Dow is in for a historic crash - again

[yourf16]

Dow In for a crash



Dow is in for a historic crash - again !
poor FTSE goes with it

in 2004 the US stockmarket has been showing technical indications of a sharp downturn. Fundamentals supported the bearish view, ballooning budge deficit, rising interest rates, rising comodity prices (indicating inflation).

Now why has it all changed, and five months down the line SPX500, DJIA and NASDAQ all have shown great rallies breaking double and tripple top resistance lines ? Because of agressive buying by PPT plunge protection team in mid 2004 and also recently. Their aim is to step in at the 'key moments' by starting rallies to restore market confidence. Why? simply because japan avoided a stock market collapse ten years ago and the effect lasted many years.

People are forgetting that was japan. this is US and the world invests in the US stock market. By injecting lots of fake dollars in NYSE the whole economic structure is endangered. Dollar loses its value, inflation sets in, interest rates rise sharply, and the stock market goes down even sharper !

So thats the dialemma FTSE100 is facing these days, volumes have dropped and ftse is all confused. Wants to go up, because breaking of double / tripple tops is very bullish indicator. Wants to go down because a falling dollar has great and fatal consequences for UK economy.
Strong pound
Trouble for UK exporters
Trouble for UK manufactureres >> falling domestic demand (everybody buys cheap US imports)

FTSE 100 has got a cramp !
it seems to follow no rules.... thats what i heard from a senior fund manager. well i'm really sorry for causing all the trouble, infact it was my money being misused by cmc. Their margin requirements is 1% on ftse100 and i have lashed ftse with just £10000. but sadly i've only lost money because cmc take positions against me. i order them to sell ftse100, they buy in the market ! my account drains out and they forcefully close my positions and make easy money. b*st*rds!
i've done this a few times and you can see on the volatility indicator if you see ftse100 chart since february 2004. i caused one million pounds buying ftse100 at the end of august. in fact i had sold £200 per point with cmc and was lucky because it was a technically bearish market and nobody took it as a rally. so i didn't lose much money. i am not going to do it again, now that i learned why...

it takes time till people realise this
ftse is forming a rising wedge bearish pattern. it will be confirmed by rising volumes during the next two weeks. once the downward break is confirmed. sell sell sell !

 

[WAEL012000]

Economic `Armageddon' predicted
By Brett Arends/ On State Street
Tuesday, November 23, 2004

http://business.bostonherald.com/bu...356&format=text

Stephen Roach, the chief economist at investment banking giant Morgan Stanley, has a public reputation for being bearish.

But you should hear what he's saying in private.

Roach met select groups of fund managers downtown last week, including a group at Fidelity.

His prediction: America has no better than a 10 percent chance of avoiding economic ``armageddon.''

Press were not allowed into the meetings. But the Herald has obtained a copy of Roach's presentation. A stunned source who was at one meeting said, ``it struck me how extreme he was - much more, it seemed to me, than in public.''

Roach sees a 30 percent chance of a slump soon and a 60 percent chance that ``we'll muddle through for a while and delay the eventual armageddon.''

The chance we'll get through OK: one in 10. Maybe.

In a nutshell, Roach's argument is that America's record trade deficit means the dollar will keep falling. To keep foreigners buying T-bills and prevent a resulting rise in inflation, Federal Reserve Chairman Alan Greenspan will be forced to raise interest rates further and faster than he wants.

The result: U.S. consumers, who are in debt up to their eyeballs, will get pounded.

Less a case of ``Armageddon,'' maybe, than of a ``Perfect Storm.''

Roach marshalled alarming facts to support his argument.

To finance its current account deficit with the rest of the world, he said, America has to import $2.6 billion in cash. Every working day.

That is an amazing 80 percent of the entire world's net savings.

Sustainable? Hardly.

Meanwhile, he notes that household debt is at record levels.

Twenty years ago the total debt of U.S. households was equal to half the size of the economy.

Today the figure is 85 percent.

Nearly half of new mortgage borrowing is at flexible interest rates, leaving borrowers much more vulnerable to rate hikes.

Americans are already spending a record share of disposable income paying their interest bills. And interest rates haven't even risen much yet.

You don't have to ask a Wall Street economist to know this, of course. Watch people wielding their credit cards this Christmas.

Roach's analysis isn't entirely new. But recent events give it extra force.

The dollar is hitting fresh lows against currencies from the yen to the euro.

Its parachute failed to open over the weekend, when a meeting of the world's top finance ministers produced no promise of concerted intervention.

It has farther to fall, especially against Asian currencies, analysts agree.

The Fed chairman was drawn to warn on the dollar, and interest rates, on Friday.

Roach could not be reached for comment yesterday. A source who heard the presentation concluded that a ``spectacular wave of bankruptcies'' is possible.

Smart people downtown agree with much of the analysis. It is undeniable that America is living in a ``debt bubble'' of record proportions.

But they argue there may be an alternative scenario to Roach's. Greenspan might instead deliberately allow the dollar to slump and inflation to rise, whittling away at the value of today's consumer debts in real terms.

Inflation of 7 percent a year halves ``real'' values in a decade.

It may be the only way out of the trap.

Higher interest rates, or higher inflation: Either way, the biggest losers will be long-term lenders at fixed interest rates.

You wouldn't want to hold 30-year Treasuries, which today yield just 4.83 percent.

 

[Trader333]

One thing I have learned, time and again, is that when so called "Experts" make any form of economic prediction they are usually wrong and I have no doubt this will be inaccurate as well.


Paul

 

[roguetrader]

Wouldn't doubt it for a minute. Fortunately for traders, tomorrow morning is long term so let it go whichever way it wants, just show me the right setups and I'll be onboard.

 

[jsd]

hmm long term I "feel or sense" that stocks will not continue in a one way uptrend. The biggest acceleration of the fall I see on the horizon is that of terror groups becomming more effective at disrupting western economies to a point where Martial law will come into force in western societies. What effect will that have on the Banking System and risks of holding any stocks ? Im not convinced joe public or even corporate investment machines believe this outcome will be the case in the relative near term (0-20 years). They must have "Faith" in the ability of the western police to be able to effectively neutralise the terror threat. But I cant see how they can stop it. The documentaries are appearing in the media stating how relatively easy it would be for a western capital to be crippled and how the effect of that will ripple outwards.
Bio med suits are in place in the hospitals in readiness and subtle preperations are working away in the backgrounds. leaflets and skant guidelines have been posted, so its a real perceived threat. But its damaged limtation when dealing with stampeding herds of people.

It needs the enthusiasm of the terrorists, who do indeed appear to be very enthusiastic about championing their cause, by the willingness to part from existence of their own current life, to deliver their agenda for change. Much like western armies I suppose. again whose right or wrong? global human manipulated oppinions , and due to human nature at present ,means violence usually follows.

I think terror threat is perhaps a greater need of focus for assessing long term investment objectives/risks before looking at traditional fundamentals of economies . Those days are gone, wasn't it a luxury? How lucky we were to be able to worry about lovely deficits ,inflation and employment figures (with the odd civilised war ?thrown in betwwen. )Geneva convention? Blueprint rule book on whats considered fare play in the act of killing fellow humans. Mass conscious free thinking evolution is the only way forward, but do governments and religions want that ? Do they eck. The Matrix Has You.

hmmm are there any terror analysis prediction models out there... Terror analysts exist but I dont see those popping up on bloomberg giving daily updates yet.

So we are just left with "faith in mankind", a belief of something for which there is no evidence. Faith.

"Keep The Faith, But Dont Be Surprised"

Macroscopic analysis by
JD.

 

[trendie]

The first two posts are most illuminating, and show an incredible depth of analysis and understanding.
The marshalling of facts and data, to provide the most likely outcome is most scholarly.

I, personally dont understand half of it !!

Dont need to know WHY. Dont need to know HOW. Dont need to know WHEN.

Price action:
If the FX, ( or Dow, or SP500, ) trends up, BUY, until the trend falters.
If the FX ( or Dow, or SP500 ) trends down SELL. until the trend falters.

All this analysis is too complex for me.

Back to the crayons and colouring books.

 

[barjon]

Wouldn't doubt it for a minute. Fortunately for traders, tomorrow morning is long term so let it go whichever way it wants, just show me the right setups and I'll be onboard.

mmm, as Kipling might have said - "If you can treat those twin impostors (fear and greed) just the same and keep your head when all around you are losing theirs then you'll be a trader my son"

Funny how the traders' twin demons of fear and greed are fed by many different routes Seem to remember SUNSEEKER predicting armageddon and "the mother of all shorts" when the dow was around 9000 over a year ago.

As Mully always counsels "trade what you see, not what you think" - seems to fit your own view.

Good trading and may many right setups come your way.

jon

 

[roguetrader]

hmmm are there any terror analysis prediction models out there... Terror analysts exist but I dont see those popping up on bloomberg giving daily updates yet.

So we are just left with "faith in mankind", a belief of something for which there is no evidence. Faith.

"Keep The Faith, But Dont Be Surprised"

Macroscopic analysis by
JD.

The general approach as regards disaster planning accepts that as regards a terror attack on UK soil there is no " if " simply a case of when and how to react to it.

 

[jsd]

yes trendie all to do with timescale and methods employed to detect the size of wave movement one is trying to hop aboard,or plan to exploit .Know what ripple and size of wave you are surfing, keep in mind the presence of the next outer 2 waves maybe and where your wave is in relation to those 2 waves and you may have a jolly good ride.

Economists preach to people and the effects it will have relating to your money, as the Dhali Lama preaches to people and the effects it will have relating to your spirituality. Both often pass right over the head and may seem complex, but if you wanted to know, or felt the need to know, the information is available.

But when you know enough is enough, then it always will be.

JD

 

[jsd]

hmm yes rougetrader agree... just a case of when and what they use, better with anthrax I suppose as opposed to radiation.... you can treat anthrax quite successfully if you have the meds available , but the NHS only have supplies for 2 weeks i think, and the NHS do not always have in place faultless Triage (resource to need) practices to deliver the care at the time of greatest need. Cipro (antibiotic),is quite effective and will cost about 400/600 quid to treat for a few months. Im out in the sticks a bit hundreds of miles away from potential major release zones but i did cost it out. a few months back thinking if i was near a major city I wouldnt wait for Government to post me any out... too late by then, panic would be in place. The markets will get hammered and conventional "Time to buy, when theres blood running in the streets" mindset might not be doable as was, as the vein pumping out the blood may be the jugular as opposed to a flesh wound, so to speak.

JD.

 

[BBB]

The chart says UP to me - but of course, like all experts, when the inevitable does happen (say in 5 years), and we see levels below the current level, all these gurus remind us how they called the crash 5 years ago etc...

 

[TheBramble]

The general approach as regards disaster planning accepts that as regards a terror attack on UK soil there is no " if " simply a case of when and how to react to it.

I have a very strong sense this 'general approach' is government installed and is there to serve its own ends - not ours. The more we acknowledge its 'existence' the stronger it become rooted in our national psyche and the more likely those very events become. Almost a self-fulfilling prophecy. The more we can do to down-play this, the better we will be and the more honest our government will have to become in bringing real intelligence in support of their 'fears' and 'concerns' into the public domain.

On the other hand, the British mainland has suffered a number of terrorist attacks (from the IRA) over the years - none of which had any noticeable impact on the markets.

Whether you believe an attack of 9/11 magnitude could or would be perpetrated on mainland Britain is a matter of personal opinion only. My own view is that without significant official support or complicity, tacit or otherwise, no such event could be brought to fruition. Either here or in the US.

Either way - attack or no attack - impact on market or not - in it's bleakest possible light - we trade what we see.

As barjon says 'Good trading and may many right setups come your way'.

 

[jsd]

fair point Bramble but long term wise, its too risky to ignore terror, the sort that is beyond IRA rules of advanced warnings , but to invest for 30 years in a stock or index tracking fund expecting growth of 8-12% PA. long term, i think those days have come and gone. and if its going to be bear,bear bear to limited rally, it may help to be aware of that and be open to bearish bias long term and its effect on the short term inter or intra timescales.

but ive just reminded myself this site is Trade2win, and Not Invest2win.

jd.

 

[Peter]

I wouldnt count out the possibility we could see 8400 by April and MAYBE 5876 in the next 6 to 12 months IF the Market has failed to break above 10600 by the end of this year.

If the bear is still there ITS surely got to follow the % big declines that we saw in the Nasdaq and SPX ie more than 50% down of all time highs. I cant see it being that far away of happening if the bears stll on..

Above 10800 by December 04 and I think the bear may have ended. Time is running out IMO for it to happen and we are close to a make or break...

 

[DaveJB]

Trade what's visible - you could make a great many long trades and turn over a good profit before the slump occurs, to stay out convinced the slump is on the way is a good way to miss profits that are available short term.

Terrorist attacks - chem/bio/nuclear weapons aren't all that easy to create... look how long it took guys like Saddam to produce them. Delivery can also be difficult. The shock value of a major attack can certainly be much greater than the actual damage done... but I think the US economy is probably a bigger threat to my own family's well being overall - if the US plummets we'll be bartering sheep for firewood pretty soon after!

'mmm, as Kipling might have said - "If you can treat those twin impostors (fear and greed)...' Barjon, admittedly the guy has an (undeserved, I might add) rep for cakes, but I'm not sure about his abilities as a guru.... <g>

Dave

 

[TheBramble]

'mmm, as Kipling might have said - "If you can treat those twin impostors (fear and greed)...' Barjon, admittedly the guy has an (undeserved, I might add) rep for cakes, but I'm not sure about his abilities as a guru.... <g>

He (Kipling) also suggested :-

"If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;"

Obviously a born trader......