Stocks Bull Market Destroys the Crash Bears Again

Interesting article. But I was wondering whether you were saying that the UK/US problems are over - and that the respective action taken in both the UK and US have solved all of the problems?

I was also wondering what about the underlying problems of money supply, I mean the creation of successive asset bubbles to maintain the equlibrium - can it continue for ever?

Many thanks,

Michael

Hi

My primary focus is in identifying high probability trends to profit from i.e. to arrive at a FIRM tradeable / investable conclusion.

As you can see, if one factors fundementals into the equation then things get confusing.

As ever the fundementals will be reflected in the price, its just that the fundementals that you think are driving stocks WILL NOT BE THE TRUE REASON of why stocks are rising.

Sticking to technicals I will however mention the general index growth spiral as a good long-term driver i.e. the stock indices dump dieing corporations for new growing corporations hence an inevitabel growth spiral for general indices (not sectors), hence why Dow went to a new high in 2007 whilst all the perma-bears said it could not then out comes some garbage to say the new high is not really a new high if we say price it in crude or gold or even tulips or banana's

A new high IS a new high which negates the preceding scenerio, without recognising when one is wrong all one is doing is talking BS.

Thanks for the reply. I was interested in your statement:-

''A new high IS a new high which negates the preceding scenerio, without recognising when one is wrong all one is doing is talking BS.''

What is of interest to me, though, is what is behind the 'high'. I mean - in the UK - there simply isn't any wealth creation, to speak of; there is a serious inbalance in imports and exports; the public finances are in a shocking state....and getting worse, yet house prices seem to be rising and so is the FTSE.

I think this is what is confusing the bears....they aren't seeeing wealth creation at the level that would support the kinds of rises that we have seen. It simply doesn't add up. Surely, the fundamentals must soon assert themselves? Am I dreaming, has gravity been switched off? Or is it just a speculative bubble, with QE money behind it?

Hi

Sorry, being immersed in the markets, I take many things for granted and forget that it may not be obvious to others.

The Obvious thing is that there is a FLOOD of money of which QE is part of with ZERO interest rates and unprecidented peace time deficit spending.

ZERO interest rates forces people to speculate, take risks as they can borrow for nothing.

QE functions in an fractional reserve banking system that can multiply the impact of the money printed by anywhere from X8 to X30 depending on how much of it triggers credit creation.

Deficit spending of near £200 billion a year speaks for itself as it pumps money into the economy for consumption.

All are inflating stock prices / commodities and eventually will show up in inflation.

I mentioned the above as possible fundemental explanations back in mid March.

Best

NW

Love your articles!

Just curious, why do you use the DJIA instead of the S&P500 for forecasting US stocks?

Hi

I analyse the Dow instead of other indices because I have been trading this index for approx 25 years.

http://www.marketoracle.co.uk/Article2499.html

Best.

NW.

Good job Nadeem. Although I felt the rally up to the mid-10,000s was obvious in by the summer, it must be hard to see the light when you are bombared daily with these repitious, fictional, propaganda articles written by extremist gold bugs.

However, the fact that you saw it might say something about your views of much of the content here. I'd say it's gotten out of hand; too many rookies with an Internet connection posing as financial professionals. Al of them rehashing the same doom, preaching myths they hear from their heros - the doomers who have media exposure.

In the end, I don't see much financial creativity or insight online. 99.999% of all authors are lost. They are followers. They follow their heros on TV...the extremists..the guys with no credibility. It's a shame viewers don't realize this. That's why making money has never been easier for me.

Oh well, if viewers don't take the time to research who they are and aren't intelligent enough to see things, I suppose its ultimately their fault.

Roubini, Schiff and the other media hams are best used as contrarian indicators. Weiss is probably the best contrarian indicator in history, as his performance reveals (lol).

I myself called Dow 10,500 in July in my newsletter (when the Dow was ~8500).I reaffirmed this in August (Dow 9200) and cautioned against a slight downward revision (Dow 10,200) for the 2009 Dow high once the market soared in early Sept...unless we saw a correction. We may have had that needed correction when the Dow went to 9500, but that doesn't matter. There is not much upside now and a good deal of downside for 2010.

Ever since I issued my market buy signal (released in to public domain) at 6500 Dow, I have kept my clients and subscribers in the market....until recently. It's time to take profits and go home for the holidays and return back in 2010.

Despite what everyone else says (i.e. everyone refers to the clowns you hear and read in the media, who are clueless), The Dow is the SINGLE-BEST market indicator for various reasons which I do not have time to get into. I rarely pay attention to the S&P 500.

As far as Roubini, of course he is a joke. He is one of the worst forecasters ever (other than Larry Kudlow and Jim Cramer).

You should also talk about how Peter Schiff was screaming the Dow would go much much lower when it hit 6400, and missed this fabulous run. That is what you get from extremists and salesmen, whose only purpose is to sell to YOU. You NEVER get valuable insight. That is precisely why they are in the media - because they add no real value, and hence ultimately steer the sheep back towards the Wall Street crowd, using Roubini and Schiff as their only examples of those opposing the perma-bull market crowd.

This is quite unfortunate for Main Street because there are many people 1000s of times more credible and more accurate than these guys. But you won't ever seee or hear from them because the media won't allow it. Why? Because the media makes money selling commerials to the financial industry. Remember, it's a zero-sum game.

If the media actually aired real experts with proven track records, their financial sponsors (Wall Street) wouldn't be able to take your money as easily as it always does. Figure it out folks.

And by watching and reading the media, you are further empowering them (since views and website hits determine ad revenues), which means you are ultimately responisble for your future losses.

Similar to the anger at the banks, stop complaining and move your moneyto a credit union. If you are upset that CNBC, FBN, Bloomberg, CNN etc. air only hacks, extremists and morons - none of which will ever halp you make money, simply STOP WATCHING, STOP READING.

If everyone does this, they will cease to exist or else have to start serving the interests of their audience instead of their advertisers.