Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

It's Un-American To Be Bearish On Anything Besides Gold and Silver, Only Evil Speculators Short Stocks

Stock-Markets / Stocks Bear Market Jun 05, 2010 - 07:49 AM GMT

By: Adam_Brochert

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleIt is un-American to be bearish on anything besides Gold and silver. Only evil, greedy speculators would bet against stocks. Only kooky people with guns and canned goods would be bullish on Gold. That would make me an un-American, evil, greedy, kooky, gun-toting, spam-eating speculative devil. As an example of the thoughts such an unstable and unfit being creates when evaluating the financial markets, please indulge me in yet another bearish scenario simulation that contradicts the "central bankstaz and governments would never let that happen" theme.


I remain invested in puts on the triple bullish commercial real estate ETF (ticker: DRN) and to a lesser extent the triple bullish S&P 500 ETF (ticker: UPRO). This is playing with napalm, as leverage is a wicked tool of the depraved and cuts both ways. I don't take such a position just for the heck of it and I have experienced both the agony of defeat and the joy of victory when placing large, heavily leveraged bets for and against the markets.

I have recently discussed commercial real estate and previously posted on my rationale for shorting this sector of the market. I don't use the phrase "black bile bearish" in jest, I use it because I smell a bloodbath in the markets. My commercial real estate short is my largest trading position, while my largest overall position is in physical Gold (which I don't trade).

I want to get back to my previous "phase shift" concept in the commercial real estate sector versus the homebuilding sector, which I believe is still valid. Many are looking for a bounce next week (and even new highs for the "correction"), while I am looking for a continuation of the trend down. Here's a current 50 month 60 minute intraday chart of the $RMZ commercial real estate/REIT index (the index behind the triple levered DRN and DRV ETFs) thru today's close:

And here is a proposed "phase shifted" equivalent from the 2005-7 vintage bear market in homebuilders (roughly 2 year 60 minute intraday chart of $DJUSHB):

What comes next is good for da bears, of course. Here is the anticipated rhyme that "should" come next:

Of course, a speculator must be quick or all the gains by going short will be gone. Here's what came next:

And you can just imagine the massive rally higher that then followed:

Greedy bears who failed to take profits at this point deserved the subsequent short squeeze slaughter, eh? Here it is in all its bullish glory:

All good things must come to an end and the bulls in all seriousness got their revenge as they always do. The printing press is infallible and Bernanke and widdle Timmy Geithner punish bears routinely. Here's what came next:

The carnage had to be over at that point, obviously, and here's what the subsequent bear massacre looked like:

Now do you understand what I mean by "black bile bearish"? Did you notice that the dates on these homebuilder index charts was 2005-2007, long before the Great Fall Panic of 2008? Did you notice that some of the biggest drops were during June, July and August of 2007? Fundamentals asserted themselves back then in the homebuilders, just as they now should do in commercial real estate. There is no recovery in real estate, nor is there any prospect for one in the near future. There is, however, the potential for a "moment of recognition" to return and panic selling to ensue in this sector (among others...).

For those keeping score, the time from the end of the first $DJUSHB chart shown to the end of the last $DJUSHB chart shown is about 10 months, during which time the $DJUSHB dropped about 60% or so. Add triple leverage and options and you can see why I call this bet "playing with napalm," but you can also probably see why I am excited about the opportunity.

In my opinion, the March 2009 lows in commercial real estate are as likely to hold as the Greek stock market's are...

Visit Adam Brochert’s blog: http://goldversuspaper.blogspot.com/

Adam Brochert
abrochert@yahoo.com
http://goldversuspaper.blogspot.com

BIO: Markets and cycles are my new hobby. I've seen the writing on the wall for the U.S. and the global economy and I am seeking financial salvation for myself (and anyone else who cares to listen) while Rome burns around us.

© 2010 Copyright Adam Brochert - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - 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

6 Critical Money Making Rules