I’ve been hearing the “commercial real estate ready to bust” argument for 6 months now. Yet, one of the top performing ETFs over this time is IYR.
The banks should not have rallied this far in the first place. But they have. This uptrend has clearly outpaced the fundamentals. It’s now about fund managers chasing performance, some of them facing extinction if they don’t post good 2009 numbers. I expect this to continue to lift the market in the short-term.
Once DOW breaks 10,000 there is little resistance to 11,000. The markets are now in a range that was erased in less than two weeks last year. It seems likely we should at least test those “pre-crash” lows. Won’t be surprised to see S&P at 1,200 or higher by the end of the year. Then we’ll see if there’s another economic shoe to drop next year. As Mike said we cannot use history as a guide because the government’s actions here are unprecedented. Did they save us, or just buy us another year or two? Will the world ever trust the dollar again? Time will tell.
Luckily, we need not concern ourselves with such things. New leaders are emerging now which is what you would expect in a new bull market. Right now most of my stocks are China companies. Wonder if that says something about the world economy…
From: canslim-bounces@??? [mailto:canslim-bounces@???] On Behalf Of Duane Runnels
Sent: Saturday, October 10, 2009 2:15 PM
To: CANSLIM Stock Investment Group
Subject: Re: [CANSLIM] IBD Market Outlook
Thanks to both of you.
A real estate friend of mine says the commercial RE market hasn't burst its bubble yet and nobody's paying much attention to it. The banks are going to take another hit.
--- On Sat, 10/10/09, Anjan . <milscaner@???> wrote:
From: Anjan . <milscaner@???>
Subject: Re: [CANSLIM] IBD Market Outlook
To: mike@???, "CANSLIM Stock Investment Group" <canslim@???>
Date: Saturday, October 10, 2009, 1:33 PM
Great observations Mike, and Duane.
In general I am a happy camper as long as the market is making higher highs and higher lows with closes near intra-day highs most of the time. However I have one caution flag up - nas has been under performing the sp500 since 7/23/2009 as indicated by the RS line.
--Anjan--
On Sat, Oct 10, 2009 at 9:18 AM, Mike Scott <mike@??? <
http://us.mc822.mail.yahoo.com/mc/compose?to=mike@paxsen.com> > wrote:
Duane,
I am not concerned. There are two times that the market stretches well above historical norms above the 200-day moving average. The first condition is early in a new bull market; the other condition occurs at the end of a bull market run with the last gasp blow off such as the ramp up from 1999 to March 2000. Each market tends to establish a norm; we haven’t had enough time to establish a norm in this market and based on the last paragraph below we may not establish anything like a norm. The 1990’s created higher excursions above the 200 day than the 2003 to 2007 period.
The early part of a new cycle bull market creates a situation where the moving averages are still moving down when the market takes off. The 200-day didn’t bottom until late July this year. The market had been rallying briskly for 4 months. So the first thrust of a bull market causes a larger extension above the 200-day than subsequent moves. If you go back to 2003 you will see that the NASDAQ got up in the 25+% territory above the 200 day moving average on the initial move. Every subsequent market thrust through the remainder of the bull market tended to top in roughly the 10% region. On October 31, 2007 it broke through the prior barrier and the bull market was finished. The statistics are based on intra-day highs compared to the index and the high jump technique was developed by Ian Woodward.
2003-2007 is what I call a normal bull market, driven by a recovering economy. I don’t know if we are in a bull market today. I think it has been driven by the Fed pumping an unprecedented amount of money through the banking system. We are on artificial life support and could possibly remain on it for a long time; the patient could die by the way. The Fed could fumble the ball also and we could tank back down to the March lows. We could implode on the debt situation. If interest rates take off we may not be able to service the gigantic debt this nation has created. We might have to default, this could be ugly. Anything is possible but applying history to a unique market situation may not work. The Fed actions are unique. I have had to just operate in this market on faith and an understanding of what the Fed is doing. So I watch the Fed and I watch the leaders and I follow the trend.
Mike Scott
Tarzana, CA
_____
From: canslim-bounces@??? <
http://us.mc822.mail.yahoo.com/mc/compose?to=canslim-bounces@mailman.xmission.com> [mailto:canslim-bounces@??? <
http://us.mc822.mail.yahoo.com/mc/compose?to=canslim-bounces@mailman.xmission.com> ] On Behalf Of Duane Runnels
Sent: Saturday, October 10, 2009 7:49 AM
To: CANSLIM Stock Investment Group
Subject: Re: [CANSLIM] IBD Market Outlook
Obviously M is in an uptrend, but IBD persists in calling it Uptrend Under Pressure. My equity curve says otherwise, but I do understand the caution when volume isn't participating.
Beyond that, here is what is bothering me now. Mike Scott I believe has a notion that the Nas retreats when it gets about 11% above its 200 dma. I checked this back to the last bear some months ago when he mentioned it and it does seem to work fairly well. With the huge runup we've had since March, the Nas is now 23% above its 200. I understand the current conditions are skewing the 11% "rule", but I wonder if Mike is nevertheless cautious or nervous about it being this high.
--- On Fri, 8/21/09, Mike Scott <mike@??? <
http://us.mc822.mail.yahoo.com/mc/compose?to=mike@paxsen.com> > wrote:
From: Mike Scott <mike@??? <
http://us.mc822.mail.yahoo.com/mc/compose?to=mike@paxsen.com> >
Subject: Re: [CANSLIM] IBD wrong?
To: "'CANSLIM Stock Investment Group'" <canslim@??? <
http://us.mc822.mail.yahoo.com/mc/compose?to=canslim@mailman.xmission.com> >
Date: Friday, August 21, 2009, 3:11 PM
David,
The leadership got hit hard on Monday. Following the leaders is a big part of determining the direction of the market. We had a large pull back in June/July that was not called a correction because largely the leadership held up.
Mike Scott
Tarzana , CA
_____
From: canslim-bounces@??? <
http://us.mc822.mail.yahoo.com/mc/compose?to=canslim-bounces@mailman.xmission.com> [mailto:canslim-bounces@??? <
http://us.mc822.mail.yahoo.com/mc/compose?to=canslim-bounces@mailman.xmission.com> ] On Behalf Of Dave Rubin
Sent: Friday, August 21, 2009 9:27 AM
To: ' CANSLIM Stock Investment Group '
Subject: [CANSLIM] IBD wrong?
Even in today’s Big Picture they indicate the market “remains in a correction.”
However it seems to me they jumped the gun and went right into “Market in correction” on Monday without even a stop in “Market uptrend under pressure.”
Frankly I don’t really understand the reason for this, but it seems to me that this call was flat out wrong and Monday’s correction was just a one-day event.
IBD also seems to be relaxing their previous rules in declaring that “an attempted rally begins with the first up day after the market goes into correction.” It’s been awhile since I read the book, but I thought the attempted rally only starts with an up day of 1% or more on higher volume than the previous session.
By this definition, unless the market sells off at the end of the day, this is a follow through day and Monday’s Big Picture should indicate “Market in confirmed uptrend” once again. IMO they screwed up on this one.
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