Has the market bottomed?

 

Has the market bottomed?  No, if you are talking about long term, then certainly not.  Please take a look at my other blog, http://perpetualbear.blogspot.com/, which has a repost of my article from March 2001, “Demographic reasons for market bubbles”. From the graphs in that article, one can see that the market bottom may be around the year 2015, give or take a few years.

 

For the short term, I think the market will give a chance to see what the Obama spendings will do.

 

Right now, the conventional wisdom is “buy bonds, avoid financials and basic materials”. But the conventional wisdom is usually wrong on the market.  The financials will benefit from the charity of the tax payers. Even if the big banks are nationalized, there will still be a substantial private banking sector in this country.  As to basic materials, they will simply benefit from the Fed’s printing press.

 

The baby boomers are taking money out of stocks and put them into government bonds, at precisely the wrong time.

 

 

http://trendmester.blogspot.com

 

 

The financial sector has reversed

The financial sector has staged island reversal today.

 

 

http://trendmester.blogspot.com

 

 

 

 

Watch out above

Look for money to flee US bonds, and for

- US dollar to go down;
- Commodities to go up;
- US stock may also benefit from the money flow.

Oil may be building a double bottom.


(Is anyone actually reading this blog? I can't tell ...)

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Watch crude oil and XLE

Crude oil is being pulled both ways: the shrinking economy, or the shrinking dollar.

 

Crude is near the low it set in late December.  If it wants to reverse, now would be a good time, as it would make a nice double bottom.

 

Meanwhile, XLE has basically been in a trading range since October and has not changed much.  It’s waiting for something. If crude should reverse, XLE may go back to the September level and that would be a very nice island reversal.  We can’t expect the oil companies to go the way of the big banks, do we?

 

 

http://trendmester.blogspot.com

 

 

 

 

 

 

More sectors in reversal

 

More sectors have staged technical reversal recently.

 

The international maritime shipping sector has staged island reversal.  The actual reversal has happened a couple of weeks ago – this is a belated report as the sector wasn’t on our watch list.

 

The US treasuries & government bond has staged bearish reversal. This is very significant for two reasons: (1) the interest rate has bottomed, it’s only trajectory going forward is to go up, perhaps eventually heading toward inflationary territory; (2) huge amount of money will flow out from US government bonds, possibly creating bullish reversals in other sectors.

 

Note that there are at least two ETF’s available as vehicles for shorting US bond: PST and TBT.  These two has staged bullish island reversal.

 

The money outflow will perhaps flow into sectors we recently called reversed:

-          Chinese stocks: Shanghai A shares has staged island reversal. Oversea Chinese shares (FXI) and other Pan-China markets (Hong Kong, Taiwan, Singapore, Korea) are on our watch list for possible reversal signals;

-          Gold: could lead precious metals upward.

-          Euro: possibly other foreign currencies as well. Basically the USD is going down to the nether world as the Fed’s printing press is running at full speed.

 

The money may also flow into other sectors. We are watching the energy-related commodities (Crude, Gas) and food-related commodities as these sectors may be in the midst of some sort of bottom building activities.

 

Other commodities and even the real estate sector could attract money but these sectors will continue to be pressured by the economy which has clearly not bottomed.

 

http://trendmester.blogspot.com