Posts filed under “Technical Analysis”

New Column: CULT OF THE BEAR, part II

RealMoneyThe latest column is up at TheStreet.com, titled Cult of the Bear, Part 2. This is now the second of what has become a 3 parter, outlining the Bear Case for 2006.

Today, I go over the cyclical and technical basis for the markets being vulnerable to a major dislocation this year.

Here’s an excerpt: 

Regardless of how each one ends, every bull market over the past century has been followed by a significant refractory period. As the chart shows, it takes quite a while to recover from a crash. Some of this is due to the destruction of capital. At the end of bull markets, many indutries end up with excess capacity (think optical fiber or telecom.) But do not overlook the large psychological component of the pain incurred by investors. The damage gets repaired when investors finally forget about the pain they suffered — or when a new crop of investors (without scars) finally appears.

Today, market junkies have a new mistress: homes. Their former passion for stocks has been replaced. As we have seen, their equity wounds — plus 46-year low interest rates — has made real estate the new hottie. My guess is that nothing short of a large and sustained move upward (e.g. several quarters) will rekindle their love affair with equities.

How likely is that? Is it possible that an 18-year bull market (1982-2000) could be followed by a two-and-a-half-year bear (March 2000 peak to October 2002 low), then followed by another multidecade (2003-2018) bull? Sure, anything is possible. But as the chart above shows, it would be historically unprecedented.

Regular blog readers have seen snippets of the 4 charts usd in this. The column attempts to pull together the cyclical and technical arguments into a coherent whole . . .


>

Source:
Cult of the Bear, Part 2
RealMoney.com, 1/9/2006 7:12 AM EST
http://www.thestreet.com/comment/investing/10260656.html

Category: Investing, Markets, Technical Analysis

Death of Volatility

Category: Markets, Psychology, Technical Analysis, Trading

P/E vs S&P 500 (50 Years)

As promised, today brings us to the 4th in our series of charts: P/E vs S&P500 click for larger chart courtesy of Mike Panzner, Rabo Securities > I’ll get into the significance of what this means to the markets later, but for now, note where the P/E is over the median, and its impact on…Read More

Category: Earnings, Markets, Psychology, Technical Analysis

2 Studies on the Flattening Yield Curve

Category: Federal Reserve, Fixed Income/Interest Rates, Inflation, Technical Analysis

Alaska is Melting . . .

It seems that the melting polar ice is becoming more of a concern to Alaskans than those of us in the lower 48. click for larger graphic courtesy of  Anchorage Daily News > Thank goodness there’s no Global Warming — imagine how much more of Alaska would be melting if there was! > See also:…Read More

Category: Science, Technical Analysis, UnScience

100 Year Dow Jones Industrials Chart

Have a look at this 100 year (actually, 105-Year) chart. I colored each “Market” appropriately — Green for Bull, and Red for Bear — to more clearly show what happens. Bull markets get ahead of themselves. At their ends, they tend towards excesses that take a very long while to recover from. When a long…Read More

Category: Markets, Psychology, Technical Analysis

4 Year Presidential Cycle

This is the first of 4 charts I plan on revealing this week. Each one will hopefully shed some insight into what we may expect in 2006. This chart shows what is known as the 4 year or Presidential Cycle. The theory behind this is that U.S. markets have a tendency to make a high…Read More

Category: Markets, Technical Analysis

Inverted Yield Curve: Its different this time (not)

Category: Federal Reserve, Fixed Income/Interest Rates, Inflation, Technical Analysis

Activity Afoot in Rove Indictment Futures

Category: Politics, Technical Analysis

Global Weather Volatility is a Strong Buy (Short UnScience)

Category: Science, Technical Analysis, UnScience