Archive through April 25, 2008

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rdumas

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Post Number: 1360
Registered: 11-2006

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Friday, April 25, 2008 - 12:53 pm:

US MARKET

This morning I posted about how well the S&P500 was performing in spite of contradicting information on the fundamentals front. The S&P500 is now 11.9% down from its highs in 2007.

If you think that's great then you will be just as surprised to see that the DOW is only 9.3% down from its high in 2007. How's that for optimism in the face of the worst crisis since the great depression !!!

Remember AMBAC? That was the bond insurance company that looked dicey a few months ago and the market was thrown into despair when it appeared to be in trouble. Well it just goes to show you how much the situation has changed now. A couple of days ago AMBAC reported once again and their share price plummeted 46% because their situation had actually worsened. What did the US market do in response to this news???? They totally ignored it !!!!

It sure is a funny world. The US market now believes that no matter how bad things get, the FED will save them so there is no need to worry. As I continue to say, we live in an insane world at present, especially in the US. Most of the reserve banks of the rest of the world are busy fighting inflation, but not in the US. They keep coming out with inflation figures that defy logic (continually increasing cost pressures, higher import prices, lower dollar, etc) and dig themselves further into the grave that they will eventually end up laying in.

rdumas

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Post Number: 1361
Registered: 11-2006

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Friday, April 25, 2008 - 01:02 pm:

Hi Sway, Eugenio,

You have been and continue to do good work with your analysis Sway. I am definitely not arguing that the US market charts are going up and I grant that the money being put into the market is being done by the big players in town.

Whether it represents reality is another question entirely. Yes it does represent the reality of the US market. It definitely does not represent the reality of the real world economic situation.

Eugenio, thanks for the comments in your last post. It was not necessary but none the less appreciated.

rdumas

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Post Number: 1362
Registered: 11-2006

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Friday, April 25, 2008 - 01:27 pm:

Why is the price of rice specifically and food generally going up ? The following video gives a US perspective.

http://edition.cnn.com/video/#/video/business/2008/04/24/velshi.rice.prices.cnn

eblode

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Post Number: 752
Registered: 11-2002

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Friday, April 25, 2008 - 01:59 pm:

Sway & Rudy,

The one factor that you both overlooked is that the Yanks are a very optimistic bunch of citizens. By and large they visualize the bright side. I find often I do the same when there is absolutely no reason. But that's the American nature, optimism. To give you some idea of what I'm talking about, here is the perfect example. Years ago I imported a fantastic little tool called a Vibro-engraver. This tool was like a thick pencil and could write on any material. Glass,steel,wood, you name it. I went the Mayne Security Co. and saw the CEO and demonstrated this tool for security and identification purposes. It's limits has no end. Police would give them to families to identify their household items permanently, kids bikes. tools. Factories, Mining company tools, workers ,etc.
The CEO got very excited at the prospects. Called his 3 Directors in to witness this marvelous tool that wholesaled for $9.00 and retailed for $20. They were all very impressed. I got out my order book as this was the largest security company in Australia. The CEO looked at his Directors and said"Men we are going to place a firm order!" and with that he ordered 6 units!! At first I thought he meant 600 or 6000. No just six, one for the Sydney office, one for Brisbane, etc.and then if it sells we'll reorder. That's the typical conservative European way of doing business.
The Americans would of shouted WHOOPEEE, GIVE ME 60,000!!! THAT,S THE DIFFERENCE.

EUGENIO

sway

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Post Number: 239
Registered: 12-2005

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Friday, April 25, 2008 - 02:20 pm:

Rudy
Out of interest, I looked at all of the world indices to see which were above their 30w WMAs.

Above 30w WMA:
Argentina, Brazil, Mexico, Canada, USA, Hong Kong, Korea, Taiwan, Austria, Belgium, Netherlands, Norway, UK.

Below 30w WMA:
Australia, China, India, Jakarta, Japan, Malaysia, NZ, Singapore, Denmark, France, Germany, Italy, Spain, Turkey.

So it's 13 above and 14 below. There is a world index that is $ weighted but I don't have it handy. Anyone?

Sway

This is not a recommendation or advice. As they say .... DYOR.

sway

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Post Number: 240
Registered: 12-2005

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Friday, April 25, 2008 - 02:45 pm:

Found it http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_gbl1200 /2,3,2,1,0,0,0,0,0,0,0,0,0,0,0,0.html
# Underlying Indices – Seven regional and country headline indices

* S&P 500 (United States) in US$
* S&P Europe 350 (Europe) in US$ and Euro
* S&P/TOPIX 150 (Japan) in US$ and Yen
* S&P/TSX 60 (Canada) in US$ and CAN$
* S&P/ASX All Australian 50 (Australia) in US$ and AUS$
* S&P Asia 50 (Hong Kong, Korea, Taiwan Singapore) in US$
* S&P Latin America 40 (Argentina, Brazil, Chile, Mexico) in US$

Country Weight Number of
Companies
ARGENTINA 0.05% 2
AUSTRALIA 3.01% 51
AUSTRIA 0.15% 4
BELGIUM 0.67% 11
BRAZIL 1.23% 18
CANADA 4.12% 60
CHILE 0.16% 10
DENMARK 0.35% 5
FINLAND 0.73% 7
FRANCE 5.25% 48
GERMANY 4.27% 33
GREECE 0.25% 5
HONG KONG 1.50% 19
IRELAND 0.31% 6
ITALY 1.90% 22
JAPAN 8.00% 150
KOREA 0.94% 12
LUXEMBOURG 0.26% 1
MEXICO 0.57% 10
NETHERLANDS 1.42% 16
NORWAY 0.35% 6
PORTUGAL 0.20% 6
SINGAPORE 0.32% 6
SPAIN 2.32% 18
SWEDEN 1.13% 23
SWITZERLAND 3.51% 22
TAIWAN 0.89% 13
UNITED KINGDOM 10.41% 117
USA 45.74% 500

Anyone have a chart?
Sway

This is not a recommendation or advice. As they say .... DYOR.

rdumas

Member

Post Number: 1363
Registered: 11-2006

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Votes: 0


Friday, April 25, 2008 - 03:36 pm:

Hi Sway,

You will find a world index chart at the following link:

http://www.ftse.com/Indices/FTSE_All_World_Index_Series/Performance_Analysis.jsp

The FTSE All-World Index Series is the Large/Mid Cap aggregate of 2,700 stocks from the FTSE Global Equity Index Series. It covers 98% of the investable market capitalisation.

Following is a screen print taken from the above link. Unfortunately I can't apply any TA tools to it.

More information about this index is found at: ttp://www.ftse.com/Indices/FTSE_All_World_Index_Series/index.jsp

rdumas

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Post Number: 1364
Registered: 11-2006

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Votes: 0


Friday, April 25, 2008 - 03:44 pm:

Hi Eugenio,

There is no doubt that the Americans are an optimistic lot. They would have to be though wouldn't they. Every time they get a decent president he gets assassinated. Any other country would get despondent.

And you're right about their ability to think big. Look at the sub prime crisis they created and lets not forget the mother of all credit squeezes that they created. God bless America !

sway

Member

Post Number: 241
Registered: 12-2005

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Friday, April 25, 2008 - 04:38 pm:

Thanks Rudy. We can't put a MA on the chart, but we can overlay the S&P.

Since the US is the biggest component of the world economy, it is no surprise that the charts are very close. Hence, we can probably conclude that the world (IC won't let me use the word index here)is also rising above its 30 week EMA.

Sorry Rudy, I just cannot agree with your post 1361 above that the world economy is in such bad shape.

Sway

(Message edited by sway on April 25, 2008)

This is not a recommendation or advice. As they say .... DYOR.

eblode

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Post Number: 753
Registered: 11-2002

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Friday, April 25, 2008 - 04:55 pm:

YES RUDY,

YOUR LAST THREE WORDS WERE STRAIGHT FROM THE HEART.

EUGENIO

rdumas

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Post Number: 1365
Registered: 11-2006

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Friday, April 25, 2008 - 05:10 pm:

Hi Sway,

I think that you may be missing the point. You appear to be saying that the index charts reflect the real economy. That is patently not correct. The index charts always represents what the market believes the future holds for the real economy. That is to say that the charts usually leads the real economy. This is equally true of the charts for companies. The share price of a company at any point in time is always based on what the market believes that the company is worth in terms of future earnings.

Quite often however the sentiment represented in the charts changes as more facts become known so it is quite a common occurence for the charts to oscillate wildly trying to determine what the real truth is about the future of the real economy. Historically market sentiment can go through extremes of optimism and pessimism whilst the market is chugging along during a recession.

ody

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Post Number: 2408
Registered: 10-2006

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Friday, April 25, 2008 - 05:12 pm:

AMERICA AND THE REST OF THE WORLD

Sway, there is, I feel, a real distinction to be made between the US and the rest of the world. The US's economy is in many ways weak, and weakening. Its sharemarket does not express that nearly sufficiently, so I think Rudy is certainly right to the extent that he sees a "reality gap" between those two (the US economy and its share market). If the rest of the world follows the US share market, it may to an extent be foolish to do so, but it ultimately has a better reality underlying it.

So if one drew ECONOMIC lines, I would draw one for the US which would point downwards, but others pointing upwards for most of the rest of the world.

If one draws lines for how sharemarkets should behave, I would think that the performance of the rest of the world is probably about right, but that the line for the US should be heading south.

It is the fact that, in the case of the US, the share market line is much too optimistic in relation to the economic reality which I see as distorting the whole picture, especially because the US is so large a portion of the world economy, but fortunately not representative of it. If it was, we would, I feel, be in a VERY bad way. Imagine, for example, the creditor nations being in the same mess, financially, as America! Where, ultimately, would the money come from to buy out Wall Street and other share markets??

ody

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Post Number: 2409
Registered: 10-2006

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Friday, April 25, 2008 - 05:17 pm:

SWAY/RUDY

As happens so often Rudy and I were writing our posts independently and at much the same time. They argue differently and use different words, but I feel that we are both hitting the same truth - one which I would have thought is hard to argue with. A key thing to remember is that sharemarkets and economies are NOT the same, and that a share market may at one time indicate matters correctly, but at another be entirely at fault. Furthermore, one share market may at one particular time be "right" while another is wrong. Share markets indicate feelings of investors, not economic realities, although at various points the two will of course intersect, even though at others they will be far apart. I think American investors are at the moment largely living in fantasy land.

ohkoolnutz

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Post Number: 741
Registered: 10-2005

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Friday, April 25, 2008 - 05:24 pm: