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blue chip bubble -> internet stock bubble -> housing bubble -> start over

By AD following x   2013 Apr 1, 1:05am 1,715 views   7 comments   watch   nsfw   quote     share    


I read how a lot of homes are being bought up by investors in Southern California who are then turning them into rentals. Perhaps some of the cash to purchase these homes is coming from stock market gains and building bubble. So the money shifts from one bubble to another bubble.

The stock market is doing well thanks in part to Federal Reserve. The trailing 12 months P/E ratio is 18 for the S&P 500, so when it hits 20 then we get into significant over-valuation territory. Also the S&P 500 push up 8% above its 200 day simple moving average. I don't think it will go above 10% over the 200 day simple moving average in the next 12 months. I would rate the S&P 500 right now as a soft buy to neutral.

#housing

1   Tenpoundbass   ignore (14)   2013 Apr 1, 1:28am   ↑ like (0)   ↓ dislike (1)   quote   flag        

adarmiento says

blue chip bubble -> internet stock bubble -> housing bubble -> start over

And to think that there are people that preach about the virtues of investing in 401K. I don't even believe in companies I work for. When they offer me stock options in their company(For retirement). The chance of any company in America right now at this given moment, still being around, and still having the same financial status as they have now, in twenty years from now. I would put at no more than a 20% chance.

2   Done   ignore (1)   2013 Apr 1, 1:46am   ↑ like (0)   ↓ dislike (0)   quote   flag        

adarmiento says

I would rate the S&P 500 right now as a soft buy to neutral.

http://www.decisionpoint.com/tac/Swenlin.html

I think that is a reasonable, playing with low leverage (small positions) such as, what can .50-.75% risk of capitol buy?
I look at it a bit more neutral looking for "price" confirmation before I'd risk any of my capitol.

Right now I would have to say the same about counter trend plays. ETFs (SH), currency pair USDMXN

http://www.barchart.com/quotes/forex/US_Dollar/Mexican_Peso/%5EUSDMXN

http://www.barchart.com/quotes/etf/SH

Lots of USD economic news this week should put some fire/ice on the situation.
http://www.forexfactory.com/calendar.php?week=apr28.2013

3   AD   ignore (0)   2013 Apr 1, 3:35am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Two factors, one technical and the other fundamental. The benchmark for the stock market is SPY (Spiders S&P 500) which is at $156 whereas its 200 days SMA is around $142. However, its P/E ratio (trailing 12 months) is 14 which is near the historic median of around the 15 to 16 range.

Source: http://finance.yahoo.com/q?s=spy&ql=1

4   AD   ignore (0)   2013 Apr 1, 12:53pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

SH (see http://www.barchart.com/quotes/etf/SH) is showing downward pressure against the shorts of the S&P 500.

Means many think the Spiders S&P 500 is still at a buy-rating.

5   Done   ignore (1)   2013 Apr 3, 10:33am   ↑ like (0)   ↓ dislike (0)   quote   flag        

adarmiento says

Two factors, one technical and the other fundamental.

I'm only responsible for my own trades execution in and out P/L. I row my own canoe and only let the consensuses of "price" make my mind as to the weight of buying or selling.

Means many think the Spiders S&P 500 is still at a buy-rating.

What do you think they are thinking about their buys now?

6   AD   ignore (0)   2013 Apr 4, 1:52pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Graybox, the shorts of the S&P 500 (symbol: SH) is trending downward in price. Hence, that is why I think that there is general consensus that the S&P 500 has not reach overvaluation yet.

7   Done   ignore (1)   2013 Apr 4, 4:31pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

adarmiento
You may prove out to be absolutely right and actually I haven't written off the S&P. At best I'm looking for this to be short term to intermediate play, I'm just willing to risk a small bit of capitol to play it my way. If I'm wrong risk management goes to work and deals with that loss. If I thought it necessary I could also buy some QQQ as a hedge.

SH isn't my cup a tea, I just presented it as a easily managed S&P short opportunity and idea. If price breaks to the upside again I would be open and looking to add another short position @1584.5+/- with the hopes of holding and taking 1st profit on target.

Another really great trade to play short the S&P is in buying the currency pair USD/MXN. It does have a great inverse correlation coefficient with the S&P.

adarmiento says

general consensus that the S&P 500 has not reach overvaluation yet.

I'm not a big trader of general consensus but rather I test and trade price. If consensus is on my side great however it really doesn't have much of anything to do in my buy/sell decision making. I don't know for a fact however I am suspicious of general consensus and their lack of weighing the USD strength and it's potential in their opinions.


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