Bill Cara: Bear market taking shape, Thurs., June 8, 2006, 6:59 AM

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June 8, 2006

Bear market taking shape, Thurs., June 8, 2006, 6:59 AM

I have always said that the NEXT one could be the BIG one.

The thing about bear markets is you never know for sure when they come until they appear. Three weeks ago I told you I thought the bear was here. At this time I pretty much know.

This will be my tenth bear market experience. I am not afraid. I am already in cash.

And my detractors over the past few months are losing their shirts.

And as well the world now gets the chance to see how expert are these so-called experts and advisors, and how utterly awful some of them are.

How about Morgan Stanley's Stephen Roach " the economist who, after several years of extreme bearishness, turned bullish in the past two months at the very peak of the equity market, just as the bear finally approached?

Yes, as I see it, the 2006 bear market has arrived. Unfortunately, the clowns you have been watching on Financial Entertainment TV will now show they are also market charlatans. Those people have no trading expertise whatsoever; their special expertise is in the art of communication " a worthy talent to be sure; but one that is not trading.

Skilled traders will now wait until the emotional pendulum has swung fully to the bearish extreme, the torrent of rating downgrades to come from Wall Street, the flood of margin calls, and, finally, evidence of capitulation.

And through this process, there is one thing I am sure of. It will become apparent to you starting today. You will see how intellectually dishonest are these talking heads who will now tell you it was they who warned you previously, who told you they were in cash, who called this bear market of 2006.

I feel strongly that the next big wrong move these so-called experts will direct you to make will be to sell gold. Don't make that mistake.

The final rally for gold has yet to come.

Using the public's credit, the world's central banks will raise interest rates and try to knock gold down in order to prop up their failing currencies and stem inflation; so there will be periods of extreme volatility.

But that will not stop the coming rally in gold and silver, which is physical money the government administrations and central banks cannot print.

Put your trust in gold until shortly after the G-20 Finance Ministers and central bankers of the world meet to agree on a new structure for global currencies. That move will set the table for the next great bull market.

I hope it comes soon because I fear that the public likes to shoot the messenger.

And yes I did give you the message like precious few others. Who else wrote to you like this?

Posted by Posted by Bill Cara on June 8, 2006 06:59:00 AM | Category: Cara Today in the Market

Discourse

I don't understand your comment "skiled traders will now wait for the emotional pendulum....". IMO, skilled traders are shorting the heck out of the market and will continue to do so for some time. The emotional pendulum swung to the extreme at Dow 11,600; copper - $4.00; Gold - $700; Oil - $75; PD - $100; OIH - $170; AAPL - $85; X - $77; etc. etc.. The list goes on and on. When the markets swing back to extreme bearish levels, then the skilled trader will build long positions.

Posted by: ragingtrader at June 8, 2006 7:34 AM [link]

Bill-

I was able to stroll into my broker's office on Black Monday to see his ashen face. I was in school but studied the crash of 74-75 (BA Economics) My portfolio was wiped out by 30% in 2000-2001. But by God I am prepared for this one!

Took off my remaining longs. Fully hedged. Let it come.

Long: GLD!

Posted by: MarkM at June 8, 2006 7:38 AM [link]

Bill-

This morning I said the whole thing looks scripted. Now, right out of Hollywood, this:

"Crude oil fell below $70 a barrel after the leader of al-Qaeda in Iraq was killed, prompting speculation the attacks and sabotage that have strangled Iraqi oil exports for more than three years will ease.

Abu Musab al-Zarqawi was killed by a U.S. air strike north of Baghdad, Iraqi Prime Minister Nuri al-Maliki and U.S. General George Casey said at a televised press conference."

What better message could have come other than bin Laden himself being captured? Now, you know my politics. Even I am amazed at what has unfolded over the last week or so.

Posted by: MarkM at June 8, 2006 7:42 AM [link]

Yesterday's Strategypage:

Zarqawi scheduled for martyrdom

http://www.strategypage.com/htmw/htmurph/articles/20060607.aspx

If WWII had been reported the way this war has been reported then people would have thought MacArthur and the battleship Missouri were going to Tokyo to surrender to the Japanese.

Posted by: Fred at June 8, 2006 7:49 AM [link]

raging trader, I suggest you not try to take my words out of context and attribute some other meaning to them in order to build some value to your own. I don't know who you are but I suggest you find yourself a blog and spew your stuff to your heart's content. And if you wish to use your pages to challenge me, then I'm sure your mother will be the one to pay attention. And while you are at it, learn how to spell if you are going to quote people who do know how to spell.

Posted by: Bill Cara at June 8, 2006 8:23 AM [link]

Bill-

You can't win! When you predict the coming bear, the bulls gore you if it doesn't happen that day. When the bear arrives, you are criticized for not being short at the top!

Posted by: MarkM at June 8, 2006 8:45 AM [link]

When it happened i.e. al Zarqawi demise it only became a blip on the London stock market and continued to decline. :(

Posted by: C.Note at June 8, 2006 8:52 AM [link]

ARRRRRRGH!!!!! When I drive to work every morning, I listen to the talking head investing "experts" on the radio. You have to listen to this motley bunch of losers once in a while, they will make you laugh. Anyway, in all fairness to them, they have been generally bearish for the last couple weeks, to their credit. This morning the three hosts were REALLY bearish about everything except cash. Ok, cool. Get this: these pinheads were APOLOGIZING to their listeners this morning with idiotic comments like, "sorry folks, but we have to call it like we see it" and, "long-time listeners KNOW we are generally bullish" and to my amazement, "Please don't change the station because we are so bearish". What the @%$#@ is that??

Bill, I truly believe that the universe of experts for the average Joe is pathetic. Thankfully, there are people like you and a couple of other blogs that freely provide me with straight and insightful commentary. Keep in mind that there are thousands of readers who don't comment, but feel the same about you as I do.

Many thanks.

Posted by: smess at June 8, 2006 9:35 AM [link]

I'm not so sure anyone can "predict" the future of gold. It's much easier to determine the future of global economies as even dumb little me can do so.

If we are repeating the 1970s and we are at 1974, gold has peaked for nearly six years if you loosely follow history. Maybe gold will rise. Maybe it won't.

Posted by: Andyg123 at June 8, 2006 9:51 AM [link]

When you say you are in cash, do you mean fully in cash, or are you holding a minimum amount in certain stocks so you'll know when they start back up? I'm in mutual funds only, have sold all but about $2500 in each fund and want to know if I should sell it all. Thanks.

Posted by: Novice at June 8, 2006 11:15 AM [link]

Bill:
Ouch! I never intended to start a fight or take your "opinion on what skilled traders do" out of context. The content of your blog is nothing short of excellent, and forgive me if my earlier post offended you.
Trading, as you are well aware, ecompasses many different time durations. I think you will agree that your articles are directed towards the medium to long range investment/trading stategies. I am strictly a short term trader and have been for over ten years. At times, I believe your articles could do a better job of focusing on the numerous trading opportunities that "float over the plate" every day.
Never been a good speller!

Ragin

Posted by: ragingtrader at June 8, 2006 9:45 PM [link]