Louise Yamada: Dow 10,000, SPX 1,175, Nasdaq 2,000

Discussing
where the market goes next, with Louise Yamada, managing director of Louise
Yamada Technical Research Advisors:

click for Video
Yamada

 

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Discussions found on the web:
  1. Ben’s Beady Eyes commented on Jun 28

    Damn, Louise … Your eyes are BUGGIN’ … I thought this was another fun with photoshop feature.

  2. guru commented on Jun 28

    Yamada has been right on the mark since I first saw her on Fast Money in November/December.

    We agree on future trend of market but my target is 1150 for S&P. To see why, go to http://www.stockchartist.blogspot.com

  3. Bruce commented on Jun 28

    Louise is right, but maybe not low enough…my wife and I were discussing this this morning over coffee…two notes from yesterday. Brunswick stated yesterday that of 29 manufacturing plants by the end of 2009 they plan to close 12…12! Almost half of their capacity will be taken off line within 18 months.

    The CEO of Lennar yesterday said he sees continuing deterioration of the housing market through the remainder of 2008, and is not making preparations for an upturn…those who tell you the end of the housing market woes are just around the corner are apparently not in the business of making and selling houses…he said his biggest “competitor” right now was the glut of foreclosed houses he is having to compete against, and doesn’t see this lessening…

    Cash is king…

    Bruce in Tennessee

  4. cinefoz commented on Jun 28

    Sorry to hear about your problems. I made money yesterday and I am not invested in anything connected with natural resources, although it is possible that some of my investments have an interest in natural resources to a limited degree, particularly latin america. I’m 25% in now and will probably go in another 25% after the 4th. I’ll wait out the remaining 50% until I hear about Congress or the Justice Dept closing in on the oil ponzi problem we have to put up with for now.

  5. Bruce commented on Jun 28

    Cinefoz,

    From the large amounts of money you were losing at the beginning of the year, how are you doing now? The tone of your comments have certainly radically changed…what made you quit drinking the kool-aid?

  6. Mike in Nola commented on Jun 28

    Too much mumbo jumbo for me. “Head and shoulders top”, “neckline”, “support levels”, etc. I suppose eye of newt wouldn’t sound too convincing.

    The problem is trying to give a false sense of accuracy. I know Americans like the cozy feeling that some expert knows exactly what’s going to happen. It’s easier than having to engage in hard, critical thinking as conditions change. I see this in my practice. My problem as a lawyer is that I’m honest with clients about the uncertainty of litigation, so they think I’m wishy washy.

    Back to Louise: At the same time there were plenty of escape hatches: “that’s our target unless we see technical improvement in the indicators.” A good astrologist always hedges her bets.

    Never have understood how people can buy into resistance or support levels in indexes, except to the extent that enough people believe in them to create them. A weighted index level is the result of potentially millions of combinations of changing prices of many stocks (whose float and components, and weight change from time to time). The concept makes some sense in an individual stock if you know a lot of shares were issued or purchased at a certain price or a lot of options are outstanding at a certain price.

    She’s obviously an intelligent person, and I would have found her a lot more credible if she had just said that anyone who looks at history knows indexes in average bear markets decline 30-40%, which probably puts the DJ somewhere around or below 10,000 at the bottom. Could change if some big unforeseen events happen. She may be doing this unconsciously anyway, but feels she needs some “scientific” basis for her opinions.

  7. cinefoz commented on Jun 28

    Bruce, FYI, I closed out all my positions in late 2007 and retained all 2007 profits, excepting the haircut I took on the first day of the big dip. I bought back in mid and late January and sold in mid April at a gain. I’m buying back in slowly.

    While I have lost money on individual investments, sometimes sold too soon, or avoided high fliers for performers I knew, I have NEVER lost on an entire strategy. My strengths are that I don’t follow the pack or the popular, or popular contrarian, view and I am patient. I always buy low and never buy anything I don’t understand. I make money.

  8. Todd commented on Jun 28

    Cinefoz, I’m glad to hear you’ve survived well in this market. Being a contrarian can be an incredibly rewarding strategy, something I wish I were better at. What the crowd here (and I) objected to a few months back were the views that a stock market selloff was not reality based and must, must, must be bought as the stock market always goes higher over time. Apparently, that is not your opinion which in my estimation is a good thing.

    As for Louise Yamada, there’s only one word I’ll use to describe her : BRILLIANT !

    I’m sure Louise is using 1175 as an interim target for now and then re-evaluate at that point once we get there. It doesn’t make much sense to go out and put an 875 target and sound like a raving lunatic when you can approach it on a more gradual basis. As an aside, CNBC seems to almost never allow such bearish views to be espoused as they don’t want to panic investors. As to whether or not they are doing a service to their viewers by doing that is open to debate.

  9. ECONOMISTA NON GRATA commented on Jun 28

    This is almost like the debate that has been occurring, creation vs. evolution. One camp is armed with delusion while the other is armed with facts.

    Eco

  10. Groty commented on Jun 28

    Stock market technical forecasting is good work if you can get it.

    In May 2007, Yamada was on CNBC forecasting 16000 on the DJIA, going insofar as to invoke the “it really is different this time” phrase due in part to the infrastructure buildout in China and India. A a little more than a year later, she’s changed her forecast by 6000 Dow points. I remember Richard Russell also briefly turning super bullish and subsequently flip flopping after the market told him he was wrong.

    I was a little surprised I was able to find it, but here is her summary of the interview on her website:

    “May 30, 2007: Louise is interviewed by Bill Griffeth on CNBC TV’s Power Lunch about her bull market thesis that was discussed in the May 23 Wall Street Journal article by E.S. Browning. In response to Griffeth’s questions, Louise distinguished long-term structural trends (ten years or more — such as the structural bull market from 1982 to 2000) as opposed to the cyclical pullbacks or moves in the opposite direction that periodically interrupt structural trends. The global markets began a powerful move in 2002, corresponding to the initiation of a new 20-year cycle. Thus far, the foreign markets have vastly outperformed the U.S. market.

    Louise noted that “it really is different this time,” with the qualifier that the psychology of the market is not different, but rather the environment. There are now 2 billion people in the world who are moving into the mainstream and toward the middle class during the next couple of decades, constituting a once-in-a-lifetime trend. The global infrastructure build-out of homes and infrastructure in support of this demographic trend corresponds to the 1942 to 1966 domestic infrastructure build-out in the post-war U.S., with road and highway infrastructure, homes and appliances purchased, except this time the global build-out is much larger. This bull market should be viewed not in terms of any particular target price but rather in terms of duration, of number of years.

    Along with the bull market in equities, the price of gold can continue to rise because the influence of the U.S. dollar is the key. A falling or devalued dollar inflates other assets and the potential rise in our markets, as an inflationary advance, may be tied to the dollar’s decline. Last October/November the Dow Jones Industrial Average broke out through a reconsolidation leading LY Advisors to put in place a target of 13,000 which has now been raised to 16,000. Global markets, however, will continue to outperform U.S. equity markets, interim pullbacks notwithstanding.

    http://www.lyadvisors.com/events2007.htm

  11. techy commented on Jun 28

    sorry barry, i tried but could not fathom Technical analysis importance where there is so much bad news around and fundamentals are deteriorating.

    technical analysis will work only when everyone was following it and basing their action on its cues….otherwise its too much information overload for too small benefit…(or maybe i am just an ignorent fool :)

  12. Jay commented on Jun 28

    Melissa Lee is hot.

  13. johnDoe commented on Jun 28

    why does the Asian woman look like she just finished saying “F-You” while Louise Yamada is smiling and thinking F-You?

  14. malabar commented on Jun 28

    Thanks Groty.

    Very important to keep track of what these folks are saying over time. Compells you to take their prognostications with a grain of salt.

  15. Patrick commented on Jun 28

    Funny how all these spotlight-seeking analysts try to one-up each other with gloom and doom predictions. What do you guys think – is this kind of media reinforcement dangerous? A self-fulfilling prophesy…of sorts?

  16. Just Visiting commented on Jun 28

    “A self-fulfilling prophesy…of sorts?”

    Patrick, are you suggesting the housing meltdown, credit collapse and economic downturn were created by people talking about these things too much?

    All we’ve heard for the past two years – until very recently – is people denying these realities and claiming a brisk recovery would follow a mild slump at worst. The Doomsayers were voices crying out in the wilderness.

    Now the Big Three auto companies are choking on lots full of cars while burning through their last cash, consumer credit availability will be slashed (perhaps by up to half), hundreds of billions of Alt-A mortgages will reset, and the downward economic spiral has barely even begun to feed itself — and you suspect all this might be due to expectation?

  17. Ron Fishman commented on Jun 29

    TOT, but wouldn’t it be useful to have a point-cloud overlaid parabolic best-fit, of the Fibonacci MA’s hindcast returns as % yield, plotted logarithmically on the y-axis, versus the next Fibonacci interval forward yield result. Backward <-> forward.

    So your 5-day MA plots last week’s return (Y) against this week’s 5-day return (X) for all of the DJIA stocks, for example.
    Once the data was in, you could run 5-day on Y and 8-day on X, and so on, opp sim, out MA’s as long as there’s correlation.

    There must be a steepness rate in hindcast yield beyond which it’s almost guaranteed the interval forward will be sharply off, e.g. “when it hits +1.85% DOD, get out!”

    Knowing that, knowing the critical slope range of values, rather than trusting your gut, would be useful to set sell ceilings, if you’re not always online day trading, rather than for sell floors, where you’ve already lost, and are cutting your losses.

    Because the only money that anyone’s gonna make for the foreseeable future will be in catching the falling knife for that brief uptick. And if you recall the last time we were here in 2000, everyone was online all the time, work or play, sweating, losing, what, 50% of their equity for 50% of them?

  18. philip commented on Jun 29

    Good one, Ron! You sure make that technical crap seem like pointless silly jargon. You were being tongue in cheek about how nonsensical that stuff is, right?

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