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Rick continues to believe we are in a full on bear market

October 6, 2015

Rick always says he takes the markets moves one step at a time. With that in mind he is not convinced at the moves in the conventional over the past 3 days and continues to say we are in a bear market. He also has some comments on gold, gold stocks, silver, and oil.

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Discussion
37 Comments
    Oct 06, 2015 06:44 AM

    You have to just love Rick…..great guy and smart as hell.

    Oct 06, 2015 06:02 AM

    Thanks, Chris, but in this business you’re only as smart as your last forecast. Pat yourself on the back and you’re dead meat.

      Oct 06, 2015 06:09 AM

      Why? Are there snipers around?

        Oct 06, 2015 06:21 AM

        In a manner of speaking, yes.

          Oct 06, 2015 06:42 AM

          I admire your caution. These markets have been a minefield for far too long.

          Oct 06, 2015 06:50 AM

          Funny but true Rick A. Good thoughts today; as per usual. Thanks!

            Oct 06, 2015 06:12 AM

            It is true. And yet the impulse to point out a great call is irresistible some days even if it never wins any new friends. I am mostly pretty happy to congratulate another guy who gets it right though. Like you Shad when you nailed that trade on the VIX a few weeks back. Or Rick when he scored a bulls-eye on gold recently (thanks for the second time buddy!) Even though we all play this game alone I still feel like its a team we are on (crazy as that sounds). It’s all of us against the Vampires, late night sleazeballs and computer cheaters.

            Gold has turned down btw. It is forming a triangle and already hit its top. I would NOT get long gold at this point as its already too late and the money is on the short side for the next few days.

            Can I pat myself on the back next week if I am right?

            Oct 06, 2015 06:19 AM

            A Listener : I can almost go with the “team” concept on a good day;
            however, the “big happy family” espoused by another party – –
            -just a minute while I shoot myself.

            Oct 06, 2015 06:40 AM

            Ha Ha Ha!!! Yeah, I would agree with that. Mind you, most families are dysfunctional as hell. That would include this one too. At least in this small group there are some like minded people whereas out in the *normal* world most people I know personally just roll their eyes when I get going about charts, deflation, the economy, stock picks etc.

            Might just as well be talking about the life cycle of salt crystals for all most care!

            Oct 06, 2015 06:45 PM

            I like the idea of celebrating others successes when they make the good call, and pooling our collective wisdom, research, thoughts, charts, ideas, philosophies, and watching movement in the different stocks, ETFs, sectors, currencies, and indexes so investors on the blog may catch a winning trade and make some cake.

            Oct 07, 2015 07:52 AM

            I like cake.

            Oct 07, 2015 07:14 AM

            “Let them eat cake!”

      Oct 06, 2015 06:29 AM

      Yes that is always true, but you rub the crystal ball better than most.
      Btw, I agree with your deflation idea. I have lived in Pattaya Thailand for the last five years. Thailand is in the biggest damn property bubble the world has ever seen.

      I live in a first class Condo that is mind blowing it’s so nice. The building is five years old and %80 unoccupied. NO BUYERS! But condos everywhere going up. To be fare many have shown signs of impending bankruptcy. So the bubble may be ready to pop.
      Even the uneducated Thai’s are in on in. It’s a fever that is scary.

      I pay $340 a month rent. One bedroom. View of the ocean and brand new. It’s unreal what value this is in USD.

      Russian were the core buyers but that has ended. Many Europeans are in financial trouble and behind on contracts. It is said that the banks are in deep trouble

      So this lends it self to your deflation argument. Cambodia and Vietnam are in similar boats.

      I too support this as I hear it and see it every day. Deflation…deflation deflation.

        Oct 06, 2015 06:31 PM

        You got my attention Chris. Just how big is the bubble? I mean for example, how much does typical housing cost versus the average wage for example? That could also be expressed in terms of rent costs compared to the assets value (how many years of rent would it take to buy the typical home). Or better yet, how far off the average inflation rate has housing shot up?

        If you don’t mind. I would love to hear a run down on the bubble there.

          Oct 06, 2015 06:47 PM

          Not really sure I have that answer however consider the following. Cheap shoebox condos for Thai owners are in the $20000.00 range. A good job pays 600-800 USD a month. So often you will have pools of buyers hoping to buy and sell for a quick flip.
          They are all stuck now and NO buyers from outside the
          markethttp://newpattayacondos.com/

            Oct 07, 2015 07:51 AM

            So a cheap condo equals about 2.5 years gross income. That is not too serious. Actually its on the low side for cost compared to other countries. I thought you were talking a bubble?

        Oct 06, 2015 06:44 PM

        Interesting comments. Your condo sounds like $800k in Miami Beach.

          Oct 06, 2015 06:48 PM

          yep easy! pretty women help too!

    Oct 06, 2015 06:18 AM

    Cant blame Rick for being careful. These false rallies have been the norm for the last 4-5 years.

    Oct 06, 2015 06:22 AM

    I think we can get to 2100 on the S&P easily by the end of the year.

    Oct 06, 2015 06:28 AM

    I don’t understand why oil would be just a dead cat bounce when the rig count has fallen about 60% in the US. That should mean a 50% reduction in production and falling inventories eventually for WTI.

      Oct 06, 2015 06:45 AM

      I suspect that oil, and to some extent gold/silver, is mainly responding to news reports coming out of Syria. There is an awful lot of NATO and Russian hardware now flying in close proximity to each other.

      If it was not for Syria I would expect that oil would be repsonding to the growth figures that Cory posted in the other blog plosting earlier – not good for oil when the economies of several countries are contracting.

        Oct 06, 2015 06:47 AM

        Demand at the margin comes down to one user: China, and the dramatic slowdown there is very bearish for crude. I have a hard time imagining that geopolitical concerns are causing the current rise in energy prices, although those concerns may be sufficient to catalyze a weak short-squeeze. The investment world seems oblivious to threats of war and likely will remain so until a mushroom cloud billows somewhere in the Mideast.

    Oct 06, 2015 06:29 AM

    i love Al’s comment “a difference of opinion”
    More like diametrically opposite views!
    Great show Al. It just keeps getting better and better. When you are up at the office at 7:50am when most people of 71 have retired and are on a cruise – or working part-time at WalMart (or B&Q in the UK) – it puts lazy people like me to shame – really! You’re an inspiration, Al.

    Oct 06, 2015 06:13 AM

    The last hurrah is happening. Oil possibility 55 I agree with. Gold to 1220-1250. Conventional markets rally fueled by oil. Then watch out! Oil is heading to $10 due to worldwide lack of demand. Gold is heading to 500. and the SPX is going to go below 666. This unravel will happen fast and furious. My guess is that we will have these targets first quarter of 2016.

      Oct 06, 2015 06:43 AM

      That is all incredibly bearish Velma. All of that would require a global deflationary bust not seen since 1929.

        Oct 06, 2015 06:38 PM

        BOB…Although I disagreed with Velma ,I think last week , She could very well be right, what if the powers that be are blowing a huge bubble on purpose which they could pop at will . What would happen , Well overnight if they crashed all the markets, would that not wipe out all of their debt..just think their derivatives debt would go to zero….”THEY” have a plan , & were not party to it .

          Oct 06, 2015 06:10 PM

          ditto on the party planners……………..

          Oct 06, 2015 06:52 PM

          What? You think they are planning on causing a global deflationary crash at least as bad as 1929 and, judging by the above, far worse?

          Why would they do that? How would they do that? That sounds a tad crazy to me.

      Oct 06, 2015 06:08 PM

      You must be reading the Dent emails calling for a Dow 3000 soon.

    Oct 06, 2015 06:30 AM

    Oil and local gas seem to be diverging here in So. Idaho. Paid $2.15 for lowest grade today. Lowest of the year. All gas in this area is from internal refineries in Wyo., Utah and Colorado though.

    Oct 06, 2015 06:11 PM

    Rick, I have a question and with luck you might be able to answer it since you are the most experienced guy with floor trading background. What I am curious to know is what would happen with certain ETF’s if for example a bank like Deutche were to fail.

    Deutche issues or is the liquidity backer for hundreds of these things including X-trackers and Pro-Shares. Since these are essentially derivatives is it possible they could drop to zero overnight given the issuing counter party becomes effectively insolvent?

    In other words, if the market making function of the bank became impaired would ETF holders end up on the losing end of the stick and not in a position to recover?

    A lot of us use these things on a regular basis….but they are not really shares of any company giving rights of ownership to anything other than faith in the strength of the issuer.

    The chatter about Deutche being on shaky ground is making me wonder if I ought to start getting a little more cautious about how much is tied up in these things as opposed to actual stock.

    Many thanks.

      Oct 06, 2015 06:04 PM

      Maybe I am asking a question so obvious it just sounds idiotic to readers here. Probably I should know better and in fact I suspect I do. But ETF’s have not been around that long. Nobody has ever seen what might happen if the issuers (backers) actually failed. The IMF and Fed have already indicated that bailing out banks is a non-starter should there be another financial crisis. So that means the risk of using certain indexed instruments and derivatives falls on the shoulders of the public holders of those securities in the case of a credit event. In other words, they could (and probably would) collapse to zero if the liquidity well ran dry. Maybe I am answering my own question by talking out loud. I would really appreciate some input on this from you or anybody here who has insight on this subject.

      Am I worried for nothing?

    Oct 07, 2015 07:15 AM

    Bird….I really enjoyed your last two posts, they sort of connect with what I wrote above…& yes Deutche Bank are walking a tight rope & have dropped their pole.

      Oct 07, 2015 07:32 AM

      Thanks Tony. You know, we talk all the time about derivatives and the idea that one day they will come unwound. But the discussion is always so vague that the term has become meaningless.

      Almost nobody puts any meat on them bones.

      Fact is, all of us are using derivatives. It is not just the big banks and major players. Even options are a form of derivative as are so many other kinds of trades so nobody is going to be immune if a true meltdown happened.

      It just occurred to me that the only people with any real claims would be those with a factual direct interest in a specific bond, a contract claim on a commodity or registered company stock. All the rest is theoretically vapour.

      This is the kind of thing nobody really wants to talk about either.

      The idea that a derivatives collapse might suddenly wipe out a large piece of our portfolios seems preposterous even though every one expects it to happen! And who would you even fight to recover?

      With reserve capital at some banks in the small single digits there would be little chance of getting anything back ever. We need to talk about this. It is hardly theory anymore and certainly we know from our history how both banks and insurers were destroyed in the Great Depression when the debt bubble popped.

      Back then there were not these kinds of instruments. Certainly not in the current form. But there was a wide range of insurance policies and when the issuers failed….well nobody ever collected.

      Supposedly the insurers and reinsurers have this all under control. Closer to the truth though is that those promises to indemnify losses are worth less than the paper they are written on. I mean, nobody has sufficient reserves to cover the damage that would materialize if a derivative nightmare came to pass.

      Like FDIC insurance. Who really believes in that myth?

    Oct 07, 2015 07:53 AM

    I didnt have time to read the posts but tyink tick is spot on.
    The comoditites are way oversold and hated. The shares looked very constructive for a rally but when you look at the big charts so far barily blips on the screen. The oil dynamic says no way in hell we will do anything other then bounce. There are massively fundamentals against it. If we see a dececent rise just watch the supply go up.
    As for pms s decent trade is on but thats all Id bet on.
    I did some serious sprott bashing and gold bashing a year ago. After Sprotts best guy and my friend and fund manager ran from sprott and commodities way back. Say no bull in oil for sure. Also Sprott lots 75% in the hedge fund then I just see this piece. Wow what great money managemwnt. Lol. http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/sprott-asset-management-diversifying-away-from-gold-and-resources/article26644552/

      Oct 07, 2015 07:17 AM

      I “tyink tick is spot on” as well. 🙂