Has the market bottomed out?

[WickedLou9]

I think we might be at or near the market bottom. So.. gulp... I moved out of my short term bond fund and back into the global equity fund. I hope I'm not making a mistake. I got out of equity back in late september and that's just about when the market started it's decline. But I think we have started to see a smattering of good news come out of the market. I am sure there will be some bumps but I think we might have seen the worst of this. I know, I know, market timing for the lose. This isn't my 401k.

Bond Fund:





Global Equity:

[Phantom]

Market timing FTL!

My guess is DJIA will hang between 12 and 13k for the rest of the year. I just dump my money in index funds tho, so I don't pay that much attention.

[WickedLou9]

Originally Posted by Phantom

Market timing FTL!

My guess is DJIA will hang between 12 and 13k for the rest of the year. I just dump my money in index funds tho, so I don't pay that much attention.

Thats what I do with my 401K. I re-allocate maybe once a year but other than that I don't mess with it. This is just a mutual fund account I opened in Feb of 2007 to put some money somewhere other than my ING savings account. 3% return is fine for your emergency fund. I don't want to take any risk there, but anything over that, putting it into a savings account is just being overly risk averse.

I'm doing OK with it though. The market is down 13% since this past september and I am actually still up around 6 %. It's not a ton but I'm beating the market. (for now )

[Phantom]

Be patriotic, invest in the US government !

[WickedLou9]

Originally Posted by Phantom

Be patriotic, invest in the US government !

Treasury bonds. YAY! zero risk, and a return that might not beat inflation. The way I see it, China is investing in US dollars and they are growing like 12% a year. maybe I should put my money in China.

[7960]

Originally Posted by WickedLou9

Treasury bonds. YAY! zero risk, and a return that might not beat inflation. The way I see it, China is investing in US dollars and they are growing like 12% a year. maybe I should put my money in China.

I'm heavy in international and my financial planner keeps telling me to fix it, but then he looks at my rate of return and shuts up. I'm beating what he would have had me pick

[WickedLou9]

Originally Posted by 7960

I'm heavy in international and my financial planner keeps telling me to fix it, but then he looks at my rate of return and shuts up. I'm beating what he would have had me pick

Don't even get me started on financial planners. ugh. There are some good ones, but there are a frightening number of them that don't know an ETF from a Common stock. Actually it's sort of an industry secret but not really a secret... most financial planners underperform the market over the long term. All the extra fees that they charge eat away at your returns and most of the time a simple index fund will beat them.

[David Octavius]

I dont think we are out of the woods yet, all indications are that consumers are holding on to their wallets, home buying is at an almost 2 decade low, food and gas prices are getting very high, high end retailers are getting less sales and consumer confidence is still low. And don't discount the group think dynamic, most people feel we are in recession or at least a significant slow down, that will affect their spending.

We have already seen a few companies lowering forecasts for the entire year.

Add to that banks slowing on giving lending despite the feds lowering rates
and the long term out look still looks muddy.

Maybe the markets already priced that in or maybe they undervalued it, I dunno.

[WickedLou9]

Originally Posted by David Octavius

I dont think we are out of the woods yet, all indications are that consumers are holding on to their wallets, home buying is at an almost 2 decade low, food and gas prices are getting very high, high end retailers are getting less sales and consumer confidence is still low. And don't discount the group think dynamic, most people feel we are in recession or at least a significant slow down, that will affect their spending.

We have already seen a few companies lowering forecasts for the entire year.

Add to that banks slowing on giving lending despite the feds lowering rates
and the long term out look still looks muddy.

Maybe the markets already priced that in or maybe they undervalued it, I dunno.

Yeah I think it may still be shakey for a couple more months but I don't think things are going to get a whole lot worse. The market knows that the forclosures are coming, they have already tightened up credit requirements, the fed did what it had to do, I don't think we will see any more banks going under. it won't get better till maybe the middle or end of the summer but there is no question the market is low right now. even if it's not the bottom, it's near. If it drops another couple of percent, that's OK. It will eventually come back up.

[David Octavius]

Originally Posted by WickedLou9

Yeah I think it may still be shakey for a couple more months but I don't think things are going to get a whole lot worse. The market knows that the forclosures are coming, they have already tightened up credit requirements, the fed did what it had to do, I don't think we will see any more banks going under. it won't get better till maybe the middle or end of the summer but there is no question the market is low right now. even if it's not the bottom, it's near. If it drops another couple of percent, that's OK. It will eventually come back up.

In your first post, was your conclusion based more off technical analysis rather than economic indicators?

[David Octavius]

One thing that makes me skeptical on the whole bottoming out thing is watching the Russell 2000 - a measure of the 2000 small cap companies from the russell 3000.

These companies are not market leaders and are more volatile and sensitive to economic downturns yet even with the tighting of credit and slow down in spending, the index is on an upward trend the past month - this indicates to me that the market is overly optimistic for the future and could fall far if we do indeed enter a real recession.

[Dumpy Dooby]

I'm hoping for doomsday. $40,000/ounce of gold. HOLLERRRRRR

[WickedLou9]

Originally Posted by David Octavius

In your first post, was your conclusion based more off technical analysis rather than economic indicators?

Nothing that fancy, I have just been watching the market fairly closely. It seems the market moves on whim and whimsy as much as it does on technical indicators.

[WickedLou9]

Here is something interesting, sorry I know it's long.

04/24/2008 4:12pm THE TRAIN IS ABOUT TO LEAVE THE STATION
The major indices have rallied back to near or slightly above their recent ranges and look poised to breakout. The major indices are close to completing inverse H&S patterns. Treasuries, both short and long, have gotten hit hard as assets move from safety back to stocks.

The major indices succumbed to some mild profit taking for most of this week after bumping up against the tops of their recent ranges. Since the mid-March lows, most indices have traced out a series of higher highs and higher lows in a fashion that can be simply described as two small steps forward, one small step backwards. We are as bored as you with this trading range environment, but it appears that it has a little further to run before the excitement starts.

The baby steps that the markets are taking are slowly diminishing the price volatility that has become so prevalent of late. Many times, when price volatility shrinks, it foretells that something big is coming. With all that we have talked about over the past couple of months with respect to sentiment, market internals, volume, and chart patterns, our guess is that there will be an upside breakout that leads to another sharp but brief increase in price volatility. Once markets get into an uptrend or downtrend, price volatility tends to decrease.

Since October, we have seen multiple days where the S&P 500 fell more than 2%, and recently, have seen multiple days where the index has risen more that 2%. That price jumpiness is slowly starting to contract as the last 2%+ decline was on April 11 and the last 2%+ gain was on April 16. These are the only 2% daily moves by the S&P 500 since April 2. Is this contraction in volatility, especially those on the downside, indicating that we are past the worst of the credit issues and/or past the worst for the economy? We admit, we don't know for sure, but we can only make educated projections.

But, according to my beloved boss, Sam Stovall, and a reading of consumer sentiment, there are some signs that signal the worst may be over. Maybe somebody does know. The Conference Board's Consumer Confidence Index fell to 64.46 in March, the lowest reading since March 2003. That just happened to be the time of the successful retest of the 2000-02 bear market low. And also represents a period when the stock market was well off its all-time highs, and much more than today. Sam concluded that whenever the Consumer Confidence Index has fallen below 76 (one standard deviation below the average of 97 since 1977), bad news about our economy's state of affairs is so pervasive that everyone - even magazine covers - are talking about it. Like the many market sentiment indicators we use, this piece of consumer sentiment data may be telling us what we already thought. This is a great example of where economic data can be charted and used by the technician.

The recent closing high last Friday by the S&P 500 was 1390.33, very close to the top of the range hit back on February 1 of 1395.42. The index is knocking on the door, but isn't hitting hard enough. In our view, the market needs to take a running start. When the markets do breakout, it will be very interesting how much upside can be garnered by the "500" because of the chart pattern that has been laid out since last August. Many times, when you finally get the breakout, and the coiled spring has been released, prices tend to jump quite a bit.

However, just above the recent high of 1395 sits what could be a brick wall of resistance. The major pivot lows last year come in at 1407, and there was a lot of buying from that level on up to the all-time highs. In addition to this chart resistance, trendline resistance, off the closing and intraday highs last year, comes in between 1400 and 1410. Not to be left out, the 200-day exponential average is at 1412. Many times, the top of an intermediate-term base or reversal formation coincides more closely with prior pivot lows, but not this time.

While we believe the stock market will break out of its sideways range, and bond prices will breakdown from their very wide and toppy looking range, there could also be an intermediate-term trend change for crude oil and gold. Commodity prices as well as commodity stocks have been on fire for much of this year, partly, we think from a weak dollar, partly from the credit crises, and partly as tried and true momentum plays. Gold has already broken down from its uptrend, while we think oil won't be far behind.

Crude oil prices hit $119.90/barrel Wednesday, and are up from $88/barrel in early February. More shocking, to us, is that crude prices have surged from $50/barrel in January 2007 without a major correction or extended sideways action. There have only been minor pullbacks during this entire 140% advance. We have raised our targets along the way, often shaking our heads as we did it. Once again, oil is knocking on our most recent target of $122 - $125/barrel. A key Fibonacci extension targets $122/barrel, while long-term trendline resistance sits up at $125/barrel. From a momentum standpoint, crude oil is stretched on a daily, weekly, and monthly timeframe. In addition, there have been some major weekly divergences.

Gold, in our view, has already started to correct after reaching our intermediate-term target of $1000/ounce. Prices have traced out a head-and-shoulders top, and with a break of the $887/ounce level, this formation will be complete. That would then signal a potential decline for the yellow metal all the way down to the $750 to $800 range. Key long-term trendline support sits in this zone. There is a small zone of chart support in the $800 area but nothing major until the $700 to $725 zone. Major Fibonacci retracement levels target $840, $785, and $730/ounce. /Mark D. Arbeter, CMT

While the S&P 500 may break out of its recent range, there is still a lot of overhead supply up in the 1407 zone so we could see a bit more strength followed by another small pullback. Longer-term investors can continue to buy price weakness.

[Ardentfrost]

When was the most recent Fed rate drop? We recovered from that yet? It's difficult to look at the market when they're pumping more dollars into the market. You gotta wait for the bad effects of the inflation to pass before you REALLY take a look.

The leveling out you're seeing could be the end of the most recent inflationary correction, but then unless the market is really doing a turn for the better, it's just going to continue on the path it was before.

It's certainly too hard to tell. The most optimistic market watchers that I've read are saying the financial and housing sectors won't start a return til late next year. There's ALWAYS room to make money, but watching indexes based heavily on those sectors (like DJIA) and then basing your decisions on them if you're NOT going to go into those sectors is pretty fallacious.

[WickedLou9]

It looks like they are a bit worried about inflation ( as they should be with all those rate cuts ) so I think we might see the end of rate cuts.

FED MINUTES SHOW ECONOMIC SITUATION AND OUTLOOK DAMPENED
04/08/2008
FOMC participants noted that prospects for both economic activity and near-term inflation had deteriorated in view of increasingly fragile financial markets and tighter credit conditions, rising prices for oil and other commodities, and the deepening contraction in the housing sector. Home prices had declined more steeply than anticipated, and the weakening housing market, combined with a softening in labor markets, appeared to be weighing on consumer sentiment. Businesses also were seen as becoming more pessimistic and cautious, despite a strong foreign demand for U.S. goods. Strains in financial markets had increased, portending a possible further tightening in the availability of credit to households and businesses. Against this backdrop, many participants thought some contraction in economic activity in the first half of 2008 now appeared likely. The economy was expected to begin to recover in the second half of the year, supported by recent monetary policy easing and fiscal stimulus. Accommodative monetary policy and a recovery in financial markets along with an abatement of the downdraft in housing activity were expected to help foster a further pickup in economic growth in 2009. However, considerable uncertainty surrounded this forecast, and some participants expressed concern that falling house prices and stresses in financial markets could lead to a more severe and protracted downturn in activity than currently anticipated. Participants noted that recent readings on inflation had generally been elevated, that energy prices had risen sharply, and that some indicators of inflation expectations had risen. Most participants anticipated that a flattening of oil and other commodity prices and easing pressures on resources would contribute to some moderation in inflation pressures. Nonetheless, uncertainties about the outlook for inflation had risen.

[Ardentfrost]

I noticed over the last couple cuts that the market didn't rally like it usually does. Rates usually related to the fed rates didn't go down and sometimes went up. This is a VERY important trend because it means banks don't care about how easy it is for them to get money as much as they are worried about the overall state of the economy. That is driving their assessed risk.

The fed would be stupid to lower rates further if that is really the case. ALL they would be doing is making people poorer.

[A_C_E]

I don't think we've bottomed out quite yet....I'm looking at mid-July or so. Once we start seeing 2Q GDP data.

I wouldn't make any moves before that.

[avsp]

Originally Posted by Ardentfrost

I noticed over the last couple cuts that the market didn't rally like it usually does. Rates usually related to the fed rates didn't go down and sometimes went up. This is a VERY important trend because it means banks don't care about how easy it is for them to get money as much as they are worried about the overall state of the economy. That is driving their assessed risk.

The fed would be stupid to lower rates further if that is really the case. ALL they would be doing is making people poorer.

yeah i dont get this either.

If the banks arent passing on the rate cuts & in fact wont lend at all teally then what does that mean?
Surely they arent still waiting for everybodies write-diwns to be public?

I dont think that comsumer spending has been hit anything like enuff yet.

I'm going to say Jan 09 for when the FTSE bottoms out

[motivez]

I kinda feel like this summer is going to get worse with the cost of gas spiking as driving increases..