Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

It's Un-American To Be Bearish On Anything Besides Gold and Silver, Only Evil Speculators Short Stocks

Stock-Markets / Stocks Bear Market Jun 05, 2010 - 07:49 AM GMT

By: Adam_Brochert

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleIt is un-American to be bearish on anything besides Gold and silver. Only evil, greedy speculators would bet against stocks. Only kooky people with guns and canned goods would be bullish on Gold. That would make me an un-American, evil, greedy, kooky, gun-toting, spam-eating speculative devil. As an example of the thoughts such an unstable and unfit being creates when evaluating the financial markets, please indulge me in yet another bearish scenario simulation that contradicts the "central bankstaz and governments would never let that happen" theme.


I remain invested in puts on the triple bullish commercial real estate ETF (ticker: DRN) and to a lesser extent the triple bullish S&P 500 ETF (ticker: UPRO). This is playing with napalm, as leverage is a wicked tool of the depraved and cuts both ways. I don't take such a position just for the heck of it and I have experienced both the agony of defeat and the joy of victory when placing large, heavily leveraged bets for and against the markets.

I have recently discussed commercial real estate and previously posted on my rationale for shorting this sector of the market. I don't use the phrase "black bile bearish" in jest, I use it because I smell a bloodbath in the markets. My commercial real estate short is my largest trading position, while my largest overall position is in physical Gold (which I don't trade).

I want to get back to my previous "phase shift" concept in the commercial real estate sector versus the homebuilding sector, which I believe is still valid. Many are looking for a bounce next week (and even new highs for the "correction"), while I am looking for a continuation of the trend down. Here's a current 50 month 60 minute intraday chart of the $RMZ commercial real estate/REIT index (the index behind the triple levered DRN and DRV ETFs) thru today's close:

And here is a proposed "phase shifted" equivalent from the 2005-7 vintage bear market in homebuilders (roughly 2 year 60 minute intraday chart of $DJUSHB):

What comes next is good for da bears, of course. Here is the anticipated rhyme that "should" come next:

Of course, a speculator must be quick or all the gains by going short will be gone. Here's what came next:

And you can just imagine the massive rally higher that then followed:

Greedy bears who failed to take profits at this point deserved the subsequent short squeeze slaughter, eh? Here it is in all its bullish glory:

All good things must come to an end and the bulls in all seriousness got their revenge as they always do. The printing press is infallible and Bernanke and widdle Timmy Geithner punish bears routinely. Here's what came next:

The carnage had to be over at that point, obviously, and here's what the subsequent bear massacre looked like:

Now do you understand what I mean by "black bile bearish"? Did you notice that the dates on these homebuilder index charts was 2005-2007, long before the Great Fall Panic of 2008? Did you notice that some of the biggest drops were during June, July and August of 2007? Fundamentals asserted themselves back then in the homebuilders, just as they now should do in commercial real estate. There is no recovery in real estate, nor is there any prospect for one in the near future. There is, however, the potential for a "moment of recognition" to return and panic selling to ensue in this sector (among others...).

For those keeping score, the time from the end of the first $DJUSHB chart shown to the end of the last $DJUSHB chart shown is about 10 months, during which time the $DJUSHB dropped about 60% or so. Add triple leverage and options and you can see why I call this bet "playing with napalm," but you can also probably see why I am excited about the opportunity.

In my opinion, the March 2009 lows in commercial real estate are as likely to hold as the Greek stock market's are...

Visit Adam Brochert’s blog: http://goldversuspaper.blogspot.com/

Adam Brochert
abrochert@yahoo.com
http://goldversuspaper.blogspot.com

BIO: Markets and cycles are my new hobby. I've seen the writing on the wall for the U.S. and the global economy and I am seeking financial salvation for myself (and anyone else who cares to listen) while Rome burns around us.

© 2010 Copyright Adam Brochert - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in