Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Trend Up But Tired

Stock-Markets / Stock Index Trading Sep 26, 2009 - 05:42 PM GMT

By: Peter_Navarro


[Thanks to all of for buying Always a Winner last Friday. You helped the book make the Top 100 in business and investing books!!!]
I had the great pleasure of meeting one of my CNBC favorites last week at a conference, Bob Pisani. What I love about Bob is his opinion-free market analysis that is based on facts rather than rants.

What struck me in my conversation with Bob was a paradox that has been bothering me. He indicated that while many of the traders he talked to were bearish, most of them had long positions because that’s the direction the market was going.

I’ve been dealing with this same paradox. I look at all of economic fundamentals and I see a general improvement globally and a lift out of the recession. I look at all the technical indicators and virtually everything is pointing up rather than down. Yet something still bothers me.

I think I may have figured out the Pisani Paradox. The problem is that we are in the midst of a recovery being propelled artificially by a massive and unsustainable fiscal and monetary stimulus. Yet, despite the current upward trajectory, even the best projections show very high employments rates through the end of next year.

Worst still, while GDP growth rates are heading into the positive, few countries other than China and maybe India can look forward to growth rates that are at full potential output for any sustained period. That means a slow growth recovery, which can’t possibly be bullish.

On top of this, many countries – including the U.S. and most of the Eurozone – are dramatically increasing their public debt to GDP ratios; this will create enormous pressures on interest rates down the road and constrain both fiscal and monetary policy.

I add all of this up and come to the conclusion that resolution of the Pisani Paradox likely lies in a range-bound market for several years that only the most nimble of traders will generate robust returns from. The question of course is whether we are now reaching the upper end of that range.

I, for one, have begun to take some significant defensive measures. Never one to be greedy, and after the best six months I”ve ever had in the markets, I have now closed all of my positions in cycle-sensitive stocks save my GE 2011 12.50 leaps. However, for now, I have hedged those leaps with a short on GE stock.

In addition, to hedge my other holdings (primarily biotechs), I have put on my favorite market hedge, TWM. This is the UltraShort Russell2000 ProShares exchange-traded fund,

I like using TWM because it has more volatility the instruments one might use to short the Dow or S&P 500. I also like using the UltraShort feature because I can buy fewer shares to achieve my desired hedge.

I have set stop losses on both of my hedges at levels which would indicate a breakout for the market over the resistance levels currently being encountered, e.g., Dow above 10,000.

My bottom line is that the best way to make money in the market is in bursts that leverage the trend. Right now the trend is up but tired and I want to give my capital a well-earned rest and breather from risk. And down the line, we will see if the Pisani Paradox was really a paradox or simply skitterishness on the part of traders who can’t accept a bull market. Either way, I’m hedged for now.

AND thanks again if you bought Always a Winner. If you haven’t yet, please do buy the book this weekend and keep it in’s Top 100 list. I guarantee you will profit from the book.

Navarro on

Click here to review my videos on  

———- Peter Navarro is the author of the best-selling The Coming China Wars, the path-breaking The Well-Timed Strategy, and the investment classic If It's Raining In Brazil, Buy Starbucks. Peter’s latest book is Always a Winner: Managing for Competitive Advantage in an Up and Down Economy. Peter is a regular CNBC contributor and has been featured on 60 Minutes.  His internationally recognized expertise lies in his "big picture" application of a highly sophisticated but easily accessible macroeconomic analysis of the business cycle and stock market cycle for corporate executives and investors. He is a Professor at the Merage School of Business, University of California-Irvine and received his Ph.D. in economics from Harvard University. Professor Navarro’s articles have appeared in a wide range of publications, from Business Week, the Los Angeles Times, New York Times and Wall Street Journal to the Harvard Business Review, the MIT Sloan Management Review, and the Journal of Business. His free weekly newsletter is published at

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in