Lussenheide Capital Management Thursday, June 15, 2006
Broadcast
The equity markets finally have found some footing, with a large 2 day turn around, coming out of a severe oversold condition. It does somewhat amaze me how the Wall Street Media has basically declared this correction "Now Over."
A quick look at some sentiment indicators (Put/Call ratio, McClellan Oscillator etc.) shows that they have bounced back much faster than the market itself, with those indicators now treading at neutral. The indicators bouncing this quickly shows a rush of bottom feeders that usually are wrong, and is not a healthy condition. The market will have to build a base and back and fill in a steady fashion to be sustainable over time. The market remains in a downward channel of lower lows, and lower highs and as we stated last week , markets never tread a direct line. They move more in a two steps forward one step back type of a fashion. This market can retrace 50% of its drop since mid May and still not be technically healthy.
Our intermediate trend models remain solidly bearish.
This current correction should not surprise anyone. Although market action over the last couple of years has been fairly staid and far from exciting, there has not been a 10% correction in the SP 500 since March of 2003. This is the third longest streak in the history of the SP 500 (which dates back to 1942) . Drawdowns and bear retreats, with 20% or more drawdowns are regular occurrences in the history of the market, and the primary reason that using our defensive trend following models is always sound wisdom
What Word Can Be Added To The Following Terms??...Record Trade Deficits, Falling Real Estate Prices, Falling Equity Prices, Falling Dollar, Record Budget Deficits, Negative Savings Rates, Rising Interest Rates, Record Oil Prices, Rising Inflation, Inverted Yield Curve. If you guessed Recession, then you would be right. I am growing increasingly concerned that the story that the markets are telling us is a recession starting as early as the end of this year. Historically the business cycle has ran about 48 months long, so this recovery, since 2001, is already old by that standard. Wise business people and individuals should be watching inventory controls, hiring practices, accounts receivables/credit and debt levels as a precautionary measure. Hopefully Fed Chief Bernanke will pull a rabbit out of the hat and engineer a "soft landing". Count me as skeptical.
Our current positions, BUY SIGNALS... NONE
SELL SIGNALS ...US Bonds, REITS, NDX 100, SP 500, Japanese Stocks, European Stocks, CRB Commodity Index,
http://www.investmentwarrior.com
Bill Lussenheide-President
Lussenheide Capital Management Inc
Broadcast
The equity markets finally have found some footing, with a large 2 day turn around, coming out of a severe oversold condition. It does somewhat amaze me how the Wall Street Media has basically declared this correction "Now Over."
A quick look at some sentiment indicators (Put/Call ratio, McClellan Oscillator etc.) shows that they have bounced back much faster than the market itself, with those indicators now treading at neutral. The indicators bouncing this quickly shows a rush of bottom feeders that usually are wrong, and is not a healthy condition. The market will have to build a base and back and fill in a steady fashion to be sustainable over time. The market remains in a downward channel of lower lows, and lower highs and as we stated last week , markets never tread a direct line. They move more in a two steps forward one step back type of a fashion. This market can retrace 50% of its drop since mid May and still not be technically healthy.
Our intermediate trend models remain solidly bearish.
This current correction should not surprise anyone. Although market action over the last couple of years has been fairly staid and far from exciting, there has not been a 10% correction in the SP 500 since March of 2003. This is the third longest streak in the history of the SP 500 (which dates back to 1942) . Drawdowns and bear retreats, with 20% or more drawdowns are regular occurrences in the history of the market, and the primary reason that using our defensive trend following models is always sound wisdom
What Word Can Be Added To The Following Terms??...Record Trade Deficits, Falling Real Estate Prices, Falling Equity Prices, Falling Dollar, Record Budget Deficits, Negative Savings Rates, Rising Interest Rates, Record Oil Prices, Rising Inflation, Inverted Yield Curve. If you guessed Recession, then you would be right. I am growing increasingly concerned that the story that the markets are telling us is a recession starting as early as the end of this year. Historically the business cycle has ran about 48 months long, so this recovery, since 2001, is already old by that standard. Wise business people and individuals should be watching inventory controls, hiring practices, accounts receivables/credit and debt levels as a precautionary measure. Hopefully Fed Chief Bernanke will pull a rabbit out of the hat and engineer a "soft landing". Count me as skeptical.
Our current positions, BUY SIGNALS... NONE
SELL SIGNALS ...US Bonds, REITS, NDX 100, SP 500, Japanese Stocks, European Stocks, CRB Commodity Index,
http://www.investmentwarrior.com
Bill Lussenheide-President
Lussenheide Capital Management Inc