# Market direction, any clues?



## Pluto (Sep 12, 2013)

some say that the financials lead the market - up and down. Looking at the Canadian banks, eg price history of xfn, zwb, and similiar bank/finance etf's we see a lot of downside. A US finance etf, xlf has sharply declined recently too and putting in a lower low. Is this an indication of a weakening bull market? Or just another buying opportunity? 


Anyone have any clues as to overall market direction?


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## larry81 (Nov 22, 2010)

Hopefully its going to crash very hard and stay low until just the month before i decide to cash out and retire !


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## indexxx (Oct 31, 2011)

Yes. It's going to go ^,v, or >. I'm sure of it...


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## Rusty O'Toole (Feb 1, 2012)

My fearless prediction is that the S&P will be down for the first half of the year.


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## 1980z28 (Mar 4, 2010)

I see 20% up across the world markets


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## Pluto (Sep 12, 2013)

Rusty O'Toole said:


> My fearless prediction is that the S&P will be down for the first half of the year.


I'm curious as to what makes you think this? What are your clues? 

I tend to think similar to you, but I'm not sure on the timing. Besides bank stocks, another thing that bugs me is a very powerful rebound on the S&P about Dec 18, that just died soon after. I'm thinking what was that? It looks to me like a pile of institutions having a short lived bout of euphoria, and then oops!, they changed their minds. Anyway, we'll see. In the meantime I do not trust this market. If the institutions are concerned, and not pushing prices up, I got no wind in my sails.


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## Rusty O'Toole (Feb 1, 2012)

From what I know of the fundamentals stocks are on the high side and have been for several years. There has not been a real down turn or bear market since 2008 which means this bull is very old.

Have been expecting a down turn for several years and been consistently wrong. But the technical action since last fall makes me suspect the market is cracking up.

The only thing that can hold it up is more QE or similar action from the Federal Reserve. And they already started "tapering" some time ago.

The situation could change at any time, but that is my opinion.


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## fatcat (Nov 11, 2009)

i think it comes down to essentially two things in the united states mainly:

earnings and earnings quality (i.e. top line earnings)
and wage growth / disposable income

if they hold we will continue to see the market move slowly up
the case of wage growth which is stagnant we need to see something like nudges upward, which would be enough


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## Rusty O'Toole (Feb 1, 2012)

If you mean corporate earnings a lot of what you see is water, based on stock buybacks and accounting tricks

If you mean workers' earnings a lot of that is "seasonally adjusted" and otherwise faked up to conceal the high unemployment, large number of full time jobs that have been replaced by part time jobs, and good union jobs that have been replaced by McJobs at half the pay, thanks to all the factories moving overseas.

Wage growth has been stagnant or down since the 90s. This has been papered over by inflation and by the huge increase in debt both private and public.

Things aren't as bad in Canada but falling oil prices aren't doing us any favors as oil accounts for a lot of our export income and of course, politicians decided years ago to destroy manufacturing in favor of resource extraction.


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## bayview (Nov 6, 2011)

I see increasing risks of a global recession and Canada would not be spared. No chance of real wage growth. Only ones who get it are the Fatcats**in Wall Street (**no relation to our esteemed senior member here). Only the USA is soft humming, ROW, especially Europe and China are sighing!

What do I know? I have been wrong for the last 3 years as some key global markets made new highs and/or made huge rallies fuelled by QE. Totally detached from fundamentals. I'm just waiting for a huge crash/ correction to dive in, although I also have a huge portfolio, but my cash level is much higher.


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## fatcat (Nov 11, 2009)

Rusty O'Toole said:


> If you mean corporate earnings a lot of what you see is water, based on stock buybacks and accounting tricks


yes, that's why i referenced _top-line_ growth ...


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## uptoolate (Oct 9, 2011)

No clue. Well, lots of clues... no idea.


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## Pluto (Sep 12, 2013)

I like to identify the dominant thesis as portrayed in the media, and then assess it. 

Not sure, but what it seems to be is this: There is no US recession in sight, so don't worry be happy.This thesis could be true, but it sure isn't infallible as there doesn't need to be a recession to have a bear market as the approximate 40% drop in 1987 showed. "Everyone" was caught off guard, as they say. The reality is, it is never "everyone", rather it is "most" were caught off guard. It has to be the majority caught off guard, because otherwise, how could a market get so high in the first place? Its obvious: the majority takes it high, then the majority doesn't want it to end. 

Another problem with the "no recession in sight, so everything is fine with the market" thesis is, recessions are very difficult to predict, and anyone who tries to predict the market based on trying to predict the economy usually fails. 

Moreover, bear markets are already in progress, and even already bottomed by the time recessions are announced. On top of that, bear markets start when the economy is good to excellent. 

In summer of '87 the talk was on how well the economy was doing, and on how well it was going to do in 88. When all that don't worry, be happy talk was going on, the market slowly started to decline. But the dominant thesis would not permit most to consider a crash. So most got creamed. 

None of my thoughts proves this bull market is over. Its the absence of evidence that it will continue with power that has me concerned.


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## Pluto (Sep 12, 2013)

Cramer gives an overview of how the VIX is signaling a possible broad based sell off. 

http://www.cnbc.com/id/102352832

VIX is considered the "Fear Index" ie markets get volatile when there is turmoil/fear among investors. He must be taking about institutional investors, as I don't see fear in the average DIY investor. On the contrary I see complacency and optimism. That could be one reason why the DIY investors gets taken by surprise, and then claims no one can know when a bull is ending. 
In my experience markets get choppy near tops, and according to the vix, it is choppy.


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## larry81 (Nov 22, 2010)

Pluto said:


> Cramer gives an overview of how the VIX is signaling a possible broad based sell off.
> 
> http://www.cnbc.com/id/102352832
> 
> ...


protip: dont listen to cramer !


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## My Own Advisor (Sep 24, 2012)

I get worried actually when "everyone" (i.e., experts) predict the same thing. The herd is usually shown to be wrong.

For example, how many folks have been calling or predicting interest rates are going up?

I've heard this for 4 years straight.

Today, a rate cut. 

When they say "don't worry, be happy" this is when I start to get nervous. Not selling nervous, just that there is something coming...

It does seem like bear markets start when the economy is good to excellent; so I guess it begs the question, when is the bull market close to the top? Now, another few thousand points?


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## larry81 (Nov 22, 2010)

Oh yea, i predict a bond funds apocalypse in 2012, 2013, 2014, 2015 .....!!! 

a broken clock is right twice per day !


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## lonewolf (Jun 12, 2012)

I got my eye on 2015.75 for THE top (pi date Martin Armstrong)


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## Pluto (Sep 12, 2013)

larry81 said:


> protip: dont listen to cramer !


I listen to everyone/anyone, but that doesn't mean I believe them. After listening to them, I make my own mind up.


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## Pluto (Sep 12, 2013)

larry81 said:


> Oh yea, i predict a bond funds apocalypse in 2012, 2013, 2014, 2015 .....!!!
> 
> a broken clock is right twice per day !


yes, you are touching on the lulled to sleep phenomenon. The predictions/worries that don't come true - until virtually everyone gives up even thinking about it.


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## Pluto (Sep 12, 2013)

Distribution days: 

In his book, The Successful Investor", O'Neil describes how to spot market tops. He wrote,
"In any uptrend there will come a point when selling activity overtakes buying. This we call distribution and it is important you recognize it as it is happening."

A distribution day is a day when the market goes down on volume higher than the day before. He found that 3 - 5 days of distribution within a span of 2 - 4 weeks is sufficient to turn a markets up trend into a down trend. 

Presently, on the S&P 500, we have 7 distribution days since Feb 25 - that's two weeks and two days. that means the odds are not good for a sustained up trend anytime soon. Anything is possible, so an up trend can happen, but it isn't likely. Such facts, among others I have mentioned elsewhere, are why I have turned negative on stocks. 
Some other reasons for negativity are, a very high % Bulls reading last year. This tends to be very early. A/D line not going to new highs when market index did recently. This tends to be very early too. Cook Cumulative tick has been signaling a bear market. This also tends to be early, apparently. 
However, the distribution days indicator, as defined by O'Neil happens soon after a top. I've never been sorry for lightening up on stocks when this distribution indicator kicks in. Too, it is easy to check historically just by going to yahoo charts and counting distribution days on previous tops of your choice. 

this post is intended only for those who are interested in learning how to spot major tops. If you are negative on this approach, and/or have an alternative investing strategy you wish to promote, start another thread.


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## Rusty O'Toole (Feb 1, 2012)

DJ and S&P now even or slightly down for the year. I still think they will be going lower before fall. However I have even less faith in fundamentals than I did in January and believe the markets are more susceptible to manipulation or influence or sentiment. 

High frequency trading is no longer as profitable as it was a few years ago and that type of trading tends to boost prices. If it dries up some support will be lost.

So I am still bearish but, I usually am. And, I am usually wrong. Or at least have been for the last 5 years.


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## dogcom (May 23, 2009)

The end has already come if we had free markets. The Fed and many central banks are buying up the bonds and front running the stock market as well, without this liquidity everything would have collapsed.


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## My Own Advisor (Sep 24, 2012)

For kicks, my latest posts about some of my market and financial predictions for 2015....spot on, on some, WAY off on others 
http://www.myownadvisor.ca/2015-financial-predictions-march-update/


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## Pluto (Sep 12, 2013)

I'd like to point out that identifying market tops by counting distribution days, strictly speaking, isn't predicting. That is, there is no implied % change, or index point change over some future time frame. I don't believe predicting can be done reliably. What it does do is identify substantially increased risk of a down trend and identify a time for those who want to preserve some gains, to take some profits. One of the best ways to make money is to not lose what one has gained. 

Besides the S&P, we have the NASDAQ - 4 distribution days since Feb 27. 

But what about market leading stocks like bio tech stocks. They are not caving in, so the picture is mixed. due to that fact, Marder, doesn't think the Bull is over. 

http://www.marketwatch.com/story/te...he-positives-for-the-nasdaq-2015-03-12?page=2

For myself, I'll be keeping an eye on distribution days, and how the IBB acts. If the latter doesn't break down, I guess I'll agree with Marder.


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## Pluto (Sep 12, 2013)

For those who are interested, check out Value Line's appreciation potential estimate. A historical graph is available here:

http://www.theburningplatform.com/2014/01/29/value-line-appreciation-potential-lowest-since-1969/

Apparently it is at an extreme low, meaning, anyone buying now should not expect much or any appreciation over the next 3 - 5 years, perhaps longer. Apparently the last time it was this low was in the late 1960's and it took over 10 years for the S&P to break even. When appreciation potential was very high, in 1974, buyers would have done very well. Besides 1974, there were numerous other occasions when appreciation potential was good to stellar - all fine buying opportunities. 

NB: - Appreciation Potential is not a market timing device so it isn't necessary to tell me one can not time the market. It is not a precise predictor of the market, so it isn't necessary to tell me one can't predict with precision what the market will do. 

Appreciation potential is a great tool for patient investors who prefer to see black, not red, in their account statements.


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## Pluto (Sep 12, 2013)

Another distribution day yesterday. 
Here is an article describing how distribution days signaled the top in 2007 -8. 

http://education.investors.com/inve...racking-distribution-days-a-crucial-habit.htm

No doubt the naysayers will be skeptical and claim tops can not be identified. OK by me. I'm not an evangelical trying to convert those who are happy with their strategy. This is just for those who are interested in learning to avoid losses.


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## Pluto (Sep 12, 2013)

mwbinaryoptions said:


> Well, the US market will keep going UP until the Fed rises the interest rates and investment banks start to pull the money out of the market to other investment products like bonds, etc.
> 
> Market review - Federal Reserve meeting


Could be. the absence of rate increases does not guarantee rising earnings. What if corporate revenues and earnings do not go up? Last fall was a weak earnings season. what if this quarter is weak too? 

Bottom line is, earnings drive the market. If market participants do not see rising earnings, in the next 6 - 12 months, they won't be eager to pay higher prices for stocks, and they may well distribute what they own. And speaking of distribution, we have seen a bit of that of late. 

What about market leaders? IBB got hit hard. 

Distribution + leaders getting hit = high risk. It isn't necessarily the end. Could be just a temporary air pocket. But if it isn't indicating the end, what would turn things around? My belief is higher earnings could turn it around, but where is the evidence of sustained higher earnings?


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## dime (Jun 20, 2013)

RBC and National Bank seem to think the TSX Composite will finish about 9% up from current levels. I like the sound of that!
Scotia and BMO are less optimistic currently with estimates of 15000 which is about where we are right now. I've not yet checked CIBC or TD's estimates. 

There's certainly higher volatility in world markets after the Fed ended QE (for now). I'd bet a sharp trader could make some money from trading the swings along the way.


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## lonewolf (Jun 12, 2012)

Price pattern

Over decade long jaws of death pattern DJI ?

From 2009 lows S&P diagonal triangle ?

From 2011 low rally with 3 peaks & domed house forming ?


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## etfstrader (Sep 26, 2014)

I don't mean to sound like an expert, but I find so many speculations on here while reading this thread that makes no difference than gambling with your hard earned money. To invest or trade well, you don't need to 'analyze' stock market on a daily basis because most of the time you have no clue of what is going to happen next and yet, market is always right (by the way, analyzing day-to-day market activities is the job of financial institution analysts or financial newsletter writers who gets paid from investors' pocket for doing this stuff.) What you need is some reliable setups or trading systems (it might take a year or few to master these setups depending on your background and knowledge) so that you can make money over and over again. Attached is my trading summary for this month to proof how I make money from both market directions.


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## fatcat (Nov 11, 2009)

etfstrader said:


> *I don't mean to sound like an expert*, but I find so many speculations on here while reading this thread that makes no difference than gambling with your hard earned money. To invest or trade well, you don't need to 'analyze' stock market on a daily basis because most of the time you have no clue of what is going to happen next and yet, market is always right (by the way, analyzing day-to-day market activities is the job of financial institution analysts or financial newsletter writers who gets paid from investors' pocket for doing this stuff.) What you need is some reliable setups or trading systems (it might take a year or few to master these setups depending on your background and knowledge) so that you can make money over and over again. Attached is my trading summary for this month to proof how I make money from both market directions.
> 
> View attachment 4090


no problem, you don't sound like an expert ...

so, do i have this right, you never lose money ? you make money when the market goes up and when it goes down because you have a "system" right ?

that's unusual, i've never heard of anyone who had a "system" to make money in the in both directions ... 

fantastic, do you have a newsletter ? ... what does it cost ?


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## 1980z28 (Mar 4, 2010)

Momentum is up or down

If you have 1k to spend each month

Do so

Dollar cost average untill you ?????


That is your best bet unless you have insider trading


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## etfstrader (Sep 26, 2014)

fatcat said:


> no problem, you don't sound like an expert ...
> 
> so, do i have this right, you never lose money ? you make money when the market goes up and when it goes down because you have a "system" right ?
> 
> ...



You've never heard of it because you are not in the "trading" world lol.... j/k

I'm neither interested in writing any newsletter nor managing someone else's money (I'm not qualified in Canada anyway). I'm happy enough by trading my own accounts and living in the style of life that I don't have to worry about my financial situation and do whatever I want. :biggrin:


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## gibor365 (Apr 1, 2011)

etfstrader said:


> You've never heard of it because you are not in the "trading" world lol.... j/k
> 
> I'm neither interested in writing any newsletter nor managing someone else's money (I'm not qualified in Canada anyway). I'm happy enough by trading my own accounts and living in the style of life that I don't have to worry about my financial situation and do whatever I want. :biggrin:


So, what is your system...?! How would it work in last 2008 recession?


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## etfstrader (Sep 26, 2014)

gibor said:


> So, what is your system...?! How would it work in last 2008 recession?


I was employed as an equity trader at a Canadian investment firm at the that time when Bear Stearns collapsed. It was a painful year for many, especially US homeowners. However, it was a good year for me and few colleages who shorted the market. But I didn't get rich at that time because I didn't have much capital lol...


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## dogcom (May 23, 2009)

I think the market is headed for a decline at some point but won't short it because of the Fed ready to go against me. The Fed has unlimited money to come in and kill the shorts whenever they want to so I stay away from shorting the market. You have to remember the Fed and the government can legally do anything and use others like JP Morgan and stuff to make the plays and they won't get charged if they do it for the government.


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## etfstrader (Sep 26, 2014)

Red circles indicate more troubles ahead for stock market with broken trend line and resistances from both MA20 and MA50. Any rebound tomorrow is likely to be sold after.


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## james4beach (Nov 15, 2012)

Don't speculate in markets! Gambling is dangerous!

Instead, buy at all time highs and gamble... oh, sorry, "buy-and-hold" ... and pray that the market continues to be overvalued until you retire 

^ that's tongue in cheek. I think everything is a gamble, it's just a matter of degrees, and risk control.


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## humble_pie (Jun 7, 2009)

etfstrader said:


> Red circles indicate more troubles ahead for stock market with broken trend line and resistances from both MA20 and MA50. Any rebound tomorrow is likely to be sold after.
> 
> View attachment 4106




mon dieu those charts are much too small to read, perhaps post them larger next time? would be appreciated

also i'm wondering what is that straight blue diagonal rising bar on the SPX lower left chart - it looks like a 6-month chart but it's so small that the dateline has been cut off


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## Pluto (Sep 12, 2013)

I'm not really skilled in short term trading, but all the more power to those who are. Short term trading takes too much time, I think. I'm more interested in avoiding major downturns, and in the 3-5-10 year time frame. Presently, due to high valuations, the out look for appreciation in the next years, is very low, so I'm not interested in buying stocks until appreciation potential is, say, > 100% over 3 to 5 years. So, except for some oil stock I bought last Dec, I'm sitting tight. I've never made any money by buying when appreciation potential is close to zero, so it just doesn't make any sense to me to put a nickel in stocks right now. In the meantime, I just keep an eye on distribution to assist in making some money with puts when the inevitable happens.


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## humble_pie (Jun 7, 2009)

Pluto said:


> ... So, except for some oil stock I bought last Dec, I'm sitting tight.


your december low call in oil was a great call! i'm happy you snagged some oil stocks, i've gingerly laid on a few myself, in the short term these are working out but long-term situation is clouded as you say


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## fatcat (Nov 11, 2009)

etfstrader said:


> You've never heard of it because you are not in the "trading" world lol.... j/k
> 
> I'm neither interested in writing any newsletter nor managing someone else's money (I'm not qualified in Canada anyway). I'm happy enough by trading my own accounts and living in the style of life that I don't have to worry about my financial situation and do whatever I want. :biggrin:


i can dig it ... i too am filthy rich and just stop by our little forum to help the little people out ... this is an actual picture of me after harvesting a huge gain shorting the mexican shrimp industry ... i make money when the shrimp are big or they take a turn for the worse and come out small, no problem, i'm on it in both directions

View attachment 4122


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## avrex (Nov 14, 2010)

Lol


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## humble_pie (Jun 7, 2009)

shrimps, parrots, we know that when it turns into a zoo out there, the end must be nigh

lonewolf & pluto have had the right idea for a while now, but of course they're already off to the Alps with the cream & the cow-bells, yodelling about their lovely safe swiss francs.

btw i ran into a nano factoid this am that might be of use some day. Goldcorp has hired kingsdale services to make sure that all their shareholders vote on the proposed by-law amendment before the AGM this april 30th.

the amendment is the 2nd one on the same issue in a year. Seems the G directors want to extend the time envelope around nomination of new directors. It'll take longer, once the by-law amendment is passed, for such nomination to reach the board. There are couple other subtle glitches to the nomination procedure, as introduced by the amendment, that seem designed to throw unwanted new nominations off the track.

all this is suggesting to me that goldcorp is concerned about hostile takeovers in this era of ultra low gold mining share prices. The fact that they've amended the nomination by-law twice in the past year suggests they are super-concerned. Clearly, they don't want uninvited - read hostile takeover - directors to be nominated.


_Edit:_ who could be interested in marrying up w goldcorp? antofagasto is already courting teck. Do i see an asian suitor in the wings.


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## dime (Jun 20, 2013)

humble_pie said:


> shrimps, parrots, we know that when it turns into a zoo out there, the end must be nigh
> 
> lonewolf & pluto have had the right idea for a while now, but of course they're already off to the Alps with the cream & the cow-bells, yodelling about their lovely safe swiss francs.
> 
> ...



Interesting observations. I just read the other day about how M&A activity is at it's highest during market peaks (ie. 2007) and at it's lowest during market bottoms (ie. 2009). 


The current pattern of increasing volatility makes sense considering that QE has ended (for now). It doesn't look like a consolidation pattern where we should expect markets to spring higher with increased buying strength. 

IMHO valuations are just a little too high on too many companies with just average or even sub par growth. So investors buying in at this point are paying today what the stock might be worth after a few years of waiting for higher earnings. The US markets are long overdue for a 10%+ correction. That being said there's a nice bunch of bluechip growth companies out there that are under fair value for the expected growth and many value investments based on book +EPS. 

It's not a bad idea to "take some money off the table" and sell something that's had a good run up and is now overpriced. It's a good idea to build up some cash reserves for when the market inevitably goes 'on sale'. 

Correct me if I'm wrong but many investors are sitting on tremendous volumes of cash right now waiting for a better entry point. Low risk yields are crap, making equities the best game in town. After a correction shakes the market a little, I could see the market in 2016 resuming a nice bull market run for a while yet.


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## fatcat (Nov 11, 2009)

dime said:


> Correct me if I'm wrong but many investors are sitting on tremendous volumes of cash right now waiting for a better entry point. Low risk yields are crap, making equities the best game in town. After a correction shakes the market a little, I could see the market in 2016 resuming a nice bull market run for a while yet.


well said ... we can talk all day about how toppy equities are but you then have to ask "where else do you go ?" ... 

this, accompanied by the fact that we are seeing stealth inflation all over the place makes the investor rightly leery of holding cash or going to low yield fixed income ... 

it's a question and fact of zero good alternatives ... 

so equities will continue to inch up unless and until there is some kind of shock to kick them back or better assets present themselves ... 

in the meantime the investor must ask "what is the risk / reward proposition by sitting on the sidelines ?"


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## dime (Jun 20, 2013)

fatcat said:


> well said ... we can talk all day about how toppy equities are but you then have to ask "where else do you go ?" ...
> 
> this, accompanied by the fact that we are seeing stealth inflation all over the place makes the investor rightly leery of holding cash or going to low yield fixed income ...
> 
> ...


Agreed! 

Great question... For the risk/reward, could the cost of sitting on some cash could be considered a bit like 'insurance'? Maybe even like the idea of holding a small some physical gold?

So how much cash to sit on waiting only earning meager short term yield? Maybe 10% of the portfolio in cash (or equivalents) for if the overheated market sells off a bit? If a millionaire sets aside 100k and DOESN'T lose 10k as the market corrects 10%... that's worth something as "a penny saved is a penny earned". Any one have suggestions?


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## humble_pie (Jun 7, 2009)

i think people tend to have a kind of amnesia about market corrections. I believe i get this amnesia myself.

folks don't remember the panic, the phone calls, the sickening downward drops of 10-12-16% per day, the margin calls, scared investors hiding under their beds, the way 40-50% in dollar value could evaporate out of an investment portfolio like a wisp of steam.

we'd all like a calm, orderly downdrift, following which we could dig out whatever cash we'd managed to build up & sedately buy stocks at 25% off. But i fear that's not how it'll happen.


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## OptsyEagle (Nov 29, 2009)

Unless you have met your goal of financial independence, it is always riskier to be sitting in cash then fully invested. If you are in cash and the market goes up 20% and never achieves a lower price then that, you will have lost exactly 20% of your retirement nest egg due to this investment mistake. If you are invested and the market goes down 20%, it is really just an annoyance. As long as you have the time to wait, before needing the money, the stock market will recoup that loss. There are exceptions to this, but that is how it pretty much how it works. Remember a down market just provides for a higher future rate of return and that is about all it does, at least to the index investor.

All that being said, I just don't think one needs to chase a stock that is going up with a higher and higher bid. I am not advocating selling and waiting for a correction, due to my opinion above, but I am also not advocating over paying for some of the higher priced stocks that seem to be in abundance these days ... due to this phenomena of having no other place to put ones money. That will last right up until it doesn't.

As for the Goldcorp issue. That sounds more like Goldcorp management ensuring they preserve their jobs from an activist investor then it does of an impending hostile takeover. I have not read the proposal, but what a lot of boards do, to preserve their jobs, is to ensure that it takes more then one shareholders meeting (usually 3 or three years) to elect a full board or a majority of the votes. In a takeover, none of that would matter, but for a CEO that doesn't want to lose their job, it matters a lot.


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## lonewolf (Jun 12, 2012)

dime said:


> Correct me if I'm wrong but many investors are sitting on tremendous volumes of cash right now waiting for a better entry point. Low risk yields are crap, making equities the best game in town. After a correction shakes the market a little, I could see the market in 2016 resuming a nice bull market run for a while yet.


 NYSE margin debt levels would not be so high if investors are sitting on tremendous amounts of cash. There is usually a strong correlation between NYSE margin debt & the stock market. Near important tops the market keeps going higher as the NYSE margin debt starts to head lower. ( divergence has started based on up to the end of Feb 2015 stats, end of March stats ?)


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## fatcat (Nov 11, 2009)

humble_pie said:


> i think people tend to have a kind of amnesia about market corrections. I believe i get this amnesia myself.
> 
> folks don't remember the panic, the phone calls, the sickening downward drops of 10-12-16% per day, the margin calls, scared investors hiding under their beds, the way 40-50% in dollar value could evaporate out of an investment portfolio like a wisp of steam.
> 
> we'd all like a calm, orderly downdrift, following which we could dig out whatever cash we'd managed to build up & sedately buy stocks at 25% off. But i fear that's not how it'll happen.


very good point, there is a big difference between the theory and the actuality of 30% market correction ... 

however, i will say that 2008 is fresh in out memory as is march 2009 ... 

i suspect that, other than those on margin (a large number i know) and using borrowed funds, people with decent cash management will say "i have seen this before and i will hold on since i know it will come back" ... 

but yes, these kinds of correction can induce a nausea that is hard to hold down


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## Pluto (Sep 12, 2013)

humble_pie said:


> your december low call in oil was a great call! i'm happy you snagged some oil stocks, i've gingerly laid on a few myself, in the short term these are working out but long-term situation is clouded as you say


Thanks for the accolades. My main message is for people to become their own gurus, in stead of being a follower of some guru. The oil stock buys have worked out, but it wasn't without risk, and since it has worked out so far, there was some luck involved. I believe in creating my own luck and in the case of oil stocks it was looking at the high volume selling starting to taper off + an over sold Rsi + stocks that I believed could survive and recover over 3- 5 years. 

And speaking of gurus,

http://www.marketwatch.com/story/enjoy-the-party-while-it-lasts-2015-04-03

Hulbert and Eisenstadt are sharp guys. Even though Eisenstadt sees a rising market over 6 months, I'm gong to stay mostly out of stocks. Personal decision. It isn't worth it for me to take high risk right now. Besides, Eisenstadt has to change his inputs according to circumstances, and there is no guarantee any changes he makes will be reported in a timely fashion. That's the danger of following gurus reported in the media, and why, I believe, one should strive to learn to become their own guru.


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## lonewolf (Jun 12, 2012)

I cant see all the countries in the Euro zone continuing to use the Euro, It would not surprise me if there was a far amount of fuel to rally the DJI from money fleeing Europe looking for a safe home in the next few months or few years. That is to dangerous of a bet for me though & if it happens it will be a mother of all shorts sometime in the future.


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## Pluto (Sep 12, 2013)

Amnesia: When I see US jobless claims getting as low as the last market top, and U3 as low as the last market top, margin debt as high or higher than the last top, % Bulls hits an extreme level, my memory comes back. I then pay more attention than ever to Distribution days.


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## humble_pie (Jun 7, 2009)

OptsyEagle said:


> ... As for the Goldcorp issue. That sounds more like Goldcorp management ensuring they preserve their jobs from an activist investor then it does of an impending hostile takeover. I have not read the proposal, but what a lot of boards do, to preserve their jobs, is to ensure that it takes more then one shareholders meeting (usually 3 or three years) to elect a full board or a majority of the votes. In a takeover, none of that would matter, but for a CEO that doesn't want to lose their job, it matters a lot.




re goldcorp, you are right, it could be the current board protecting its patch, but in a way it might also be an anti-takeover manoeuvre.

there are so many kinds of takeovers. I'm thinking of new york city hedge fund manager donald Drapkin, who has effectively accomplished a hostile takeover of Cliff resources, without a takeover. He succeeded by insinuating himself slowly.

initially drapkin's conviction was that sprawling, money-hemorrhaging Cliff should shed its losing properties in canada, cut costs, hunker down on its core coal & iron ore properties in the US & sit tight while waiting for the next global expansion cycle.

the company at the time opposed his ideas fiercely. Drapkin responded by buying enough shares to become an insider & get himself on the board. More share purchases & he got his friends on the board. More shares & by early 2014 the Drapkin gang was able to install its own CEO in office.

things moved swiftly after that. Cliff's canadian properties at bloom lake & ring of fire were sold. Costs cut. The global economic boom cycle hasn't started yet & there's nothing drapkin can do about that, so he waits patiently as chairman of the board, with all his i's dotted & all his t's crossed.

there's no doubt but that Drapkin has taken over Cliff resources. Today the company is 100% rebuilt according to his specifications. But there was no formal buyout, no merger, no underwriters, no lawyers, no costs, no tieup of capital, no public gossip, no unhappy shareholders, not even a hiccup.

it's the same kind of drapkin stealth takeover that i thought the Goldcorp directors might be moving to prevent, with their by-law amendments that make it so much more difficult for an outsider to even set a tiptoe on the goldcorp board.


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## gibor365 (Apr 1, 2011)

bearish view....
_Investors should sell any equities bought over the past year, hold the proceeds as cash and take a holiday from the market for six months, according to Steen Jakobsen, Saxo Bank A/S’s chief economist_
http://www.bloomberg.com/news/artic...s-and-take-six-months-off-says-saxo-economist


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## gibor365 (Apr 1, 2011)

Interesting how markets would react on Thusday's employment report big miss at Monday open?!.... _In fact, the 126,000 new jobs created in March was about half of what the consensus had been expecting. The 69,000 jobs downward revisions... _

After a 3 days to think this over ... the disappointing employment news can be interpreted as being good considering the likelihood of interest rates being increased is lower....


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## PatInTheHat (May 7, 2012)

gibor said:


> Interesting how markets would react on Thusday's employment report big miss at Monday open?!.... _In fact, the 126,000 new jobs created in March was about half of what the consensus had been expecting. The 69,000 jobs downward revisions... _
> 
> After a 3 days to think this over ... the disappointing employment news can be interpreted as being good considering the likelihood of interest rates being increased is lower....


Very interesting to see how this plays out. I absolutely agree it is very unlikely they can consider a rate hike this summer now. Normally the markets have rallied higher off disappointing news for this exact reason. If this time we sell off it would definitely be a change of character.

The feds are in a terrible position because any rate hike will put the markets and the economy at risk but how long can they leave the rates so low without it having more extreme repercussions. Also what if things get worse? Will we be looking at more quantitative easing? It will be interesting to see how long will the feds be able to artificially sustain things if the economy starts to tank. I foresee this all unwinding very poorly.

I am extremely bearish going into April and May and I expect this earnings quarter to be filled with lots of misses and poor guidance due to the strong USD. I am an extremely nimble trader however and my time horizions are often very short. Going against this bull market has been a mistake for a very long time now.

For most investors I would recommend sticking to their current plan but certainly not a bad time to at least lock in some profits.


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## humble_pie (Jun 7, 2009)

market corrections are seldom orderly but rather drop by fits & plunges ...

would panic drive some buying in gold markets


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## gibor365 (Apr 1, 2011)

> For most investors I would recommend sticking to their current plan but certainly not a bad time to at least lock in some profits.


 I'm bad in timing markets...so most likely will just hold my stocks... also leaving next week to Jamaica and won't follow markets too close....hope when I come back , I won't see meltdown 
Also, if there will be sell off on Monday, who knows what gonna be on Wed, especially if there will be some hints that interest hike will be postpone to next year


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## gibor365 (Apr 1, 2011)

It will be even more interesting as Saudi Arabia, the world’s largest crude exporter, raised pricing for all May sales to Asia, after the country’s oil minister said global demand was improving

http://www.worldoil.com/news/2015/4...oil-pricing-to-asia-on-signs-of-demand-growth


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## dogcom (May 23, 2009)

Gibor if your gains are good and stocks look high then just raise your short term bonds or something and keep going forward. If I was 90 percent equities today then maybe I would be 50 percent equities and 50 percent in short term bonds and cash and go forward from there. If markets keep going higher thats good and if they get hammered then you have money to deploy at cheaper prices and knowing the grinding of a bear market then maybe one would ease that cash in over time.


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## PuckiTwo (Oct 26, 2011)

lonewolf said:


> I cant see all the countries in the Euro zone continuing to use the Euro, It would not surprise me if there was a far amount of fuel to rally the DJI from money fleeing Europe looking for a safe home in the next few months or few years. That is to dangerous of a bet for me though & if it happens it will be a mother of all shorts sometime in the future.


Interesting that you say that...... My impression is a totally different one. http://money.cnn.com/2015/03/24/investing/us-investors-flooding-into-europe/
This is only a CNN quote, a tabloid "not to be taken too seriously". But there are others who say the same thing. 
DAX up YTD 22.5%. 
SMI 1 year 10.42%, Ytd 2.89% (due to de-pegging)
Spain, Portugal, Iceland, Ireland - increasing
Buffet expressing strong interest in German mid-size companies
Soros looking at Europe

So, what are you saying?


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## james4beach (Nov 15, 2012)

I'm inclined to think the market is still in bull mode and going up. I watch the buy/sell signals on this web site, just below the graph.

I also generally watch the 200 day simple moving average for the broad indices. Generally when I see the index stay above the 200 day average, I consider it likely that it will keep rising. The S&P 500 is well above the 200 day, and the TSX is above it but just barely so


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## lonewolf (Jun 12, 2012)

If staying above 200 day moving average is bullish. One might think that the higher the market is above the 200 day moving average the more bullish. Not so fast think of parabolic advances & the crashes that follow.


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## james4beach (Nov 15, 2012)

lonewolf: I don't think the height above the 200 day moving average means anything. I consider it more of a binary meaning (below or above).

When a trend is established it tends to stick around. Another way to look at it is that reversal events are much more rare than continuations of existing trends. There is also a psychological element, as traders everywhere in the world look at the 200 day moving average. Therefore it becomes a self-fulfilling prophecy. Look at the charts of the S&P 500 going back to 2000 and you'll see what I mean.

The charts are interesting and have merit, though. I encourage you to use stockcharts.com to view charts of the $SPX and $TSX through the tech crash and multi-year bear market. Notice how they remained below their 200 day moving averages. In a bear market, the moving average acts as a "ceiling" that the price can't break through. On the flip side, in a bull market the average acts as a "floor" that the price can't drop below.


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## dogcom (May 23, 2009)

This can't be a good sign for the market direction. Then again the market has gone bananas.

http://www.zerohedge.com/news/2015-...a-guy-starts-trading-stocks-you-know-its-over


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