Thread: Market Talk / Jan. 22 - 28

From Merrill:

The market is likely to experience a cyclical decline in 2006 as an offset to the post 2002 cyclical bull market that is now quite old by historical standards. Such a decline, based on fairly consistant historical patterns, could involve a 20 to 25% peak to trough risk on the DJIA and SPX. That could set the stage for a new cyclical advance in 2007-08.

The early-January rally produced what is often referred to as a "good" overbought reading. That means that the upside momentum of the recent advance was so strong that, even though it may lead to a short-term pullback, the market should eventually have a "second wind" in terms of renewed strength in late Januar or February before the entire post-October leg advance and (this is the best part) possibly the entire post-2002 bull market cycle reach their final peaks on the major averages.

As a contrarian of unknown renown I enjoy the negative outlook.

Dennis - permabull #2

Australia is down 1.25% in early morning trading. Looks like there might be some follow through after all.

Dave
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And Japan's down a quick 2% right out of the gate.

Dave
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Crude 68.52.

Originally Posted by Wheels

And Japan's down a quick 2% right out of the gate.

Dave
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Tried to bounce. Now down 2.12%.

Originally Posted by Wizard

Tried to bounce. Now down 2.12%.

Selling has picked up now down 2.38%. 368 points.

US futures just turned south.

Crude 68.60.

Precious metals opened to the upside.

Iran Sanctions Could Drive Oil Past $100

By BRAD FOSS and GEORGE JAHN, Associated Press WritersSun Jan 22, 6:39 PM ET

A surge in oil prices last week to almost $70 a barrel on concerns about the restart of Iran's nuclear program only hints at what may lie ahead.

Prices could soar past $100 a barrel, experts say, if the U.N. Security Council authorizes trade sanctions against the Middle Eastern nation, which the West accuses of trying to make nuclear bombs, and Iran curbs oil exports in retaliation. A sharp global economic slowdown could follow.

That's the dilemma the United States and European nations face as they decide whether to act. But Iran would also pay a hefty price if the petro-dollars that now represent 80 percent of export revenues are reduced, potentially stirring civil unrest in a nation with a 14 percent unemployment rate.

"They would shoot themselves in the foot," said Mustafa Alani, director of national security and terrorism studies at the Dubai-based Gulf Research Center. "It's one thing to test the market psychology, it's another to take the actual step and stop oil exports."

Iran, the second-largest oil producer within the Organization of Petroleum Exporting Countries, exports roughly 2.5 million barrels per day — 1 million barrels more than current excess production capacity worldwide. It also controls the strategic Strait of Hormuz, a critical shipping lane in the Middle East.

"Even if Iran pulled a small amount of its oil off the market, say it pulled a half million barrels a day, I could see oil prices literally jumping over the $100 per barrel mark," said James Bartis, a senior researcher at Rand Corp.

Market heading south BIG TIME today. I put everything back into stocks at COB on last friday. I am riding it down. No chute to pop. I'm toast.

But hey, I wanted to work until 72 anyway......

Things don't appear to be starting off so bad. Unless of course your in the dreaded I fund........

http://money.cnn.com/2006/01/23/mark...atch/index.htm

This is not the plan I had laid out for the start of 2006. The plan was the dollar was going to drop and the I fund was going to see 30% gains. Then the stock market scandal hit Japan and the I fund responded. I fund losses may be held to a min today as the Euro market did well.
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Jan. 23 (Bloomberg) -- The dollar fell to a four-month low against the euro after European Central Bank officials suggested higher interest rates are needed to prevent a surge in oil prices from spurring faster inflation.

Lorenzo Bini Smaghi, who votes on rates at the ECB, told Italian radio on Jan. 21 that the bank will focus on reining in prices, ``notwithstanding all the risks.'' The dollar dropped the most in three weeks against the yen after Federal Reserve Bank of St. Louis President William Poole suggested in an interview the Fed may soon stop raising rates.

``ECB central bankers are talking up interest rates and U.S. central bankers are saying the rate cycle is going to terminate,'' said Hans Guenter Redeker, head of currency strategy in London at BNP Paribas SA. ``The U.S. dollar is going to lose its most important pillar, rising interest rates.''

The dollar weakened to $1.2274 per euro at 7 a.m. in New York from $1.2135 late on Jan. 20. It dropped to 114.35 yen from 115.30 and declined against at least a dozen other currencies.