Jim, I'm not debating you but simply playing devil's advocate to the
pessimism.
I think we will push through $100 a barrel on oil not
so much because of demand but simply to have done it and I also believe that
the actual supply and demand of the product puts a price of around $75 per
barrel on it with the rest being speculation. The Arabs are planning on
oil settling at around $60 short term and $40 long term and have built these
numbers into their economic models.
Housing is a problem
certainly but it's not a crash in real value. It is simply a bubble
bursting and for all of us who didn't borrow against the equity in our homes
and if we are not planning a move, the drop is of little to no
importance. Secondly, the correction will begin to slow soon and prices
will stabilize just as they always do with every bubble that finally
bursts. Those who did borrow heavily against inflated equity are having
problems .. there is no doubt about that but people who use temporary gains in
value to buy toys and live a higher standard of life than they could otherwise
afford, should expect there to be a day of reckoning. However, this too,
will pass just as the 5200 NAS did and we all survived and have made nice
returns from the equity markets. Financial institutions who loaned money
in the sub-prime area were operating on pure greed and with little to no
common sense. Heads are now rolling for that lunacy and will continue to
roll as the depth of the problem unravels.
Inflation has
probably been very falsely represented to us by the U.S. government but this
isn't necessarily a bad thing for the market since once people find out what
goods are really costing them in terms of real percentage increases, they will
also realize there is no place to earn that much return anywhere other than
the stock market. (Mutual funds for the average American).
I do think it possible and even likely we will test the 12,600 area
which represents a 10% retracement from the highs but for I am positive on the
market over-all at least until Hillary fear sets in later next year. I
am holding 80% cash now but as of the close today, I am looking to begin
putting that to work.
Bob
At 01:52 PM 11/7/2007, you wrote:
Rising energy prices
act as a tax on the economy - all elements of the economy- and it is one we
cannot lower by congressional action. The impact will be on lowered earnings
and eventually higher unemployment world wide.
Here in the US the real
estate correction will hurt all the downstream businesses.
As more of the
credit crises comes visible, underlying confidence will deteriorate and a
rising market depends on confidence.
Inflation in this country has only
been kept low by improved productivity by out sourcing manufacturing to low
wage economies. As money supply increases to counteract the credit bubble,
inflation must rise, usually with a six month lag. Add to this the continued
lack of faith in the Dollar and in holding US debt and I would say we
could be on the verge of a major down turn. And, if the world economy is
truly on fire, you can rest assured there will be better places to put money
than the US.
Admittedly this is a very pessimistic analysis but the facts
are the facts.
Jim White
Pivot Research & Trading
Co.
PivotTrader.com
- ----- Original Message -----
- From: BobsKC
- To: realtraders@yahoogroups.com
- Sent: Wednesday, November 07, 2007 10:26 AM
- Subject: Re: [RT] weekly analysis
- At 10:39 AM 11/7/2007, you wrote:
- Please forgive my last post - I posted the wrong
chart.
- My work suggests we are in the period for a weekly pivot on major
indexes.11/16 is the Near Impulse forecast for DOW, S&P and
Russell.This should be a low pivot and start a year-end rally.
- This is what the methodology says yet when I consider all the
external influences( the Dollar, Oil, Near East Uncertainty, Credit
correction, etc.) I see no basis for bullish behavior.
- Jim White
- Pivot Research & Trading Co.
- PivotTrader.com
- What about full employment, rising wages, strong S&P performance,
reasonable PE's, a world economy on fire and no other choices for returns
exceeding inflation?
- Bob