Wednesday, April 14, 2010

America is back!

Here is my latest post on "The Art of Contrarian Trading".


mam said...


I want to reiterate a posting I made a few weeks back.

Readers should be reminded that you made an astonishingly accurate call on the direction and indeed timing of the market over the last few months.

I remember with some amusement you were accused - when you were a lone voice saying the market would go up - of drinking kool-aid as a result of your persistent calls for the market to go up. And while doom and gloom abounded and the market sank.

And here we are now at 1200 as you said. Very impressive

TMG2010 said...

I take that as we have reached a short-term top.

Joe said...

Hi Carl!

Good to see you to be so strongly Bullish.

Yes, there are many pointers, that the US economy slowly climbing out of the deep hole, but I also think that the stock market currently is much closer to the top than to the bottom.

Some of the points:
- The NASDAQ is up almost 100% in about 13 month, going through a huge runup, that we have',t seen in 10 years.

- The Wall street manipulators managed to kill all Bear players during these 13 month up moves.
Some of the moves were clearly extremely unusual, I have never seen before.
In the past 2 - 3 weeks, Bulls are pulling up the market during the 11.00 13.00 hour time frame, when
usually we have very low volume and usually have no directional moves.
During the past 2 - 2.5 month we had only 3 - 4 days, when we saw Bears in force for more than 2 - 3 hours.
This is extremely unusual.

- The NASDAQ market Today is above the levels of any time period during the past 10 years, except for 6 month.
Above levels, when US had

- No Huge debt
- Not 9.6% unemployment, but 5.6% unemployment
- Much more trust in the government and in the Financial industry.
- Real consumers with money to spend and not overwhelmed by the debt levels.
- No housing issues, lost wealth.

- Europe and Japan was in much better position and as a consumer population was in much better shape to really consume.

The majority of these up moves happened using virtual money, that the invetment banks got from the goverment almost free and channeled to the stock market and with that turning nothing into something, which is stock value.

I believe that the goverment clearly knows that this is simply the most efficient way to increase wealth by not only allowing the banks to push up the stocks, but probably even require to do that. (Obviously this would never be published.)

It is possible to Increase the total value of the stock market by 5 trillion dollars pushing into the stocks less than 20% of that amount.
There is no other way I know with such efficiency to improve wealth.

This way the high tech companies get some support, easier credit, and European, Japanese, Chinese... companies will not by them up cheap, as it would have been possible if prices drop below the levels of March 2009.

All in all I expect to see a top within the next 2 - 4 month if not sooner, and after that a return to levels about 10 - 20% below current levels and than staying in a range untill real proof arrives from other side of the word and not only the US govermnet as confirmation about sustained recovery.

Joep Papczun