Originally Posted by qed

Well, I am always on the look out for changing relationships. If something is not acting the way it has been or should be I take note. The fact that the stock market was falling and the USDJPY was not is enough for me to put on a trade. When you combine that with a near exact double bottom and the fact that the noncommercial traders in the COT report are very bullish the YEN I think you at least have the possibility of a turn should there be some kind of catalyst. Maybe all of these bailouts, who knows? And the S&P futures seem to have a propensity to bounce off of the 800 level.

Also, China and Brazil are demonstrating relative outperformance. Even Australia and commodities are showing signs of stability. Oil stocks are acting very well also predicting a rebound in demand IMO.

My personal belief is that efforts to revive the U.S. economy will fail. Obama is going to announce some type of plan to address the large buget deficit according to the news wires. Of course this means taxing the rich which will kill consumption. The U.S. consumer is dead and that is very bad for Japan IMO since they rely on exports to the U.S. Even Europe relies on the U.S. on the margin because they export cars to the U.S. and autos are 1/5th of the German economy. The poor fundamentals of Europe and Japan are catching up to the trade.

I would endorse John Klicklighters analysis of the USD and JPY and suggest that anyone trading this pair read his analysis in the Weekly Forecast. Good stuff.

Originally Posted by qed

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My personal belief is that efforts to revive the U.S. economy will fail. Obama is going to announce some type of plan to address the large buget deficit according to the news wires. Of course this means taxing the rich which will kill consumption. The U.S. consumer is dead and that is very bad for Japan IMO since they rely on exports to the U.S. Even Europe relies on the U.S. on the margin because they export cars to the U.S. and autos are 1/5th of the German economy. The poor fundamentals of Europe and Japan are catching up to the trade.

Originally Posted by se1paul

How do you reconcile this view with your prediction of the S&P 500 hitting 1,200 by year end?

Originally Posted by qed

Thats easy. I have to set my sights lower. I am beginning to doubt the magnitude of a rally because now we are facing option-Arm resets which are bigger than subprime loans. I suppose it is possible that these loans may have already defaulted since there are so many job losses. Still it is a worry. Housing will continue to flounder and so to will the U.S. consumer. The U.S. consumer is DEAD. I do not believe in the end of the world though. I suspect that the stock market will be range bound for many years as it was from 1966 to 1982, while we adjust to the new Obamanomics wealth transfers. The market went nowhere but there were at least 5 stock market rallies of 20% or more. The trick is in timing them.

Of course this is all speculation on my part. Nobody can truly know where the market will go. The system I use can change market bias in as little as a week.

Originally Posted by qed

Thats easy. I have to set my sights lower. I am beginning to doubt the magnitude of a rally because now we are facing option-Arm resets which are bigger than subprime loans.

Originally Posted by andruha

Either you're going to be absolutely right or absolutely wrong. I just hope that some of those things can be extended at least a year, maybe give people a chance to take action and save up for those debt payments.

On a side note, I ran into an article praising communism.

http://www.nytimes.com/2009/02/15/we...1&ref=business

Does anyone have any ideas about this one?

Originally Posted by se1paul

Some wise words, qed. I sense elements of Keynesian thought.

Yes, predicting future asset prices is always, to a certain extent, speculation. Even when using the most sophisticated models, we can never fully factor in the radomness of the markets and the erractic traits of human behaviour, which is particularly pertinent in these turbulent times we find ourselves experiencing. There are simply too many known unknowns and unknowns unknowns.

We had a decent bear market rally from November's low. This entailed a 20% move to the upside, which, as you say, is not unusual in structural bear markets. There will likely be a few more of these rallies.

Originally Posted by qed

Well, which is it Paul. Am I wise or am I a Keynesian? LOL

Originally Posted by se1paul

Oucchhhh!!! I had high hopes for you, qed. Haven't you heard that we're all Keynesians now? There were definitely creeping elements of the great man's philosophy in your post, for that reason I shall hold out hope that you will soon come to your senses and admit to being a fully fledged Keynesian!

Originally Posted by qed

China 2009 Keynesianism good.

Great Depression Keynesianism somewhat OK.

Great Depression II U.S. Keynesianism not really Keynesianism.

Japanese lost decade Keynesianism abject failure.