Monthly Archives: May 2007

The Last Great Stock Market Bubble

 

-As you can see, the four most important models—monthly, weekly, daily, and hourly—have all reached a completed topping sequence and are all telling me that the current move to new highs in stocks is a “false” move which will be “quickly and completely retraced.”   

– We believe, as highlighted in chart #1 below (The popping of a bubble), that the BKX will be the next “shoe to drop” in the US mortgage/housing debacle.

Full report coming soon

Share

The Dominos Keep Falling

-Last week’s report focused on the idea that the busted US housing bubble is unraveling like falling dominos, as the carnage rolls through group after group… I’ve already reco’d getting short banks and brokers.

-Based on studies of the past, including a “fakeout” inversion into the top in 1929 and 1987, I doubt that I’ll witness another period in my lifetime where my big picture view of the US stock market is as bearish… 

-The more we learn about  various Carry Trades around the world,  the more we think an unwinding of one or more of them could trigger a liquidity crisis in markets all over the world… If investors are using the same strategy (arb or otherwise) to provide the liquidity needed to enter into diverse investments, that strategy is no longer “diversified.” An unwinding of the “carry” from which the liquidity originates could potentially act as a large enough catalyst to unwind each and every one of the other positions entered into.   Mechanical unwinding would likely take place on a scale not seen before and we would have to just hope that another group of geniuses aren’t on the wrong side of a 32-1 leveraged bet gone bad.

Full report coming soon

Share