A golden wall of worry
By Mark Hulbert, CBS.MarketWatch
Last Update: 12:18 AM ET Dec. 12, 2003
ANNANDALE, Va. (CBS.MW) -- The gold timers I track at the Hulbert Financial Digest are not behaving the way they normally do.
And that's bullish for gold.
Normally, of course, we would be witnessing irrational exuberance right now on the part of gold newsletter editors. Gold bullion (38099902: news, chart, profile) convincingly rose above the $400 level at the beginning of December, and has been there ever since.
The last time the yellow metal was trading this high was in February 1996, nearly eight years ago.
But, far from becoming more exuberant, the average gold timer I track has become significantly more bearish.
Consider recent readings from the Hulbert Gold Newsletter Sentiment Index (HGNSI), which represents the average percentage portfolio exposure to the gold market among a subset of gold timing newsletters. As recently as earlier this month, the HGNSI stood at 65.4 percent.
As of Thursday night, in contrast, it stood at 34.6 percent, or barely more than half its level from earlier this month.
That precipitous a drop would be noteworthy in any market environment. But, given that it has taken place while gold has been close to an 8-year high, the drop is truly extraordinary.
Also extraordinary is the fact that the HGNSI is no higher today than where it stood in mid-March of 2002, when gold bullion was trading just above $290 per ounce. In other words, even though gold bullion has risen by nearly 40 percent over the past 20 months, the average gold timing newsletter I track is no more bullish today than then.
Posted 12 December 2003 - 08:35 PM
good to hear yer certainty when ya say all that.
I was going to write something similar about PM's, but was too disgruntled before to do it.
PM's got trashed end of day. Agreed.
One of our astute brothers made note of the HOD close on POG, vs. the not-HOD on xau/hui.
I myself still believe PM's are headed up. Even so, even -I- took PM money off the table this afternoon. Someone else in IDS mentioned cashing out a pile of WHT this afternoon. Who -wouldn't- sell some stocks at HOD on a Friday; and a Friday when so much is going awry in the world? One can always get back in on Monday....if the planet still has a breathable atmosphere
It looked like profit-taking and weekend-safety to me. For example, the NEM chart shows a calm gentle decline, with volume no greater than that calm midday up-slope; and much less than the buying volume in the morning...and FAR less than the buy-volume yesterday morning.
Gold closed at 409.20. Let me say that again: gold closed at 409 ! That's good stoolies! Just a couple weeks ago it was in the 3's still!
I'll readily agree that cycles and share-specific TA suggests it's "time" for a turndown, but every single factor affecting the -GOLD- price points UP. And the PM's WILL follow POG; sure as day follows night.
I don't know if the friday-noon gold-slam failed; or simply wasn't done....one of our sharp fellows suggested in IDS that the borkers may well have gotten their big buy-ins done earlier in the week, and didn't WANT a slam any more.
Doesn't matter which explanation is right; or whether it's something else entirely. Fact: friday gold-slam did not happen whatsoever. Not even a blip.
Posted 12 December 2003 - 08:53 PM
The End How did that dow story go that since 1896 when the
dow makes a lower low in the first Q .it will be a down year. TIA
Bears can dream
Posted 12 December 2003 - 08:57 PM
Ahhh! And I took mucho money off the table on Monday and Tuesday and have felt, well, dirty ever since.
Locked in profits, sure, but I betrayed my best judgement. I HAVE to remember: In the metal stocks, buy fear, Sell excitement.
So, the most important point of the week bears repeating: GOLD @ 409!!!
Sweet mother of god, last it was this high the very miners I hold were 2x to 5x HIGHER! And gold was still in a certified bear market. This time, given the inexorable rise off the 2001 lows, it is in the beginnings of a multi-year bull market.
So, you tell me. Would you rather hold these very same miners at entire multiples higher during a bear market in the base metals, or at a significant fraction during a bull market?
To anyone who can point me towards a single indicator, intermediate-term to long-term, that would suggest even a glimmer of a possibility that gold/silver are NOT in a bull market, I will be forever indebted.
But the fact remains. Gold has an unbroken primary channel to the upside going on 2.5 years now.
Silver for a shorter time so far but, because of that, with even more upside potential.
I bought WHT today because of the HUGE volume on it during this recent breakdown. Why? Because the MACD has not been as reliable on this stock as the RSI. The RSI has been better at predicting the moves on WHT than the MACD, which has been "ok" but kinda sucked by comparison.
Anyhoo, I am dirty and sullied for having sold out my shares, but I have come to respect nothing but price action on all my short-term trades.
Sell excitement and buy fear, but respect price action.
Posted 12 December 2003 - 09:04 PM
...A declining spenglerian carnival of Colossaalism united with Inflation where the numbers one through 10 are forever banished as worthless arithmetical detritus from a bygone age... - Beardrech
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