Thread: Bear Cave 2 (Bull Allowed)

My sources say Adam lost a boatload in 2013 playing with puts.

I have been a sub with TRI for around a year.


FEBRUARY 8, 2014PUBLIC POST

A WIDER PERSPECTIVE


I don’t post publicly very often anymore now that I have closed my site to new subscribers, but every now and then it is healthy to objectively look at the market and where it could be in the bigger picture.

The overly popular “inflation to the moon because of QE” narrative that was well-rehearsed amongst the investing public has proven to be false, and now looking ahead we must be aware of the paths that the market could take to fool the most people possible.

First off, to clarify my outlook I will simply list them while remaining open to any possibility:


1. Stocks are in Wave 1 of a new secular bull market
2. There will be a deflationary event in the next two years to end this cyclical bull run in stocks (Wave 2)
3. We will see the US Dollar index test its overhead trendline at the 90+ level in the next 2-3 years
4. Gold and commodities have not seen their cyclical bear market lows, and they will be pulled down by deflation again in the next 2 years
5. The secular bull market in interest rates has seen its secular low in 2012
6. Interest rates will dip one more time in the next two years, but that will begin the next leg of a secular bear market
7. The overall market has been in a deflationary cycle since 2008, and will transition to an inflationary one after the next deflationary event
8. Inflation will be beneficial for both stocks and tangible assets simultaneously as the dollar eventually moves down in 2016+

A Wider Perspective | The Refined Investor

Originally Posted by Bullitt

My sources say Adam lost a boatload in 2013 playing with puts.

You are correct......I have been a sub with Adam for over 3 years, and he did lose lots of money in 2013 shorting the S&P 500.....and long gold/gold miners stocks. He still thinks, and is currently positioned for what he thinks will be around a 50% correction over the next few years for S&P 500.



"Today's cyclical stock bull is nearly 5 years old, and wildly oversized. On top of that, stock valuations have surged to dangerous bull-killing extremes. So the next cyclical bear is much more likely than a mere correction.

This would cut stock prices in half over a couple years!

The best way to weather it will be in gold, which is inversely correlated to the SPX and overdue to rebound strongly."

pp. 1-8. Very interesting thoughts on the big and long term picture....

http://www.gmo.com/websitecontent/GM...ALL_4Q2013.pdf

THE NAAIM EXPOSURE INDEX 50.97
LAST QUARTER AVERAGE 82.84


NAAIM Exposure Index | The National Association of Active Investment Managers - NAAIM

Is the Stock Market Correction Over?
Saturday, February 8, 11:40 a.m.


So is the correction over?

It’s possible but unlikely.

The catalyst for the rally seemed to be the ADP jobs report on Wednesday and the Labor Department’s employment report yesterday.

The potential problem for the rally is the history of the Labor Department’s employment reports. As subscribers and long-time readers of this blog know, we refer to the Labor Department’s monthly report as ‘The Big One’ because they so often cause a one-to three day triple-digit move by the Dow in one direction or the other, and the other side of the history is that the move is usually reversed over subsequent days, and the market returns to whatever was its focus prior to the report.

In this case, that prior focus was on the slowing U.S. economy, renewed concerns about a hard landing in China, the potential effect of the Fed’s tapering on emerging markets, and so on. The dismal jobs reports did not alleviate any of those situations, in fact exacerbated them.

Meanwhile, there is the possibility that the 50-day m.a. may now be overhead resistance.

So we shall see.

The similar situation in European markets, which rallied the last two days along with the U.S. market, is also interesting.

StreetSmartPost

BluSTar is at it again........I say we shall see.


Sell-Off Monday?, Looks Like 25 SPX Points to Me

I have poured over the charts and it looks like an analogy to Jan 29 coming in on Monday. That is basically 25 SPX points down for the day. Tuesday is up and we could go all the way to as high as the 1812/13 area, but at least into the low 1800's minimum.

In bear rallies, 16 TD cycle lows work at least 4 TD's up (Tuesday top), 8 TD's go 2 TD's up (we had that Friday) and the 4 TD low 1 TD up (Monday into Tuesday).

The 4 TD cycle low from last Wed is due early Tuesday, but the dominant low last week happened late Monday creating a melding effect to late Monday this week (3/5).

On the 8 TD cycle tops, one was due Friday from 8 TD before on Jan 28 and the other is due Tuesday this week from Jan 30's top. Tues-Thursday next week is down, Friday even.

I have found three important bisector lows this month: Feb 13, Feb 19 and Feb 28.

Feb 13 should be -a- of ©, -b- of © Friday, and -c- of © Feb 19 near 1651 +/- 5 pts.

Sell-Off Monday? - Traders-Talk.com

February 10, 2014
Double Trouble

John P. Hussman, Ph.D.

On the basis of a broad range of valuation measures that are tightly (nearly 90%) correlated with actual subsequent S&P 500 total returns over the following decade, we estimate that stock prices are about double the level that would generate historically adequate long-term returns. The chart below presents estimated versus actual 10-year S&P 500 total returns using a variety of methods that I’ve detailed in prior weekly comments, and including a few additional ones for good measure. We presently estimate 10-year S&P 500 nominal total returns of only about 2.7% annually over the coming decade, with negative returns on all horizons shorter than about 7 years.

Hussman Funds - Weekly Market Comment - Double Trouble - February 10, 2014

Update #1972: Monday early morning, February 10, 2014: Commitment​s 2014-2-7; life on planet Earth


I added an additional rung to the top of my ladder for HDGE, so that I will begin buying it again at 12.99 instead of 12.89. I will continue to add to this position each time it drops another 10 cents. Each of these orders is for 0.10% of my total net worth. I began buying HDGE when it first dropped below 13 in December 2013, and have made repeated purchases especially at 12.79. Betting on lower U.S. equity prices is almost always an intelligent decision whenever the S&P 500 is above 1800, because eventually the pattern of higher highs and lower lows for this index which goes back to the mid-1990s is going to result in a bottom below the 666.79 nadir of March 6, 2009. Even if I'm wrong and we end up with a higher bottom than I am expecting--and almost surely I'm too optimistic rather than the other way around--the overall decline for virtually all U.S. equity indices over the next few years will surely be more than half.


Was Friday's U.S. employment report "important"? In my opinion, this data is about as useless as knowing whether the 50-day moving average has crossed above or below the 200-day moving average. However, since many people actively trade around this report, just as they do with technical analysis, it is essential to prepare in advance to deal with it. It's very similar to what you would do if all of your opponents in a game of Monopoly choose not to buy any property which they land on after rolling doubles; it's completely irrational, but if you can adjust your behavior to fit such human irrationality then you will live long and prosper like an unemotional Vulcan (i.e., Mr. Spock, who did quite well for himself). The December employment report coincided to the minute with five-year bottoms for GDX and GDXJ; the January report created its own short-term emotional extremes; and Friday morning again established what will likely prove in hindsight to be key turning points.

True Contrarian

good morning!

are you headed into the week with any ideas on the miners?

Originally Posted by robo

February 10, 2014
Double Trouble

John P. Hussman, Ph.D.

On the basis of a broad range of valuation measures that are tightly (nearly 90%) correlated with actual subsequent S&P 500 total returns over the following decade, we estimate that stock prices are about double the level that would generate historically adequate long-term returns. The chart below presents estimated versus actual 10-year S&P 500 total returns using a variety of methods that I’ve detailed in prior weekly comments, and including a few additional ones for good measure. We presently estimate 10-year S&P 500 nominal total returns of only about 2.7% annually over the coming decade, with negative returns on all horizons shorter than about 7 years.

Hussman Funds - Weekly Market Comment - Double Trouble - February 10, 2014

Thanks for posting this article, great analysis IMO. You know, it makes sense, my "feeling" is we're hitting a top. It's kinda weird, very smart and wise stuff, and unless I'm missing something, I clicked on the fund returns, and they're pretty darned dismal. I guess it's one thing to hit the analysis on the head, and it's another to use it to produce positive gains. There's folks on our autotracker that's killing these funds year over year. Sure wish I was one of them!