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There is no new driver, just the same old driver, although he is showing
more signs of fatigue. I don't have my older "big picture" posts handy,
however they should be in the archives for anyone interested. Bottom line is
that very little has really changed in the big picture during the past
several years to pave the way for economic and business prosperity. Yes,
some of the air has come out, but not nearly enough to radically alter the
bull market belief system of continuous, unlimited, and effortless
prosperity for all. I will remain bearish until a lot more air has been let
out of the equity, housing, credit, and consumption (especially import)
markets.
I have mentioned many times here that such a great bull market can only be
corrected by a combination of price and time. I attach my chart of the S&P
500 showing time and price retracements ... the chart hasn't really changed
much from the last time I posted it. Yes, the Fed and the politicians will
do all they can to prolong the party, however prolonging the party will only
make the hangover that much greater. Time and price in combination will not
be denied!
More specifically to the shorter term, I am sensing fatigue on the part of
the consumer and on the part of the Fed. Further, fatigue is not just in the
US, it is global and there is no other Great Consumer which is going to bail
out the world by consuming excess goods and services. Even looking to the
country receiving the best "hot growth" press, I am recently reading of
severe limits on depositor withdrawals from the banking system ... it is
never a good omen when the banking system is in trouble. That country is
China! I also believe that military operations in the Middle East are going
to be far more difficult and prolonged than widely believed. The people of
Iraq and surrounding countries are just not going to kneel down in front of
the US military even though they may not mount overt and concerted
resistance. A home grown despot is always preferable to foreign rule and
occupation. Make no mistake, the plans are to occupy Iraq and use it as a
platform to carry out operations throughout the Middle East while pumping as
much oil as possible.
Getting really short term, the price charts are looking fatigued. Advisor
sentiment has returned to extreme bullish (bearish) levels. The SP
commercials are once again loading the boats with SP short positions. (The
SP commercials very adroitly load their boats to the gunnels well in advance
of the bear and then unloaded into the pre-election rally engineered by the
policy makers.) Need I mention that there is still a lot of crap on the
corporate books, especially outlandish pension plan projections? I figure we
have anywhere from a few days to a month before the bear resumes in earnest.
Bottom line? The next (interim) bear market bottom is probably 3-6 months
away, although it is possible we could get a major bottom if the policy
makers leave the market alone. The real bottom of the bear is some
combination of 500+- SP points and 7 years away. The next major bull market
is probably 15+- years away. This remains an extremely dangerous equity
market suitable only for nimble traders.
Earl
----- Original Message -----
From: "sue crew" <screwy@xxxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, January 01, 2003 2:51 AM
Subject: Re: [RT] Uncovered Puts
> Earl what do you think will be the main driver for a big move down, in
> equity markets.?
>
> cheers
>
> sue
>
>
>
>
>
>
> EarlA wrote:
>
> >The income sounds nice, however I don't envy your exposure to another
major
> >leg down and I believe it is coming and coming soon (within the next 3-6
> >months). Many of these stocks appear to either be resuming major declines
> >(e.g. S) or topping out in bearish formations (e.g. EXC). The only
question
> >on my table is "when" not "if". Keep your fingers crossed and hope you
make
> >it through January expiration.
> >
> >Earl
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