Good News! Big Gains in the Stock Market Today

<p><a href="http://www.nytimes.com/2012/02/04/business/daily-stock-market-activity.html%5B/url%5D"&gt;http://www.nytimes.com/2012/02/04/business/daily-stock-market-activity.html&lt;/a&gt;&lt;/p>

<p>One percent and change is a big gain for a day?</p>

<p>The $COMPQ is up 10% for the year.</p>

<p><a href="http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&b=5&g=0&id=p91147795094"&gt;http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&b=5&g=0&id=p91147795094&lt;/a&gt;&lt;/p>

<p>The 50 day moving average just crossed over the 200 day moving average which is an institutional buy signal. Most of the smart technical analysis guys that I follow had a bullish bias from late last year but were expecting a pullback or sideways action in the last two weeks of January. We really didn't get a pullback and morning dips typically got bought.</p>

<p>BTW, I'm up about 10% this year. The one percent may not be a big deal but it's on top of relatively nice gains for the year.</p>

<p>The $INDU is up about 5% for the year.</p>

<p><a href="http://stockcharts.com/h-sc/ui?s=$INDU&p=D&b=5&g=0&id=p78036738544"&gt;http://stockcharts.com/h-sc/ui?s=$INDU&p=D&b=5&g=0&id=p78036738544&lt;/a&gt;&lt;/p>

<p>I might be able to retire one day after all. </p>

<p>My total assets are back to what they were in April of 2011.</p>

<p>Time to go to the sidelines...the market has moved up with low volume, not a positive sign....my bet is the market finishes this year within 5% of where it is currently,up or down</p>

<p>I don't know that I'd call it low. On the $compq (I mainly trade this rather than the $indu and $spx). A quick look at those two indices shows a big move on average volume, certainly a caution flag. I think that the $compq is outperforming the other two indices because of the lack of financials and the flight to risk. I believe that small caps are doing better than large caps.</p>

<p>BTW, the technical breakout of the 10-year high on the $compq points to another 400 to 700 points north. It should be interesting. One of the boards that I follow had the bears dancing all over the place before today. Today they are very quiet.</p>

<p>The nice thing about today's rally (for me) was that while US Treasury bonds went down a lot, most dividend paying stocks participated in the rally. So at least today I got to have my cake and eat it too! (My cake being some income while interest rates remain zero... grrrr! eating it too = capital gains)</p>

<p>I'm long FAS and riding that baby like a witch on a broom! </p>

<p>Larry Kudlow suggested the jobs report today was a game changer regarding the economy. I am hoping he is right. </p>

<p>Last November, ECRI said definitively that we would be entering a recession and that governments could do nothing about it. I am hoping the only thing that drops is their credibility.</p>

<p>Reports on the Facebook IPO have mentioned that Zuck. wants to provide an opportunity for the little guy to participate. How might they do this? A share for each friend on FB? I heard one speculation that an offering would be provided for "small account holders". Not that I can see the long range value, just curious how they can democratize the process.</p>

<p>Google did a reverse Dutch auction which gave the little guy a decent chance to get shares. That's how I got mine.</p>

<p>Zuck rhymes suck which is what the underwriters will do when they suck the life out of retail investors with this dog of an offering. I plan to watch it spike and short it as soon as possible. Many people will get rich, but it won't be retail investors.</p>

<p>Zuck himself will have a separate class of voting shares so he retains majority voting rights. It's not unusual to do a deal like this but there is no question Zuck is in it for himself.</p>

<p>I am taking money off the table as the rally soars. Europe is still an issue.</p>

<p>Loving the positive trend!</p>

<p>I am really tempted to move some 401K funds from stock funds to money market next week. It seems like the market is doing great and now might be a good time to cash in some of those gains. Problem is, I stink at market timing, I always seem to time it the wrong way, and am better off just letting it ride.</p>

<p>You can use stops to protect some gains.</p>

<p>I am not an expert investor like you all. My philosophy is to stay the course, and not to get too excited about good days or too upset about bad days. I'm investing for the long-term, and for someone like me, market timing is a fool's errand. My goals are no different than they were yesterday.</p>

<p>Plus, as my daddy taught me, "Buy low, sell high." Buying next Monday would be a combination of market timing and buying high; not a smart move for someone like me. So my investments are staying put, just as they have throughout the downturn. :)</p>

<p>From Doug Noland's weekly Credit Bubble Bulletin. I learned about CDOs in 2002 from his letters. Also learned about Enron almost a year before it crashed. Doug Noland's focus is on the credit markets and his weekly letter is a great summary of global credit markets during the week. He worked at the Prudent Bear for many years before they were bought out. He manages the Prudent Bear Safe Harbor fund which I owned for many years - it's basically a fund that bets against the dollar.</p>

<p>There are some great comments in this article but I will limit my fair-use reproduction to two paragraphs and suggest you read at least the top half. The bottom half is for finance and accounting junkies.</p>

<hr>

<p>The U.S. economic recovery has achieved some momentum, risk markets are quite strong, the liquidity backdrop is amazingly robust, the banking system stable – and the Fed has nonetheless committed to sticking with near-zero rates for at least several more years. To be sure, market participants are anything but oblivious to the fact that they enjoy both ultra-loose liquidity conditions and a Federal Reserve eager to implement additional quantitative easing in the event of renewed economic weakness or market stress. It makes the old “Greenspan put” rather child’s playish.</p>

<p>In such a speculative marketplace, bubbling risk markets provide a powerful incentive that forces believers and non-believers alike to hop aboard. Increasingly, it’s a marketplace where everyone is being forced to become a trader with a short-term performance and trend-following focus. Attention to risk is proving too excruciating. For this phase of a historic Bubble cycle, it has been more a case of the Federal Reserve inciting rather than just accommodating Bubble Dynamics.</p>

<p>[url=<a href="http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10627%5DPrudentBear%5B/url"&gt;http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10627]PrudentBear[/url&lt;/a&gt;]&lt;/p>

<p>I don't know why when markets go up...it is bubble watch time.</p>

<p>Sometimes....most of the time...when markets go up...there is no bubble.</p>

<p>PEs look very reasonable to me.</p>

<p>My worries include ....that E...is that E due to low interest rates and cheap financing? Also....corporate share of revenue is at highs.....workers share at lows....is that going to change and affect earnings?</p>

<p>M2 is up 10% year over year....that is a positive for stocks.</p>

<p>Volumes are down. Quite a bit. We can all pick sectors where volumes are ok...but
overall...volumes are down in stocks....yet...stock prices are going up.</p>

<p>We are not in 1999-2000 when valuations were stretched off the charts</p>

<p>Percentages can play tricks on people. Yes...financials are up in percentage terms quite a bit this year...but what about over the last 2 years? The time frame chosen affects the percentages.</p>

<p>I think one reason..a big reason...volumes are down is because the public has sold out and the public isn't buying much yet.</p>

<p>I see people feeling a little better about things. I think people are tired of feeling bad about the economy....time for a mood change.</p>

<p>We can find short term indicators that show we are overbought...heck...the VIX is below 17...</p>

<p>But..if a person is going to invest for 20 years...who cares?
Traders might care...because their focus could be incredibly short...but most people aren't traders and even traders get it wrong...</p>

<p>Most traders don't do well..</p>

<p>It is very hard to go in and out of the market. People have a tendency when they leave the market to fail to get back in. I speak from
experience. :) </p>

<p>I missed the ten years of really crummy returns...which is good. I was a buyer of bonds and money market equivalents and avoided stocks for 10 yearsb but I see the public has been doing this for several years...and I look at bond yields now and
stock prices now and at these prices...I see that trade as a loser.</p>

<p>Because the central banks are so involved in the markets...it is difficult
to tell what is going to happen.</p>

<p>Ok...that is my rambling.</p>

<p>Any body like to comment on my strategy?</p>

<p>Got tired of the bubbles and caulderas. We can no longer dollar cost average new money. Nov 08 opened guaranteed income (?) annuities using pretty much a 2030 portfolio and 25% in mm for DCA.</p>

<p>About a year ago I realized that my advisory was correct. Because there is guarantee increase the annuity has a floor but big upside. I,m all in.
One last time.</p>

<p>I recall your post in another thread that nothing is guaranteed.</p>

<p>I personally love bubbles and crashes. It's the sideways stuff that I hate. It's a lot more work trying to make money in a sideways market and I then have to switch to fundamental analysis to look for good values which is a lot more work.</p>

<p>I don't like bubbles and crashes because they can be harmful to the economy and to people...(I know some people do well with bubbles and crashes).</p>

<p>I do prefer volatility when trading....especially when trades that can do ok in low volatility markets like butterflies. Seling straddles and strangles can work..but there isn't as much premium to collect in low volatility markets. Condors and vertical spreads can work...but in low volatilty markets you might not get enough movement. And commission costs can kill.</p>

<p>I like arbitrage...but in low volume environments there isn't as much to do...so by definition..the profit opportunities are less.</p>

<p>And in high volatilty markets...similar products are more likely to get out of line opening up more profit opportunities.</p>

<p>If we have low volatilty because asset prices are going up without much downside volatilty...then those that own those assets can do well.</p>