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Sunday, December 27, 2009
Tuesday, December 22, 2009
Sunday, December 20, 2009
Market Forecast for 2010
From AlphaKing Investment Newsletter.....a depressing forecast
*******************
For 2009 we forecasted the mother of all bear market rallies, to retrace
50-63% of the losses of the bear market that began October, 2007.
Archive: http://alphaking.com/portfolios/archive/?id=727
In 2008, our Index Long/Short Portfolio earned 70%.
We will follow the major intermediate-term trend wherever it may lead.
We hope you enjoy our 2010 forecast:
Welcome to the 2010 AlphaKing forecast issue. As always, we believe strongly
that the only opinion traders and investors should be listening to when it
comes to their trading and investment decisions is that of the stock market.
We go long as intermediate rallies unfold and short as intermediate bear
corrective phases land. So please keep that in mind as you read our thoughts
on what we expect to see in 2010, as following the trends is the optimal and
safest way to make money over the long term.
2010 should be a tumultuous year as the great bear returns. We see the action
of 2009 as a bear market partial recovery bounce after the first down-leg of
the great bear ended in March, 2009. Once the current rally exhausts itself,
we expect the second down-leg of the great bear to land, and one that should
be of equal length, or longer than, the brutal swoon of October 2007-March
2009. The technical action during the recovery bounce run-up - the post March
2009 rally - speaks strongly of the rally being nothing more than a sucker
advance designed to trap the unwary into believing the bear was over and a new
bull move underway. Such action is the classic set-up to a brutal reversal of
fortunes that few are expecting. There are also a couple of major fundamental
reasons why we believe the bull case to be all bull.
1) The debt de-leveraging process is for real, persistent, and no where near
complete. For the economic recovery to stick we would need to see not only an
end to the de-leveraging process, but also a return to debt expansion, and
such a nirvana turnaround is a very long way from happening. Banks remain
unwilling to lend; the economy continues to provide too much supply; which
should all lead to more bankruptcies, more unemployment, and falling prices
till the de-leveraging process completes and the economy reaches a balance of
supply matching demand.
2) Aging baby-boomers, like banks, continue to hoard cash as they increase
savings, and remain very picky consumers, avoiding big ticket items like the
plague. Since consumers are 70% of the economy, and large ticket industries
such as automakers and homebuilders need a resumption of past buying frenzies
just to be able to stay in business, they are hardly likely to step forward to
borrow and spend on mass debt, which means, yes, it is different this time
around and the financial day of reckoning is here now that the financial
musical chair song has ended.
3) Taxes are going up next year, and way up in 2011 and beyond, while
government deficit spending increases dramatically as money is shifted from
the haves to the have nots. Rising taxes in the face of rising unemployment,
along with increased in trade protections, were hallmark of past depressions,
and repeating things over and over while expecting a different outcome is the
definition of insanity. Those who forget history are destined to repeat it.
4) Government control of the economy never works, as the 1930s US/Europe, post
1989 Japan, and entire Soviet experience can attest to. Raw capitalism where
winners can climb on the backs of the losers is the best way to grow the
economy as a whole, and if we want to be all the same then we can be, for we
can all be poor and unemployed. We live in a world where losers are not
allowed to exist, thus winners will diminish in numbers as their money is
whisked away to help the growing numbers of have nots. Since politics is a
numbers game, the dwindling number of winners will be outvoted by such a wide
margin that I’m afraid our economic fate is sealed, or soon will be, on the
backs of unintended consequences of good intentions.
So for our expectations in 2010:
1) The stock market should see a major life-changing peak, somewhere between
Dow 10,500 (here) and 12,000, and then crash and crash and crash as the March
2009 lows get taken out in a big way.
2) We should see a complete unwinding of the USD carry-trade, which we aptly
call the lemming trade. While selling US dollars to buy gold and other
commodities, as well as stocks and all things China were the major trends of
2009, next year should see the exact opposite, as the race begins to grab
dollars as the imploding debt bubble leaves too many individuals,
corporations, institutions, and countries swimming naked and overexposed to
debt backed by too little capital. Gold should get cut in half. Oil should
revisit and surpass the $35 per barrel area. China will implode, leading stock
markets around the world into a crashing retest of the March lows, which will
likely be breached by a significant margin.
3) 2010 should be the year of currency crises, with the British Pound the
crown jewel of pending disasters, with the EURO not far behind in the race to
the bottom.
4) Unemployment will rise to the very unexpected 12-14% range, creating an
“off with their heads” mentality among voters as we head into the mid-term
elections later in the year.
5) Voters will - eventually - balk at governments giving money to failing
institutions, which means some very big name financial companies will go the
way of the Dodo. AIG, Citibank, Chrysler, are sure to be in the crosshairs of
such former too-big-to-fail companies who run out of money and time, though
they will likely be the tip of a very large financial iceberg. Once one goes,
all of them will suffer a collapse as investors shoot first and ask questions
later, leaving each company struggling to show they have the means to survive.
I could go on, but basically what we are facing is the reality of what was
threatened by the 2007-2009 bear market collapse, only this time no one will
be fooled into believing anyone can save us, as the FED and government lose
all credibility as all attempts to stem the financial blood-letting fail. A
dark prediction, yes, though the good news is that eventually, once the
winners have been separated from the losers and the debt de-leveraging problem
gets defaulted away, the economy can start to grow again and the future can
once again be expected to be brighter than the past.
If the economy and financial markets want to prove this analysis flawed, and
dead wrong - which given the dark nature of our expectation we BETTER be wrong
- then we have no problem making money on the long side as we follow the stock
markets higher. As we always say, and we repeat here again, the only opinion
one should listen to is that of the stock market. Just keep in mind the
potential severity of the situation facing us I’ve just outlined if indeed the
stock market begins to slide, as failing to follow those trends could have
life changing consequences, and I don’t want any of us following those
lemmings over the day of reckoning cliff.
Now try and have a great weekend and stay away from ledges and knives!
401K investors should be invested in money market funds.
Kevin Wilde, Chief Trading Strategist, AlphaKing.com
*******************
For 2009 we forecasted the mother of all bear market rallies, to retrace
50-63% of the losses of the bear market that began October, 2007.
Archive: http://alphaking.com/portfolios/archive/?id=727
In 2008, our Index Long/Short Portfolio earned 70%.
We will follow the major intermediate-term trend wherever it may lead.
We hope you enjoy our 2010 forecast:
Welcome to the 2010 AlphaKing forecast issue. As always, we believe strongly
that the only opinion traders and investors should be listening to when it
comes to their trading and investment decisions is that of the stock market.
We go long as intermediate rallies unfold and short as intermediate bear
corrective phases land. So please keep that in mind as you read our thoughts
on what we expect to see in 2010, as following the trends is the optimal and
safest way to make money over the long term.
2010 should be a tumultuous year as the great bear returns. We see the action
of 2009 as a bear market partial recovery bounce after the first down-leg of
the great bear ended in March, 2009. Once the current rally exhausts itself,
we expect the second down-leg of the great bear to land, and one that should
be of equal length, or longer than, the brutal swoon of October 2007-March
2009. The technical action during the recovery bounce run-up - the post March
2009 rally - speaks strongly of the rally being nothing more than a sucker
advance designed to trap the unwary into believing the bear was over and a new
bull move underway. Such action is the classic set-up to a brutal reversal of
fortunes that few are expecting. There are also a couple of major fundamental
reasons why we believe the bull case to be all bull.
1) The debt de-leveraging process is for real, persistent, and no where near
complete. For the economic recovery to stick we would need to see not only an
end to the de-leveraging process, but also a return to debt expansion, and
such a nirvana turnaround is a very long way from happening. Banks remain
unwilling to lend; the economy continues to provide too much supply; which
should all lead to more bankruptcies, more unemployment, and falling prices
till the de-leveraging process completes and the economy reaches a balance of
supply matching demand.
2) Aging baby-boomers, like banks, continue to hoard cash as they increase
savings, and remain very picky consumers, avoiding big ticket items like the
plague. Since consumers are 70% of the economy, and large ticket industries
such as automakers and homebuilders need a resumption of past buying frenzies
just to be able to stay in business, they are hardly likely to step forward to
borrow and spend on mass debt, which means, yes, it is different this time
around and the financial day of reckoning is here now that the financial
musical chair song has ended.
3) Taxes are going up next year, and way up in 2011 and beyond, while
government deficit spending increases dramatically as money is shifted from
the haves to the have nots. Rising taxes in the face of rising unemployment,
along with increased in trade protections, were hallmark of past depressions,
and repeating things over and over while expecting a different outcome is the
definition of insanity. Those who forget history are destined to repeat it.
4) Government control of the economy never works, as the 1930s US/Europe, post
1989 Japan, and entire Soviet experience can attest to. Raw capitalism where
winners can climb on the backs of the losers is the best way to grow the
economy as a whole, and if we want to be all the same then we can be, for we
can all be poor and unemployed. We live in a world where losers are not
allowed to exist, thus winners will diminish in numbers as their money is
whisked away to help the growing numbers of have nots. Since politics is a
numbers game, the dwindling number of winners will be outvoted by such a wide
margin that I’m afraid our economic fate is sealed, or soon will be, on the
backs of unintended consequences of good intentions.
So for our expectations in 2010:
1) The stock market should see a major life-changing peak, somewhere between
Dow 10,500 (here) and 12,000, and then crash and crash and crash as the March
2009 lows get taken out in a big way.
2) We should see a complete unwinding of the USD carry-trade, which we aptly
call the lemming trade. While selling US dollars to buy gold and other
commodities, as well as stocks and all things China were the major trends of
2009, next year should see the exact opposite, as the race begins to grab
dollars as the imploding debt bubble leaves too many individuals,
corporations, institutions, and countries swimming naked and overexposed to
debt backed by too little capital. Gold should get cut in half. Oil should
revisit and surpass the $35 per barrel area. China will implode, leading stock
markets around the world into a crashing retest of the March lows, which will
likely be breached by a significant margin.
3) 2010 should be the year of currency crises, with the British Pound the
crown jewel of pending disasters, with the EURO not far behind in the race to
the bottom.
4) Unemployment will rise to the very unexpected 12-14% range, creating an
“off with their heads” mentality among voters as we head into the mid-term
elections later in the year.
5) Voters will - eventually - balk at governments giving money to failing
institutions, which means some very big name financial companies will go the
way of the Dodo. AIG, Citibank, Chrysler, are sure to be in the crosshairs of
such former too-big-to-fail companies who run out of money and time, though
they will likely be the tip of a very large financial iceberg. Once one goes,
all of them will suffer a collapse as investors shoot first and ask questions
later, leaving each company struggling to show they have the means to survive.
I could go on, but basically what we are facing is the reality of what was
threatened by the 2007-2009 bear market collapse, only this time no one will
be fooled into believing anyone can save us, as the FED and government lose
all credibility as all attempts to stem the financial blood-letting fail. A
dark prediction, yes, though the good news is that eventually, once the
winners have been separated from the losers and the debt de-leveraging problem
gets defaulted away, the economy can start to grow again and the future can
once again be expected to be brighter than the past.
If the economy and financial markets want to prove this analysis flawed, and
dead wrong - which given the dark nature of our expectation we BETTER be wrong
- then we have no problem making money on the long side as we follow the stock
markets higher. As we always say, and we repeat here again, the only opinion
one should listen to is that of the stock market. Just keep in mind the
potential severity of the situation facing us I’ve just outlined if indeed the
stock market begins to slide, as failing to follow those trends could have
life changing consequences, and I don’t want any of us following those
lemmings over the day of reckoning cliff.
Now try and have a great weekend and stay away from ledges and knives!
401K investors should be invested in money market funds.
Kevin Wilde, Chief Trading Strategist, AlphaKing.com
Friday, December 18, 2009
Wednesday, December 16, 2009
Friday, December 11, 2009
Wednesday, December 9, 2009
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