Is this rally for real?

[John Hjorth]

Are you guys frustrated or what's the motivation behind the last few posts?

 

Did we somehow force you into reading the macro threads? Or do we take up too much space in this forum?

 

What's your problem?

 

I suppose you haven't read the subtitle of the "General Discussion" forum: "Feel free to talk about anything and everything on this board".

 

You are right of course.  Carry on.

 

No. Please don't yeld. There is money to make in every market, what so ever.

[ni-co]

We live in interesting times. By now, it seems quite obvious to me that there was some common ground reached between the central banks at the G20 meeting. Draghi and Kuroda both have restrained from weakening their currencies further and the Fed seemingly decided to not only talk down the US dollar but to do a 180 with regard to raising interest rates—even in the face of rising inflation data which allegedly was the only data point they'd been waiting for. Dalio was right, again. If it's playing out like he predicted then what we saw in December was already the peak of the "hiking cycle".

 

However, I think that the risk of a shock for the global economy induced by a CNY deval hasn't gone away. IMO it's now even more likely. It seems to me that what Kuroda, Yellen, Draghi and Zhou are doing is preparing markets for a CNY devaluation.

 

At least, this is my hypothesis for the moment. If it's correct, rising commodity prices and currencies/weak USD should be short-lived. However, since I may very well be wrong and since it's very difficult to estimate how long this rally is going to last before the next shock will inevitably set in, I became very careful and cut back my exposure to everything but gold.

[Graham Osborn]

I think the trouble you run into with a question like this is that the financial media really just functions like a moving average.  The indices really come to drive the fundamentals although there is a reflexive loop for sure.  So I think you either need to believe that markets do trend/ TA can be predictive over the longer term or throw in the towel.

 

If you look at the SMA 50/200 with weekly periods for the last 25 years it would be very unusual for the S&P to break into a new bull phase rather than break to the downside later in the year.  What's been interesting for me is how strong and persistent the rallies have been - much longer hugging of the SMA50 with each rally than in 00 or 08.  Frankly I didn't think the rally would make it this far.

 

Now that we have in fact breached the SMA200 the interesting question will be whether we churn along the moving average for the next 6 months before the next break or whether we will see a much quicker move to new lows.  I'm not expecting any real fireworks until around election time, but who knows - this bull is bleeding so slowly the 50 may not cross the 200 (weekly periods) until next year.

 

To be clear, I don't bet against indices.  The vast majority of the stocks I'm short are already in a bear market.  When I bought my first round of put options the mistake I made was buying 2017 expiries, which is probably too soon to hit my individual price targets based on the action we've been seeing.  As a result I will probably lose money on many of these positions unless volatility goes through the roof.  The big lesson of this rally was that I needed to be buying 2018 puts to be more confident of capturing the greater part of the price move for the stocks I follow.  Now that I have built that second cohort of positions I feel better prepared for both early and late scenarios.

 

I know that most value investors prefer to ignore the market, but I personally feel quite comfortable picking out long-term multiyear trends.  You just have to realize the utility of charting tends to vary proportionately to the duration of the period analyzed.

[Graham Osborn]

One other comment - I've noticed these value boards have really dried up the past few weeks.  I use the boards partly as an indicator of buying enthusiasm in the retail value community.  I don't know if it means anything but that could synch with the observation that the rally has been sharp and on fairly low volume.  I get the sense a lot of people may be selling the bounce rather than pyramiding right now, but I guess we'll see over the next few months.  I am learning the meaning of patience for sure ;)

[PatientCheetah]

I got 80% of the recent move. Sold too many names a week too early  :'(

[james22]

Does anyone else besides me start losing interest in your investments when there are 2 up weeks in a row in the market. there has to be a name for a disorder like that but I'm not sure what it is.

 

Was reminded of this last night when my golfing partners were talking about the market going up.

 

Wake me when it falls.

[randomep]

I got 80% of the recent move. Sold too many names a week too early  :'(

 

Looks like you need to be more patient, patientCheetah :)