Pat494
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Wall Street ended an erratic week with a moderate advance Friday as investors welcomed a government employment report that painted the U.S. job market as robust heading into the holiday season, easing concerns that the economy is losing steam too quickly. The major indexes all posted gains for the week.
The Labor Department report showed a slightly better-than-expected increase in jobs creation last month and ultimately helped diminish nervousness about a drop in the dollar and a weaker-than-expected reading from the University of Michigan's consumer confidence figure.
'What this number does is it breaks the streak of several weak economic indicators you've had until today,' John Shin, an economist at Lehman Brothers Holdings Inc., said of the jobs figure.
Wall Street has pored over economic data in recent months as it tries to determine whether the health of the economy warrants the run-up seen in stocks since September. Shin (SHIN.BK - news) contends the jobs figure raises Wall Street's hopes about a slew of economic data expected next week, including retail sales figures.
The Labor Department report showed a slightly better-than-expected increase in jobs creation last month and ultimately helped diminish nervousness about a drop in the dollar and a weaker-than-expected reading from the University of Michigan's consumer confidence figure.
'What this number does is it breaks the streak of several weak economic indicators you've had until today,' John Shin, an economist at Lehman Brothers Holdings Inc., said of the jobs figure.
Wall Street has pored over economic data in recent months as it tries to determine whether the health of the economy warrants the run-up seen in stocks since September. Shin (SHIN.BK - news) contends the jobs figure raises Wall Street's hopes about a slew of economic data expected next week, including retail sales figures.
This is a very volatile market - just look at the Dax yesterday - and sharp movements up or down will probably continue next week with TW this Friday. The range seems to be widening on the Dow and if it convincingly breaks through 12400 then the 'Santa' rally could take it up to 12700.
However it really will need to break down through 12000 if we are going to see a real correction back to 11000 otherwise it will continue to reverse short, sharp 100 pt drops on an intraday basis. Difficult market to trade at the moment but probably quite lucrative if you can time your entries and exits right !
However it really will need to break down through 12000 if we are going to see a real correction back to 11000 otherwise it will continue to reverse short, sharp 100 pt drops on an intraday basis. Difficult market to trade at the moment but probably quite lucrative if you can time your entries and exits right !
Well you're probably right at the moment and I've largely stayed out except for the odd intraday trade. I'm sure most bears have had to cover positions over the past few weeks but you know what they say - the time to really go short is when the last bear has gone long !chump said:
Just hope that some kind soul will let me know when that happens :cheesy:
The real hangover from dotcom party may still be waiting
The Times 09/12/06: Magnus Grimond
Judgment does not necessarily get better as you get older, but it certainly helps if you have seen it all before. The impressive performance through the dot-com boom and bust by well-seasoned professional investors such as Fidelity’s Anthony Bolton or Invesco Perpetual’s Neil Woodford bears that out.
But even Messrs Bolton and Woodford cannot boast the experience of markets enjoyed by Jeremy Grantham, an expatriate from over here who founded the Grantham Mayo Van Otterloo money management company over there in Boston nearly 30 years ago. With experience like that under his belt, Mr Grantham is not afraid to break some investment taboos. Speaking at a conference this week organised by Independent Investor, a research group, he brought both reassurance for those who cling to the hope that they can outperform the market, but also some unsettling thoughts on where the market is heading.
So what of the dot-com boom? Well it has not quite followed past patterns — yet. Having thundered back to earth after the bubble burst, the market bounced, as we know, in 2003 without crashing through the trend, as it should have done on past form. The saviour was the “Goldilocks” economy, the virtually unparalleled combination of economic stability with record growth and low inflation. The fuel for this has been huge amounts of borrowing, encouraged by interest rates kept low by the Federal Reserve chairmen Alan Greenspan and Ben Bernanke. This, however, may only have delayed the natural tendency of the market to overreact, Mr Grantham suggests. There are danger signals aplenty for the more thoughtful investor, he believes. The biggest short-term risk is that the market is failing to reflect the fact that, wherever you look, profit margins are exceptionally high. In the US, for instance, they are, at 7.7 per cent, as fat as they have been in the past 75 years. In Japan, they are at 9 per cent and in emerging markets they are around 6.5 %
Mr Grantham says: “Profit margins are the most reliably proven mean-reverting measure in capitalism.” And if they are currently at record highs, that means there is only one way they can go — down. He points out that, on several key measures, the US stock market is looking overblown. At 18.6, the p/e ratio compares with a long-term average of of 14, the dividend yield of 1.9 per cent is a long way adrift from the trend of 4.3 per cent, and those profit margins will eventually fall back to the 4.9 per cent typical since 1926.
The bond market is telling a similar story. Interest-rate margins over “risk-free” Treasury bonds for the riskiest junk bonds and emerging market debt are tighter than they have been for years. It will only take a shock — a new outbreak of hostilities in Lebanon, perhaps, or the resurgence of bird flu — to send investors running for cover. Little wonder that Mr Grantham has upped the level of cash and safe bonds in his clients’ portfolios to about 45 per cent. But, as he would be the first to admit, timing the next downturn is extraordinarily difficult.
As G. K. Chesterton said: “Life is not an illogicality; yet it is a trap for logicians. It looks just a little more mathematical and regular than it is; its exactitude is obvious, but its inexactitude is hidden; its wildness lies in wait.”
The same thought could be applied to the stock market.
The Times 09/12/06: Magnus Grimond
Judgment does not necessarily get better as you get older, but it certainly helps if you have seen it all before. The impressive performance through the dot-com boom and bust by well-seasoned professional investors such as Fidelity’s Anthony Bolton or Invesco Perpetual’s Neil Woodford bears that out.
But even Messrs Bolton and Woodford cannot boast the experience of markets enjoyed by Jeremy Grantham, an expatriate from over here who founded the Grantham Mayo Van Otterloo money management company over there in Boston nearly 30 years ago. With experience like that under his belt, Mr Grantham is not afraid to break some investment taboos. Speaking at a conference this week organised by Independent Investor, a research group, he brought both reassurance for those who cling to the hope that they can outperform the market, but also some unsettling thoughts on where the market is heading.
So what of the dot-com boom? Well it has not quite followed past patterns — yet. Having thundered back to earth after the bubble burst, the market bounced, as we know, in 2003 without crashing through the trend, as it should have done on past form. The saviour was the “Goldilocks” economy, the virtually unparalleled combination of economic stability with record growth and low inflation. The fuel for this has been huge amounts of borrowing, encouraged by interest rates kept low by the Federal Reserve chairmen Alan Greenspan and Ben Bernanke. This, however, may only have delayed the natural tendency of the market to overreact, Mr Grantham suggests. There are danger signals aplenty for the more thoughtful investor, he believes. The biggest short-term risk is that the market is failing to reflect the fact that, wherever you look, profit margins are exceptionally high. In the US, for instance, they are, at 7.7 per cent, as fat as they have been in the past 75 years. In Japan, they are at 9 per cent and in emerging markets they are around 6.5 %
Mr Grantham says: “Profit margins are the most reliably proven mean-reverting measure in capitalism.” And if they are currently at record highs, that means there is only one way they can go — down. He points out that, on several key measures, the US stock market is looking overblown. At 18.6, the p/e ratio compares with a long-term average of of 14, the dividend yield of 1.9 per cent is a long way adrift from the trend of 4.3 per cent, and those profit margins will eventually fall back to the 4.9 per cent typical since 1926.
The bond market is telling a similar story. Interest-rate margins over “risk-free” Treasury bonds for the riskiest junk bonds and emerging market debt are tighter than they have been for years. It will only take a shock — a new outbreak of hostilities in Lebanon, perhaps, or the resurgence of bird flu — to send investors running for cover. Little wonder that Mr Grantham has upped the level of cash and safe bonds in his clients’ portfolios to about 45 per cent. But, as he would be the first to admit, timing the next downturn is extraordinarily difficult.
As G. K. Chesterton said: “Life is not an illogicality; yet it is a trap for logicians. It looks just a little more mathematical and regular than it is; its exactitude is obvious, but its inexactitude is hidden; its wildness lies in wait.”
The same thought could be applied to the stock market.
mark twain uk
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It stays tantalisingly close to last week's high, it should normally make a run to take up the stops placed just above the high, but then again, it could just drop from here, either way, I see lower prices in the next few days.
Currently with a small short on both dow and spx, will add if it makes a token new high and will look to close on a pull back if it goes above 12,390
Currently with a small short on both dow and spx, will add if it makes a token new high and will look to close on a pull back if it goes above 12,390
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Silvertip
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The support is very strong, looks to me asthough all the textbooks are about to be re-written. Ive been looking for a shorting opportunity for quite sometime as I anticipate a few others have been too, however price actually appears to be accumulating. If we break out to the upside the target will be 13700, and then 17000 ! I'll pull the trigger up or down, either way suits me.
Silvertip
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Looking for < 12066 for weakness and > 12533 for strong growth. Until then it is an intra-day range trading strategy, something that may be best avoided, depending on your trading style. We have had a visit to 12100 recently and prices came back higher very quickly displaying the qualities of the Dow we all adore, so no guarantees it will signal real weakness if there is a next time neither.
FOMC TOMMOROW
FOMC TOMMOROW
mark twain uk
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Silvertip said:
Speak for yourself, not everybody is enamoured with the Dow and its qualities
JFK
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Hi tircks,
I know this is the Dow thread, but we also go on about S&P:
Last years high 14/12/05, 52 weeks ago. 26 weeks ago 14/06/06 this years low. Tomorrows the 14th & one year on! Looks like we need a Gann expert to put some more light on things, where’s Bez when you need him?
I know this is the Dow thread, but we also go on about S&P:
Last years high 14/12/05, 52 weeks ago. 26 weeks ago 14/06/06 this years low. Tomorrows the 14th & one year on! Looks like we need a Gann expert to put some more light on things, where’s Bez when you need him?
Pat494
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tricks said:
A lot of the regulars are ( allegedlly) a bit bearish by nature and
the index has been going up and up
so you can imagine wot might of happened
RIP
your day will yet come Teddys but not just yet hopefully ( ssssshhhhh I'm long )
catracho
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