Bill Cara: Bulls on the run, Thurs., Mar. 2, 2006, 6:42 PM

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March 2, 2006

Bulls on the run, Thurs., Mar. 2, 2006, 6:42 PM

I have been too busy today (IT and Bahamas stuff) to blog much. And now that my back spasms are finished, I'm staying away from the mirror. How about that gold and silver, and USD? Those bulls are having a good run.

Dr. John Rutledge of Rutledge Capital, a frequent guest on the Larry Kudlow show at CNBC, was on Kudlow again tonight. I don't know why I watch except to say I love to see a blowhard wince when markets don't go his way.

So tonight, Rutledge tells the audience to get a grip on their emotions. This is the same guy who jams your emotions into fifth gear when the broad market is on a bull run, which is the only way he likes to see it.

If there is one thing the market has taught me is that a trader's cockiness is his worst enemy. And if Dr. Rutledge is one thing, it's cocky.

So the whole group on Kudlow tonight was super bullish. I'm saying that having only caught the last ten minutes of the show. But do you don't have to watch any more to see that it's the same old people with the same old ideas " American bond's are always great, American stocks are always great, the U.S. Dollar is always great, the French, the Russians, the Chinese (etc) are always bad, the bears are perma-bears / naysayers, yada-yada.

On TV, there is this type of talking head, and then there are the people like certain CNBC personalities who act like they're the center of the universe, trying to engineer the news. What the buy-side needs is an independent and objective media " people with high journalistic standards who don't have an axe to grind.

And then when they opine that the bulls (or the bears) are on the run, and how and why, and so forth, then we might tune in to the whole show. And we might learn something.

Btw, today the bulls were on the run. How do I know? Well, of the S&P 500, there were 302 down on the day, and just 170 up. Of the Russell 2000 (small cap), there were 1087 down and just 603 up.

Tomorrow might be different, but if any of the Kudlow guests tonight actually gave me some insight rather than more stories, I might have a clue.

But then, if you read this weekend's Week In Review, you probably figure I do have a clue.

p.s.,

MarkM has commented that one of the Kudlow guests was Barry Ritholtz, who happens to be bearish. That may be, but in the final minutes of the show, which were the ones I happened to watch, Barry was opining that the U.S. market was going to rally some 5 to 7 pct in the near term -- presumably in the next three months. I take that as bullish.

I like Barry because he usually tries to teach his audience whenever he speaks or writes, but when he goes on TV shows like Kudlow's, the dynamics are such that you help your host do his thing or you don't get invited back.

In Kudlow's case, he thinks he has all the answers (and regardless of the issues or the market environment, it's always the same answers), and so guests like Barry are not given the chance to do their thing. But all these guests, including Barry, are marketing themselves, so they accept it. In the end, I think they do themselves a disservice.

But my point in writing this article was to say that we ought not be cocky or think we have all the answers, when clearly we don't. Trading is a new journey every day. Some days, like yesterday, the trip is more pleasant. Today may be less so. What we think at any point on our journey is not as important as how we think.

Posted by Posted by Bill Cara on March 2, 2006 06:42:46 PM | Category: Cara Today in the Market

Discourse

Bill-

One of the guests was Barry Ritholtz (The Big Picture). He is nowhere near being a cheerleader. In fact, his market prediction for the Dow in 2H 2006 is (drumroll please).....6800. However, they didn't let him speak to the market in general except in bites. Call it controlled input.

From R. Russell's site:

"[O]n February 1, Lowry's Buying Power Index stood at 446 with the Dow at 10953. Yesterdays the Buying Power stood at 425, which was 21 points below the February 1 level.

On February 1, Lowry's Selling Pressure Index stood at 485. Yesterday the Selling Pressure Index was at 502, which was 17 points above the February 1 level. In other words, the Lowry's statistics have deteriorated, even with the Dow at 10053 which was exactly 100 points higher than the Dow at its February 1 level.

Another comparison -- on February 1 my PTI stood at 5708. Yesterday with the Dow 100 points higher than its February 1 level, my PTI stood at 5698 -- this was 10 points lower below its February 1 level."

On the early morning (5:30am!) of 2/28 I commented that the $USD was looking like it was going to roll over. Boom! There goes gold. Oil followed.

A couple of closes over 62.70 for oil will confirm that the low has been put in. It was moving up smartly after hours. I will be the first one to eat my words if it produces a higher high here.

Long: Treasuries, gold and everything else is hedged to the hilt.

Posted by: MarkM at March 2, 2006 7:25 PM [link]

The bulls are leading oil as well. Up $1 already from where I posted my comment yesterday. Breakout of small base and break above $63 resistance.
BULL!
European Central Bank being hawkish is a very bullish event for gold. Trichet noted robust money supply growth and that EU rates were at historical lows, and thus rates will gradually "normalize". Though due to politicul pressure from EU member countries, Trichet & Co may not be the most loudest voices screaming for future rate hikes, I believe the ECB will continually hike rates, and thus, the Euro will benefit. And gold of course.
Shanghai is up a bit today, sentiment remains to be seen. Institutions are slightly more bearish than bullish. Our Average Joes(186 of them) are primarily bearish. I'm up 5% today on my gold stock in real life so you bet I'm jumping for joy.
RGLD and NEM are still crawling back up. I think the current price movement in US gold stocks is RIDICULOUS and will correct soon with a 20, 30 maybe 50% for the patient and intelligent buyer that was buying into the panic, impatient and stupid selling. It'll be good since I recommended them in my newsletter...
Life is good when everything's going your way.

Posted by: FirstConsul at March 3, 2006 4:32 AM [link]

FirstConsul-

The XAU/GLD and HUI/GLD ratios started to strengthen yesterday. The weakening is normal during a corrective phase. The ratio correcting to date was far less than seen the last three years as was gold's correction (Phase II is here as Bill has pointed out.)

What is the name of your newsletter? How frequently is it coming out?

Posted by: MarkM at March 3, 2006 5:49 AM [link]

Zhan's Outlooks and Picks
It's a weekly. Free of charge. No ads, spam, touts, strict disclosure rules. In the future, I plan to expand it to a daily. I do often send intraweek supplements, like today, when I just sent my subscribers some updates in my predictions. Including some predictions on future European Central Bank actions and bullish on oil & silver prediction.
I currently cover US economy & equities extensively, global economy & equities a bit, commodities and forex.
The unique feature of my newsletter is that I post picks on it like I would run a portfolio, so there is a hypothetical portfolio, with 50% margin for stocks. I also differ my picks in 3 categories, high risk, medium risk and low risk.
Finally, there's the good old legal boilerplate, err disclaimer, so someone doesn't come knock on my door for not doing their own due diligence;).
Newer features will be added soon. I plan to let some of my subscribers willingly do a few live testimonials(i.e. newer subscribers can email them and ask about the newsletter after agreeing not to spam the email) for say, a few hours of teaching/discussing investing with them.
There are currently 64 subscribers(the newsletter is pretty new, less than 2 weeks old) Most of the growth is organic, NOT me going around asking everyone I know to subscribe. I just post on forums that I have a little bit of "fame" (maybe notoriety) and ask interested people to provide a valid email address.
I think I will see exponential growth as long as I am able to make accurate predictions. 1000 satisfied subscribers by year-end 2006 is my initial objective, with the sky being the limit after I have a strong, growing base of loyal subscribers.

Posted by: FirstConsul at March 3, 2006 8:49 AM [link]

Bill-

Good point! Barry has expressed surprise he gets called so often, but you think that maybe he's becoming the show's Affable Bear. Always something to think about.

Ah, life. It's never simple.

Posted by: MarkM at March 3, 2006 9:38 AM [link]

All-

They tried this gold raid in the Far East last night. It failed. $4 down. $4 straight back up. Look at the charts at Kitco. Another try coming up. Those wanting miners may get some bargains here if they push it down enough.

Posted by: MarkM at March 3, 2006 10:04 AM [link]